Cretella v. Azcon, Inc.

2022 IL App (1st) 211224, 214 N.E.3d 178, 464 Ill. Dec. 732

• Court: Appellate Court of Illinois
• Decided: September 22, 2022
• Docket: 1-21-1224
• Status: Published

Opinion

2022 IL App (1st) 211224 No. 1-21-1224 Opinion filed September 22, 2022 Fourth Division ______________________________________________________________________________

IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT ______________________________________________________________________________ TANJA CRETELLA, ) Appeal from the ) Circuit Court of Plaintiff-Appellant, ) Cook County. ) v. ) No. 21 L 4742 ) AZCON, INC., d/b/a Azcon Metals, Inc., ) Honorable ) Michael F. Otto, Defendant-Appellee. ) Judge, presiding.

PRESIDING JUSTICE LAMPKIN delivered the judgment of the court, with opinion. Justices Hoffman and Rochford concurred in the judgment and opinion.

OPINION

¶1 The plaintiff, Tanja Cretella, filed this action against her former employer, Azcon, Inc.,

d/b/a Azcon Metals, Inc., alleging claims of retaliatory discharge and violation of section 20 of the

Whistleblower Act (740 ILCS 174/20 (West 2020)). Plaintiff’s retaliatory discharge claims were

based on both the tort and an implied private right of action under section 224.1 of the Illinois

Insurance Code (215 ILCS 5/224.1 (West 2020)), alleging that defendant unlawfully terminated

her employment when she exercised her right under section 224.1 to refuse to consent to defendant

purchasing insurance coverage on her life and receiving the proceeds in the event of her death. No. 1-21-1224

¶2 The circuit court granted defendant’s motion to dismiss the complaint for failure to state a

cause of action.

¶3 On appeal, plaintiff argues that she sufficiently stated causes of action for retaliatory

discharge because (1) Illinois public policy disfavors retaliation for an employee’s refusal to

consent to life insurance coverage when the proceeds go to the employer in the event of the

employee’s death and (2) a private cause of action is implied under section 224.1 of the Insurance

Code.

¶4 For the reasons that follow, we reverse in part and affirm in part the judgment of the circuit

court.

¶5 I. BACKGROUND

¶6 Plaintiff filed a three-count complaint against defendant, alleging that she had worked as

defendant’s human resource director from about October 2013 through June 7, 2018. She alleged

that she was presented with a consent to life insurance coverage form that was represented to her

as being necessary to meet certain liquidity needs related to the employee stock ownership plan

and other capital needs of the company. She also alleged that she refused to sign the form and

defendant fired her on June 7, 2018, for refusing to consent to company-owned life insurance

(COLI). She alleged against defendant claims of (1) retaliatory discharge in violation of section

224.1 of the Insurance Code, (2) violation of section 20 of the Whistleblower Act for refusing to

participate in illegal activity, and (3) common law retaliatory discharge.

¶7 Defendant moved to dismiss plaintiff’s complaint under section 2-615 of the Code of Civil

Procedure (Code) (735 ILCS 5/2-615 (West 2020)), arguing that plaintiff failed to state an

actionable claim of statutory retaliatory discharge because the Insurance Code does not provide a

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private right of action for retaliatory discharge for violation of section 224.1 of the Insurance Code

and an implied private right of action is not appropriate under Illinois law. Regarding plaintiff’s

claim under the Whistleblower Act, defendant argued that signing a consent to life insurance

coverage form did not violate the Insurance Code or any other law. Regarding plaintiff’s common

law retaliatory discharge claim, defendant argued that her claim did not fit under either of the two

recognized categories—i.e., whistleblowing activities or the exercise of rights under the Illinois

Workers’ Compensation Act (820 ILCS 305/1 et seq. (West 2020))—for Illinois’s narrow common

law exception to the at-will employment doctrine.

¶8 On September 8, 2021, the trial court heard argument on defendant’s motion to dismiss.

The trial court granted the motion and dismissed all three counts of plaintiff’s complaint with

prejudice. The trial court ruled that plaintiff failed to state a claim of retaliatory discharge based

on an implied right of action under section 224.1 of the Insurance Code because she was not a

member of the primary class for whose benefit section 224.1 was enacted, since the purpose of the

Insurance Code was to regulate insurance companies and not to protect employees. The court also

ruled that plaintiff was not a whistleblower because being asked to consent to employer-owned

life insurance coverage was not illegal or misconduct. Finally, the court ruled that plaintiff failed

to state a claim of common law retaliatory discharge because her discharge did not violate a clear

mandate of public policy.

¶9 Plaintiff timely appealed the dismissal of her statutory and common law retaliatory

discharge claims but does not appeal the dismissal of her whistleblower claim.

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¶ 10 II. ANALYSIS

¶ 11 We review de novo an order granting a motion to dismiss pursuant to section 2-615 of the

Code and may affirm the trial court’s dismissal for any reason supported by the record. Chang

Hyun Moon v. Kang Jun Liu, 2015 IL App (1st) 143606, ¶ 11. A section 2-615 motion to dismiss

tests the legal sufficiency of a complaint, i.e., whether the allegations of the complaint, when

construed in the light most favorable to the plaintiff, state sufficient facts to establish a cause of

action upon which relief may be granted. Green v. Rogers, 234 Ill. 2d 478, 491 (2009). When

ruling on a section 2-615 motion to dismiss, the court must accept as true all well-pled facts in the

complaint and reasonable inferences drawn therefrom. Bryson v. News America Publications, Inc.,

174 Ill. 2d 77, 86 (1996). We do not, however, take mere conclusions of law or fact contained

within the challenged pleading as true unless they are supported by specific factual allegations.

