New Illinois Workers’ Compensation Legislation: Unconstitutional If Applied Retroactively

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With the passage of Senate Bill 1596 and the expected signing of the law by Governor J.B. Pritzker, Illinois lawmakers have again attempted to address perceived injustices associated with long-standing statutes of repose that bar claims of some plaintiffs who have been diagnosed with asbestos-related diseases many years after they were exposed to asbestos during their employment. Specifically, the law indicates that plaintiffs whose workers’ compensation claims against their employers are barred by the statute of repose for workers’ compensation claims may bring civil suits against their employers. This creates an exception to the exclusive remedy provision of the workers’ compensation system, which typically prevents employees from suing their employers for work-related diseases and injuries.

The new law echoes a similar effort in 2014 when Illinois lawmakers enacted Public Act 98-1131, amending the construction-related statute of repose as it applies to certain asbestos lawsuits. On its face, Public Act 98-1131 appeared to broaden the scope of asbestos litigation to include additional claims that would have previously been time-barred. However, under Illinois Supreme Court precedent Public Act 98-1131 could not revive claims that had already lapsed under the previously applicable statute of repose, so the only claims affected by the new law were those originating from construction projects that occurred in 2005 and later. Because asbestos products were almost completely phased out of construction in the 1970s, few, if any, claims would be saved from the time-bar by Public Act 98-1131.

Similarly, Senate Bill 1596 attempts to revive claims that have long been barred by the workers’ compensation system’s exclusive remedy provision. But choice-of-law rules would dictate that the law in force at the time of the employees’ employment with the employer would apply. And Illinois Supreme Court precedent clearly prevents the legislature from retroactively stripping away a vested defense. The Illinois Supreme Court’s Folta decision clearly established that employers had a vested defense with the exclusive remedy provision barring all occupational disease claims related to on-the-job asbestos exposures that were not the result of intentional actions. Thus, a constitutional application of Senate Bill 1596 will not provide any relief until 25 years from now, when employees who suffer from latent onset occupational diseases and are barred from bringing workers’ compensation claims will first be able to sue their employers in civil court.

The Illinois Workers Compensation System’s Exclusive Remedy Provision and Statutes of Repose

Under the Illinois Workers’ Compensation Act (820 ILCS 305/1 et seq. (West 2010)) and the Workers’ Occupational Diseases Act (820 ILCS 310/1 et seq. (West 2010)), employees are not permitted to bring civil lawsuits against their employers for work-related injuries or diseases because workers’ compensation benefits are deemed to be the exclusive remedy for such ailments. 820 ILCS 305/5(a), 11 (West 2010); 820 ILCS 310/5(a), 11 (West 2010).

Both acts also provide limitations periods in which the employee can file for workers’ compensation benefits. Specifically, the Workers’ Occupational Diseases Act provides that, “[i]n cases of disability caused by exposure to . . . asbestos, unless application for compensation is filed with the Commission within 25 years after the employee was so exposed, the right to file such application shall be barred.” 820 ILCS 310/6(c) (West 2010); see also 820 ILCS 305/6(d) (West 2010) (parallel 25-year limitation period under the Workers’ Compensation Act). The act further provides that “[i]n cases of death occurring within 25 years from the last exposure to . . . asbestos, application for compensation must be filed within 3 years of death . . . .” 820 ILCS 310/6(c) (West 2010).

In Folta v. Ferro Engineering, 43 N.E. 108 (Ill. 2015), the Illinois Supreme Court held that the exclusive remedy provision barred employees from bringing civil suits against their employers, even when their occupational diseases were not diagnosed until after the 25-year period in which they could bring a workers’ compensation claim had expired. Id. at 114-15. The court recognized that this prevented certain plaintiffs from obtaining any remedy from their employers for latent occupational diseases. In response to the Folta decision, Illinois lawmakers have attempted to eliminate this perceived injustice by amending the exclusive remedy provision to allow employees whose workers’ compensation claims for occupational diseases or injuries are barred by the applicable statute of repose to bring civil suits against their employers.

