ABF Freight System, Inc. v. Fretts , 2015 IL App (3d) 130663 ( 2015 )

Illinois Official Reports
Appellate Court
ABF Freight System, Inc. v. Fretts, 2015 IL App (3d) 130663
Appellate Court ABF FREIGHT SYSTEM, INC., Plaintiff-Appellant, v. DENNIS
Caption FRETTS, Defendant-Appellee.
District & No. Third District
Docket No. 3-13-0663
Rule 23 Order filed July 10, 2015
Motion to publish
allowed August 12, 2015
Opinion filed August 12, 2015
Decision Under Appeal from the Circuit Court of Kankakee County, No. 12-L-78; the
Review Hon. Kendall O. Wenzelman, Judge, presiding.
Judgment Affirmed.
Counsel on Bradley J. Smith (argued), of Keefe, Campbell, Biery & Associates,
Appeal LLC, of Chicago, for appellant.
Thomas A. Kelliher (argued), of Horwitz, Horwitz & Associates, of
Chicago, for appellee.
Panel JUSTICE LYTTON delivered the judgment of the court, with opinion.
Justice Schmidt specially concurred, with opinion.
Presiding Justice McDade dissented, with opinion.
OPINION
¶1 Plaintiff, ABF Freight System, Inc. (ABF), appeals from an order dismissing its complaint
alleging fraud and seeking to recover workers’ compensation benefits paid to defendant,
Dennis Fretts, pursuant to section 2-619(a) of the Code of Civil Procedure (Code) (735 ILCS
5/2-619(a) (West 2012)). We hold that the trial court lacked jurisdiction to hear ABF’s claims
and affirm.
¶2 FACTS
¶3 ABF, a trucking company that provides long-haul trucking, employed Fretts as a semi-
tractor trailer driver for a number of years. In 2009, Fretts filed two workers’ compensation
claims against ABF in which he alleged he suffered injuries to his right shoulder in 2007 and
again in 2009 while loading and unloading a semi truck. In his workers’ compensation cases,
Fretts was evaluated by doctors who opined Fretts was in need of lifting restrictions based in
part on information Fretts provided. One of the doctors believed that the restrictions should be
permanent. Because of these lifting restrictions, Fretts claimed he was unable to work for ABF.
Relying on these statements, ABF paid Fretts temporary total disability (TTD) payments
through September 15, 2011.
¶4 On September 15, 2011, ABF received information suggesting Fretts was driving and
receiving pay from another trucking company, Havener Enterprises (Havener). ABF hired a
private investigator who followed Fretts and videotaped him lifting weights at a local gym.
After reviewing the videotaped surveillance, orthopedic surgeon Dr. Steven Mash concluded
that Fretts was physically capable of exceeding the lifting restrictions placed upon him by his
doctor and that he was able to return to his prior work with ABF.
¶5 On May 7, 2012, ABF brought a motion for determination of workers’ compensation fraud
before the Illinois Workers’ Compensation Commission (Commission). In its motion, ABF
asserted that Fretts (1) made knowing misrepresentations regarding the extent of his injuries
and disabilities in order to obtain workers’ compensation benefits, including TTD payments,
(2) was secretly driving for Havener, (3) made knowing misrepresentations regarding the
extent and nature of his shoulder injuries, his alleged disabilities and his alleged inability to
work, and (4) intentionally made false and fraudulent material statements as to the nature and
extent of his injuries, the nature and extent of his physical limitations, his alleged disability and
his alleged inability to work to both ABF and his physicians.
¶6 ABF’s motion for a determination of fraud was heard before a Commission arbitrator in
August of 2012. At the hearing, Fretts testified that he was unable to obtain other work. He
admitted that he worked for Havener for a couple of days driving a flatbed and a pickup truck
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to Louisiana. The arbitrator determined that a few days of light duty work did not constitute a
stable labor market for purposes of determining TTD eligibility under the Workers’
Compensation Act (Act) (820 ILCS 305/1 et seq. (West 2012)). In a written order denying
ABF’s fraud claims, the arbitrator found that “[ABF] failed to show any statement by [Fretts]
that was both intentional and fraudulent regarding his working for Havener Enterprises while
collecting TTD.” She also concluded that ABF “[had] not proven by a preponderance of the
evidence, that [Fretts] committed a fraudulent act.”
¶7 On May 14, 2012, one week after it had filed the workers’ compensation motion, ABF filed
a civil complaint against Fretts alleging that Fretts (1) fraudulently obtained TTD benefits from
ABF while receiving compensation from another employer, (2) made material
misrepresentations to obtain insurance benefits, and (3) committed workers’ compensation
fraud under section 25.5 of the Act (820 ILCS 305/25.5 (West 2012)).
¶8 After the arbitrator issued her decision in the workers’ compensation case, ABF filed an
amended complaint in circuit court, reducing its civil claims to two counts. Count I alleged that
Fretts committed insurance fraud pursuant to section 17-10.5 of the Criminal Code of 2012
(720 ILCS 5/17-10.5(e)(1) (West 2012)) when he obtained insurance benefits from ABF
through misrepresentation and deception. Count II alleged that Fretts committed common law
fraud when making multiple misrepresentations to ABF to obtain workers’ compensation
benefits.
