Safety Nat'l Cas. Co. v. Tig Speciality Ins. Solutions
| Decision Date | 06 December 2013 |
| Docket Number | No. 1-12-1979,1-12-1979 |
| Citation | 2013 IL App (1st) 121979 |
| Parties | SAFETY NATIONAL CASUALTY COMPANY, Individually and as Assignee of Intergovernmental Risk Management Agency and Village of Glendale Heights, An Illinois Municipal Corporation, Plaintiff-Appellant, v. TIG SPECIALITY INSURANCE SOLUTIONS, Defendant-Appellee. |
| Court | United States Appellate Court of Illinois |
HELD: Insurer was not entitled to summary judgment on breach of contract and equitable claims against a purported co-insurer where key allegations could never be proven.
¶ 1 A municipal employee sought worker's compensation benefits for injuries to his left foot in 1991 and while the claim was pending before the Illinois Workers' Compensation Commission (Commission), he filed a new claim for injuring the same foot in 1998. TIG Insurance Company (TIG) was the municipality's excess workers' compensation insurer in 1991and Safety National Casualty Company (Safety National) had that role in 1998. Safety National proposed that the claims be jointly settled or tried together with the expectation that Safety National would show that the 1998 claim was a continuation or aggravation of the 1991 injury for which TIG was solely liable. TIG responded that it was not liable for an injury or claim that occurred outside the effective dates of its policy and that its contract entitled TIG to settle the 1991 claim independently. After TIG settled, Safety National also settled, but Safety National sued TIG, individually and as the assignee of its insureds, contending the separate settlements disadvantaged them. The circuit court resolved crossmotions for summary judgment in favor of TIG. Safety National appeals.
¶ 2 The Village of Glendale Heights (Village) is a small suburban community located 25 miles west of Chicago in Du Page County, Illinois. In 1991 and 1998, it was one of at least 35 Illinois municipalities that obtained workers' compensation liability coverage by joining a risk-sharing management pool known as Intergovernmental Risk Management Agency (IRMA). As a member of IRMA, the Village limited its exposure in each loss to a $1,000 deductible. IRMA was self-insured for the first $350,000 of each loss in 1991 and the first $400,000 of each loss in 1998, and protected itself from larger claims by purchasing excess insurance coverage. IRMA was based in Oakbrook Terrace, Illinois, employed about 20 people, about half of whom were dedicated to handling claims, and as of 2002, which is the time frame relevant to this appeal, was headed by Larry Bush, who had considerable experience with workers' compensation claims and risk management.
¶ 3 IRMA purchased excess workers' compensation insurance from TIG that covered"loss resulting from an occurrence during the contract period" of January 1, 1991 to January 1, 1992. The TIG policy authorized the excess insurer to settle a claim without consulting its insureds (the Village and IRMA) or obtaining their consent: "[TIG] at its own election and expense *** shall have the right but not the duty to participate with the Insured in, or to assume in the name of the Insured control over, the investigation, settlement, defense or appeal of any claim, suit or proceeding which might involve liability of [TIG]." This authority, however, was one-sided, because the TIG policy also specified, "No assignment of the Insured's interest hereunder shall be binding upon the Company [TIG]" and "The Insured shall make no voluntary settlement involving loss to the Company except with written consent of [TIG's agent Wexford]." The Safety National policy that IRMA obtained seven years later was slightly different in that it covered "claims made" between January 1, 1998 and December 31, 1998 "due to an Occurrence taking place" within that policy period.
¶ 4 While the TIG policy was in force, 32-year-old John Urso, a maintenance worker who started his employment with the Village in 1985, purportedly injured himself on the job in late 1991 by twisting his left foot. Although Urso's injury seemed relatively minor at the time (a twist), he complained of persistent ankle and heel pain and underwent years of extensive medical care which ranged from having the ankle immobilized in a cast to undergoing surgery to be implanted with an epidural catheter through which he could self-administer pain medication (a "pain pump"). Urso was diagnosed with reflex sympathetic dystrophy or RSD, which is a chronic pain condition that is also known as complex pain syndrome or complex regional pain syndrome. We will detail his medical evaluations below. He timely filed a worker'scompensation claim with the Commission. When IRMA exhausted its self-insured retention it tendered the claim to TIG, and TIG accepted the 1991 claim without reserving any rights. Urso filed a separate compensation claim alleging he injured his left foot by twisting it while at work on August 4, 1998, during the effective dates of the Safety National coverage. His two claims together resulted in the largest compensation request that Bush, IRMA's executive director, could recall during his five years with the company.
¶ 5 After Urso filed the second claim, IRMA retained attorney John F. Power, III, to defend the interests of the insureds before the Commission.
¶ 6 In the current proceedings, the litigants have emphasized indications that the claims were perceived as two separate injuries or as one, more-or-less continuous injury. Urso considered his 1998 injury to be distinct from his 1991 injury, as indicated by the fact that he filed a separate claim even though his first claim and right to compensation for the 1991 injury was still open at the time. IRMA also opened and maintained two claim files and communicated to TIG on more than one occasion that TIG was liable for the first injury claim only. For instance, on September 22, 1999, IRMA claims representative Martha S. Glaza wrote to TIG's agent, Wexford, describing Urso's second accident as "a re-injury to his left heel/ankle on August 4, 1998" when "he was repairing a sewer pipe and got his foot stuck in the mud." Glaza referred to the incident as "a new on the job occurrence" which required "a completely new claim file" and said "[s]ince this re-injury occurred during the calendar year of 1998[,] you are obviously not responsible for the reinsurance of that file." "However, the permanency portion of the case remains unsettled and therefore your file must remain open." Glaza still viewed the claims asrelated but separate injuries implicating both insurers when she wrote to Wexford on March 20, 2000:
¶ 7 The record indicates that the idea of treating the claims as a single injury originated with Safety National. On July 22, 2003, IRMA's claim director, Miria Gasparro, notified Wexler about the most recent status of the 1991 claim:
"Martha Glaza has been reporting to you on the above file, which is a 1991 claim for injuries. As you may know, Mr. Urso had another accident on 8-4-98, which is still open and on which she is making payments.
Attached is a letter received from Mike Harris at Safety National regarding his position on Mr. Urso's 1998 claim, as you will read. It is his opinion, that the 1998 injury is a continuation of the 1991 injury. He is suggesting some cost sharing between Wexler [TIG's agent] and Safety National. A copy of this letter will be sent to Mike Harris, I am requesting that you discuss this issue with him.
¶ 8 When deposed in the current case, attorney Power said a good part of his practice was workers' compensation defense and that he defended the Urso claims together with a view toward mitigating or eliminating them altogether. Power asked Urso to submit to an independent medical examination. In a four-page letter dated May 22, 2000, Dr. Armen S. Kelikian, M.D., Assistant Professor of Orthopaedic Surgery, Northwestern University Medical School gave his opinion: However, five years later, Dr. Kelikian reevaluated Urso and came to a contrary conclusion. In 2005, Dr. Kelikian had the benefit of five additional years of treatment and a comprehensive neurological and rehabilitative assessment from Dr. Richard B. Lazar, M.D. of Schwab Rehabilitation Hospital dated February 12, 2001. It was Dr. Lazar's opinion that...
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