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Clark v. Cannon Steel Erection Co.8/24/2005
Defendant, Cannon Steel Erection Company, appeals from an order of the circuit court of Cook County which granted the motion of the plaintiff, the Director of the Illinois Department of Insurance, as liquidator of Back of the Yards Neighborhood Council Risk Management Association, Inc. (BYRMA), for summary judgment. Defendant's cross- motion for partial summary judgment was denied, and judgment was entered in plaintiff's favor in the amount of $186,318.
BACKGROUND
Plaintiff pursued this action to recover unpaid premiums and assessments that defendant allegedly owed under a group self-insured workers' compensation fund operated by BYRMA. The fund was created under section 4a of the Workers' Compensation Act (820 ILCS 305/4a (West 1996)) and provided workers' compensation insurance and employer liability insurance to its members. In 1996, defendant entered into an agreement (the pooling agreement) to become a member of the group self- insurance pool and received a policy of insurance that defined the coverage that it obtained. Specifically, for purposes of this case, the workers' compensation coverage required BYRMA to pay benefits due to defendant's employees under the Workers' Compensation Act, while the employers' liability insurance provided defendant coverage for claims brought against it by a third party by reason of a claim filed against the third party by one of defendant's employees. Under both coverages, BYRMA was responsible for defending and indemnifying defendant at BYRMA's expense.
Defendant was required under the pooling agreement to pay both premiums and assessments and "make prompt payment of all its contributions, premiums, costs and assessments." The initial premiums were estimated and subject to adjustments after the policy year ended based upon an audit by BYRMA of the participant's payroll and other business records. In addition, BYRMA could assess additional premiums proportionately among its members during any calendar year if the premiums collected were insufficient to meet the fund's obligations. For this purpose, the pooling agreement provided, in relevant part: "D. Costs, Contributions, Distributions and Assessments
1. Each participant shall be responsible for its proportionate share of all BYRMA's costs, based on premiums or contributions charged to that participant in relation to premiums or contributions charged to all of the participants, including but not limited to risk charges, administrative expenses, losses, and loss adjustment expenses.
4. In the event that BYRMA deems, in its business judgment, that BYRMA should issue assessments to its participants, in order to meet its obligations to the participants, (and its obligations to employees and their dependents), BYRMA shall do so in accordance with rules established by it, and such assessments shall be equitably apportioned among all participants, and any former participants who are subject to assessments, based on the total amount of premiums or contributions paid or payable by all participants. Participants and former participants shall be liable for any such assessments as provided in this Agreement and as may be required by the Illinois Insurance Code, the Illinois Workers Compensation Act, Illinois Occupational disease laws, and the regulations of the Illinois Department of Insurance and Industrial Commission.
E. Duration of Liability for Additional Assessments
Each participant shall be liable for assessments should they occur, for claims filed during the period of its participation, regardless of subsequent termination from BYRMA."
On April 21, 1999, the circuit court entered an agreed order for conservation of
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