- Jury Returns Verdict in favor of Hospital and Emergency Medicine Physicians
- Judge Grants Summary Judgment in favor of Hospital and Emergency Medicine Physician
- Jury Returns Verdict in favor of Health System and Family Practice Physician
- Victory on Claims of Excessive Force Against Task Force Members
- Radiologist not guilty of failing to diagnose lung cancer in a 40-year-old male which resulted in his death and, who was survived by a wife and 4 children
Although we strive for accuracy, the content of our blog is intended for informational purposes only. It is not intended to solicit business or to provide legal advice. Laws differ by jurisdiction, and the information may not apply to every reader. You should not take, or refrain from taking, any legal action based upon the information contained on this blog without first seeking professional counsel.
Your use of the blog does not create an attorney-client relationship between you and LGLJ.
Characteristic signs of plaintiff-insured collusion, which may work to extinguish an insurer’s obligation to indemnify the insured
When an insurer denies policy coverage for a suit or even issues a reservation of rights and files a declaratory judgment action, the insured occasionally settles directly with the third-party claimant or plaintiff for a specified amount that may only be collected from the insurance proceeds if coverage is found. Two recent Illinois appellate court actions, discussing an insurer’s duty to defend an insured in separate Telephone Consumer Protection Act (“TCPA”) suits, have addressed the issue of plaintiff-insured collusion as a bar to indemnification under a policy of insurance. In short, both courts agree on a common sense conclusion: if an insured’s settlement with a third-party plaintiff is more than what a reasonable uninsured would agree to settle for, an insurer may not be required to indemnify the insured.
Central Mutual Insurance Company v. Tracy’s Treasures, Inc.
In Central Mutual Insurance Company, the trial court in a declaratory judgment action denied an insurer’s motion for summary judgment, which alleged that coverage was barred by collusion and fraud in a settlement between the TCPA class action plaintiff and the insured. The First District Appellate Court affirmed the denial of summary judgment in favor of the insurer, Central Mutual Insurance Company, but noted that pursuant to the Illinois Supreme Court’s decision in Guillen v. Potomac Insurance Co. of Illinois, the settlement may be deemed unreasonable if there is evidence of bad faith, collusion, or fraud by insured. The Court noted that there are no Illinois state court decisions addressing the circumstances under which a settlement will be deemed collusive, but cited to foreign authority as persuasive on the topic:
We recognize that collusion and fraud in the context of settlements negotiated by an insured and an underlying plaintiff are broadbrush concepts and that ‘[a]ny negotiated settlement involves cooperation to a degree.’[…] But a settlement ‘becomes collusive when the purpose is to injure the interests of an absent or nonparticipating party, such as an insurer or nonsettling defendant. Among the indicators of bad faith and collusion are unreasonableness, misrepresentation, concealment, secretiveness, lack of serious negotiations on damages, attempts to affect the insurance coverage, profit to the insured, and attempts to harm the interest of the insurer. They have in common unfairness to the insurer, which is probably the bottom line in cases in which collusion is found.
Collusion occurs when ‘the insured and a third party claimant work together to inflate the third party’s recovery to artificially increase damages flowing from the insurer’s breach’ of the duty to defend.
Several factors are relevant to a determination whether a settlement is collusive, including ‘the amount of the overall settlement in light of the value of the case; a comparison with awards or verdicts in similar cases involving similar injuries; the facts known to the settling insured at the time of the settlement; the presence of a covenant not to execute as part of the settlement; and the failure of the settling insured to consider viable available defenses.
Due to fact questions, the First District Appellate Court in Central Mutual Insurance Company declined to find that the plaintiff and insured colluded, that the settlement was therefore unreasonable and that Central Mutual Insurance Company was not required to indemnify the insured for the settlement amount as a matter of law. However, the Court noted that “certain facts on the record before us certainly point to a finding that there was not even the illusion of adversity or arms’-length negotiations between counsel for [the class action plaintiff] and counsel for [the insured].”
G.M. Sign, Inc. v. State Farm Fire & Casualty Co.