Ziemba v. Mierzwa, 142 Ill. 2d 42, 47 (1991).

“A cause of action will not be dismissed on the pleadings unless it clearly appears that no

set of facts can be proved which will entitle the plaintiff to recover. Because Illinois is a

fact-pleading jurisdiction, a plaintiff must allege facts sufficient to bring his or her claim

within the scope of the cause of action asserted.” Turner v. Memorial Medical Center, 233

Ill. 2d 494, 499 (2009).

¶ 12 A. Preliminary Matters

¶ 13 Defendant asks this court to disregard plaintiff’s statement that she was fired in retaliation

for her refusal to consent to life insurance coverage as an improper argumentative legal conclusion

made without citation to the record. We deny defendant’s request but acknowledge defendant’s

position that it does not concede that plaintiff’s discharge was retaliation. However, for purposes

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of a section 2-615 motion to dismiss, the court must accept as true all well-pled facts in the

complaint and reasonable inferences drawn therefrom. Bryson, 174 Ill. 2d at 86. Plaintiff’s

allegation that she was fired in retaliation for refusing to consent to life insurance coverage is one

of the central allegations of her complaint and is properly pled.

¶ 14 Defendant also asks this court to disregard an insurance form and e-mail that were attached

for the first time to plaintiff’s memorandum opposing defendant’s motion to dismiss, filed before

the trial court. Defendant argues that the insurance form and e-mail are outside of the allegations

of the complaint and attachments thereto. “In ruling upon a 2-615 motion, a trial court may

consider only the allegations of the complaint [citation] and may not consider other supporting

material [citation].” (Emphasis in original.) Id. at 91. The circuit court properly relied only on the

allegations of the complaint in dismissing this lawsuit under section 2-615. We also will rely only

on the allegations of the complaint and thus grant defendant’s request to disregard the insurance

form and e-mail.

¶ 15 B. Common Law Retaliatory Discharge

¶ 16 Plaintiff argues that Illinois public policy disfavors an “Illinois citizen-insured” from being

discharged for exercising her right not to consent to have COLI coverage taken out on her life,

with the proceeds to go to the employer upon her death, even after she is no longer employed.

Plaintiff argues that the plain language and legislative history of section 224.1 of the Insurance

Code provides the public policy behind the statute, which seeks to protect employees from being

fired for refusing to consent to exorbitant insurance policies employers attempt to obtain on

employees’ lives in what constitutes an improper wager policy to gamble on employees’ lives.

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¶ 17 Defendant argues that plaintiff’s claim is not premised on a clear mandate of public policy,

COLI policies are not contrary to Illinois public policy, no cases have extended the tort of

retaliatory discharge to factual allegations similar to the allegations at issue in this case, and this

is an employer-employee dispute that is in the nature of a private and individual grievance rather

than a matter affecting our society and striking at the heart of a citizen’s social rights, duties, and

responsibilities.

¶ 18 Section 224.1 of the Insurance Code provides, in pertinent part:

“Notwithstanding any other Section of this Code, an employer or an employer sponsored

trust for the benefit of its employees has an insurable interest in the lives of the employer’s

directors, officers, managers, nonmanagement employees, and retired employees and may

insure those lives on an individual or group basis with the consent of the insured. The

consent requirement will be satisfied if the insured is provided written notice of the

coverage and does not reject such coverage within 30 days of receipt of such notice. The

extent of the employer’s or the trust’s insurable interest for nonmanagement and retired

employees shall be limited to an amount commensurate with the employer’s projected

unfunded liabilities to nonmanagement and retired employees for welfare benefit plans

***. An insurable interest must exist at the time the contract of life or disability insurance

becomes effective, but need not exist at the time the loss occurs. An employer shall not

retaliate in any manner against an employee or a retired employee for refusing consent to

be insured. The proceeds of any policy or certificate issued pursuant to this Section are

exempt from the claims of any creditor or dependent of the insured. As used herein,

‘employer’ means an individual, sole proprietorship, partnership, firm, corporation,

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association, or any other legal entity that has one or more employees and is legally doing

business in this State.” (Emphases added.) 215 ILCS 5/224.1 (West 2020).

¶ 19 In Illinois, “a noncontracted employee is one who serves at the employer’s will, and the

employer may discharge such an employee for any reason or no reason.” Zimmerman v. Buchheit

of Sparta, Inc., 164 Ill. 2d 29, 32 (1994). However, an exception to this general rule of at-will

employment arises where there has been a retaliatory discharge of the employee. Price v. Carmack

Datsun, Inc., 109 Ill. 2d 65, 67 (1985). This court has recognized a limited and narrow cause of

action for the tort of retaliatory discharge. Fellhauer v. City of Geneva, 142 Ill. 2d 495, 505 (1991).

To state a valid retaliatory discharge cause of action, an employee must allege that (1) the employer

discharged the employee, (2) in retaliation for the employee’s activities, and (3) the discharge

violates a clear mandate of public policy. Id.; Palmateer v. International Harvester Co., 85 Ill. 2d

124, 134 (1981). Surveying many cases from across the country, the Illinois Supreme Court in

Palmateer discussed the meaning of “clearly mandated public policy.” Palmateer, 85 Ill. 2d at

130.

