Appeal from the Circuit Court of Cook County; the Hon. Arthur
Dunne, Judge, presiding.
JUSTICE KASSERMAN DELIVERED THE OPINION OF THE COURT:
Rehearing denied November 25, 1986.
Petitioner, Lois Kinzel, as the widow of Lawrence Kinzel, made an application for adjustment of claim under section 7 of the Workers' Compensation Act (Ill. Rev. Stat. 1981, ch. 48, par. 138.8) for survivor accidental death benefits resulting from the death of her husband, which allegedly occurred while in the course of his employment with National Can Corporation (National Can).
This appeal requires an interpretation of section 4(i) of the Workers' Compensation Act (Ill. Rev. Stat. 1983, ch. 48, par. 138.4(i).) Section 4(i) is one of a series of amendments to the Act contained in Public Act 81-1482, which became effective on September 15, 1980. It provides:
"(i) If an employer elects to obtain a life insurance policy on his employees, he may also elect to apply such benefits in satisfaction of all or a portion of the death benefits payable under this Act, in which case, the employer's compensation premium shall be reduced accordingly." (Ill. Rev. Stat. 1983, ch. 48, par. 138.4(i).)
Specifically, we are asked to determine whether National Can, pursuant to section 4(i), may apply the proceeds of two group life insurance policies on the life of Lawrence Kinzel in satisfaction of a portion of the death benefits payable to his widow under section 7 of the Act.
The evidence introduced at the hearing before the arbitrator is not in dispute. Lois Kinzel and Lawrence Kinzel were married in Green Bay, Wisconsin, on August 9, 1947. On December 9, 1980, Mr. Kinzel died in an automobile accident while in the course of his employment with National Can in Madrid, Spain. At the time of his death, Mr. and Mrs. Kinzel were the parents of five adult children.
As a part of Mr. Kinzel's employment benefit package, National Can provided him with two group life insurance policies, one of which was issued by the Equitable Life Assurance Society of the United States (Equitable) and the other by the Life Insurance Company of North America (INA). Mrs. Kinzel testified that she had received proceeds of $114,134.22 as the beneficiary of the Equitable policy and $100,000 as the beneficiary of the INA policy.
The parties stipulated at the hearing before the arbitrator that National Can first informed Mrs. Kinzel of its intention to elect the section 4(i) credit at some point after Mr. Kinzel's death on December 9, 1980.
The arbitrator awarded Mrs. Kinzel burial expenses under section 7(f) of the Act (Ill. Rev. Stat. 1981, ch. 48, par. 138.7(f)) and death benefits in the amount of $358.95 per week under section 7(a) (Ill. Rev. Stat. 1981, ch. 48, par. 138.7(a)). The order of the arbitrator provided that (1) National Can pay the weekly sum to Mrs. Kinzel until the "sum of $250,000.00 has been paid or until the period of 20 years has passed whichever is greater," (2) the payments of death benefits shall cease upon Mrs. Kinzel's death, and (3) Mrs. Kinzel would receive a lump-sum amount equal to two years of her weekly compensation benefits if she were to remarry.
The arbitrator further determined that, under the provisions of section 4(i), National Can could not apply the proceeds of either the Equitable or INA group life insurance policies in satisfaction of a portion of the death benefits payable under the Act.
With one commissioner dissenting, the Industrial Commission affirmed the decision of the arbitrator. Specifically, the Industrial Commission concluded that National Can was not entitled to a section 4(i) credit because National Can failed to advise Mr. Kinzel prior to his death that it might elect to seek such a credit and the Equitable and INA policies "were silent as to any election under section 4(i)." In addition, the Industrial Commission determined that section 4(i) should not be applied to life insurance contracts in existence on September 15, 1980, when section 4(i) became effective because the language of that section was prospective in nature. Furthermore, the Industrial Commission concluded that the following language contained in paragraph E of the "Additional Provisions" portion of the INA policy indicated that National Can did not intend to elect a section 4(i) credit:
"E. Not in lieu of Workmen's Compensation: This policy is not in lieu of and does not affect any requirement for coverage by Workmen's Compensation Insurance."
On review, the circuit court of Cook County confirmed the decision of the Industrial Commission in part and reversed it in part. In accordance with the Industrial Commission decision, the circuit court determined that National Can was not entitled to apply the proceeds of the INA policy in partial satisfaction of the death benefits payable under the Act due to the language in paragraph E of that policy. However, the circuit court adopted the rationale of the dissenting member of the Industrial Commission and concluded that National Can was entitled to offset against the amount of death benefits payable to Mrs. Kinzel ...