Heyl Royster

 


Heyl Royster

 

The Illinois Appellate Court Gives “Credit” where Credit is Due

2/9/17

By: Jessica N. Klaus, jklaus@heylroyster.com

In Salisbury v. Illinois Workers’ Compensation Comm’n, 2017 IL App (3d) 160138WC, the Appellate Court, Workers’ Compensation Commission Division, held that an employer who voluntarily pays benefits following a fatality in the workplace, but prior to an arbitration hearing, is entitled to a credit for the overpayment of those benefits. As a secondary ruling of interest, the court held that a Section 9 petition for a lump-sum award will only be granted when the movant has established that it is in the best interests of both parties.

The Credit

The decedent, Charles Salisbury, died in a work-related accident in 2009 when the crop-duster he was piloting crashed. Shortly after Salisbury’s death and up until the date of the arbitrator’s award, employer paid death benefits at the rate of $1,231.41 per week. Following the arbitration hearing on May 8, 2012, the arbitrator awarded claimant, decedent’s widow, death benefits in the amount of $461.78 per week commencing June 13, 2009. The Arbitrator gave the employer a credit for the overpayment of benefits which accrued between June 13, 2009, and the date of the arbitration award. Claimant appealed the credit to the appellate court, arguing respondent’s credit was void as the Commission, a creature of statute, lacked the statutory authority to allow credit for an overpayment of benefits prior to arbitration against those death benefits which were awarded at the hearing. Claimant relied on the long-held notions that the Commission is bound by the powers granted to it by the legislature and that any action taken outside the Commission’s statutory authority is void.

The court upheld the Commission’s decision, finding it was within its statutory authority to award the employer credit. The court recognized that the employer had voluntarily taken steps to satisfy its obligation to the claimant under the Act and, absent statutory bar prohibiting it, the Commission could, within its powers, award a credit for the employer’s overpayment. Salisbury, 2017 IL App (3d) 160138WC, ¶ 12, citing, Messamore v. Industrial Comm’n, 302 Ill. App. 3d 351, 358-59 (4th Dist. 1999). The court reasoned a credit for an overpayment is not considered part of an award such that it does not order the transfer of obligations, benefits, or funds from the claimant to the respondent nor does it deprive the claimant of something she would have received but for the Commission’s action. Salisbury, 2017 IL App (3d) 160138WC, ¶ 11. Rather, to deny the credit would discourage employers from making prompt and voluntary payments of benefits for fear that an error might result in an overpayment for which there would be no credit.

The Lump-Sum Payout

The claimant also appealed the Commission’s denial of her Section 9 petition for lump-sum payout. Section 9 of Act permits a lump-sum payout in certain circumstances. 820 ILCS 305/9. The court observed that a lump-sum award is to be considered the exception, not the rule, and held that in order to succeed on a petition for lump-sum payment a movant must establish that it is in the best interests of the parties. Salisbury, 2017 IL App (3d) 160138WC, ¶ 18 citing 820 ILCS 305/9. The court found that claimant failed to satisfy this burden as she offered no evidence which suggested it was in either party’s interest to grant her petition. Salisbury, 2017 IL App (3d) 160138WC, ¶ 19. Claimant acknowledged she had saved most of the money which was paid to her by respondent prior to the arbitration hearing and that she was not suffering an economic hardship at the time her petition was heard. Id. Lastly, the court found that claimant had failed to provide any reason why it would be in the respondent’s best interest to pay this award as a lump-sum as is required by Section 9. Id. ¶ 21. As such, the appellate court upheld the rulings of the Commission and the circuit court and denied claimant’s petition.

Possible Impact

The court’s ruling is certainly welcomed by employers and should instill confidence in employers that if they inadvertently overpay benefits following the death of an employee, their interests will be protected at a subsequent arbitration hearing. This ruling should encourage swift and voluntary payments of benefits to an employee’s family at a time when financial security should be the least of their worries.

Additionally, on the issue of Section 9 petitions, by requiring the movant establish that lump-sum payment is in the best interest of both parties, the court’s ruling prevents a workplace fatality from financially ruining the employer’s business.

If you have any questions or would like to discuss this further, please do not hesitate to contact any member of our statewide workers’ compensation team.