Who pays workers’ comp after a merger?

On Behalf of | Oct 11, 2019 | Workers' Compensation |

When a company goes through a merger or sale, what happens to its employees who are receiving workers’ compensation benefits? One Illinois truck driver found himself in the middle of a fight between two companies as well as its workers’ comp insurers. To complicate matters, his original workers’ comp insurer was liquidated by the state. The matter has just been settled by an Illinois appellate court.

The trucker was injured when he slipped on ice back in January 2000. That was not long after his employer, Fox Midwest Transport, went through a merger with a subsidiary of Transit Group. Eventually, the company became part of Priority Transportation.

The workers’ comp insurer for Fox Midwest — Fremont Casualty Insurance Co. — paid the truckers’ benefits until July 2003. That’s when the state liquidated it. After that, Illinois Insurance Guaranty Fund, which is a state fund established to protect claimants and policyholders of insurance companies that have become insolvent. It took over paying his benefits.

However, later Illinois Insurance later filed a suit against Transit Group, Priority Transportation, its workers’ comp insurer (Ace Insurance Co.) and the truck driver. It claimed that Ace was responsible for the man’s benefits.

Among the questions that needed to be determined were what company the trucker worked for when he was injured. Although the merger had already taken place, employees’ paychecks and tax forms still listed Fox Midwest as their employer. Further, an insurance account executive who worked on the transition testified that the company’s workers’ comp policy hadn’t been added to the Ace policy at the time of the trucker’s injury.

Ace argued that it wasn’t responsible for paying the man’s benefits. Meanwhile, Illinois Insurance claimed that the truck driver was covered by both insurance companies, so the fund didn’t have to cover his workers’ compensation benefits.

A circuit court ruled that Fox Midwest “no longer existed” on the day the truck driver was injured. At that time, it ruled, Transit Group had already acquired “all rights, responsibilities, and liabilities of Fox Midwest.” That means that Ace was responsible for his workers’ comp benefits. The appellate court upheld that ruling.

It can be easy for employees to get trapped in the middle of large companies and insurers battling over responsibility for their benefits. When that happens, it’s wise to seek legal guidance to protect your interests and your right to workers’ compensation.

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