Refusal to Provide Workers’ Compensation is Expensive
Post 5240
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In Illinois Department of Insurance, Insurance Compliance Department v.USA Water And Fire Restoration, Inc., And Nicholas Pacella, Individually And As Officer, Nos. 23WC021808, 18INC00228, No. 25IWCC0467, the Illinois Department of Insurance (Petitioner) initiated an investigation after the Injured Workers’ Benefit Fund (IWBF) was added to a pending workers’ compensation claim. The claim alleged a work-related injury during employment with the Respondents who failed to maintain workers’ compensation Insurance.
Company Overview:
USA Water & Fire Restoration, Inc. was incorporated on January 17, 2014, and dissolved on June 14, 2019, for failure to file annual reports and pay franchise taxes. It then operated under assumed names including USA Board Up & Glass Co. and USA Plumbing and Sewer. The business involved rehabilitating structures damaged by fire or water (e.g., remodeling, repairs), subjecting it to automatic coverage under the Illinois Workers’ Compensation Act (Act).
Officers/Agents:
Tad Christensen (who was later identified as the true officer) had a history of fraud (e.g., 2005 insurance fraud charges under Action Fire Restoration; prior imprisonment). The Commission took judicial notice of Christensen’s criminal history.
Employee Evidence:
Illinois Department of Employment Security (IDES) quarterly wage reports showed employees (up to 6) from Feb. 2016–Aug. 2017 and Oct. 2017–Apr. 2018; zero reported in Sep. 2017. Illinois Department of Revenue records confirmed business activity (e.g., 2017 tax return signed by Christensen) but incomplete filings.
Violation Periods:
145 total days without coverage while doing business and employing workers.
Key Testimonies
Antonio Smith (Petitioner Investigator, 8 years experience) confirmed company’s subjection to Act; that there was no insurance during violation periods.
Summary of Law - Jurisdiction and Coverage
Section 3(1) of the Act (820 ILCS 305/3):
Automatically subjects employers to the Act if engaged in “erection, maintaining, removing, remodeling, altering or demolishing of any structure.” The company’s fire/water restoration (remodeling damaged structures) qualified.
Section 4(a) of the Act (820 ILCS 305/4(a)):
Requires all covered employers to secure workers’ compensation coverage via insurance or Commission-approved self-insurance.
Penalties and Culpability
Section 4(d) of the Act (820 ILCS 305/4(d)): For knowing/willful failure to comply with §4(a):
1. Civil penalty up to $500 per day per violation (post-1989 amendments).
2. Minimum $10,000.
3. Each day is a separate offense.
4. Personal liability for corporate officers/directors (e.g., Christensen) if they knowingly/willfully failed; primary liability on employer, secondary on officers if unpaid after 30 days.
Penalty Factors
1. Duration of violation (here: 145 days—significant but not continuous).
2. Number of claims (1 pending).
3. Prior awareness.
4. Number of employees (up to 6).
5. Ability to secure/pay coverage (no evidence of inability).
6. Mitigating circumstances (none alleged; intermittent prior coverage noted in mitigation).
7. Ability to pay penalty (no evidence presented).
Decision and Rationale
Findings:
The Company and Christensen knowingly/willfully violated §4(a) and Rule 9100.90 during 145 days (employees present, business active, no coverage/self-insurance). Violation was “knowing/willful” by inference from ignored notices, history of lapses, and non-appearance.
Penalty Assessed:
Maximum $500/day × 145 days = $72,500 against USA Water & Fire Restoration, Inc., and Tad Christensen (personally as officer). Exceeds minimum $10,000; justified by duration, claim, and awareness, tempered slightly by non-continuous lapses.
Enforcement:
Payable within 30 days by certified check/money order to Commission. Enforceable as circuit court judgment; judicial review per §19(f) of Act (bond fixed at $75,000). Debt owed to State.
