James v. SCR Medical Transportation, Inc.
2016 IL App (1st) 150358
| Ill. App. Ct. | 2016Background
- On March 9, 2010, SCR van driver Corey James was injured in a collision; he recovered $50,000 from the other driver and received workers’ compensation payments (intermittent TTD and a final lump sum).
- James sued SCR (his employer), Pace (public transit agency), and Empire (SCR’s auto insurer) seeking declaratory relief that SCR/Pace contract required $1,000,000 UIM coverage and that he was entitled to up to $1,000,000 in UIM benefits.
- SCR had originally bid to provide paratransit service with $1,000,000 UIM/UM but later selected an Empire policy that reduced UIM/UM to $50,000 via an executed selection form; Pace’s risk manager allegedly orally approved the reduction.
- The trial court dismissed James’s third amended complaint with prejudice under section 2-619; James appealed.
- On appeal the court considered: (1) whether James could sue his employer despite workers’ compensation, (2) whether he was a third-party beneficiary of the SCR–Pace contract, (3) whether Empire’s UIM step-down could be reformed / invalidated on public policy grounds, and (4) a jurisdictional issue about the notice of appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Can James sue his employer (SCR) despite workers’ compensation exclusive remedy? | James framed claim as breach of contractual insurance obligation (not for injuries) and argues exception to exclusive remedy. | SCR: Claim is for failure to provide coverage to compensate the same work-related injuries; barred by workers’ compensation and by James’ acceptance and settlement of benefits. | Dismissal affirmed — barred by the Act; James accepted compensable benefits and settled, precluding suit. |
| 2. Is James a third-party beneficiary of the SCR–Pace contract (entitling him to enforce $1M UIM)? | James says RFP, SCR proposal, and the contract contemplated $1M UIM/UM for van drivers and passengers, so he is a direct beneficiary. | Pace: Contract shows intent to benefit Pace (not unnamed third parties); strong presumption contracts benefit only parties. | Dismissal affirmed — James is not an identified direct third-party beneficiary. |
| 3. Can Empire’s UIM step-down be reformed/voided on public policy so James gets $1M? | James urges public policy disfavors "step-down" and seeks reformation to require SCR to pay small additional premium to restore $1M UIM. | Empire: The policy definition excludes an "underinsured" vehicle where limits equal the tortfeasor’s payment; reduction was validly executed; no public-policy basis to reform. | Dismissal affirmed — step-down complied with statutory/formal requirements; heavy burden to void on public policy not met. |
| 4. Did James’s notice of appeal confer jurisdiction to review dismissal of Empire? | James incorporated prior complaints into third amended complaint, preserving claims against Empire; notice sought reversal of dismissal of third amended complaint. | Empire argued notice failed to reference earlier dismissal and thus deprived appellate jurisdiction. | Court exercised jurisdiction — incorporation preserved issues and notice was sufficient and not prejudicial. |
Key Cases Cited
- Phoenix Insurance Co. v. Rosen, 242 Ill. 2d 48 (discusses UIM/UM statutory framework and public-policy constraints on voiding insurance agreements)
- Meerbrey v. Marshall Field & Co., 139 Ill. 2d 455 (explains workers’ compensation exclusive remedy and its purpose)
- Fredericks v. Liberty Mutual Insurance Co., 255 Ill. App. 3d 1029 (third‑party beneficiary/contract enforcement context involving workers’ compensation rights)
- Martis v. Grinnell Mutual Reinsurance Co., 388 Ill. App. 3d 1017 (plaintiff must be specifically identified or belong to an identified class to be a direct third‑party beneficiary)
- Barney v. Unity Paving, Inc., 266 Ill. App. 3d 13 (strong presumption that contract terms benefit only contracting parties; incidental beneficiaries lack enforcement rights)
- Collier v. Wagner Castings Co., 81 Ill. 2d 229 (once employee accepts workers’ compensation benefits, they cannot assert inconsistent noncompensable‑injury position)