In G.M. Sign, Inc. v. State Farm Fire & Casualty Co., the Second District Appellate Court reversed the trial court and ordered summary judgment in favor of an insurer, finding that a policy exclusion precluded coverage under the policy for a TCPA claim. While it avoided specific reference to “collusion,” the Court chided the reasonableness of the plaintiff-insured settlement and attempts to “plead into possible insurance coverage:”
We doubt whether, under these circumstances, any amended complaint could have triggered State Farm’s duty to defend. In essence, [the plaintiff] was attempting to recharacterize, at the eleventh hour, the class action that it had already litigated and negotiated to settlement, for purposes of obtaining insurance coverage. This is not a strategy that courts should condone. […] Moreover, [the plaintiff] was attempting to trigger State Farm’s duty to defend even though, under the terms of the settlement agreement, [the insured] was guaranteed not to be personally responsible for paying the judgment. Thus, when [the plaintiff] filed the amended complaint, State Farm’s duty to defend was moot. Perhaps this explains why [the insured’s] attorney tendered the amended complaint to State Farm at [the plaintiff’s] suggestion only six days before final approval of the settlement, conspicuously neglecting to attach a copy of the settlement agreement.
Characteristic Signs of Plaintiff-Insured Collusion
Because the facts and potential damages associated with each suit and the settlement negotiations for the same differ significantly, “collusion” is a very fact-specific concept and there is no bright-line test for it. However, some of the characteristic signs of plaintiff-insured collusion that an insurer may consider are:
- Settlement agreements predicated upon a release of personal liability against the insured and a settlement that is only collectable from insurance proceeds;
- Settlement amounts far outside the reasonable or pled damages in a case, and unsupported by jury verdict analysis in the jurisdiction and venue of the underlying complaint;
- Settlement terms that an insured would normally fight if they were personally liable for the settlement, such as unclaimed funds in a class action settlement automatically converting to cy pres funds rather than reverting back to the insured or exorbitant attorney’s fees for the plaintiff’s counsel;
- An insured’s decision not to plead or assert through dispositive motion fundamental defenses that could negate all or part of the plaintiff’s allegations or damages;
- An insured’s decision not to sue or interplead third-parties responsible for the plaintiff’s alleged damages; or
- Settlement between the plaintiff and insured prior to early and rudimentary discovery in the suit establishing liability against the insured.
To quote the Queen of Soul, Illinois local government officials “better think about what they’re trying to do” . . . when they decide to provide traffic signage.
Under Illinois law, there is no affirmative duty placed on municipalities to post any traffic control devices. Indeed, under Section 3-104 the Illinois Tort Immunity Act, local authorities are completely immune from any potential liability that may arise out of their decision not to initially provide a traffic control device.
This was not, however, always the case. Prior to 1986, Section 3-104 had a sub-section (b), which created an exemption to tort immunity for local authorities where a traffic control device was necessary to warn of a condition which “endangered the safe movement of traffic.” In 1986, the Illinois legislature deleted sub-section (b) Section 3-104, the ultimate effect of which was to absolutely immunize an initial failure to provide a traffic control device.
In 1992, the Illinois Supreme Court interpreted the revision to Section 3-104 in West v. Kirkham. The Supreme Court affirmed the trial court’s grant of summary judgment for the city of Urbana, finding that the 1986 amendment to the Illinois Tort Immunity Act both expanded the scope of immunized actions, and, more importantly, by the deletion of sub-section (b), absolutely immunized a municipality even where such a failure might “endanger the safe movement of traffic.” In doing so, the Illinois Supreme Court established Section 3-104 as a municipality’s best defense to any claim that it should have provided a traffic control device – whether signage, lighting, or roadway markings – and failed to do so.
Since then, however, subsequent cases have nevertheless reinforced the long-standing principle that once a municipal authority has made the decision to provide a public improvement, they are required to do so in a “non-negligent” manner.