¶9 Fretts moved to dismiss ABF’s amended complaint pursuant to sections 2-615 and
2-619(a) of the Code (735 ILCS 5/2-615, 2-619(a)(9) (West 2012)). In an attached affidavit,
Fretts admitted that he drove a straight truck for Havener to Louisiana on two occasions: once
in August 2011 and again in October 2011. In his motion to dismiss, Fretts argued that ABF’s
complaint should be dismissed because, among other things, (1) the doctrines of res judicata
and collateral estoppel barred ABF’s claims, and (2) the trial court lacked jurisdiction to hear
fraud claims related to a workers’ compensation case.
¶ 10 The trial court granted Fretts’ motion to dismiss. The court held that:
“Clearly there is privity of the parties. And it appears that the fact in issue, the
alleged filing of a fraudulent workers’ compensation claim, is identical to an issue
critical to the remaining fraudulent theories contained in the first amended complaint.
And lastly, the issue of fraud was brought to a final determination by the
[Commission]. Thus under a collateral estoppel analysis, the court finds that the
[section] 2-619 basis of the motion to dismiss should be and hereby is allowed.”
¶ 11 ANALYSIS
¶ 12 An order dismissing a cause of action pursuant to section 2-619 of the Code is reviewed
de novo. Selective Insurance Co. of South Caroline v. Cherrytree Cos., 2013 IL App (3d)
120959, ¶ 18. In reviewing a motion to dismiss, it is axiomatic that we review the judgment of
the lower court, not its reasoning. Rodriguez v. Sheriff’s Merit Comm’n, 218 Ill. 2d 342, 357
(2006). Therefore, we may uphold the court’s judgment on any ground called for by the record.
Id.
¶ 13 ABF argues that the trial court erred in dismissing its petition because the causes of action
for insurance fraud and common law fraud were not adjudicated during the workers’
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compensation proceedings and a dismissal based on collateral estoppel would defeat the
equitable purpose of the doctrine by preventing ABF from ever litigating its fraud claims.
¶ 14 Illinois courts have original jurisdiction over all justiciable matters. Ill. Const. 1970, art.
VI, § 9. The legislature may vest exclusive original jurisdiction in an administrative agency.
However, if the legislative enactment does divest the circuit courts of their original jurisdiction
through a comprehensive statutory administrative scheme, it must do so explicitly. People v.
NL Industries, 152 Ill. 2d 82, 96-97 (1992).
¶ 15 Section 18 of the Act specifically states that “[a]ll questions arising under this Act, if not
settled by agreement of the parties interested therein, shall, except as otherwise provided, be
determined by the Commission.” 820 ILCS 305/18 (West 2012). In Employers Mutual Cos. v.
Skilling, 163 Ill. 2d 284 (1994), our supreme court held that section 18 does not divest circuit
courts of jurisdiction. The court held that, since no language in section 18 specifically excluded
the circuit courts from deciding workers’ compensation cases, the Commission and the circuit
court have concurrent jurisdiction. Id. at 287. The court noted that while administrative
agencies should be given wide latitude in resolving factual issues, questions of law are more
appropriately answered by the circuit court. It then concluded that determining the scope of
coverage afforded under a workers’ compensation insurance provision is a question of law
which the circuit court, not the Commission, is in the best position to address. Id. at 289.
¶ 16 Our supreme court has also determined that circuit courts have no original jurisdiction in
cases involving a determination of workers’ compensation benefits. Hartlein v. Illinois Power
Co., 151 Ill. 2d 142, 157-58 (1992). This rule of law was further explained in Hollywood
Trucking, Inc. v. Watters, 385 Ill. App. 3d 237 (2008). In Hollywood Trucking, the employer
filed a complaint in the circuit court against its employee alleging that the employee
fraudulently misrepresented his medical history during a medical examination. The employer
alleged that had it been aware of the employee’s medical history, it would not have hired him
and would not have subsequently become liable to provide him workers’ compensation
benefits when he was injured. The circuit court dismissed the fraud count for lack of
jurisdiction. Id. at 240-41.
¶ 17 The appellate court relied on Hartlein and affirmed the dismissal. The court found that the
allegations of fraud against the employee concerned the types of factual issues, such as the
circumstances of the accident, the nature and extent of the injury and the employer’s potential
defenses, which should be determined by the Commission rather than the circuit court.
Id. at 245.
¶ 18 After reviewing these cases and the language of section 18, we have determined that the
relevant inquiry is whether the issues in the case involve questions of law or factual issues
related to the workers’ compensation accident, the nature or extent of the employee’s injury or
the potential defenses to the workers’ compensation claim. If they raise issues of fact related to
the payment of workers’ compensation benefits, the circuit court’s role is appellate only.
