Tegeler v. Industrial Commission

672 N.E.2d 1126, 173 Ill. 2d 498, 220 Ill. Dec. 114, 1996 Ill. LEXIS 110

• Court: Illinois Supreme Court
• Decided: October 18, 1996
• Docket: 80498
• Status: Published

Opinions

CHIEF JUSTICE BILANDIC

delivered the opinion of the court:

The claimant, Brian Tegeler, filed an application for adjustment of claim pursuant to the Workers’ Compensation Act (Act) (820 ILCS 305/1 et seq. (West 1992)) alleging that he sustained injuries arising out of and in the course of his employment with E.C. Baker & Sons, Inc. The arbitrator found in favor of the claimant and awarded him compensation for temporary total disability and permanent partial disability. The Industrial Commission reversed the decision of the arbitrator, finding that the claimant’s application for adjustment of claim was barred by the applicable statute of limitations. On administrative review, the circuit court of Effingham County confirmed the Industrial Commission’s decision. The Industrial Commission division of the appellate court, with one justice dissenting, affirmed the circuit court. 276 Ill. App. 3d 1078. The appellate court certified the cause for further review, and the claimant filed a petition for leave to appeal (155 Ill. 2d R. 315(a)). We granted review and now reverse the judgment of the appellate court. We remand the cause to the Industrial Commission for further proceedings consistent with the views expressed in this opinion.

FACTS

On July 29, 1987, Brian Tegeler, a 25-year-old well driller, was injured in a motor vehicle accident in the course of his employment with E.C. Baker & Sons, Inc. E.C. Baker & Sons, Inc. (the employer), is owned and operated by Brian’s uncle. Brian’s mother, Loretta Tegeler (Loretta), is the employer’s corporate secretary and works in the company’s office. Shortly after the accident happened, Loretta contacted the employer’s insurance agent, R.D. Hughes, and reported the accident. Robert Scybert (Scybert), an independent claims adjuster for the employer’s insurance carrier, handled the matter on behalf of the carrier. Sometime after the accident, Scybert contacted Loretta about scheduling an appointment to take Brian’s statement about the accident. Scybert was in contact with Brian only once, when Scybert took Brian’s statement. All other contacts were between Loretta and Scybert. Loretta acted on behalf of Brian and relayed any messages from Scybert to Brian. Brian was not represented by counsel during this time.

Brian was treated by Dr. Carl Belber, an orthopedic surgeon, for two years following the accident. Among other treatments, Dr. Belber surgically repaired a partial laceration of Brian’s left ulnar nerve above his elbow, an injury caused by the accident. Brian was also treated by Dr. Gaylin Lack, an orthopedic surgeon, for three years after the accident. Dr. Lack determined that Brian suffered a right shoulder separation as a result of the accident. Brian saw Dr. Lack periodically from August 11, 1987, through December 3, 1990.

Around February of 1990, Scybert called Loretta and requested that Brian undergo a medical examination by Dr. Brown in connection with his claim. Brian complied. Subsequent to the examination, Scybert informed Loretta that he was waiting for Dr. Brown’s report.

On May 23, 1990, Scybert relayed by telephone a settlement offer for Brian’s injuries to Loretta. Scybert offered to settle Brian’s workers’ compensation claim for $7,346. Scybert explained that this amount represented compensation for Brian’s permanent injuries to his left arm. Loretta responded by informing Scybert that there were permanent injuries to Brian’s right shoulder as well. Scybert stated that it was his understanding that Brian’s right shoulder had no permanent injuries. Loretta disagreed. She then told Scybert that she would obtain Dr. Lack’s report regarding the injuries to Brian’s right shoulder. There were no further communications between Scybert and Loretta or Brian following the settlement offer.

On December 15, 1990, the day before Loretta received the report from Dr. Lack, Loretta was informed in a letter from the employer’s insurer that the settlement offer had been withdrawn and the case closed. When Loretta spoke with Scybert after reading the letter, he informed her that, because the statute of limitations had expired, the case had been closed. Brian subsequently filed an application for adjustment of his claim with the Industrial Commission on January 4, 1991.

