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Date: May 21, 2019

Illinois Legislature’s Attempt to Overturn Folta v. Ferro Engineering and What it Means for Employers in Illinois

by foleyandmansfield
Date: May 21, 2019
by foleyandmansfield

Illinois Legislature’s Attempt to Overturn Folta v. Ferro Engineering and What it Means for Employers in Illinois

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Employers who find themselves sued in Illinois are probably familiar with reports of recent legislative activity dedicated to changing Illinois’ Workers’ Compensation and Illinois’ Occupational Diseases laws. More important than knowing changes are coming, though, is the need for employers to be aware of how these expected changes will impact businesses with Illinois employees, and methods employers can use to minimize negative impacts. This is not the first time that the Illinois legislature has attempted to amend, or entirely delete, a statute of limitations or a statute of repose for a cause of action. Employers need not wait to plot a strategy to defend against claims that are filed in light of these new amendments. 

First, what is the backstory? Illinois Workers’ Compensation laws and Folta.

Since May 1, 1912, when Illinois’ first Worker’s Compensation law went into effect, employers have enjoyed protection from civil lawsuits brought in Illinois courts by employees who were injured while on-the-job.  Prior to that, both employees and employers endured prolonged and uncertain litigation where the employer’s liability was unlimited but the employee’s chance of winning damages was low.  High injury and death rates throughout the Industrial Revolution and growing pressure from reformers, journalists and labor unions gradually led to the enactment of workers’ compensation laws abroad and at home. Illinois passed its first law in 1911, effective May 1, 1912.

The modern workers’ compensation system operates by requiring employers to pay benefits defined by law to most employees who experience work-related injuries or occupational diseases without an analysis of fault. Traditional tort damages – pain and suffering and loss of consortium – are not available under either of the Acts.  Illinois has two separate statutes. Illinois’ Workers’ Compensation Act (820 ILCS 305/1 et seq.) covers accidental injuries or death sustained by an employee arising out of and in the course of the employment.  Illinois’ Workers’ Occupational Disease Act (820 ILCS 310/1 et seq.) applies to individuals who develop a disease as a result of exposure to things like chemicals, dust, fumes, mold, or radiation during their employment. The original Workers’ Compensation Act substituted an administrative process as the exclusive remedy for an employee instead of civil lawsuits against employers. The Acts were intended to cover all of the potential claims that could be asserted against an employer. Matthiessen & Hegeler Zinc Co. v. Industrial Board, 284 Ill. 378, 382 (1918).  In exchange for giving up proof of fault, employers rely upon the Acts to protect them from civil lawsuits that entail disproportionate time, attention and money, to limit the amount of defense costs and damages they must pay, and to extinguish these claims after a set period of time. That last part, extinguishing the claims, is the subject of the most recent legislative zeal.

In 1936, the Illinois legislature first included a time limitation on filing a workers’ compensation claim.  Today, an employee must file a workers’ compensation claim or occupational disease claim against an employer either within two years from the last paycheck, or within three years from the date the disease develops, whichever is longer. Folta presented a case where the disease developed more than 25 years after the last paycheck. Section 6 of the Occupational Disease Act and Section 6 of the Workers’ Compensation Act both state that, unless a claim for compensation is filed within 25 years of the last day of employment, the right to file a claim for compensation is barred. 

In 1970, James Folta worked his last day for Ferro Engineering.  Over 40 years later, in 2011, he was diagnosed with mesothelioma.  One of mesothelioma’s basic characteristics is that, if it is related to asbestos exposure, it takes decades to develop after the person is exposed to asbestos. Mr. Folta filed a civil lawsuit against Ferro Engineering in Illinois claiming that he was exposed to asbestos while he worked at Ferro Engineering and that exposure caused him to develop mesothelioma 41 years after he quit working there.  Ferro Engineering defended itself by arguing that it was protected from civil suits by Illinois’ Occupational Diseases Act.  Mr. Folta responded that the Act’s “exclusive remedy” condition can only be invoked against claims that are able to be compensated under the terms of the act, and that because the Act does not permit anyone to bring a claim more than 25 years after employment, he was unable to be compensated under the terms of the Act, and so he should be allowed to file a civil lawsuit. After years of litigation and appeals, the case landed in front of the Illinois Supreme Court. 