“There is no precise definition of the term. In general, it can be said that public policy

concerns what is right and just and what affects the citizens of the State collectively. It is

to be found in the State’s constitution and statutes and, when they are silent, in its judicial

decisions. [Citation.] Although there is no precise line of demarcation dividing matters that

are the subject of public policies from matters purely personal, a survey of cases in other

States involving retaliatory discharges shows that a matter must strike at the heart of a

citizen’s social rights, duties, and responsibilities before the tort will be allowed.” Id.

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Merely citing a constitutional or statutory provision in a complaint will not give rise to a retaliatory

discharge cause of action. McGrath v. CCC Information Services, Inc., 314 Ill. App. 3d 431, 440

(2000).

¶ 20 Numerous decisions of this court have maintained the narrow scope of the retaliatory

discharge action. Buckner v. Atlantic Plant Maintenance, Inc., 182 Ill. 2d 12, 19-20 (1998)

(collecting cases). “The common law doctrine that an employer may discharge an employee-at-

will for any reason or for no reason is still the law in Illinois, except for when the discharge violates

a clearly mandated public policy.” Barr v. Kelso-Burnett Co., 106 Ill. 2d 520, 525 (1985); see also

Fisher v. Lexington Health Care, Inc., 188 Ill. 2d 455, 467 (1999) (the Illinois Supreme Court “has

consistently sought to restrict the common law tort of retaliatory discharge”). Illinois has

recognized the tort of retaliatory discharge when the discharge stems from exercising rights

pursuant to the Illinois Workers’ Compensation Act or where the discharge is for certain activities

referred to as “whistleblowing.” Irizarry v. Illinois Central R.R. Co., 377 Ill. App. 3d 486, 490-91

(2007). Plaintiff’s claim does not fall into either of these two categories.

¶ 21 To support her claim of a clearly mandated public policy against the alleged retaliation that

occurred in this case, plaintiff cites the floor debates prior to section 224.1’s enactment, when

members of the Illinois Senate discussed the notice that the employer would be required to give

the employee and the importance of the employee’s consent to the COLI coverage. See 87th Ill.

Gen. Assem., Senate Proceedings, June 23, 1992, at 110 (statements of Senator Cullerton). Senator

Cullerton explained that, at the request of the Department of Insurance, the bill had been amended

from requiring the employee’s written consent to instead requiring the employee to reject the

coverage within 30 days of receiving written notice of the proposed coverage from the employer.

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Id. Senator Hawkinson expressed concern about the amendment and requested assurance that the

notice to the employee would not be an easily overlooked paragraph in an insurance policy or an

employee handbook. Id. at 111-12 (statements of Senator Hawkinson). Senator Cullerton

responded that the goal of the bill was to help the insured, i.e., the employee, by providing “health

benefits for that person after they retire.” Id. at 112 (statements of Senator Cullerton). Senator

Schuneman asked Senator Cullerton to explain what happened to the provision that required the

employee’s prior consent “for this new insurable interest feature to be legalized in Illinois.” Id. at

113 (statements of Senator Schuneman). Senator Cullerton stated that he would ask the director of

the Department of Insurance why he wanted this amendment and took the bill “out of the record.”

Id. (statements of Senator Cullerton).

¶ 22 We recognize the importance the legislature placed on protecting the right of a prospective

insured to freely consent to COLI coverage. However, by stating in section 224.1 that employers

have an insurable interest in the lives of their employees, the legislature recognized the benefits of

employers obtaining COLI coverage, which can be used to either indemnify the employer for the

costs of replacing a key employee who dies or becomes disabled or finance the cost of a stock

redemption agreement or deferred compensation plan, or finance broad-based welfare benefit

plans. See Nat’l Ass’n of Ins. Comm’rs, Guidelines on Corporate Owned Life Insurance 602-1

(April 2005), https://content.naic.org/sites/default/files/inline-files/MDL-602.pdf [https://

perma.cc/BQ95-QLGP]. Clearly, COLI coverage is legal in Illinois. Moreover, to protect

employees, the legislature subjected the employer’s insurable interest in a current or retired

employee’s life to the requirements of obtaining the employee’s consent and not retaliating against

the employee in any way if she refuses to give her consent.

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¶ 23 The supreme court’s stated reluctance to expand the tort of retaliatory discharge militates

against creating an exception here. Accordingly, we affirm the judgment of the circuit court that

dismissed plaintiff’s common law retaliatory discharge claim based on her refusal to consent to

COLI coverage.

¶ 24 C. Implied Right of Action

¶ 25 Plaintiff argues that the circuit court improperly dismissed her claim of an implied right of

action for defendant’s purported violation of section 224.1 of the Insurance Code for discharging

plaintiff based on her refusal to consent to defendant obtaining and being the beneficiary of life

insurance coverage on plaintiff’s life.

¶ 26 In construing the meaning of a statute, the primary objective of this court is to ascertain

and give effect to the intention of the legislature, and all other rules of statutory construction are

subordinated to this cardinal principle. Carver v. Sheriff of La Salle County, 203 Ill. 2d 497, 507

(2003). The plain language of the statute is the best indicator of the legislature’s intent. Allstate

Insurance Co. v. Menards, Inc., 202 Ill. 2d 586, 591 (2002). When the statute’s language is clear,

it will be given effect without resort to other aids of statutory construction. Petersen v. Wallach,

198 Ill. 2d 439, 445 (2002). We review issues of statutory interpretation de novo. Metzger v.

DaRosa, 209 Ill. 2d 30, 34 (2004).

