A widow’s challenge to a credit against future death benefits and the denial of her petition for lump sum payment were rejected by the Appellate Court in Salisbury v. Illinois Workers’ Compensation Commission, 2017 IL App (3d) 160138WC  Google Scholar | Illinois Courts PDF

The Illinois Workers’ Compensation Act provides for weekly benefits to a surviving spouse in the event of an accidental work-related death. 820 ILCS 305/7 Illinois General AssemblyIWCC PDF. These benefits are paid for the life of the surviving spouse, but only up to 25 years or $500,000, whichever is greater. 820 ILCS 305/8(b)4.2 (“Any provision to the contrary notwithstanding, the total compensation payable under Section 7 shall not exceed the greater of $500,000 or 25 years.”) Illinois General AssemblyIWCC PDF.

However, in the event of remarriage, “the surviving spouse shall be paid a lump sum equal to 2 years compensation benefits and all further rights of such widow or widower shall be extinguished.” 820 ILCS 305/7(a) Illinois General AssemblyIWCC PDF.

Under section 9 of the Act, when the Illinois Workers’ Compensation Commission has awarded weekly benefits, any party may petition to commute the award to an equivalent (present value) lump sum payment:

Any employer or employee or beneficiary who shall desire to have such compensation, or any unpaid part thereof, paid in a lump sum, may petition the Commission, asking that such compensation be so paid.

If, upon proper notice to the interested parties and a proper showing made before such Commission or any member thereof, it appears to the best interest of the parties that such compensation be so paid, the Commission may order the commutation of the compensation to an equivalent lump sum. . . .

820 ILSC 305/9 Illinois General Assembly | IWCC PDF.

In Salisbury v. Illinois Workers’ Compensation Commission, 2017 IL App (3d) 160138WC  Google Scholar | Illinois Courts PDF, the claimant was a widow whose husband died in a crop-duster accident at work. The employer respondent thereafter began paying the widow $1,231.41 per week in death benefits. Following an arbitration hearing, however, the widow was awarded only $461.78 in weekly benefits – based on an apparent miscalculation of her husband’s average weekly wage. The employer was given a credit of $192,594.22 based on the overpayment.

The widow then filed a petition for a lump sum payment of this award that was heard by the Commission. She testified that she wanted a lump sum payment because the benefits could stop if she passed away during the 25 year period (or remarried). She did not have any financial hardship and her children were adults.

The Commission denied her petition, noting that section 9 of the Act requires that a lump sum order is only appropriate if it is in the best interests of both parties. “The Commission then noted that since the award to claimant was not a definite sum and could, in certain circumstances, be terminated, it was clearly not in respondent’s best interests to commute the ongoing payments to a lump sum.”

On appeal, the widow challenged the denial of her lump sum petition and the Commission’s granting of a credit to the employer.

Regarding the credit, the Appellate Court first rejected its characterization as an “award” for which the Commission lacked statutory authority to order:

Quite simply, what is happening here is that the Commission is merely recognizing that an employer has already made a partial payment that goes to satisfying its obligation. There is no award in the sense that the Commission is not ordering the transfer of any obligations, benefits, or funds from claimant to respondent. Claimant is not being deprived of something she otherwise would have received but-for the action of the Commission. Instead, respondent has voluntarily elected to satisfy part of its obligation prior to a formal order being entered— something which accrued to claimant’s benefit. In other words, the Commission did not award respondent anything, it simply factored respondent’s payments into its final order.

The Court found that the recognition of credit for the overpayment of death benefits was appropriate in the absence of a statutory prohibition, similar to credits for the overpayment of temporary total disability benefits against permanent disability benefits. Citing World Color Press v. Industrial Commission, 125 Ill. App. 3d 469 (1984) Google Scholar; Messamore v. Industrial Commission, 302 Ill. App. 3d 351 (1999) Google Scholar | Illinois Courts. Allowing credits for overpayments encourages prompt and voluntary payments by employers.

Regarding the lump sum petition, the “evidence available showed that claimant was suffering no economic hardship and had saved most of respondent’s periodic payments.” The Court found that the widow did not even carry her burden of establishing that the lump sum payment was in her best interest, let alone in the best interests of both parties as required by section 9 of the Act itself. Citing Bagwell v. Industrial Commission, 94 Ill. 2d 101 (1983) (“In the instant case the Industrial Commission correctly interpreted section 9 to require that the best interests of both parties be served before a lump-sum payment will be awarded.”) Google Scholar.

The Court affirmed the decision of the Commission.

Further reading:

820 ILSC 305/9 (providing that the present value calculation “shall be an amount which will equal the total sum of the probable future payments capitalized at their present value upon the basis of interest calculated at the maximum rate of interest payable by member banks of the Federal Reserve System on passbook savings deposits as published in Regulation Q or its successor or, if Regulation Q or its successor is repealed, then the rate in effect on the date of repeal.”) Illinois General Assembly | IWCC PDF.

820 ILCS 305/7(g) (allowing for a partial lump sum award of death benefits if in the best interest of the beneficiary only, not requiring the best interests of both parties (not discussed in the above case): “Such compensation may be paid in a lump sum upon petition as provided in Section 9 of this Act. However, in addition to the benefits provided by Section 9 of this Act where compensation for death is payable to the deceased’s widow, widower or to the deceased’s widow, widower and one or more children, and where a partial lump sum is applied for by such beneficiary or beneficiaries within 18 months after the deceased’s death, the Commission may, in its discretion, grant a partial lump sum of not to exceed 100 weeks of the compensation capitalized at their present value upon the basis of interest calculated at 3% per annum with annual rests, upon a showing that such partial lump sum is for the best interest of such beneficiary or beneficiaries.”) Illinois General AssemblyIWCC PDF.

This article does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.