ZALMA OPINION
Workers’ Compensation systems allow injured workers to obtain compensation for work related injuries without needing to prove anyone was responsible for the injury. It is a crime in almost every state to fail to report accurately employees for workers’ compensation insurance and a failure to provide any coverage requires punishment.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Convicted Criminal Seeks to Compel Receiver to Protect his Assets
Post number 5291
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The Work of a Court Appointed Receiver is Constitutionally Protected
In Simon Semaan et al. v. Robert P. Mosier et al., G064385, California Court of Appeals, Fourth District, Third Division (February 6, 2026) the Court of Appeals applied the California anti-SLAPP statute which protects defendants from meritless lawsuits arising from constitutionally protected activities, including those performed in official capacities. The court also considered the doctrine of quasi-judicial immunity, which shields court-appointed receivers from liability for discretionary acts performed within their official duties.
Facts
In September 2021, the State of California filed felony charges against Simon Semaan, alleging violations of Insurance Code section 11760(a) for making...
When There are Two Different Other Insurance Clauses They Eliminate Each Other and Both Insurers Owe Indemnity Equally
Post number 5289
In Great West Casualty Co. v. Nationwide Agribusiness Insurance Co., and Conserv FS, Inc., and Timothy A. Brennan, as Administrator of the Estate of Pat- rick J. Brennan, deceased, Nos. 24-1258, 24-1259, United States Court of Appeals, Seventh Circuit (February 11, 2026) the USCA was required to resolve a dispute that arose when a tractor-trailer operated by Robert D. Fisher (agent of Deerpass Farms Trucking, LLC-II) was involved in a side-impact collision with an SUV driven by Patrick J. Brennan, resulting in Brennan’s death.
Facts
Deerpass Trucking, an interstate motor carrier, leased the tractor from Deerpass Farms Services, LLC, and hauled cargo for Conserv FS, Inc. under a trailer interchange agreement. The tractor was insured by Great West Casualty Company with a $1 million policy limit, while the trailer was insured by Nationwide Agribusiness Insurance Company with a $2 million ...
Opiod Producer Seeks Indemnity from CGL Insurers
Post number 5288
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Insurers Exclude Damages Due to Insured’s Products
In Matthew Dundon, As The Trustee Of The Endo General Unsecured Creditors’ Trust v. ACE Property And Casualty Insurance Company, et al., Civil Action No. 24-4221, United States District Court, E.D. Pennsylvania (February 10, 2026) Matthew Dundon, trustee of the Endo General Unsecured Creditors’ Trust, sued multiple commercial general liability (CGL) insurers for coverage of opioid-related litigation involving Endo International PLC a pharmaceutical manufacturer.
KEY FACTS
Beginning as early as 2014, thousands of opioid suits were filed by governments, third parties, and individuals alleging harms tied to opioid manufacturing and marketing.
Bankruptcy & Settlements
Endo filed Chapter 11 in August 2022; before bankruptcy it ...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lost the ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah. Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being. Jews believe the force we call G_d created the entire universe and everything in it. Jews feel G_d is all seeing and knowing and although we can’t see Him, He is everywhere and in everyone.We understand...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
Read the full article at https://www.linkedin.com/pulse/passover-americans-barry-zalma-esq-cfe-5vgkc.
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lostthe ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah.
Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and ...
You Get What You Pay For – Less Coverage Means Lower Premium
Post number 5275
Posted on January 30, 2026 by Barry Zalma
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When Experts for Both Sides Agree That Two Causes Concur to Cause a Wall to Collapse Exclusion Applies
In Lido Hospitality, Inc. v. AIX Specialty Insurance Company, No. 1-24-1465, 2026 IL App (1st) 241465-U, Court of Appeals of Illinois (January 27, 2026) resolved the effect of an anti-concurrent cause exclusion to a loss with more than one cause.
Facts and Background
Lido Hospitality, Inc. operates the Lido Motel in Franklin Park, Illinois. In November 2020, a windstorm caused one of the motel’s brick veneer walls to collapse. At the time, Lido was insured under a policy issued by AIX Specialty Insurance Company which provided coverage for windstorm damage. However, the policy contained an exclusion for any loss or damage directly or indirectly resulting from ...