¶ 27 The plain language of section 224.1 does not articulate any precise relief for an employee

who suffers retaliatory action in violation of this provision. Nor does any other provision of the

Insurance Code expressly provide employees with the right to pursue an action for damages under

section 224.1. Although the Insurance Code lacks specific statutory language granting a private

right of action, a court may determine that a private right of action is implied in the statute. See

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Metzger, 209 Ill. 2d at 35; Fisher, 188 Ill. 2d at 460. Courts consider four factors in determining

if a private right of action may be implied from a statute.

“Implication of a private right of action is appropriate if: (1) the plaintiff is a member of

the class for whose benefit the statute was enacted; (2) the plaintiff’s injury is one the

statute was designed to prevent; (3) a private right of action is consistent with the

underlying purpose of the statute; and (4) implying a private right of action is necessary to

provide an adequate remedy for violations of the statute.” Fisher, 188 Ill. 2d at 460.

Whether a private right of action is implied in a statute presents a question of law that we review

de novo. Metzger, 209 Ill. 2d at 34. A court should use caution in implying a private right of action

because, in doing so, it is assuming the policy-making authority more appropriately exercised by

the legislature. Moore v. Lumpkin, 258 Ill. App. 3d 980, 989 (1994).

¶ 28 1. Class Member

¶ 29 Regarding the first factor, plaintiff argues that this court’s analysis of the class member

factor should focus specifically on section 224.1, instead of looking at the purpose of the Insurance

Code as a whole. To support this proposition, plaintiff contends that the introductory phrase

“[n]otwithstanding any other Section of this Code,” clearly indicates that the legislature intended

section 224.1 to be a standalone statute that should be read in isolation from the Insurance Code

as a whole. We reject plaintiff’s contention. Our supreme court has made it clear that in conducting

an analysis of the class member factor, “we must read the statute as a whole and not as isolated

provisions.” Metzger, 209 Ill. 2d at 37; Fisher, 188 Ill. 2d at 463. Where a particular provision of

a statute provides incidental benefits to one class but does so in order to benefit the primary class

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for whose benefit the statute was enacted, no private right of action will be implied in favor of the

class provided such incidental benefits. Metzger, 209 Ill. 2d at 38.

¶ 30 In the alternative, plaintiff argues that she is a class member because the scope and history

of the Insurance Code establishes that its purpose is not simply to regulate insurance but to protect

the Illinois public from unregulated insurance practices. Plaintiff contends that she is a member of

the class for whose benefit section 224.1 was enacted because the plain language and legislative

history of this section show that the legislature intended to protect employees from retaliatory

discharge for refusing to consent to be insured on their lives by their employers. Specifically,

plaintiff argues that section 224.1 regulates the insurable interest an employer may obtain by

requiring the employee’s consent before the employer may obtain that insurable interest. Plaintiff

also contends that the second factor regarding prevention of her injury goes “hand-in-hand” with

the analysis of the first factor because the primary focus of the Insurance Code includes protecting

insureds and prospective insureds from unfairness in the purchase and sale of insurance policies.

¶ 31 Regarding the first factor, defendant responds that plaintiff is not a member of the class for

whose benefit the Insurance Code was intended because it was not designed primarily to benefit

employees who have disputes with their employers and does not focus on preventing discharge or

other injuries to employees. Defendant cites Price, 109 Ill. 2d at 69, to support the proposition that

the primary purpose of the Insurance Code is merely to regulate “all types of insurance” and “was

designed to govern operations of insurance companies, not insureds [like the defendant employer,

who provided the plaintiff employee with health insurance under the employer’s group policy].”

Defendant’s reliance on Price, however, is misplaced. Whereas our analysis addresses whether a

private right of action is implied, Price involved a common law retaliatory discharge claim. In

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Price, the plaintiff argued that the health insurance regulations of the Insurance Code showed that

there was a clearly mandated public policy against the discharge of employees for filing health

insurance claims. Id. The defendant argued that the filing of a health insurance claim was founded

on a private contractual right and was not a matter supported by public policy. Id. at 67. The court

agreed with the defendant and held that the alleged discharge of an employee for filing a health

insurance claim under the employer’s group policy did not support a common law retaliatory

discharge claim because the discharge did not violate a clearly mandated public policy. Id. at 69.

¶ 32 Regarding the second factor, defendant argues that the Insurance Code was not intended to

prevent the alleged injuries plaintiff suffered because any protections extended to employees are

incidental to the Insurance Code’s primary focus of regulating insurance companies and the

insurance industry. Defendant argues it is illogical to contend that the Insurance Code was

designed to prevent employees from losing their jobs.

¶ 33 The Insurance Code consists of 45 articles. Section 224.1 appears in article XIV, which is

entitled “Legal Reserve Life Insurance.” 215 ILCS 5/art. XIV (West 2020). Some articles in the

Insurance Code contain a section stating the purpose of the article. However, most articles,

including article XIV at issue here, do not list any purpose. The following sections of the Insurance

Code contain purpose statements that show the legislature’s intent to protect the insured or promote

the public welfare. Section 1301 states that the purpose of article XLIII, “Mortgage Insurance

Consolidation,” is to “protect the interests of Illinois insureds.” Id. § 1301. Section 155.51 states

that the purpose of article IX1/2, “Credit Life and Credit Accident and Health Insurance” is “to

promote the public welfare.” Id. § 155.51. Section 1201 states that the purpose of article XLII,

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“Insurance Cost Containment,” “is to promote the public welfare.” Id. § 1201. Section 1001 states

that the purpose of article XL, “Insurance Information and Privacy Protection,”

“is to establish standards for the collection, use and disclosure of information gathered in

connection with insurance transactions by insurance institutions ***; to maintain a balance

between the need for information by those conducting the business of insurance and the

public’s need for fairness in insurance information practices, including the need to

minimize intrusiveness.” Id. § 1001.

