Insurer Must Make Reasonable Efforts to Secure Cooperation

The Appellate Court of Illinois, First District, in an opinion written by Justice Gordon, applying Illinois law, held that an insurer had not adequately demonstrated that it had made reasonable efforts to secure the cooperation of the insured regarding its investigation into a workers compensation claim. As such, the Appellate Court reversed the Circuit Court’s award of summary judgment in favor of the insurer.

The insured, Under Construction and Remodeling, Inc. (“Under Construction”), purchased a workers’ compensation insurance policy from Country Mutual Insurance Company (“Country Mutual”). The policy listed among the duties owed by Under Construction that of cooperating and assisting in the investigation, settlement, and defense of any claim. An employee of the insured thereafter submitted an application for adjustment of a claim with the Illinois Workers’ Compensation Commission, and Country Mutual initiated an investigation.

Between early January 2020 and mid-April 2020, Country Mutual attempted to contact Under Construction regarding its investigation on nine occasions, none of which were successful. These methods included five phone calls and four letters, the last of which was sent by certified mail. Then, Country Mutual filed a Complaint for Declaratory Judgment against Under Construction citing their alleged lack of cooperation as reason enough to not provide coverage in the underlying workers’ compensation case. Under Construction never filed an answer or appearance in the case.

Nonetheless, the Appellate Court found that Country Mutual’s efforts were inadequate. Comparing their efforts to that described in prior cases, the Appellate Court noted that Country Mutual failed to determine whether other phone numbers or addresses might have worked, failed to attempt contacting the insured at any other addresses, failed to contact the insured’s broker to ask for contact information, failed to reach out via email, failed to contact any listed employees, or even failed to conduct a search on the Secretary of State’s website. In short, Country Mutual did nothing to discover alternative methods of contacting Under Construction, and it relied only on “making fruitless phone calls and sending letters to the same unsuccessful address.”

Finding Country Mutual’s efforts inadequate, then, the Appellate Court could not determine that Under Construction was willfully refusing to cooperate in Country Mutual’s efforts to investigate the workers’ compensation claim, and, thus, reversed and remanded the Circuit Court’s grant of summary judgment in favor of Country Mutual. Country Mut. Ins. Co. v. Under Constr. and Remodeling, Inc., 2021 IL App (1st) 210600 (Dec. 22, 2021).