In April 2015, the Illinois Supreme Court issued its opinion on this matter.  First, it reaffirmed what had been the law since 1918: anyone who is injured as a result of their employment and who wants to be compensated by their employer for that injury must pursue the claim via the Workers Compensation process, that the Act established an employee’s exclusive remedy for a workplace injury.  But more importantly, the court said that the Occupational Diseases Act clearly bars the right to apply for benefits if the last day of work with the employer was more than 25 years earlier, even if the injured party did not know of or had not developed the injury yet. Folta v. Ferro Engineering, 43 N.E.3d 108, 397 Ill.Dec. 781, 2015 IL 118070 (2015). It is this last holding that the Illinois legislature has recently addressed.

Next, what did the legislature attempt to do? 

Shortly after the inauguration of Illinois Governor J.B. Pritzker in January 2019, legislation was introduced in both the Illinois House and Senate to essentially override the Illinois Supreme Court’s decision in Folta to allow people to file lawsuits for injuries that do not manifest within 25 years of the last date of employment.  On March 20, 2019, the bill, having been approved by both the House and the Senate, was sent to Gov. Pritzker for his signature.  Governor Pritzker signed the bill into law on May 17, 2019.

The new law creates two new statutes – 820 ILCS 305/1.2 and 820 ILCS 310/1.1, which carve out exceptions to the “exclusive remedy” rules. Under the new statutes, some claims that were barred due to the passage of time are now able to be filed as civil claims.  The Illinois legislature approved a new section of Illinois Workers’ Compensation Act, 820 ILCS 305/1.2, which reads:

Sec. 1.2. Permitted civil actions. Subsection (a) of  Section 5[1] and Section 11[2] do not apply to any injury or death  sustained by an employee as to which the recovery of compensation benefits under this Act would be precluded due to the operation of any period of repose or repose provision. As to any such injury or death, the employee, the employee’s heirs, and any person having standing under the law to bring a civil action at law, including an action for wrongful death…has the nonwaivable right to bring such an action against any employer or employers. (emphasis added.) 

The new section of the Illinois Workers’ Compensation Act, 820 ILCS 310/1.1, reads likewise:

Permitted civil actions. Subsection (a) of Section 5[3] and Section 11[4] do not apply to any injury or death resulting from an occupational disease as to which the recovery of compensation benefits under this Act would be precluded due to the operation of any period of repose or repose provision. As to any such occupational disease, the employee, the employee’s heirs, and any person having standing under the law to bring a civil action at law, including an action for wrongful death … has the nonwaivable right to bring such an action against any employer or employers. (emphasis added.) 

The legislature intended to continue the requirement that an employee who develops a work-related injury within 25 years of the employee’s last date of employment must pursue recovery under the Acts, while permitting a claimant who develops an injury more than 25 years after his last date of work-related exposure not only to file a civil action, but to collect damages that are otherwise limited, or even prohibited, by the Acts. However, the employee will have a different burden of proof, will be submitting the case to a jury, and will face an employer permitted to challenge its fault. Despite the changes to the statutes, the legislature still intended to prevent employees from opting out of the Workers’ Compensation System if a claim could still be filed within the statutory period specified under either Act.

So now, who has the right to file a lawsuit against their employer for a work related injury?

That depends on when the disease develops.  First of all, this statute does not affect any statute of limitations, nor does it affect any individual who develops a disease within 25 years of the employment that may have caused the disease. Subsequent to the enactment of this amendment, any individual who develops a disease within 25 years will have the opportunity to file a workers’ compensation claim subject to the statutes of limitations in the Acts. 

Potential claimants are those who left their employment more than 25 years before developing an occupational disease, like Mr. Folta. So would this new law save Mr. Folta’s claim? Not necessarily.

