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General release does not bar filing a workers' compensation claim

In Maxit, Inc., v. Van Cleve, 2008, an employee sustained work-related injuries as a result of an auto accident and filed a workers' compensation claim and a claim under the employer's underinsured motorist (UIM) policy. The UIM claim was settled for $800,000 and a release was signed by the employee and his wife. Terms in the release stated the employee released any and all claims arising from the accident.

One year after the release was signed, the employee and employer reached a settlement to resolve the workers' compensation case for $200,000. But the employer then filed a complaint against the employee, alleging a breach of the release terms and claiming workers' compensation fell under the release he signed when settling the UIM claim. The employee filed a counterclaim stating that the employer fraudulently induced him to settle the workers' compensation claim for $200,000. Both filed motions for summary judgment.

This case worked its way up to the Illinois Supreme Court. The employer argued that the language of the release included in the UIM settlement, which used the phrase "any and all claims," was clear, unambiguous and applied to the workers' compensation claim. The employee argued the release specified only the UIM policy and released only claims in conjunction with that policy.

The Court agreed there was some ambiguity in the release as to whether the parties intended to release further claims against only the UIM policy or meant to include the workers' compensation claim as well. The Court did not have to answer that question because it found that the Illinois Workers' Compensation Act resolved the case. The relevant section states in part:

"No employee . . . shall have power to waive any of the provisions of this Act in regard to the amount of compensation which may be payable to such employee . . . except after approval by the Commission and any employer . . . who shall enter into any payment purporting to compromise or settle the compensation rights of an employee . . . without first obtaining the approval of the Illinois Workers' Compensation Commission (WCC) . . . shall be barred from raising the defense of limitations in any proceedings subsequently brought by such employee."

Because the release was never approved by the WCC, the court rejected the employer's argument that this was a breach of contract case that had nothing to do with the Act. The employer argued that the requirement to abandon the claim for benefits was not a waiver of rights under the Act but a contractual obligation agreed to in the release. The court found this to be a distinction without any difference. The language of the Act is clear and states that no settlement purporting to settle claims under the Act can be effective unless it is approved by the WCC.

The Court also rejected the employer's argument that a previous appellate court's ruling allowed a double recovery. The Court's opinion noted the employer did not have workers' compensation coverage for the accident.

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