¶ 34 Illinois courts have also recognized that the purpose of the Insurance Code is more than

merely regulating insurance companies. See Walsh v. Department of Insurance, 2016 IL App (1st)

150439, ¶ 25 (“[t]he stated purpose of the Insurance Code is to protect the public interest in the

area of for-profit insurance” (internal quotation marks omitted)); Hoglund v. State Farm Mutual

Automobile Insurance Co., 148 Ill. 2d 272, 277 (1992) (“purpose behind the statutorily mandated

uninsured motorist provision is that the insured be placed in substantially the same position as if

the wrongful uninsured driver had been minimally insured”); Keller v. State Farm Insurance Co.,

180 Ill. App. 3d 539, 556-57 (1989) (“purpose of section 155 of the Illinois Insurance Code is not

only to aid the insured, but also to discourage insurers from profiting by their superior financial

positions while delaying the payment of contractual obligations”); Logsdon v. Shelter Mutual

Insurance Co., 143 Ill. App. 3d 957, 961 (1986) (regarding uninsured motorist coverage, the

purpose is to “ensure that insureds be provided adequate information so that they [can] make

intelligent, informed decisions on the coverage they want and are willing to pay for”).

¶ 35 Courts have also addressed concerns raised by stranger-originated life insurance (STOLI)

coverage on another person’s life. See 215 ILCS 159/5 (West 2020) (“ ‘Stranger-originated life

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insurance’ or ‘STOLI’ means an act, practice, or arrangement to initiate a life insurance policy for

the benefit of a third-party investor who, at the time of policy origination, has no insurable interest

in the insured.”). An insurance policy on a person’s life generally is void if the person did not

consent to the issuance of the policy. See Bajwa v. Metropolitan Life Insurance Co., 208 Ill. 2d

414, 427-28 (2004). A beneficiary of a life insurance policy has a financial interest in the insured’s

dying as soon as possible because an early death minimizes the amount of premiums the

beneficiary would pay, and money received in the present is more valuable than money received

in the future. Ohio National Life Assurance Corp. v. Davis, 803 F.3d 904, 907-08 (7th Cir. 2015).

“So the requirement of consent protects the prospective insured; he is unlikely to consent to

someone becoming the beneficiary if he suspects that person of wanting to shorten his life.” Id. at

908. Courts are also “concerned with the unseemliness of gambling on when a person will die”

(id.), which is referred to as wager policies. Consequently, one must have an interest, financial or

otherwise, in the life of the insured rather than in his early death before one can take out a life

insurance policy on a person. Grigsby v. Russell, 222 U.S. 149, 155 (1911).

¶ 36 As discussed above (supra ¶ 22), by providing in section 224.1 that employers have an

insurable interest in the lives of their employees, the legislature recognized the benefits of COLI

coverage to both employers and employees. Nevertheless, the legislature addressed the insurable

interest concerns regarding STOLI coverage and wager policies among employers and their

employees by including in section 224.1 the requirement that an employer shall not retaliate in any

manner against an employee or a retired employee for refusing to consent to be insured.

Specifically, the legislature subjected the employer’s insurable interest in a current or retired

employee’s life to the requirements of obtaining the employee’s consent and not retaliating against

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the employee in any way if she refuses to give her consent. As discussed above (supra ¶ 21), this

concern of protecting employees from STOLI coverage and wager policies is reflected in the floor

debates prior to section 224.1’s enactment.

¶ 37 We conclude that plaintiff is a member of the class for whose benefit the Insurance Code

was enacted. When viewed as a whole, it is clear that the Insurance Code was primarily designed

to promote the public welfare and protect the interests of the insureds (and prospective insureds)

by regulating the insurance industry to ensure fair practices in the sale of insurance products.

Furthermore, the protections afforded employees as prospective insureds under section 224.1 of

the Insurance Code are not incidental to the Code’s overall purpose. Cf. Marque Medicos

Fullerton, LLC v. Zurich American Insurance Co., 2017 IL App (1st) 160756, ¶ 60 (providers of

medical services to employees for work-related injuries were not members of the class benefitted

by the statute because the statute’s purpose was to protect employees by providing them with

prompt and equitable compensation for their injuries and any benefit the providers received

regarding payment obligations was at most incidental and provided solely in an effort to serve the

goal of complete and prompt compensation for employees).

¶ 38 2. Plaintiff’s Injury

¶ 39 Next, we consider whether plaintiff’s injury is one the statute was designed to prevent.

