The Illinois Supreme Court recently ruled that an employee disabled by a work-related injury is entitled to continued temporary total disability workers' compensation benefits (TTD), even if he is later terminated for misconduct unrelated to the injury. The Court held that an employer’s obligation to pay TTD does not cease because the employee is discharged, whether or not for cause. Rather, the proper test is whether the employee’s condition has stabilized and reached maximum medical improvement. Interstate Scaffolding, Inc. v. Illinois Workers’ Compensation Commission, 2010 WL 199914 (Ill. 1/22/10)

The Interstate case involved an employee injured on the job. At times, he was able to work “light duty” with restrictions, but he often missed work due to his medical condition. He received TTD when he could not work. During a light duty assignment, the employee was terminated for misconduct unrelated to his injury (property defacement). The employer contended that TTD automatically ended upon his termination because he was fired for a volitional act of misconduct. The Workers' Compensation Commission disagreed, finding that the employee was entitled to continue receiving TTD benefits until his condition stabilized.

After the Circuit Court affirmed the Commission, the Appellate Court reversed, finding TTD properly ceased. The Appellate Court reasoned that the worker's own volitional conduct in defacing company property was cause for proper discharge, and that but for his misconduct, the employee would have continued receiving benefits until medically stabilized.

The Illinois Supreme Court decided that TTD should continue. The Court determined that the critical question is whether the employee's condition has stabilized and reached maximum medical improvement. The Court noted the Commission's finding that the employee's condition had not stabilized and reached maximum medical improvement. Therefore, the Court held that the employee was entitled to continue receiving TTD until he was able to return to the workforce, regardless of having been fired for volitional misconduct.

Focus on Medical Condition, Not Discharge or Voluntary Departure

Under prior Illinois law, an employee's right to continued benefits after leaving light duty employment focused on whether the employment had ended voluntarily on the worker's part or involuntarily based on the work-related disability. In reviewing cases from other jurisdictions, the Court noted that some jurisdictions deny compensation where the disability played no part in a discharge for "just cause." However, other jurisdictions uphold the right to continued TDD benefits after termination of light duty employment if the employee proves that the inability to find other employment was related to the job injury disability.

In Interstate, the Supreme Court rejected the focus on whether employment separation is voluntary and relied instead on a liberal interpretation of the Workers’ Compensation Act (820 ILCS 305) (“Act”). The Court noted that the fundamental purpose of the remedial Act is to provide injured workers with financial protection until they can return to the workforce. The Court pointed to Section 8(b) of the Act, which provides that compensation shall be paid “as long as the total temporary incapacity lasts.” This has been consistently interpreted to mean that an employee injured on the job will continue receiving benefits until he is able to return to the workforce. The Court found that nothing in the Act supports the conclusion that benefits may be denied to an employee who remains injured yet has been discharged for an unrelated cause.

Acknowledging that Illinois is an "at-will" state where an employee may be discharged for any (non-discriminatory) reason or no reason at all, the Court nevertheless stated that whether a discharge is for valid cause or unlawful is “foreign to” Illinois Workers’ Compensation. According to the Court, the entitlement to ongoing TTD is a completely separate issue, and the Act’s purpose is not furthered by automatically denying benefits due to discharge.

The Court noted that the Act encourages injured employees to strive toward recovery and return to employment through certain narrow exceptions by which the Act supports suspension or termination of disability benefits. These exceptions include refusing reasonable medical treatment, failing to cooperate with rehabilitation efforts and refusing work within the doctor's restrictions. The Court found no statutory basis for terminating benefits following an unrelated discharge for cause.

It remains to be seen whether there are situations in which the Illinois Workers’ Compensation Commission denies TTD where some volitional act of the employee constitutes refusal of work and voluntary removal from light duty employment. But under Interstate, discharge for cause no longer will result in suspension, denial or termination of temporary total disability benefits in Illinois.

Lesson for Employers

Workers’ compensation benefits are determined through a highly technical statutory procedure in exchange for which employers are protected from most personal injury claims by employees who are injured while working. Because of costly premiums for workers' compensation insurance, some employers have been tempted to try limiting employees' TDD benefits by seeking opportunities to fire injured employees for cause, unrelated to the injury. Such a strategy risks significant exposure in a retaliatory discharge suit. In addition to this exposure, Interstate makes clear that no insurance premium cost-savings will arise from firing the injured employee. Based on Interstate, employers now know that workers’ compensation TDD benefits may continue – regardless of discharge even for good cause (unrelated to injury) – so long as the employee’s medical condition remains unstabilized and not at maximum medical improvement.