Intervening IL Workers’ Comp Insurer is Not a “Party” to the Underlying Tort Suit

Circuit Court’s Contempt Order for Failure to Abide by Discovery Order is Erroneous

An Illinois trial court committed error when it found an intervening workers’ compensation insurer in contempt for failing to comply with various discovery orders in an underlying tort suit filed by an injured employee against a third party, held a state appellate court [Burdess v. Cottrell, Inc., 2020 IL App (5th) 190279, 2020 Ill. App. LEXIS 810 (Dec. 1, 2020)]. Stressing that under section 5(b) of the Workers’ Compensation Act [820 ILCS 305/5(b)], intervenors were allowed but a limited role in such litigation, the appellate court concluded that the insurer did not become a “party” to the underlying litigation by intervening to protect its lien. As a result, most of the trial court’s discovery orders pertaining to the insurer were improper and the trial court’s sanctions for the insurer’s failure to comply with the discovery orders was also improper.

Background

In April 2016, the plaintiffs–a husband and wife–filed a seven-count complaint against the defendants, Cottrell, Inc. (Cottrell), General Motors, LLC (GM), and Auto Handling Corporation (AHC), seeking damages for employment-related injuries Gregory sustained on April 28, 2014, when he fell from the deck of a vehicle transportation rig while working for Jack Cooper Transport Company, Inc. (Jack Cooper). In July 2018, Continental Indemnity Company (“Continental”) sought to intervene for the purpose of protecting and securing a lien as provided in section 5(b) of the Act. The circuit court granted Continental’s motion for leave to file a petition to intervene, without objection. Continental subsequently entered its appearance as intervenor.

Soon thereafter, the plaintiffs issued interrogatories to Continental, pursuant to Illinois Supreme Court Rule 213 and a request for production of documents, pursuant to Illinois Supreme Court Rule 214. Continental objected, contending its role as an intervenor was limited. It acknowledged that it was subject to the subpoena power of the circuit court and accordingly produced an electronic file containing materials related to the underlying workers’ compensation claim of the husband, along with an itemization of the workers’ compensation benefits paid for which Continental was asserting its lien.

Plaintiffs moved to compel discovery and for sanctions for Continental’s failure to comply with the discovery requests. Thereafter, the circuit court entered an order granting the plaintiffs’ motion to compel, overruling Continental’s objections, ordering Continental to fully respond to the discovery within 14 days, and denying the plaintiffs’ request for sanctions. Subject to the nonparty objection, Continental answered 15 of the 16 interrogatories. Continental responded to 45 of the 48 requests to produce and asserted additional objections to request numbers the three that it did not produce.

$200,000 to Comply With Orders

Continental stated, in relevant part, that the production requests required it to comb through thousands of claim files to determine which claims, if any, involved a fall from the upper deck of a trailer, a task that would require 1.5 hours per file to review and redact the protected information, for a total of 4950 hours at a cost of $ 50 per hour for a skilled individual, totaling over $200,000. Plaintiffs’ counsel produced no evidence rebutting Continental’s estimate of the expenses necessary to comply. Plaintiffs’ counsel emphasized that the plaintiffs were not conceding its accuracy, however.

Contempt Order

The circuit court denied Continental’s motion to quash to the extent that it sought to relieve Continental of the obligation to produce workers’ compensation claim forms and reports of injuries completed by supervisors and/or drivers and injury reports filled out by drivers and/or supervisors for injuries. Treating the matter as one of “friendly contempt,” the circuit court observed Continental’s refusal to comply with the order to produce the information, held Continental in contempt of court, and imposed a penalty of $ 25 for its noncompliance. Continental filed a timely notice of appeal.

Appellate Court’s Opinion

In a long, but well-reasoned opinion, the Court held an intervenor such as Continental was not a “party” to the underlying litigation, that section 5(b) allowed for, but did not require intervention, and that generally, after intervention was allowed by a trial court, the intervening insurer was not allowed to participate in the trial. The Court indicated that the record reflected that Continental’s purpose in filing its motion for friendly contempt was not to cause undue delay or to dishonor the court.

Insurer Had No Direct Stake in the Outcome

The Court stressed that because Continental was not a party to the underlying litigation, it was not subject to the discovery mandates of Rules 213 and 214. As a result, the circuit court’s discovery orders were improper, as were the sanctions imposed in one of the orders. The Court found the sum of $200,000 to produce the workers’ compensation claims as requested by plaintiffs was “substantial and disproportionate” to Continental’s lien amount of $128,897.79 [Opinion, ¶ 82]. The Court noted that In determining the breadth of the burden, besides the monetary amount to produce the information, it had also considered that Continental was not a party to the underlying litigation “with no direct stake in the outcome” [Id.].

Based on the foregoing, the Court reversed the circuit court’s discovery orders in relevant part. Moreover, because the discovery orders were improper, the Court also reversed the order holding Continental in contempt of court for violating the discovery orders.