Employers beware.  Underreporting the number of workers employed allowed an insurance company for an Illinois employer to rescind the workers’ compensation policy of a construction company.  On July 7, 2015, the Illinois Appellate Court Fourth District handed down a decision in the case of Pekin Insurance Company, Plaintiff-Appellee, v. Tyree Campbell, d/b/a Campbell Construction & Improvement, Defendant-Appellant.

The problem arose when Pekin Insurance Company obtained information that an employee of a construction company by the name of Campbell Construction & Improvement failed to list any employees in the final quarter of the policy audit.  In fact, according to Campbell’s petition, the employer requested $72,000 from the insurance company to settle a suit filed by one of its employees, Mr. Poor, who the employer claimed was an independent contractor.

Campbell Construction’s first mistake was the underreporting of the number of its employees.  Campbell’s second mistake was not responding to the complaint that was filed by the workers’ compensation insurance company, thus allowing a default judgment to be entered.  After the default judgment was entered, Campbell filed a petition to vacate the default judgment, claiming that the court lacked jurisdiction to make the determination, and that the determination was solely within the jurisdiction of the Illinois Workers’ Compensation Commission.

The workers’ compensation insurance company filed a motion to dismiss the petition, which was granted.  Campbell then filed for an appeal to the Appellate Court.

Campbell’s final mistake was that it failed to file a record of proceedings or transcript, so the Appellate Court decided the matter without the benefit of that record.

Illinois Workers’ Compensation Commission, Workers’ Compensation Insurance Companies

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