At the hearing before the arbitrator, Scybert was questioned about his conduct concerning the settlement offer he relayed to Loretta on May 23, 1990. Scybert testified that the employer’s insurance company had instructed him to make the offer and await a response. The insurance company had further instructed Scybert that, if the statute of limitations should expire before the settlement offer was accepted, then the offer was to be withdrawn. Scybert indicated in his testimony that he knew the statute of limitations would expire two months and five days after he made the settlement offer to Loretta. Nonetheless, Scybert did not tell Loretta or Brian when the settlement offer would terminate. Nor did he inform Loretta or Brian that the statute of limitations would soon expire.

In addition, Loretta testified that no one ever provided Brian with a copy of the Industrial Commission’s instruction handbook, which contains information regarding the rights and obligations of employers and employees under the Workers’ Compensation Act. Loretta specifically requested a copy of the handbook from the employer’s insurance carrier immediately after the accident to give to Brian. Loretta also informed Scybert that Brian did not have a copy of the handbook.

After considering the testimony of Brian, Loretta, and Scybert, the evidence deposition of Dr. Lack and the office records of Dr. Belber, the arbitrator found in favor of Brian. The arbitrator found that the statute of limitations was "tolled.” The arbitrator based her finding on Scybert’s actions with Loretta and Scybert’s failure to advise Brian of the expiration date of the statute of limitations. The arbitrator awarded Brian $157.94 per week for a period of 12 2/7 weeks for temporary total disability and $142.15 per week for a period of 132.5 weeks for permanent partial disability, as provided in section 8(e) of the Act (820 ILCS 305/8(e) (West 1992)). According to the arbitrator, the permanent partial disability award was based on Brian’s 45% loss of use of his left arm and 20% loss of use of his right arm.

The employer submitted a petition for review of the arbitrator’s decision to the Industrial Commission (Commission). Two members of a three-member panel reversed the arbitrator’s decision and found in favor of the employer. The Commission determined that Brian’s application for adjustment of claim was barred by the applicable statute of limitations (820 ILCS 305/6(d) (West 1992)). The Commission found that the employer was not estopped from asserting the statute of limitations as a defense because the employer did not mislead or lull Brian into failing to file his claim. The Commission also found that the employer had no obligation to advise Brian when the statute of limitations would expire on his claim.

A dissent was filed by one member of the Commission. The dissent focused on section 7110.60 of the Commission’s rules, which requires employers to deliver a copy of the Handbook on Workers’ Compensation and Occupational Diseases to any employee who reports a work accident. 50 Ill. Adm. Code § 7110.60 (1991). According to the dissent, this rule is designed to insure that employees know their statutory rights and obligations, including the statute of limitations for filing a claim for workers’ compensation. The dissent pointed out that the evidence showed that Brian did not receive a copy of the handbook and there was no evidence that he knew or should have known the statute of limitations was running. The dissent thus concluded that the claim was timely and the arbitrator’s decision should be affirmed.

Brian sought review of the Commission’s decision in the circuit court. The circuit court confirmed the Commission’s decision, finding that it was not contrary to the manifest weight of the evidence.

The Industrial Commission division of the appellate court, with one justice dissenting, affirmed the judgment of the circuit court. The majority found that Brian failed to show that the employer should be estopped from raising the statute of limitations as a defense. 276 Ill. App. 3d 1078. On the other hand, the dissenting opinion agreed with the conclusion of the dissenting commissioner. 276 Ill. App. 3d at 1084 (Rarick, J.,. dissenting).

ANALYSIS

The issue before this court is whether estoppel prevents the employer from raising the statute of limitations as a defense.

The statute of limitations for filing an application for adjustment of claim under the Act is set forth in section 6(d) (820 ILCS 305/6(d) (West 1992)). There is no dispute in this case that the applicable statute of limitations expired three years after the date of the claimant’s accident. See 820. ILCS 305/6(d) (West 1992). The claimant was injured on July 29,1987. The claimant, however, did not file his claim until January 4, 1991, a few months after the expiration of the three-year limitations period. The claimant argued before the Commission that the employer was estopped from asserting the expiration of the limitations period as a defense. The Commission rejected the claimant’s argument. The claimant now advances two arguments in support of his position that the employer is estopped from raising the statute of limitations as a defense. We address the two arguments separately.