The Illinois Vehicle Code requires local authorities to place and maintain their traffic control devices in conformance with national manual on Uniform Traffic Control Devices, as adopted by the Illinois Department of Transportation. Thus, when a municipal authority decides, for reasons of safety or economy, to provide a traffic control device, they must do so in a “non-negligent manner”, and that means complying with the Illinois Manual on Uniform Traffic Control Devices.
Snyder v. Curran Township, decided by the Illinois Supreme Court in 1995, analyzed the interplay between the absolute immunity granted to municipalities for discretionary acts such as the failure to initially provide traffic control devices, and ministerial acts like the Illinois Vehicle Code requirement that local authorities comply with the Manual on Uniform Traffic Control Devices.
The Supreme Court held that once a municipal authority makes the (discretionary) decision to provide the warning sign, the installation itself is a ministerial act, requiring the township to do so in a “non-negligent manner” that complies with the Illinois Manual, for which municipalities do not enjoy tort immunity.
Like the advice given to all of us by our parents at some point, it is important to think before acting. Local municipal authorities should always bear in mind that they have complete immunity for the discretionary decision not to initially provide a traffic control device. However, once the municipality decides, after considering the needs and safety of its citizenry, to provide such a device, the action is no longer discretionary, but ministerial. The municipality must always be aware of its obligation to comply with all statutory and administrative guidelines in the performance of its now-ministerial duties.
What do you do when your client receives a subpoena to testify or to provide records at arbitration hearing? Is the subpoena binding on a person that did not consent to the arbitration and my not have any interest in it? The short answer is yes.
Arbitration is an increasingly preferred forum for dispute resolution since it offers a cheaper alternative to dispute resolution than litigation. In the last several years, courts from the US Supreme Court down to the state courts have upheld the validity of mandatory arbitration clauses in contracts, which has further popularized arbitration. As arbitration becomes more common, it is likely that we will see an increase in discovery requests submitted to third-parties, or parties not actually involved in the arbitration, before the arbitration hearing.
Pre-hearing discovery is usually limited in arbitration, but some discovery tools native to litigation are still available in the arbitration context. Chief among these tools is the subpoena for documents or testimony from a third-party, or one not a party to the contract.
So what do you do when you receive an arbitral subpoena? The best thing to do is speak with an attorney early to help you assess the situation. One key reason to do this is to determine which law applies to the arbitral proceeding. The Federal Arbitration Act (FAA) governs arbitration provisions when a contract involves interstate commerce. The general rule for arbitrations held in Illinois is that the Illinois Uniform Arbitration Act (UAA) applies, absent an agreement to the contrary. This matters to third-parties because there are several key differences between how federal law and the Illinois UAA address third-party discovery.
The UAA allows broader pre-hearing third-party discovery than federal law. The federal circuit courts are split as to whether the FAA authorizes an arbitrator to compel third-parties to respond to discovery requests. Illinois law is clearer: arbitrators may issue subpoenas for the attendance of a witness and the production of documents. The statute allows for the issuance of subpoenas to a “witness,” which indicates a broader scope than if the statute limited discovery to “parties,” for example. Further, all applicable provisions of law compelling a person to testify under subpoena are applicable. Even witness fees are the same as in the Circuit Court.
Despite this strong expression of liberal fact-finding in arbitration, Illinois case law shows that arbitral subpoenas are not self-executing orders in their own right. This means that a party seeking to enforce a subpoena submitted to a third-party must bring the matter before the circuit court.
Unfortunately, there is relatively little guidance in the case law to show how a party who has received an arbitration subpoena should respond. The issue arose in Board of Education of the City of Chicago v. Illinois Educational Labor Relations Board, when a union janitor was terminated for allegedly getting in an altercation with two minor students at a school. The union filed a grievance, which proceeded to arbitration. The union sought the disciplinary records of the students involved since it believed one student had a history of violence and the other student had a history of lying. The arbitrator issued a subpoena for the records. The school board, however, did not produce the documents, arguing that they were protected by law under the Illinois School Student Records Act. The school board indicated that it would comply with a court’s order to produce the records.