¶ 19 Here, ABF filed a motion for determination of benefits before the Commission and then
filed a complaint in the circuit court based on identical allegations of fraud and
misrepresentation involving the determination of benefits and TTD payments. The circuit
court complaint alleges theories of insurance fraud and common law fraud and presents
questions of fact, such as the extent or existence of Fretts’ injury and his representations to
medical personnel regarding his injury both before and during the workers’ compensation
proceedings. These are questions of fact in which the Commission is in a better position to
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draw on its special expertise to answer. See Hollywood Trucking, 385 Ill. App. 3d at 245.
ABF’s complaint does not present a question of law as in Skilling. Therefore, the cause should
be before the Commission rather than the circuit court.
¶ 20 ABF relies on Smalley Steel Ring Co. v. Illinois Workers’ Compensation Comm’n, 386 Ill.
App. 3d 993 (2008), in support of its argument that the appropriate forum for its allegations is
in the circuit court. But its reliance is misplaced. Smalley Steel involved a workers’
compensation proceeding where the evidence demonstrating fraud was not discovered until
after the workers’ compensation decision was entered. Id. at 994-95. Unlike this case, the fraud
evidence at issue in Smalley Steel was not presented during the pendency of the workers’
compensation proceedings. Moreover, the court in that case found that the Act “expressly
provides for recall of an arbitrator’s decision in only one instance, i.e., to correct clerical or
computational errors.” Id. at 997. The court noted that the arbitrator had no authority to recall
his decision to address allegations of fraud learned after the workers’ compensation decision.
Id. Where evidence of fraud is discovered after the arbitrator’s decision, the appropriate forum
to address the issue is the trial court. Id.
¶ 21 In this case, AFB requested that the Commission hear the fraud claim and presented
evidence of the alleged fraud in the workers’ compensation case, and the arbitrator properly
exercised the Commission’s jurisdiction in ruling on the fraud claims because they involved
factual issues directly related to the determination of the employee’s workers’ compensation
benefits. Consequently, the trial court lacked jurisdiction to hear ABF’s complaint. Our
disposition of this jurisdictional issue obviates discussion of ABF’s contention that the fraud
claims are not barred by collateral estoppel.
¶ 22 CONCLUSION
¶ 23 The judgment of the circuit court of Kankakee County granting Fretts’ motion to dismiss is
affirmed.
¶ 24 Affirmed.
¶ 25 JUSTICE SCHMIDT, specially concurring.
¶ 26 While I concur in the judgment, I write separately to point out three things. First, I disagree
with Hollywood Trucking to the extent that it states the Commission has some special expertise
that equips it better than the circuit court to deal with issues of fraud. Supra ¶ 17. Second, I do
not understand why ABF did not appeal the Commission’s decision to the appellate court.
Third, I agree with the trial court that ABF’s suit attempts to litigate issues that were raised at
the Commission. Therefore, I find the suit barred by res judicata rather than lack of
jurisdiction.
¶ 27 PRESIDING JUSTICE McDADE, dissenting.
¶ 28 The majority has found that we do not have jurisdiction over allegations of fraud in
workers’ compensation cases unless the claim is discovered after the arbitrator for the Illinois
Workers’ Compensation Commission (the Commission) has made a decision. For the reasons
that follow, I respectfully dissent from that decision.
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¶ 29 In Leviege v. Ford Motor Co., No. 07 W.C. 51713, 10 I.W.C.C. 1287, 2010 WL 5584488
(Ill. Indus. Comm’n Dec. 28, 2010), the Commission itself denied it had jurisdiction to
determine if fraud was committed in instances involving misrepresentations to acquire
workers’ compensation benefits. It held that the Commission can make findings regarding
credibility of witnesses and weight of evidence but “[it] does not have jurisdiction to determine
what, if any, fraud was committed; that issue is the jurisdiction of another tribunal.” Id.
¶ 30 It is uncertain if this is the reason the Commission’s arbitrator in this case made relevant
findings but failed to make a determination regarding Fretts’ allegedly fraudulent
misrepresentations. However, as the majority has pointed out, the statute is clear that once the
arbitrator has made a determination on issues presented to her or, as in this case, failed to make
a determination, she is prohibited from relitigating the issue by setting aside their order absent
fraud in the proceedings itself or a clerical or computational error.
¶ 31 Thus, if the majority is correct in stating our courts do not have jurisdiction to rule on issues
of fraud in workers’ compensation benefits cases and the Commission is also correct in
concluding it too lacks jurisdiction, then a plaintiff like ABF Freight is left without a tribunal
able to resolve its justiciable claim of fraud. This is untenable and unjust. Though our courts
may not have original jurisdiction over cases involving a determination of workers’
compensation benefits (Hartlein v. Illinois Power Co., 151 Ill. 2d 142, 158 (1992)), where the
Commission has clearly stated that it is not the proper forum for determinations of fraud, our
courts need not forgo our authority to handle the matter. Kellerman v. MCI
Telecommunications Corp., 112 Ill. 2d 428, 445 (1986) (“[W]hen an agency’s technical
expertise is not likely to be helpful, or there is no need for uniform administrative standards,
courts should not relinquish their authority over a matter to the agency.”). We should find the
courts also need not relinquish authority if the agency has denied its own authority to resolve
the issue presented.
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