First, the claimant maintains that an employer has a duty to advise a claimant of the statute of limitations under the Act. According to the claimant, an employer that fails to so advise is estopped from raising the statute of limitations as a defense. We disagree. This court has held that an employer’s failure to advise a claimant of the statute of limitations for filing a workers’ compensation claim does not, in and of itself, create an estoppel. City of Chicago v. Industrial Comm’n, 75 Ill. 2d 270 (1979); Pantle v. Industrial Comm’n, 61 Ill. 2d 365 (1975). We adhere to this court’s prior holdings and reject the claimant’s argument. We therefore agree with the Commission’s finding that the employer in this case had no duty to advise the claimant when the applicable limitations period would expire.

The claimant next argues that the employer is estopped from asserting the statute of limitations as a defense because of the conduct and statements of the claims adjuster during the course of settlement negotiations. We agree.

Estoppel is an equitable doctrine that is invoked to effectuate justice by precluding a party from benefiting from its own wrongdoing. See 18 Ill. L. & Prac. Estoppel ch. 2, § 22 (1956); Byron Community Unit School District No. 226 v. Dunham-Bush, Inc., 215 Ill. App. 3d 343, 348 (1991). The law is clear that an employer in some circumstances may be estopped from asserting the statute of limitations as a defense. George Young & Sons, Inc. v. Industrial Comm’n, 66 Ill. 2d 220 (1977); Molex, Inc. v. Industrial Comm’n, 62 Ill. 2d 46 (1975); Kaskaskia Constructors v. Industrial Comm’n, 61 Ill. 2d 532 (1975); Pope v. Industrial Comm’n, 53 Ill. 2d 560 (1973). Estoppel applies when the conduct or statements of an employer or its representatives lull the employee into a false sense of security, thereby causing the employee to delay the assertion of his or her rights. See George Young & Sons, Inc., 66 Ill. 2d at 225; Molex, Inc., 62 Ill. 2d at 50; Kaskaskia Constructors, 61 Ill. 2d at 535; Pope, 53 Ill. 2d at 565; Dickirson v. Pacific Mutual Life Insurance Co., 319 Ill. 311, 318 (1925).

A clear example of how estoppel applies appears in Molex, Inc. v. Industrial Comm’n, 62 Ill. 2d 46 (1975). In Molex, an employee suffered an injury during the course of his employment. A representative of the employer’s insurance company required the employee to be examined by a particular doctor. The employee underwent the examination and the doctor forwarded his findings to the insurance company. The insurer’s representative then informed the employee by telephone of the doctor’s report and offered a settlement. This settlement offer was made a little over one month prior to the expiration of the statute of limitations. When the employee "resisted” the offer, the representative recommended another examination by the insurer’s doctor, suggesting that such an examination could lead to a better offer. The employee agreed, and the insurance representative indicated that she would make the appointment and call him back. Despite several telephone calls and letters on the part of the employee over the course of two months, the insurer’s representative never responded. When the employee spoke with another representative at the insurance company, he was informed that the statute of limitations had run. Consequently, the claimant was unable to file his application for adjustment of claim until after the expiration of the statute of limitations. Molex, 62 Ill. 2d at 49.

In Molex, this court found that the insurance representative’s discussion of settlement with the employee induced the employee to reasonably believe that there would be a further settlement offer after another examination by the insurance company’s doctor. Molex, 62 Ill. 2d at 50. The record showed that the employee was waiting for further instructions from the insurance representative regarding an appointment with the insurance company’s doctor. It was not until after the expiration of the statute of limitations, however, that the employee was informed that no further offer would be made. Molex, 62 Ill. 2d at 50. As a result of reasonably relying on the conduct of the insurance representative, the employee did not file his claim for compensation until after the expiration of the statute of limitations. This court, therefore, held that the employer was estopped from asserting the statute of limitations as a defense to the late filing of the claim. Molex, 62 Ill. 2d at 50. In reaching this conclusion, this court reasoned that, when settlement negotiations are conducted close to the expiration of the statute of limitations, notice of a termination of the negotiations should be given to the claimant a reasonable length of time before the expiration of the limitations period. Molex, 62 Ill. 2d at 51. Such notice gives the claimant adequate time to prepare and file an application for adjustment of claim. Molex, 62 Ill. 2d at 51. As this court stated:

"Whether or not the result is intended, it is manifestly unfair for an employer or its insurance carrier, being versed in the operations of the Workmen’s Compensation Act, to lead the employee to the very brink of the expiration date and then precipitously abandon him too late for him to preserve his claim.” Molex, 62 Ill. 2d at 51.

