If there is a third party case associated with your workers’ compensation claim, you need to be careful about what body parts you list in that contract at the time of settlement! The third district of the Illinois Appellate Court recently decided the case of Clifton Armstead v. National Freight, 2020 IL App (3d) 170777. In that case the court addressed the question of whether plaintiff’s workers’ compensation settlement contract estopped the plaintiff from pursuing injuries in his third party tort claim.

THE ACCIDENT

Plaintiff was injured on March 6, 2015. He was working as a truck driver for Manfredi Mushroom Company when his semi-truck was struck by another driver in a semi working for National Freight.  Plaintiff filed a workers’ compensation claim in Pennsylvania for his injuries, and was represented by an attorney.

THE PENNSYLVANIA WORKERS’ COMPENSATION CLAIM

During the workers’ compensation proceedings, plaintiff was examined by an independent medical examiner who opined that plaintiff had suffered an injury to his right knee as a result of the accident. The examiner further opined that plaintiff’s lower back condition was not related to the accident. On November 9, 2016, plaintiff settled his workers’ compensation claim. In the settlement agreement, plaintiff was required to state the precise nature of the injury. Plaintiff described the injury as “right knee strain. The parties agree that Claimant did not sustain any other injury or medical condition as a result of his 3/06/2015 work injury.” The agreement was signed by the plaintiff.

THE THIRD PARTY CLAIM AT THE CIRCUIT COURT

Plaintiff  filed his third party claim against National Freight and their driver in Grundy County where the accident occurred. He claimed injuries not only to his knee but to his back as well. The defendants moved for partial summary judgement on plaintiff’s third party tort claim, arguing the claim was barred under the doctrines of (1) collateral estoppel, (2) res judicata, and (3) judicial admission. The circuit court granted defendant’s motion, finding that the statement in the settlement contract concerning the scope of plaintiff’s injuries to be a judicial admission disclaiming other injuries. The court limited plaintiff’s tort claims to injuries to his right knee. The circuit court rejected summary judgement on the basis of collateral estoppel. Plaintiff moved for reconsideration, which the circuit court denied. Plaintiff then dismissed the underlying complaint.

THE THIRD PARTY CLAIM AT THE APPELLATE COURT

On January 17, 2019, the appellate court issued a Rule 23 order reversing the circuit court’s grant of summary judgment in favor of defendants. Plaintiff moved to publish the order as an opinion. On February 5, 2019, the court granted plaintiff’s motion and published the opinion the same day. Two days later, defendants filed a petition for rehearing, which the court granted.

ANALYSIS BY THE APPELLATE COURT

In the initial disposition, the court agreed with plaintiff that the statement about the scope of his injuries as contained in the Pennsylvania workers’ compensation settlement contract did not constitute a judicial admission. What exactly is a judicial admission? The court explained that judicial admissions are formal admissions in the pleadings that have the effect of withdrawing a fact from issue and dispensing wholly with the need for proof of that fact. For a statement to qualify as a judicial admission, it must be clear, unequivocal, and uniquely within the party’s personal knowledge. The statement must also be an intentional statement that relates to concrete facts, and not an inference or unclear summary. Also, judicial admissions do not include admissions made during the course of other court proceedings. Those statements constitute evidentiary admissions, not judicial admissions.

What is an evidentiary admission? Evidentiary admissions may be explained by the party and may be made in pleadings in a case other than the one being tried. The appellate court found that plaintiff’s contradictory statement about the scope of his injuries in the Pennsylvania workers’ compensation claim amounted to an evidentiary admission.

On rehearing, the defendants asked the appellate court to address their argument that plaintiffs claims were barred under collateral estoppel, stating that plaintiff should be estopped from seeking any damages beyond those identified in the Pennsylvania workers’ compensation settlement agreement. The appellate court agreed with the defendant that plaintiff’s claim was barred under the doctrine of collateral estoppel.

What is collateral estoppel?  Collateral estoppel is an equitable doctrine precluding a party from relitigating an issue decided in a prior proceeding. The minimum threshold requirements for the application of collateral estoppel are as follows:

  1. The issue decided in the prior adjudication is identical with the one presented in the suit in question.
  2. There was a final judgment on the merits in the prior adjudication.
  3. The party against whom estoppel is asserted was a party or in privity with a party to the prior adjudication.

Was the issue in the Pennsylvania workers’ compensation claim identical to the issue presented in the third party tort claim? Yes. The court found that the workers’ compensation claim resolved the issue of the extent of plaintiff’s injuries following the March 6, 2015 accident and plaintiff’s tort claim resulted from the same accident.

Was there a final judgment on the merits in the Pennsylvania  workers’ compensation claim? Yes. The settlement agreement set the parties’ rights and liabilities based upon the agreed facts stated in the agreement. Therefore, it qualified as a judgment on the merits. In Illinois, a settlement award entered by the Workers’ Compensation Commission is a final adjudication of all matters in dispute up to the time of the agreement. Consequently, the Pennsylvania settlement agreement acted as a final adjudication as to the extent of plaintiff’s injuries.

Is the party against whom estoppel is asserted a party or in privity with a party to the prior adjudication? Yes. Plaintiff in the third party tort action is the same party to the workers’ compensation case.

Since all three requirements of collateral estoppel were met, plaintiff is estopped from seeking compensation for any injury beyond that contained in the Pennsylvania workers’ compensation settlement agreement. The court went on to find that there was no unfairness in applying collateral estoppel because the Pennsylvania workers’ compensation system was in adequate. The plaintiff made no argument that the workers’ compensation forum in Pennsylvania differed in any meaningful way from the same type of proceedings in Illinois, which have long been recognized as procedurally adequate by Illinois courts. And plaintiff had a full and fair opportunity to litigate the extent of his injuries in Pennsylvania.

TAKE AWAYS

  1. When you file a workers’ compensation claim, thoroughly investigate the possibility of a third party claim, whether that claim would lie in Illinois or in another jurisdiction. You should be doing this anyway, but you may want to include a section in your intake sheet that is dedicated solely to the potential of a third party tort claim. In addition to taking the usual and customary precautions related to statutes of limitation and possible referral of the third party claim to another attorney, you will want to make sure that you list all of the injuries that are alleged by your client at the time you meet them, and keep a running tab of any other injuries that subsequently develop that may be related to that initial accident.
  2. Communicate. Communicate. Communicate. If you are not handling the third party tort claim yourself, make sure that you stay in communication with the lawyer handling the third party claim. Keep him or her informed about the medical treatment and the development of any additional injuries throughout the course of the claim. Don’t leave anything out, even if it seems mundane.
  3. When it comes time to settle the workers’ compensation claim, sit down and discuss the settlement with both your client and the attorney handling the third party claim. Make sure everybody is on board with what injuries and body parts will be listed in the contract, and what language you want to use to protect the third party tort claim. You should list injuries even if they are disputed by the employer in the workers’ compensation claim. List all the injuries, and if necessary add the word disputed after injuries that are disputed as being related to the work injury.
  4. If necessary, go to hearing. Sometimes you have no choice but to go to hearing to clear up disputes about work related injuries that are also the subject of a third party claim.

 

 

If you have a work related injury and feel that you may have a third party claim, do not hesitate to contact me for a free consultation.