While section 224.1 specifically prohibits retaliating against an employee who refuses to consent

to be insured by her employer, the statute’s broad purpose is to protect the public by regulating the

insurance industry to ensure fair practices. Just as employees, as members of the Illinois public,

are part of the class for whom the statute was primarily enacted to benefit, it is clear that the

Insurance Code is designed generally to prevent members of the public from being coerced or

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duped into applying for life insurance coverage without their consent. As discussed above (supra

¶ 35), the prevention of STOLI coverage and wager policies has long been a concern in the

regulation of insurance practices. Accordingly, we conclude that employers coercing employees

to agree to COLI coverage or else face some form of retaliation, including discharge, is an injury

the Insurance Code was designed to prevent.

¶ 40 3. Consistency

¶ 41 We next consider the third factor: whether a private right of action is consistent with the

underlying purpose of the Insurance Code. Pilotto v. Urban Outfitters West, L.L.C., 2017 IL App

(1st) 160844, ¶ 26. Consistency with the underlying purpose of a statute includes ensuring that

such a private right “would not adversely affect any other provision within it.” Id. ¶ 27.

¶ 42 Plaintiff argues that implying a private right of action regarding section 224.1 would not

undermine the operation of the statute, but rather would facilitate redress for violations of the

statute. Defendant, however, argues that implying a private right of action for an employee is not

consistent with the Insurance Code’s underlying purpose of regulating the insurance industry

because the Insurance Code gives the director of the Department of Insurance “broad enforcement

powers” since the director “is charged with the rights, powers and duties appertaining to the

enforcement and execution of all the insurance laws of this State.” 215 ILCS 5/401 (West 2020).

¶ 43 “Cases where a private right of action has been found inconsistent with the purpose of a

statute generally have involved situations where such a right would impede the operation of the

statute in some way.” Fiumetto v. Garrett Enterprises, Inc., 321 Ill. App. 3d 946, 952 (2001). For

example, in Metzger, 209 Ill. 2d at 39, the court found that an implied private right of action for a

government whistleblower reprimanded after reporting statutory violations was inconsistent with

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the Personnel Code (20 ILCS 415/1 et seq. (West 2002)). Specifically, the underlying purpose of

the statute was to ensure government employee competency, and in ensuring such competency,

the statute protected employees who reported such violations from unjust retaliation. Metzger, 209

Ill. 2d at 37-38. To carry out this purpose, the statute outlined procedures for the State to review

whether an employee who was reprimanded after reporting a violation was unjustly disciplined.

Id. at 39. The court found that implying a private right of action would have been inconsistent with

the express procedures for carrying out the underlying purpose of the statute because it would have

stripped the State of its independent authority to determine whether the reprimand was retaliation

or appropriate management and would have given that authority to the courts instead. Id.

¶ 44 Similarly, in Helping Others Maintain Environmental Standards v. Bos, 406 Ill. App. 3d

669, 686 (2010), the Livestock Act gave citizens the ability to provide some input through

informational meetings but ultimately gave the Department of Agriculture discretion to determine

compliance with the Act, as required before construction of a livestock facility could commence.

See 510 ILCS 77/12.1 (West 2008). The Act left inspections and violation determinations to the

department and provided that producers would be subject to fines or orders to cease operations for

violations of the Act. Moreover, the Act did not preempt other common law causes of action such

as nuisance. The court held that implying a private right of action would strongly undermine the

department’s authority, contrary to the legislature’s intent. Bos, 406 Ill. App. 3d at 686 (“Where

broad discretion is given to an agency, it negates the implication that there was legislative intent

to create a private right of action.” (Internal quotation marks omitted.)).

¶ 45 In contrast, in Fiumetto, 321 Ill. App. 3d at 953, where a former employee alleged that she

was terminated for filing a claim for temporary unemployment benefits, the court found that a

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private right of action for retaliatory discharge was consistent with the Unemployment Insurance

Act (820 ILCS 405/100 et seq. (West 1996)). The court found that the purpose of the remedial

statute was to lessen the burden of unemployment on unemployed workers and “a private right of

action would both benefit those that the statute was enacted to protect and dissuade employers

from interfering with employees attempting to seek benefits under [the statute].” Fiumetto, 321 Ill.

App. 3d at 952.

¶ 46 The case before us is similar to Fiumetto and distinguishable from Metzger and Bos.

Similar to Fiumetto, a private right of action under section 224.1 of the Insurance Code would both

benefit those employees that the statute was enacted to protect and dissuade employers from

coercing employees who wish to exercise their right to refuse to consent to COLI coverage.

Furthermore, providing an implied right of action for employees against their employers would

not deprive the Department of Insurance of its independent ability to regulate the insurance

industry for the benefit of the public and prevent unfair practices in the purchase and sale of

insurance. Unlike the Personnel Code at issue in Metzger, the Insurance Code does not contain

express outlined procedures for the director to review whether claims of retaliation were

appropriate management decisions. Cf. Metzger, 209 Ill. 2d at 39. And unlike the Livestock Act at

issue in Bos, the Insurance Code does not expressly outline a framework that leaves section 224.1

violation determinations solely to the discretion of the director of the Department of Insurance. Cf.

Bos, 406 Ill. App. 3d at 686.

¶ 47 Accordingly, we hold that a private right of action is consistent with the underlying purpose

of the Insurance Code.

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¶ 48 4. Necessity

¶ 49 Finally, we examine whether implying a private right of action is necessary to provide an

adequate remedy for violations of the Insurance Code. The Illinois Supreme Court has implied a

private right of action under a statute “only in cases where the statute would be ineffective, as a

practical matter, unless such an action were implied.” Fisher, 188 Ill. 2d at 464.