In the case sub judice, the arbitrator estopped the employer from asserting the statute of limitations as a defense. The arbitrator based her finding in part on Scybert’s actions with Loretta, who acted on behalf of the claimant, during settlement negotiations. The Commission reversed the arbitrator’s finding and refused to apply estoppel. The Commission found that the employer through its insurer’s claims adjuster did not mislead the claimant into delaying the filing of his claim. We find that the Commission’s decision is inconsistent with Molex and is against the manifest weight of the evidence.

Here, as in Molex, the employer’s representative lulled the claimant into a false sense of security, thereby causing the claimant to delay the assertion of his rights under the Act. The record in the present case reveals that Scybert was the. representative of the employer’s insurance company. Loretta was acting on behalf of her son, the claimant. On May 23, 1990, Scybert called Loretta and offered a settlement of $7,346, as compensation for the claimant’s permanent injuries to his left arm. Loretta did not reject the offer, but simply inquired as to why it did not include compensation for the claimant’s injury to his right shoulder. Scybert disputed the permanency of that injury. However, when Loretta indicated that she would get a report from Dr. Lack regarding that injury, Scybert acquiesced. His acquiescence suggested that the settlement offer was open to negotiation on this point. Consequently, Loretta was clearly left with the reasonable belief that the insurer was holding the $7,346 settlement offer open and that settlement negotiations would continue regarding the right shoulder subsequent to Loretta’s receipt of Dr. Lack’s report. In fact, after the settlement discussions on May 23,1990, there were no further communications between Scybert and Loretta until December 15, 1990, when Loretta was informed that the settlement offer was withdrawn because the limitations period had expired.

Moreover, Scybert admitted in his testimony before the arbitrator that the employer’s insurance company had instructed him to make the settlement offer and await a response. Scybert was also instructed that if the statute of limitations ran before the settlement offer was accepted, then the settlement offer was to be withdrawn. Scybert knew the limitations period would expire two months and five days after he made the settlement offer. Nevertheless, Scybert did not inform Loretta or the claimant that the settlement offer would soon be withdrawn.

All these facts show that Scybert misled Loretta into believing that the settlement offer remained open and that settlement negotiations would continue regarding the right shoulder at least until Loretta’s receipt of Dr. Lack’s report. Scybert knew when he commenced settlement negotiations that the settlement offer and negotiations would terminate two months and five days later when the statute of limitations expired (i.e., July 29, 1990). Scybert, however, did not inform Loretta or the claimant of this fact. Scybert thereby misrepresented the facts regarding an existing time limitation on the settlement offer, which lulled the claimant into a false sense of security that both the settlement offer and settlement negotiations remained open. The claimant reasonably relied to his detriment on this false sense of security created by Scybert by delaying filing an application for adjustment of claim until after he was informed that the settlement offer had been withdrawn. See Kaskaskia Constructors, 61 Ill. 2d at 535 (the claimant relied on the conduct of the employer’s insurance company’s representative because the claimant withheld filing his claim until receipt of the letter denying liability). The facts further show that Scybert entered into settlement negotiations close to the expiration of the statute of limitations and failed to give the claimant notice of a termination of the negotiations a reasonable length of time before the expiration of the limitations period. As this court found in Molex, it would be unfair to permit the employer’s representative to conduct settlement negotiations close to the expiration of the statute of limitations and then abandon the claimant too late for him to preserve his claim. Molex, 62 Ill. 2d at 51. We therefore hold that the employer is estopped from raising the statute of limitations as a defense.

Because of our holding, we need not address the claimant’s other argument that the employer’s failure to provide him with a copy of the Commission’s handbook pursuant to section 7110.60 of the Commission’s regulations (50 111. Adm. Code § 7110.60 (1991)) also served as a basis for estoppel.

CONCLUSION

For the reasons stated, we reverse the judgments of the appellate and circuit courts and set aside the decision of the Industrial Commission. We remand the cause to the Industrial Commission for further proceedings consistent with the views expressed in this opinion.

Appellate court judgment reversed; circuit court judgment reversed; Commission decision set aside; cause remanded.