News

October 01, 2011

The Appellate Court, First District, has weighed in on the subject of fraud in workers’ compensation cases, this time in a case pending before the Commission.  Roberts filed an application alleging work-related injuries on January 16, 2007, following which Country Insurance paid temporary total and medical benefits.  Payments ceased when Country Insurance discovered that Roberts had returned to work with another employer.

Country Insurance then filed suit in the Circuit Court of Cook County alleging fraudulent misrepresentation, insurance fraud, fraud pursuant to the Workers’ Compensation Act, and fraudulent concealment.  Roberts moved to dismiss, alleging that the Commission retained jurisdiction over the claim.  The Circuit Court agreed and found that it lacked primary jurisdiction to adjudicate the issues set forth in the complaint.

On appeal, the appellate court agreed, stating,

“Because Roberts’ Application for Adjustment of Claim remains pending before the Commission, the Commission has not yet made any findings or rulings as to whether Roberts was entitled to receive any benefits under the Act.  The complaint   presents questions of fact…in which the Commission can draw on their special expertise to answer.  Country Insurance’s complaint does not present a question of law . . . .  As such, the cause should be before the Commission rather than the Circuit Court.”

Therefore, the complaint for fraud was dismissed.

COMMENT

The courts have permitted concurrent jurisdiction in questions involving insurance coverage.  Where a coverage action is brought in the Circuit Court, this is in the form of a motion for declaratory judgment wherein the court is asked to interpret the terms of the contract to determine if there is coverage over the particular claim.  With regard to fraud, the courts have previously pronounced that the courts are the sole arbiter when the Commission has issued a final decision.  The court in Country Insurancemakes a clear distinction between pursuing fraud at the Commission after a final award and when a case remains pending.

Also, unlike complaints for declaratory judgment, the complaint filed by Country Insurance did not ask for a declaration of rights under a contract, but rather made specific allegations of fraud which Country Insurance would have to prove by competent evidence.  Notwithstanding earlier pronouncements that fraud is the exclusive province of the courts, the Court here made a distinction because the case remained pending before the Commission.  The Commission is competent to adjudicate the factual issues which presented in this case, one of which is undoubtedly the period of temporary total disability.

Of course, the Commission cannot impose the same remedies as can of the Courts; it can only deny a claim.  If a claim is denied, the effect of this decision will permit an employer to assert a credit for sums paid and seek reimbursement plus other damages in the Circuit Court.  But, unless the Commission makes a specific finding on the issue of fraud, the employer will be faced with having to prove the necessary intent to deceive in the Circuit Court.  This seems to require a duplication of effort which ought to be unnecessary, at least in a clear-cut case.  On the other hand, the time necessary to conclude a fraud claim could inhibit the process at the Compensation Commission and unnecessarily delay an award of compensation in a case where fraud cannot be shown.  It appears that this was on the mind of the Appellate Court when it found a distinction for a case pending before the Commission as opposed to one already decided.