Depending on the situation, the school board’s strategy could be useful. If you feel that producing your representative to testify or that submitting records is not in your best interest, then waiting to see if the issuing party will initiate a court proceeding to enforce the subpoena could be a viable option. That does not mean you should ignore the subpoena or do nothing until you are notified that an enforcement action has started.
The UAA states that “all provisions of law compelling a person to testify are applicable” when an arbitration subpoena is issued. It does not distinguish between requests to party or non-party witnesses. In litigation, sanctions on non-party witnesses are available outside of the arbitration setting through Illinois Supreme Court Rule 219.
You should not forget Rule 219 since the UAA says “all provisions of law” compelling witnesses still apply. Illinois courts have imposed litigation sanctions under Rule 219 on non-parties to court-appointed arbitrations. It is not farfetched to envision courts upholding sanctions outside court-appointed programs, particularly as parties increasingly use alternative dispute resolution privately. Any individual served with an arbitration subpoena is well advised to consult with an attorney familiar with discovery procedures in arbitration and in litigation before producing records or appearing to testify.
Recently, LGLJ joined the Employment Law & Litigation Committee of the Illinois Chamber of Commerce, Employment Law Council. Tom Weiler, Theresa Bresnahan-Coleman, and John Masters attended the October meeting. Representatives of the Illinois Human Rights Department (IDHR) and the Illinois Human Rights Commission joined the Committee for a discussion of recent changes to Illinois employment discrimination laws.
Implementation of the new pregnancy accommodations law
One of the key topics of discussion was the implementation of the new law requiring employers to make reasonable accommodations for pregnancy and “conditions related to pregnancy.” You may recall Kristen Cemate’s previous posts outlining the requirements of the new law. The IDHR will be developing rules to implement the law and welcomed our Committee’s input to the process. The IDHR indicated it plans to issue draft rules before the end of the year. If you have any questions or comments or would like to discuss any input into the rule making process, please contact Tom, Theresa, John, or Kyle Lewis.
Proposal to require IDHR to close allegations pending before the Department once suit is filed
The Committee also discussed an initiative proposed by the Employment Law Council which would require the IDHR to administratively close allegations pending before the Department after the beginning of a civil action, commenced by an aggrieved party under any State or federal law, seeking relief with respect to those allegations. Currently, the IDHR can continue with the investigation process even after the employee has filed suit. The Committee’s next step is to meet with the Department and opponents of the legislation.
Implementation of the new “Ban the Box” law
In addition, the Committee discussed the upcoming implementation of the new “Ban the Box” law, which goes into effect on January 1, 2015. Under this new law, it will be illegal for employers to inquire into an applicant’s criminal record until the applicant has been determined to be qualified for the position and selected for an interview, or if no interview, until after a conditional offer of employment has been made.
Both the Illinois Department of Labor and IDHR to have jurisdiction to investigate alleged Equal Pay Act violations
The IDHR’s representatives noted that they will be meeting with the Illinois Department of Labor soon to review regulations related to investigations under the Equal Pay Act. As of January 1, 2015, the Department of Labor will have the ability to refer cases to the IDHR for investigation, giving both Departments jurisdiction to investigate alleged Equal Pay Act violations.
Workplace Violence Protection Act requires consultation with employee prior to filing petition for restraining order
Finally, the Committee noted that the Workplace Violence Protection Act went into effect on July 18, 2014. Importantly, employers who seek to obtain a workplace protection retraining order when an employee is a victim of domestic violence must first notify the employee in writing of the intent to seek a restraining order and conduct a verbal consultation with the employee prior to filing the petition for the order. If the employee does not give full and voluntary consent for the order, the employer must wait for four days before filing the petition.
As a society, we have now reached the point where many older workers are choosing not to retire at age 65, but instead, are opting to continue working. More concerning are the growing number of those who do not have the luxury of choice in retirement options, but rather must continue working indefinitely due to financial constraints.
With any eye on its aging work force, an employer might begin to wonder, is there an upper age limitation for employment? Or more poignantly, how old is too old?
The simple answer is that there is no universal age limit that once reached acts as a “free pass” for an employer to terminate the employment of a senior worker. Section 4(a) of the Age Discrimination in Employment Act (ADEA) defines what constitutes an unlawful practice by an employer, and specifically includes discharge of an individual because of that individual’s age.
