APPELLATE COURT OF ILLINOIS, FOURTH DISTRICT
534 N.E.2d 1040, 179 Ill. App. 3d 710, 128 Ill. Dec. 595 1989.IL.155
Appeal from the Circuit Court of McLean County; the Hon. Ronald C. Dozier, Judge, presiding.
JUSTICE SPITZ delivered the opinion of the court. McCULLOUGH, P.J., and GREEN, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE SPITZ
Plaintiff Country Mutual Insurance Company filed a declaratory judgment complaint against defendants, Wagner's Bulldozing and Ruth Wagner, widow of Wayne Wagner, seeking a determination it had no responsibility to defend Wagner's Bulldozing or pay any benefits to Ruth Wagner under a standard workers' compensation insurance policy issued to Wagner's Bulldozing. Judgment was entered in favor of plaintiff and defendants appeal. At issue is an interpretation of several amendments to the Workers' Compensation Act (Act) (Ill. Rev. Stat. 1987, ch. 48, par. 138.1 et seq.), which became effective in 1983 and whether, by reason of these amendments, Wayne Wagner was entitled to coverage under the workers' compensation policy issued by plaintiff.
Prior to 1983 sole proprietors and partners could not elect to be covered by workers' compensation insurance in Illinois. Public Act 83 -- 190, effective August 31, 1983 (1983 Ill. Laws 1693), amended the compensation act to permit such coverage under certain conditions. Two types of employments are distinguished under the compensation act; those for which the employer may elect to provide coverage and those which by their very nature are defined as extrahazardous, making coverage automatic and mandatory without exception. The 1983 amendments apply to both classes of employments. Section 1(b)(3) of the Act states:
The methods by which this election may take place are set forth in section 2 of the Act. However, section 2 is specifically restricted to those employers not covered by section 3 of the Act (Ill. Rev. Stat. 1987, ch. 48, pars. 138.2, 138.3).
Section 3 is directed exclusively to extrahazardous occupations and states in pertinent part:
"The provisions of this Act hereinafter following shall apply automatically and without election to . . . employers and all their employees, engaged in any department of the following enterprises or businesses which are declared to be extra hazardous, namely:
"Nothing contained in this Act shall be construed to apply to any sole proprietor or partner who elects not to provide and pay compensation for accidental injuries sustained by himself, arising out of and in the course of the employment according to the provisions of this Act." (Emphasis added.) Ill. Rev. Stat. 1987, ch. 48, par. 138.3(20).
Because decedent's occupation, excavation, was specifically defined as extrahazardous, he purchased compensation insurance in 1978 to cover the employees he might hire on an excavation project. No change in the basic coverage was ever expressly sought after the initial policy was purchased. The policy permitted plaintiff to audit decedent's records after the expiration of the policy period to determine whether additional premiums were due if the wages actually paid to additional employees exceeded the amount set forth in the declaration of the policy. Decedent renewed the policy annually, with the last renewal occurring on March 1, 1984, by mail from decedent to the home office of Country Mutual. Decedent died June 12, 1984, from a heart attack and his widow filed a claim for benefits with the Industrial Commission.
The parties agree that after the adoption of Public Act 83 -- 190 in August 1983, Country Mutual began informing its agents, first by notice dated January 27, 1984, that sole proprietors could receive coverage under the compensation act. Certain forms were later produced, and on April 20, 1984, Country Mutual again updated its agents with respect to this change in the legislation. A notice to policyholders at approximately the same time made reference to the new potential coverage. It is largely undisputed decedent did not receive a copy of this notice as it was prepared after his policy was renewed on March 1, 1984, some six months after the effective date of the amendments.
Defendants contend the 1983 amendments set up two distinct methods for permitting sole proprietors the voluntary option of electing coverage under the Act. For those employments which are not extrahazardous, the sole proprietor is permitted under section 1 of the Act to make an election to obtain coverage under any of the various ways enumerated in section 2 of the Act. For those occupations which are extrahazardous and ...