For almost 200 years, the Illinois Supreme Court has taken issue with the Illinois legislature trying to re-open an expired statute of limitations or statute of repose and create for individuals a new period of time in which to sue.  In 1895, the Illinois Supreme Court cited to its opinions from 1820 as well as opinions from several other state supreme courts, saying,

In almost all of the states of the Union in which the question has arisen, it has been held that the right to set up the bar of a statute of limitations as a defense to a cause of action, after the statute has run, is a vested right, and cannot be taken away by legislation, either by a repeal of the statute without a saving clause, or by an affirmative act, and that it is immaterial whether the action is for the recovery of real or personal property, or for the recovery of a money demand, or for the recovery of damages for a tort. (citations omitted.)

Bd. of Educ. of Normal Sch. Dist. v. Blodgett, 155 Ill. 441, 447, 40 N.E. 1025, 1027 (1895). The holding in Blodgett is still law today. 

In M.E.H. v. L.H., 177 Ill.2d 207, 685 N.E.2d 335 (1997), the Supreme Court held that the 12-year statute of repose barred a tort action for sexual child abuse even though the statute was not in effect when the abuse occurred and was repealed before the action was filed, relying on the ‘vested right’ of the defense. A defendant’s right to a defense based on the expiration of a statute of repose is just as valuable, and is entitled to as much protection, as the Plaintiff’s right to bring the lawsuit itself.  Id. at 238.  In 2009, the Illinois Supreme Court specifically relied on M.E.H., quoting: “[i]f the claims were time-barred under the old law, they remained time-barred even after the repose period was abolished by the legislature.” Doe A. v. Diocese of Dallas, 234 Ill. 2d 393, 409, 917 N.E.2d 475, 484 (2009). 

Lastly, in Folta the Supreme Court recognized that, for 80 years, Illinois enforced time limits on making a claim for an employment-related injury without problem.  Between Blodgett (1895) and Doe (2009), the Supreme Court repeatedly recognized that those time limits create a constitutionally protected right. In a situation where a former employer is sued for a latent injury more than 25 years after the employee’s separation, the employer has a strong constitutional challenge to application of the statute.

What, then, happens if an employee who quit work in 1994 develops an occupational disease next year? Or if an employee was occupationally exposed to a chemical last year and develops a disease in 2045? Did the employers’ right to be free of lawsuits vest before the law changed? That is going to be argued in the courts.  On one hand, basic legal principles followed in Illinois dictate that the law that was in force at the time of the exposure should apply to later injuries. Furthermore, the statute does not include language indicating it should be applied to claims that arise from exposure less than 25 years ago.  Because of the absence of legislative intent in the statute, application of the amendment to claims based on exposure before the amendments, or “retroactive application” should be refused.  Basically, since  the Illinois legislature did not expressly give the statute a retroactive application, the courts should presume that it was intended to apply prospectively only. See Commonwealth Edison Co. v. Will Cty. Collector, 749 N.E.2d 964, 971 (Ill. 2001) (adopting United States Supreme Court’s analysis from Landgraf v. USI Film Products, 511 U.S. 244, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994)).  It should not matter that the rights have not yet vested, but more than likely this is going to be a question that the Illinois Supreme Court will answer.

Is that it?

No. This change applies to cases filed in Illinois and subject to Illinois law. Not every case filed in Illinois is subject to Illinois law, though. If the employer is not subject to the Illinois Courts’ jurisdiction, i.e., has a valid personal jurisdiction defense, then the employer should pursue that defense and get a dismissal, avoiding operation of this amendment completely.  What is more, if the employer is ultimately subject to the courts’ jurisdiction but the particular case has more connections to a different state, a request to apply a different state’s workers’ compensation laws to the case could also erase any effect this amendment has on the employer. All other states have exclusivity provisions in their worker’s compensation laws and limits on filing claims.  If the court must abide by another state’s law that limits the time to bring a claim, this amendment has no impact. Work with your counsel to explore the personal jurisdiction and foreign law options.

[1]The section of the Workers Compensation Act that makes the administrative process the employee’s exclusive remedy.

[2] The section of the Workers Compensation Act that that limits damages in workers’ compensation claims.

[3] The section of the Occupational Diseases Act that makes the administrative process the employee’s exclusive remedy.

[4] The section of the Occupational Diseases Act that that limits damages in workers’ compensation claims.

Alexa Newton, Partner, Foley & Mansfield

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