For the average employer, failure to institute practices designed to comply with these laws could result in the imposition of some very stiff penalties.
But then, does this mean that an employer must continue to indefinitely employ a senior worker or risk a discrimination claim? Not necessarily. The law is reasonable, and it still allows businesses to continue making staffing decisions, even if some of those decisions result in the termination of an individual within the protected age class of 40+ years of age.
The ADEA has established 5 practices that are lawful under the Act. If an employer takes action based on any of the following defenses, it is not unlawful. These defenses are as follows:
2) the reasonable factors other than age defense;
3) the bona fide seniority system defense;
4) the good cause defense; and
5) the inconsistency with foreign law defense.
An attorney who practices in this area of the law can help a business to manage its risks and reduce the odds of having to defend against an age discrimination claim by helping the business to craft policies and procedures that are geared towards compliance with these laws. An employer can help itself to reduce the risk of having to defend against an age discrimination claim by following these guidelines. Moreover, because each claim of discrimination is fact specific, the more documentation an employer can produce to show that there was a lawful reason for the employment decision, the easier it will be to defend against a discrimination claim, if one is filed. Thus, proper documentation of all employment actions is imperative to good employment practices.
New OSHA Rules Require Employers to More Quickly Report Workplace Injuries, While New Federal Case Law Makes it More Difficult for Employers to Comply
New OSHA recordkeeping rules, which take effect on January 1, 2015, will require employers to report more types of work place injuries and report them more quickly. However, a new federal court decision may make it harder to comply as the court ruled that employers are barred from requiring an employee to notify the employer before seeking medical treatment for a work related injury.
New OSHA Recordkeeping Rule
OSHA recently announced two key changes to its recordkeeping rule that will take effect on January 1, 2015.
First, all employers must now report:
- All work-related fatalities within 8 hours.
- All work-related hospitalizations, all amputations, and all losses of an eye within 24 hours.
Reports can be made by:
- Calling OSHA’s free and confidential number at 1-800-321-OSHA (6742).
- Calling your closest OSHA Area Office during normal business hours.
OSHA is in the process of developing an online form for this purpose which should be available very soon. Prior to the new rule, OSHA required an employer to report only work-related fatalities and in-patient hospitalizations of three or more employees. These requirements apply to all employers, including those who are otherwise exempt from the requirement to routinely keep records of work-related injury or illness.
Second, OSHA has updated and reduced the list of industries exempt from the requirement to routinely keep injury and illness records. The new rule retains the exemption for businesses that maintain ten or fewer employees during the prior calendar year, regardless of industry classification. Read More…
This year the Illinois Appellate Courts have been busy analyzing general contractors’ degree of retained control over construction projects and resulting liability for injuries, if any. Four key appellate court decisions have been rendered. The following is a brief overview of the recent opinions.
Summary Judgment upheld when general contractor did not promulgate a body of safety rules for subcontractors to follow
The plaintiff, an employee of a subcontractor, was injured while setting roof trusses on top of a garage. Suit was filed against the general contractor. “The best indicator of whether a contractor has retained control over the subcontractor’s work is the parties’ contract, if one exists.” The Court first looked to the contract language – and found that the general contractor did not contractually retain any control over the subcontractor. The court also noted that the general contractor “did not promulgate a body of safety rules for subcontractors to follow.” Summary judgment in favor of the general contractor was upheld, finding that the general contractor owed no duty to the plaintiff. Cain v. Contarino, 2014 IL App 130482 (Ill. App. Ct. 2d Dist. 2014).