¶ 50 Plaintiff argues that this court should imply a private right of action because the potential

penalty for violating section 224.1 is not adequate to ensure compliance with the statute.

Specifically, reporting an employer’s retaliatory action to the director of the Department of

Insurance provides neither compensation nor an adequate remedy to an injured employee, makes

compliance with section 224.1 unlikely, and renders ineffective the requirement of no retaliation,

which is crucial to protect the element of the employee’s valid consent to COLI coverage.

¶ 51 Defendant argues that a private right of action is not necessary because the legislature has

provided an adequate statutory framework to encourage the reporting of violations and punish

retaliation and any other violations of the Insurance Code. Specifically, the director of the

Department of Insurance “is charged with the rights, powers and duties appertaining to the

enforcement and execution of all the insurance laws of this State.” 215 ILCS 5/401 (West 2020).

Those powers include conducting investigations “to determine whether any person has violated

any provision of such insurance laws” and instituting actions necessary for the enforcement of the

Insurance Code or of any order or action made or taken by the director under the Insurance Code.

Id. The director is authorized to subpoena and examine witnesses and documents related to

investigations and hearings provided for by the Insurance Code. Id. § 403. Additionally, companies

or persons who willfully or repeatedly violate the Insurance Code or any rule or regulation

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promulgated by the director must forfeit to the State of Illinois a civil penalty not to exceed $2000.

Id. § 403A(1). The Insurance Code includes a catchall penalty provision indicating that

“[a]ny person who violates any of the provisions of this Code, or fails to comply with any

duty imposed upon him or it by any provision of this law, for which violation or failure no

penalty is elsewhere provided by the laws of this State, shall be guilty of a petty offense.”

Id. § 446.

¶ 52 Defendant argues that plaintiff may not like the way enforcement of the Insurance Code is

structured because it does not expressly grant her the right to recover monetary damages, but her

focus on a right to compensation for her injuries is not appropriate under the private right of action

analysis of the fourth factor, which focuses instead on whether adequate remedies are provided to

make compliance with section 224.1 of the Insurance Code likely. See Metzger, 209 Ill. 2d at 41

(the plaintiff could not satisfy the fourth factor of the implied private right of action analysis based

on the expressed outlined procedures of the Personnel Code that encouraged the reporting of

violations and ensured the effectiveness of the statute by preventing and punishing violations).

¶ 53 Defendant relies extensively on Fisher, 188 Ill. 2d 455, and Metzger, 209 Ill. 2d 30, to

support its position. However, we find those cases distinguishable concerning the fourth factor

analysis.

¶ 54 In Fisher, 188 Ill. 2d at 460, the court concluded that section 3-608 of the Nursing Home

Care Act (210 ILCS 45/3-608 (West 1996)) did not imply a private right of action to nursing home

employees who were harassed and discharged after providing information during an investigation

concerning the death of a resident. Regarding the fourth factor necessity of an adequate remedy

analysis, the court stated that the residents, who had a private right of action under the statute, and

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their friends and families would monitor the conditions at the facilities and thereby deter violations

of the statute. Fisher, 188 Ill. 2d at 465. Furthermore, the comprehensive statutory scheme gave

the Illinois Department of Public Health numerous sanctions and remedies to punish statutory

violations, including fines that accumulated for each day a violation existed, license revocations

and suspensions, fines of up to $10,000 for intentionally failing to correct certain types of

violations or impeding any investigation or enforcement action, and fines of up to $10,000 for any

retaliation against a nursing home employee. Id. at 465-67.

¶ 55 In Metzger, 209 Ill. 2d at 45, the court concluded that the whistleblower statute in the

Personnel Code (20 ILCS 415/19c.1 (West 2002)) did not imply a private right of action for state

employees who suffer retaliatory action for reporting wrongdoing by other state employees. The

court ruled that implying a private right of action for state employees was not necessary to achieve

the statutory purpose of encouraging honesty and candor among state employees because the

Personnel Code expressly provided sufficient sanctions and remedies for violations of its

provisions, including (1) “an administrative process through the Civil Service Commission for

both discipline and protection of state employees,” (2) “judicial review of the Civil Service

Commission’s administrative decisions,” (3) “authority for the Director of Central Management

Services to institute and maintain any action or proceeding to secure compliance with the

Personnel Code and its implementing rules and orders,” and (4) “demotion, suspension, or

discharge,” and “criminal penalties for violation of any provision of the Personnel Code.” Metzger,

209 Ill. 2d at 40-41.

¶ 56 Unlike the Nursing Home Care Act at issue in Fisher and the Personnel Code at issue in

Metzger, the Insurance Code at issue here does not contain a multitude of express sanctions and

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remedies to ensure compliance with section 224.1. One purpose of section 224.1 is to ensure that

employees are free of coercion when deciding to consent to COLI coverage and implying a private

right of action for employees who are retaliated against if they do not consent to this insurance

coverage is necessary to achieve that purpose.

¶ 57 In Rodgers v. St. Mary’s Hospital of Decatur, 149 Ill. 2d 302, 308 (1992), the court

determined that the plaintiff was a member of the class for whose benefit the X-Ray Retention Act

(X-Ray Act) (210 ILCS 90/0.01 et seq. (West 2000)) was enacted and that the plaintiff’s injury,

loss of evidence to support his medical malpractice claim, was one the X-Ray Act was designed

to prevent. The court noted that the X-Ray Act provided no specific administrative remedy for a

violation of the Act. Rodgers, 149 Ill. 2d at 308-09. The court further noted that administrative

remedies would not provide an adequate remedy to those injured by violations of the X-Ray Act

and that the threat of liability was an efficient method of enforcing the regulation. Id. at 309.

