Appellate Court Rules on Question of Section 8(j) Credit

Appellate Court Rules on Question of Section 8(j) Credit

July 17, 2023

The City of Joliet v. The Illinois Workers’ Comp. Comm’n., 2023 IL App (3d) 220175WC

Claimant filed two claims against respondent related to two at-work injuries she suffered while in respondent’s employ. The first occurred on September 29, 2014, when claimant was involved in a motor-vehicle accident. The second took place on January 31, 2017, when claimant lost her footing on uneven ground and felt a “crack and pop” in her neck. The compensability of these injuries and the treatments she received for them are not in dispute.

Following the first injury, claimant continued to work until January 28, 2015, at which time she was taken off-work by her treating physician. Respondent began paying claimant temporary total disability (TTD) payments and additional payments pursuant to a “make-whole” provision in the collective-bargaining agreement (CBA), which obligated the respondent to pay the difference between what she received for TTD and her actual salary. Respondent was required to make these “make-whole” payments for six months. After that, an employee can opt to continue to receive the “make-whole” payments, which would reduce her accrued sick leave at a rate of one-hour for every three-hour period the employee is absent or her vacation or compensatory leave by one day for every three days absent. These payments continued until July 28, 2015.

After July 29, 2015, respondent continued to make TTD payments and “make-whole” payments. No deductions were made from claimant’s sick leave or compensatory leave during this period, which continued for 48 weeks. There were no indications in claimant’s personal file that she elected to continue to receive the “make-whole” payments beyond the initial six-month period.

On December 16, 2015, claimant underwent an independent medical examination which opined that claimant was at maximum medical improvement and was capable of full-duty work. On January 12, 2016, respondent terminated claimant’s TTD. Claimant, relying on her own doctor, remained off work. Respondent began paying claimant her full salary in lieu of TTD benefits. Claimant did not actually return to work until August 2016, when she returned to light-duty employment. She continued to receive her salary while working light duty.

On January 31, 2017, claimant suffered a second work-related injury when she slipped and felt a “crack and pop” in her neck. Respondent initially denied this claim, and claimant was taken off work by her doctors on February 17, 2017. Claimant did not receive TTD, but was paid pursuant to her expenditure of sick, vacation, and compensatory leave. Claimant also applied for benefits from the Illinois Municipal Retirement Fund (IMRF).

Respondent argued that it was entitled to a credit for (1) the “make-whole” payments it made during the first six months of claimant’s disability; (2) the “make-whole” payments it made after the first six-month period when it was no longer required to make them in accordance with the CBA; (3) the payment of wages during the period claimant did not work following respondent’s decision to terminate TTD; and (4) the benefits claimant received following her second injury due to her expenditure of vacation, sick, and compensatory leave.

Appellate Court Holding and Analysis
The issue in this appeal is respondent’s claimed entitlement to Section 8(j) credit for sums paid to claimant as a result of her two work-related accidents.

A. January 28, 2015, to July 28, 2015 – “Make-Whole” Payments (initial six-month period)

During this period, respondent claimed an entitlement to credit of $14,210.30 for the initial six-month period for the payments it made pursuant to the “make-whole provision” in the CBA. The arbitrator awarded responded a credit for these payments, and the Commission reversed this award.

Under the CBA agreement, respondent voluntarily assumed an obligation to pay claimant the difference between whatever she received for TTD and her actual wage. Respondent had also received full credit for the TTD credits made during this period. There was no overpayment of TTD, nor was there an early payment made toward satisfying a future obligation.

The appellate court found that allowing respondent a credit against future awards for sums it was required to pay by the CBA during the first six months of claimant’s injury would be a windfall to respondent. Furthermore, it is difficult to see how these payments would make claimant whole if respondent was allowed to take them back later in lieu of paying other benefits under the Act.

The appellate court reaffirmed the Commission’s decision to deny respondent’s request for credit.

B. July 29, 2015, to January 12, 2016 – “Make-Whole” Payments (after initial six-month period)

Respondent asserts that it erroneously continued to make these “make-whole” payments after the initial 6-month period provided by the CBA. The CBA allowed the claimant to elect to continue to receive “make-whole” payments after the initial six-month period in a manner which deducted from accrued but unused sick leave, vacation leave, and/or compensatory leave.

The Commission, adopting the decision of the arbitrator, found that the continuation of these payments was based on the expenditure of claimant’s sick and vacation leave, to which she was entitled regardless of whether her injury was work-related. The Commission based this finding on the general procedure of the CBA, rather than the information found on the payment vouchers, which they deemed unreliable. Respondent responded by asserting that the Commission drew a “sweeping inference that [respondent] deducted payments from [claimant’s] sick and vacation leave.”

The appellate court emphasized that respondent bore the burden of proving any entitlement to credit. See Elgin Board of Education School District U – 46, 409 Ill. App. 3d at 953. Respondent complained that claimant “provided no proof these benefits came out of any of her accrued benefits,” but it was respondent’s burden to prove that they did not. The absence of evidence by the respondent mandated resolving the case against it.

C. January 13, 2016, to August 11, 2016 – Payments made after termination of TTD

During this period, respondent continued to pay claimant her full salary even though claimant was not working, and her TTD had been terminated. The Commission found that these payments were made by virtue of the expenditure of claimant’s accrued leave benefits. Respondent pointed out that claimant acknowledged that she did not know if these payments represented regular payroll.

Claimant testified that she spoke with Andrea from human resources who said that her continued payments would be based on her expenditure of accrued leave. Respondent pointed out that no accrued benefits were deducted from claimant during this period. At best for respondent, the evidence was conflicting regarding the basis of benefits.

The appellate court re-emphasized the rule in Elgin Board of Education School District U-46, 409 Ill. App. 3d at 954, that an employer is not entitled to such a credit where the payments in question could have been paid irrespective of the occurrence of an at-work accident. The Commission’s determination that this was the case was not against the manifest weight of the evidence, and the appellate court reaffirmed the Commission’s decision to deny respondent’s request for credit here.

D. February 17, 2017, to December 7, 2017 – Expenditure of accrued sick leave, vacation, and compensatory leave

During this period, claimant was paid her salary through the expenditure of her accrued sick, leave, vacation, and compensatory leave. The Commission found that claimant received these payments by expending accrued leave time. Such leave time may be used irrespective of the occurrence of a work-related injury.

The appellate court looked to the plain language of Section 8(j)(1), which states that: “This paragraph does not apply to payments made under any group plan which would have been payable irrespective of an accidental injury under this Act.” 820 ILCS 305/8(j)(1) (West 2014). Because there was no dispute that claimant was paid through the expenditure of her accrued leave time and since there was no indication that she could not have used this leave time absent an occupational injury, the Commission’s decision was not contrary to law or against the manifest weight of evidence.

This case demonstrates the importance of employers communicating the source of benefits paid to an employee and to leave no speculation as to whether it originated from accrued sick or vacation days. Had the employer provided its attorney with sufficient evidence to present at trial to prove entitlement to Section 8(j) credit, the outcome may have been quite different. Furthermore, the court’s ruling emphasizes that credit will only apply to payments made strictly in relation to a work accident and not those payments which would have been payable “irrespective of an accidental injury.”


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