General contractor lacks retained control when subcontractor is contractually responsible for safety
Plaintiff, an employee of a subcontractor, was injured when he tripped on a pipe. Plaintiff sued the general contractor, alleging it retained control. In construction negligence cases where there is a contract between a general contractor and a subcontractor that employed the plaintiff, summary judgment in favor of the general contractor is appropriate where a subcontractor is contractually responsible for jobsite safety. The general contractor took no active role in ensuring safety. Although general contractor had supervisory authority, it did not exercise this authority and in no way altered or directly supervised the work of the subcontractor. The general contractor never stopped work, and the subcontractor controlled the means and methods of its own work during construction. Summary judgment in favor of the general contractor upheld. Fonseca v. Clark Constr. Group, LLC, 2014 IL App 130308 (Ill. App. Ct. 1st Dist. 2014). Read More…
It’s Better Together: Avoid Third-Party Headaches by Ensuring Claimants are Aware of Other Responsible Parties Pre-suit
It seems like a rare occasion when a plaintiff files suit more than a couple days in advance of the expiration of the statute of limitations. As a result, defendants are typically left filing third-party actions to bring in other potentially responsible parties. This not only creates added costs for defendants, but defendants also face a number of barriers to filing third-party actions, such as indemnity agreements and waivers of liability, warranties of merchantability or fitness for a particular purpose, and the like.
Although third-party defendants could move to dismiss the third-party actions based on such contractual provisions, those defenses typically do not foreclose a plaintiff’s claim at the pleading stage. For this reason, it is better practice to ensure that claimants are aware of other potentially responsible parties pre-suit and have the opportunity to name them as defendants.
Once a claim is reported, as much information as possible should be gathered from the insureds, including any contractual agreements, such as leases or licenses, invoices, purchase or work orders or similar documents evidencing any deliveries, construction, maintenance or repair work.
- Ownership of property – leases, management association agreements, service agreements, such as snow removal, etc.
- Repairs, maintenance or modifications – estimates, work orders, invoices, contracts or subcontracts, additional insurance certificates, etc.
- Chain of distribution – purchase orders, invoices, receipts, proofs of payment, rental or delivery agreements, etc.
If an initial investigation reveals that there may be another potentially responsible party, the identity of that party should be shared with the claimant or claimant’s counsel in a denial letter or other writing to increase the chance that the claimant reaches out to a potentially responsible party pre-suit or names it in the complaint. A potentially responsible party can also be put on notice directly through a tender letter, if appropriate, or a written request to provide the identity of any insurance carriers. A proactive investigation could then also trigger the identification of other potentially responsible parties and also increase participation in pre-suit settlement negotiations.
It is also important to remember that some potentially responsible parties, such as municipal entities, are subject to shorter statutes of limitations, creating an even greater incentive to pass along this information to the claimant sooner rather than later. Additionally, a potentially responsible party may impact the jurisdiction and venue in which an action is brought, and jurisdictional limitations could also foreclose later third-party actions.
Even where potentially responsible parties are not identified pre-suit or named in the complaint, defendants in Illinois have two years from the date suit was filed against them to file a third-party action against any other potentially responsible party for contribution under the Joint Tortfeasor Contribution Act and the Illinois Code of Civil Procedure (735 ILCS 5/13-204).
The Illinois Human Rights Act has been on the books for years, yet some of its provisions may come as a surprise to Illinois employers. It should go without saying that few employers would intend to violate Illinois’ laws protecting an employee’s civil rights, but what about conduct which an employer may not even realize is a violation of the Act? Here are five prohibitions from the Act that may surprise you.
An employer is prohibited from restricting its employees from communicating by a certain language
The Act gives specific examples of what it means by “language.” Language means a person’s native tongue, such as Polish, Spanish or Chinese. Language does not include such things as slang, jargon, profanity or vulgarity. It is a civil rights violation under the Illinois Human Rights Act for an employer to impose a restriction which has the effect of prohibiting its employees from speaking a particular language.
An employer is prohibited from inquiring into or using the fact of an arrest or an expunged criminal history as a basis for most employment decisions
It is a civil rights violation under the Act for any employer, “to inquire into or to use the fact of an arrest or criminal history record information ordered expunged, sealed or impounded . . . as a basis to refuse to hire, to segregate, or to act with respect to recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure or terms, privileges or conditions of employment.” In other words, an employer cannot consider even an expunged record as a basis for taking the above described employment actions. Importantly, exceptions do exist. The employer may use “other information” indicating that the person actually engaged in the conduct for which he was arrested, but may not use the mere fact of the arrest or criminal history ordered expunged, sealed or impounded. The Act explicitly states that this provision does not prohibit compliance with state or federal laws or regulations that require criminal background checks in evaluating the qualifications and character of an employee or a prospective employee.