Accordingly, the court concluded that a private right of action was necessary to provide an

adequate remedy for violations of the Act and that it was consistent with the underlying purpose

of the Act. Id.

¶ 58 Like the X-Ray Act at issue in Rodgers, the Insurance Code does not expressly provide

sanctions and remedies for violations of section 224.1. As stated above (supra ¶ 51), the Insurance

Code provides authority for the director to conduct investigations and hearings to determine

whether any person has violated any provision of Illinois’s insurance laws. 215 ILCS 5/401 (West

2020). This provision, however, is not sufficient to enable employees to freely exercise their choice

to consent to COLI coverage and prevent and punish retaliatory action against employees who

refuse to consent. A violation of the Insurance Code is a petty offense, which is punishable by a

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fine of $75 to $1000 (730 ILCS 5/5-4.5-75(a) (West 2020)) and is “any offense for which a

sentence of imprisonment is not an authorized disposition” (id. § 5-1-17). These penalties are too

minimal to serve as a deterrent and assure compliance with section 224.1.

¶ 59 Given the Insurance Code’s overarching objective to promote the public welfare and

protect the interests of insureds and prospective insureds by ensuring fair practices in the sale of

insurance products, eliminating coercion or misinformation in the purchase and sale of COLI

coverage is an integral part of that goal. The type of workplace coercion alleged in this case would

be difficult to police. When an employee is discharged in violation of section 224.1 for refusing to

consent to COLI coverage, the other employees who do not want to consent to this coverage will

observe any minimal penalty imposed by the director of the Department of Insurance and resign

themselves to signing their employer’s consent form instead of facing the loss of their job and

income, like their hapless former employee. Keeping employers honest and fair in the purchase

and sale of COLI coverage depends on the ability of the employees to seek meaningful redress if

they suffer retaliation for refusing to consent. Those employees, however, are unlikely to exercise

the right to refuse COLI coverage unless they are assured that they will not be the target of

retribution by their employers.

¶ 60 The importance of true and voluntary consent to allowing a third-party beneficiary to

purchase a life insurance policy on a person is necessary to avoid the harm of wager policies or

situations similar to STOLI coverage. The importance of protecting the employees’ voluntary

consent in a COLI situation was recognized by the General Assembly when it enacted section

224.1 of the Insurance Code. Relegating discharged employees to lodging a consumer complaint

with the director of the Department of Insurance—who does not have the power to impose

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significant sanctions on an offending employer, order the employee’s reinstatement or award the

employee damages—is not sufficient to achieve the General Assembly’s purposes. As a result,

employees will simply resign themselves to succumbing to their employer’s will and apply for life

insurance coverage the employees do not want. For all practical purposes, the safeguard against

any retaliation promised to employees by section 224.1 of the Insurance Code will be rendered

meaningless.

¶ 61 Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 185 (1978), recognized a private right of action for

retaliatory discharge based on the Workers’ Compensation Act. The Illinois Supreme Court wrote:

“The imposition of a small fine, enuring to the benefit of the State, does nothing to alleviate

the plight of those employees who are threatened with retaliation and forgo their rights, or

those who lose their jobs when they proceed to file claims under the Act.” Id.

These considerations apply with equal force here.

¶ 62 Protecting the Illinois public from retaliation in the workplace for exercising their right to

reject COLI coverage is a matter of ongoing concern for the General Assembly. While the General

Assembly acknowledges the benefits of the use of COLI coverage in the workplace, it limited the

legality of this coverage to the requirements that the employee must voluntarily consent and cannot

face any retaliation for refusing to consent. We conclude that implying a private right of action for

retaliatory discharge in violation of section 224.1 of the Insurance Code is necessary to provide an

adequate remedy because the statutory requirements of voluntary employee consent and no

retaliation for a refusal to consent would be ineffective unless such an action is implied.

¶ 63 For the foregoing reasons, we conclude that plaintiff is entitled to assert a private right of

action to recover damages for the injuries she sustained as a result of defendant’s alleged violation

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of section 224.1 of the Insurance Code. Plaintiff was a member of the class for whose benefit the

statute was enacted, the retaliation she allegedly suffered was one the statute was designed to

prevent, a private right of action is consistent with the underlying purpose of the statute, and

implying a private right of action is necessary to provide an adequate remedy for violation of

section 224.1.

¶ 64 III. CONCLUSION

¶ 65 For the foregoing reasons, we affirm the judgment of the circuit court that granted

defendant’s motion to dismiss plaintiff’s common law retaliatory discharge claim. However, we

reverse the trial court’s dismissal of plaintiff’s implied private right of action retaliatory discharge

claim under section 224.1 of the Insurance Code.

¶ 66 Affirmed in part and reversed in part.

¶ 67 Cause remanded.

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Cretella v. Azcon, Inc., 2022 IL App (1st) 211224

Decision Under Review: Appeal from the Circuit Court of Cook County, No. 21-L-4742; the Hon. Michael F. Otto, Judge, presiding.

Attorneys Dean J. Caras, of Caras Law Group, P.C., of Chicago, for for appellant. Appellant:

Attorneys Brian M. O’Neal, of McMahon Berger PC, of St. Louis, for Missouri, for appellee. Appellee:

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