The Limited Application of a Constitutionally Applied Senate Bill 1596

The legislature enacted Senate Bill 1596 in an effort to revive certain asbestos-related lawsuits that were previously barred by the Workers’ Compensation system’s exclusive remedy provision. However, basic choice-of-law principles dictate that the law in force at the time the employee was working for the employer will apply. Indeed, the Illinois legislature has not expressly given the statute a retroactive application, so 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)). Thus, the Folta decision and the exclusive remedy provision in effect prior to Senate Bill 1596 should remain the controlling law for all pre-2019 occupational asbestos exposures.

While the statute should apply prospectively only, on its face, the plaintiffs’ bar clearly intends to sue employers in asbestos cases immediately for asbestos exposures that occurred well before the passage of Senate Bill 1596. But well-established Illinois precedent prevents the legislature from stripping away vested defenses to legal actions. In the case of Illinois employers, as made clear by Folta, they had an absolute, vested defense to occupational disease claims related to asbestos exposures that occurred prior to the passage of Senate Bill 1596, unless the employee could establish one of the exceptions to the exclusive remedy provision, i.e. the disease was caused by an intentional act, did not arise out of the employment, or was not incurred in the scope of the employment.

The Supreme Court of Illinois previously refused to allow the legislature to strip away a vested defense in Doe v. Diocese of Dallas, 917 N.E.2d 475 (Ill. 2009). The Doe case involved a civil childhood sexual abuse claim that was previously time-barred by a two-year statute of limitations but was brought pursuant to an amended statute of limitations that provided a five-year discovery rule. Id. at 480. The Court addressed whether the new five-year limitations period could be retroactively applied to resuscitate a claim that was time-barred under the previous two-year statute of limitations. Id. at 482. While it was clear that the legislature intended the five-year statute to apply retroactively, the court held that retroactive application was unconstitutional and violated the defendant’s due process rights under the Illinois Constitution. Id. at 483. The court found: “Once a statute of limitations has expired, the defendant has a vested right to invoke the bar of the limitations period as a defense to a cause of action. That right cannot be taken away by the legislature without offending the due process protections of our state’s constitution.” Doe, 917 N.E.2d at 484 (quoting M.E.H. v. L.H., 685 N.E.2d 335 (Ill. 1997)).

“Retroactivity is generally disfavored in the law in accordance with ‘fundamental notions of justice’ that have been recognized throughout history.” E. Enters. v. Apfel, 524 U.S. 498, 532 (1998). “Retrospective laws are, as a rule, of questionable policy, and contrary to the general principle that legislation by which the conduct of mankind is to be regulated ought to deal with future acts, and ought not to change the character of past transactions carried on upon the faith of the then existing law.” H. Broom, Legal Maxims 24 (8th ed. 1911). Indeed, retroactive legislation “presents problems of unfairness that are more serious than those posed by prospective legislation, because it can deprive citizens of legitimate expectations and upset settled transactions.” E. Enters., 524 U.S. at 532 (quotation omitted).

Prior to the enactment of the Senate Bill 1596, all occupational injuries and diseases were subject to the exclusive remedy provision, and employers were not subject to civil damages for those injuries or diseases. Knowing that they were not subjected to civil damages, employers generally did not purchase insurance that would cover civil damages claims brought by their employees. Employee wages and benefits were negotiated and set at a given level with that established insurance cost structure in mind. To retroactively impose civil liability would completely upset these settled wages and benefits transactions. Employers would have no way to offset their increased liability exposure. They could not reach back and retroactively lower wages or benefits to the employees to whom they might now owe civil damages. As such, retroactive application of Senate Bill 1596 would violate the Illinois Constitution by imposing new liabilities on those settled employment relationships.

The Impact of Senate Bill 1596

While Illinois law dictates that Senate Bill 1596 is unconstitutional as applied to any claim involving asbestos exposures that occurred before its enactment, the issue will clearly have to be litigated. Companies that are subject to asbestos-related disease claims arising out of operations in Illinois should expect to be sued in civil court. The plaintiffs’ attorneys will use Senate Bill 1596 and the uncertain constitutionality of its retroactive application to force settlements until the Illinois Supreme Court weighs in on the issue. Defense counsel must push back and be prepared to competently argue that retroactive application of this law is unconstitutional.

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