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Illinois Insurance Guaranty Fund v. Virginia Surety Company, Inc.

2012 IL App (1st) 113758 (Ill. App., 2012)

Words & Phrases

Guaranty Association: Other Insurance

Trial Judge

Brigid McGrath

Appellate Judge

Justice McBride


Borrowing employer's insurer not liable to provide worker's compensation benefits.

Fact Summary

Szaradzinski was injured on the job while his employer, T.T.C. Illinois (T.T.C.), was lending him to MGM Company, Inc. (MGM). When the workers' compensation insurer for T.T.C. subsequently became insolvent, the Illinois Insurance Guaranty Fund (the Fund) made timely payments to Szaradzinski and then filed this action for reimbursement from MGM's workers' compensation insurer, Virginia Surety Company, Inc. (Virginia Surety). The Fund prevailed on cross-motions for summary judgment in the circuit court. In this appeal, MGM's insurer contends its policy did not cover borrowed employees and should not have been construed pursuant to section 546 of the Illinois Insurance Code (Code) to be "other insurance" that must be exhausted before the Fund is liable.  The Appellate Court reversed the trial court holding that the Illinois legislature did not require both a lending employer and borrowing employer to procure identical coverage for the same employees. The legislature did not mandate duplicate coverage and premiums in a loaned worker arrangement, because other sections of the Act limit the amount of compensation a worker may receive, bar any common law or statutory right to recovery from the employer except as provided under the Act, and do not allow a worker to receive a second recovery for the same injuries.