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What happens if my employer goes out of business during my worker’s compensation claim?

Unfortunately, given the current health crisis due to Covid-19/Coronavirus, many companies and employers are facing financial difficulties. Injured workers are understandably concerned about what will happen to their claims if their employers go out of business. Don’t panic, but best to get help. The good news is that a workers’ compensation claim typically survives whether the employer is actively operating its business or not.

The Illinois Workers’ Compensation Act requires that employers carry workers’ compensation insurance unless it is allowed to self-insure. Most small and midsized employers, and many large employers, do carry workers’ compensation insurance. When an insured employer goes out of business, the insurance carrier typically remains liable for coverage of the workers’ compensation claim. The Illinois Workers’ Compensation Act permits us to file the claim directly against the Insurance Company in these situations. There may be delays in benefits, court hearings and settlements due to bankruptcy court “stay” orders on all litigation. However, many injured workers’ claims can be kept on course under most circumstances, with the insurance company paying for medical treatment and disability benefits.

If the workers’ compensation insurance company were to go out of business, then the claim typically would be handled by the Illinois Guarantee Fund. When this happens, the claim would still be active, but would be paid by the Illinois Guarantee Fund instead of the original insurance company. This is not a desirable situation as the Illinois Guarantee Fund is not always fully funding the settlement claims.

Many large Illinois employers self-insure for workers’ compensation. The State of Illinois Self-Insured Fund, created by the Illinois Workers’ Compensation Act , oversees workers’ compensation benefits for self-insured employers. In cases where the employer is self-insured and declares bankruptcy, the claim may be affected while the bankruptcy proceeding unfolds. Again, there may be delays due to bankruptcy court “stay” orders on all litigation, until permitted to resume by the bankruptcy court. For the injured worker, this can get complicated, requiring filing not only a claim before the Illinois Workers’ Compensation Commission, but also before the bankruptcy court.

As of 1/10/20, some of the Illinois Self-Insured Parent Companies included:

  • Construction: Asplundh Tree Expert Co., Denk & Roche Builders, Walsh Construction Company
    Food Products and Distribution: Aldi, Inc. Archer Daniels Midland(ADM), Costco Wholesale Corporation, Gonnella Baking Company, Hormel Foods Corporation, Kroger Limited Partnership, Pepsi MidAmerica Co., Starbucks Corporation
  • Healthcare: Adventist Midwest Health, Advocate Health & Hospitals Corporation, Blessing Corporate Services, Inc., The Carle Foundation, Loyola University of Chicago, Northwestern Memorial Healthcare, OSF Healthcare Systems, Silver Cross Hospital & Medical Centers, Inc. Swedish American Health System Corporation, University of Chicago Medical Center
  • Manufacturing: Caterpillar, Continental Tire the Americas, LLC, Deere & Company, FCA US LLC (Chrysler), Ford Motor Company, Sherwin-Williams Company, Sloan Valve Company, Titan International
    Transportation: ABF Freight System, Inc., Cassens Transport Co., Fed Ex Freight, Inc., Fed Ex Ground Package System, Inc., United Continental Holdings, Inc. (UAL) and American Airlines

Katz, Friedman has represented injured workers for over 65 years successfully guiding our clients through the 2002 United Airlines Bankruptcy, the 2009 Chrysler Bankruptcy and several others. We can help get your medical expenses paid and worker’s compensation pay benefits to continue when your employer is going through bankruptcy or has closed its business. With some injuries that result in permanent restrictions, we may be able to secure vocational retraining, rehabilitation and continuing pay benefits while you look for a new job. You may also be entitled to a settlement or award for your claim.

What should I do if I am injured at work and worried about my company going out of business?

It is advisable for an injured worker to file his or her workers’ compensation claim with the Illinois Workers’ Compensation Commission as quickly as possible following the accident or exposure. However, given the current financial difficulties employers are facing, it is perhaps even more important that injured workers protect their rights by filing a claim as quickly possible. Unfortunately, employers experiencing financial problems, also tend to lay off human resource managers and supervisors. In light of this, best to provide a written accident report to your employer, document all relevant communications with management, and keep a copy for your own records. Reporting your claim orally is permitted but could lead to litigation in these instances.

The Illinois Workers’ Compensation Act requires that an injured worker notify their employer of the accident or exposure. Practically, this is more difficult to report an injury if the employer is no longer operating its business. Don’t delay! Depending on how the company structures its bankruptcy or dissolution, it will likely be in the injured worker’s best interest to already have the claim filed with the Illinois Workers’ Compensation Commission so there is a already an established record of that worker’s claim when the employer goes out of business.

Once a claim is filed with the Illinois Workers’ Compensation Commission, there are procedural delays at the Commission such as time to open claim, assign the claim to the arbitrator, etc. Given the current state of affairs, it is reasonable to expect there may be longer delays than normal. Filing the claim quickly after the date of accident helps prevent delays in resolution if any disputes related to medical treatment or time off of work arise.

If you have questions regarding a work related injury or personal accident injury, please contact the skilled Chicago workers’ compensation attorneys at Katz, Friedman, Eisenstein, Johnson, Bareck & Bertuca for the legal advice and advocacy upon which you can confidently rely. To set up a free case evaluation, contact us at 800-444-1525 or through our website.

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