An employer can be liable for sexual harassment in certain circumstances even when the employer was not the one who committed the harassment
An employer will be liable vicariously for the sexual harassment performed by its managerial or supervisory employees. In the case of non-managerial or non-supervisory employees, however, the employer would only be liable if he is aware of it and fails to take reasonable corrective measures. So, for managerial or supervisory employees, the employer can be liable under the Act for the sexual harassment, regardless of whether it was aware of the harassment and regardless of whether it took measurements to correct it.
It is a civil rights violation for an employer to take employment action on the basis of “unlawful discrimination,” including sexual orientation
What does unlawful discrimination mean? The Act defines the phrase. Unlawful discrimination is defined by the act to mean discrimination against the person because of race, color, religion, national origin, ancestry, age, sex and marital status, order of protection status, disability, military status, sexual orientation, or unfavorable discharge from military service.” The Act goes on to define that sexual orientation refers to one’s actual or perceived sexuality.
An employer cannot discriminate based on unfavorable military discharge, except in the case of dishonorable discharge
The phrase “unlawful discrimination” is also defined so as to include an unfavorable military discharge. This includes discharges from the armed forces of the United States, their reserves, or the national guard or naval militias. Significantly, the Act excludes a discharge characterized as “dishonorable.” With the exception of a dishonorable discharge, it is a civil rights violation for the employer to take an employment action as defined by the statute, with respect to an unfavorable military discharge.
These five aspects of the Illinois Human Rights Act may be just the tip of the iceberg of the laws and regulations with which Illinois employers must comply. By educating themselves on some of their legal obligations, employers may be better able to protect themselves from unknowingly walking into a civil rights violation under the Illinois Human Rights Act.
What to do when an accident yields two claimants, each of whose damages exceed the total policy limit
Adjusters and attorneys alike often encounter cases where a claimant’s damages greatly exceed the policy limits for a given accident. In those cases (liability aside), the company will simply tender its policy limits, settle the case, and avoid trial and a potential excess verdict. What happens, however, when an accident yields two claimants, each of whose damages exceed the total policy limit for the accident? The answer is nuanced and requires a balancing of legal obligations and business interests.
Illinois courts employ a “first to settle rule.” In Illinois, as long as a settlement made by an insurer on behalf of its insured is made in good faith, that amount is subtracted from the amount of the policy limits. According to the Illinois Appellate Court, “the insurer has the right to settle claims in good faith even though such payments exhaust the policy limits of the insured’s policy so that a subsequent judgment creditor cannot collect on the policy.” In other words, it is legal for an insurance company to settle a claim with “Claimant 1” for the full policy limits, and then turn to “Claimant 2,” who has an equally viable claim, and deny liability because the policy limits have been exhausted. Additionally, once the policy limits have been exhausted, the insurer has no duty to defend its insured.
Though a company’s response to “Claimant 1” and “Claimant 2” above is legal, it might not be the most prudent course of action. This is because a plaintiff, if his recovery greatly exceeds the available policy limits, can attempt to recover from an insured’s personal assets. This rarely happens when the plaintiff has recovered something, but if he/she has been shut out completely, like “Claimant 2,” this avenue may be the only route to recovery. Having an insured pay a lawsuit out of his personal coffers on a claim that was supposed to be covered is not likely to sit well with the insured, and therefore does not lead to a happy customer.
What then is an adjuster or attorney to do when confronted with this situation? Practically speaking, the best course of action is to quickly discover potential claimants where this case might be an issue. The next step is to bring all plaintiffs/claimants to the negotiating table at one time, explain the applicable policy limits, and work out a resolution with all plaintiffs. This way, the appropriate releases can be signed and the insured can be absolved and have peace of mind.