A logistics broker company from Chicago’s western suburbs has filed suit against Liberty Mutual, claiming the insurer has a “pattern and practice” of allegedly drastically and illegally overcharging them and similar businesses for workers’ compensation insurance, by counting independent contractors, who are ineligible for workers comp, as employees.
On July 18, Virnich Corportation, of West Chicago, filed suit in Cook County Circuit Court. According to information found in the complaint and on the company’s website, Virnich serves as a “broker” for truckers, using “an open bidding process” to help arrange for shippers to find truck drivers willing to make delivers.
Virnich is then paid by the shippers after the deliveries have been made, and Virnich, in turn, pays the truckers.
According to the complaint, Virnich has purchased workers’ comp insurance through Liberty Mutual since June 2019. The complaint states the policy includes language requiring Virnich to pay premiums for all Virnich officers and employees, and for “all other persons engaged in work that could make us liable under … this policy.”
According to the complaint, Liberty Mutual allegedly audited Virnich’s payroll records in 2020, and claimed the company should owe $312,350 in workers’ comp insurance premiums. In the complaint, Virnich asserts this amounts to a rate similar charged to trucking companies who employ drivers as “direct, W-2 employees.”
Virnich disputed the charges, allegedly notifying Liberty Mutual that it employs no drivers directly. Liberty Mutual then allegedly agreed to drop the premium to about $5,600, after removing the alleged independent contractor drivers from the premium payroll calculations.
However, in 2021, Liberty Mutual allegedly conducted another audit on Virnich’s payroll, and allegedly sought to revise its premiums upward, boosting the 2019-2020 and 2020-2021 premiums by a total of $134,000.
According to the complaint, the insurer again counted “independent contractors and individuals who could not, under any circumstances, make a worker’s compensation claim against Virnich.”
Virnich alleges Liberty Mutual intends to conduct a similar audit for the 2021-2022 premium year, “which no doubt will result in the same dispute.”
“The independent motor carrier individuals and companies that Liberty Mutual included in determining Virnich’s premium are independent contractors in every sense,” Virnich wrote. “… The independent contractors control every aspect of their jobs and Virnich has no control over or involvement in the performance of the independent contractors’ duties.
“Despite the complete lack of control over any aspect of the independent contractor’s job performance, Liberty Mutual still charges Virnich premiums as if the independent contractors were Virnich’s employees.”
Virnich asserts Liberty Mutual’s alleged actions violate Illinois state law, which forbids “excessive” insurance rates, defined under the law as premiums that “are higher than reasonably necessary to address … actual risk.”
Virnich claims Liberty Mutual has threatened to sue to enforce the premium demands.
The complaint asks the court to declare Liberty Mutual’s alleged premium to be illegal, and to bar Liberty Mutual from counting alleged independent contractor drivers as workers potentially covered by Virnich’s workers’ comp policy.
A spokesperson for Liberty Mutual declined comment.
Virnich is represented by attorneys Howard L. Teplinsky and Katherine A. Grosh, of Chicago, and by attorney Scott M. Priz, of Priz Law, of Riverside.