By Celeste Bott

Law360 (July 15, 2021, 3:36 PM EDT ) The Illinois Workers' Compensation Commission isn't on the hook for legal fees in a lawsuit challenging its emergency rule providing an avenue for frontline workers and first responders exposed to COVID-19 to seek benefits, as it repealed the rule on its own and not by a court's order, an Illinois appellate panel said Wednesday.

Vacating a lower court's judgment that required the agency to reimburse attorney fees and costs for the Illinois Manufacturers' Association and the Illinois Retail Merchants Association, the appellate court said the temporary restraining order the trade groups won doesn't constitute an invalidation of the rule by a court.

The Illinois Administrative Procedure Act requires that a court must invalidate an administrative rule in order for attorney fees to be awarded, and that didn't happen here, the panel said. Rather, the commission held an emergency meeting in the wake of the trade associations' lawsuit and repealed its own rule to dodge unnecessary litigation expenses, the court said.

"The statute does not state that attorney fees shall be awarded if an administrative agency invalidates its own rule in order to avoid litigation expenses in response to a party's successful efforts in seeking temporary equitable relief against the agency," the panel said.

The lower court did grant the associations' bid for a TRO to block enforcement of the rule, but a TRO is "inherently temporary" and the effect was not to invalidate the emergency rule, the panel said, noting that the court later found the commission's repeal of the rule rendered their claims moot.

"Instead, the effect was to maintain the status quo for a limited period of time until the circuit court could hear evidence to determine whether a preliminary injunction should issue," the appellate panel said.

While the trade associations pointed to language in the IAPA requiring the court to award fees if it invalidates the rule "for any reason," it didn't sway the appellate court.

"While we agree this language is intended to be broad and encompass successful efforts at invalidating an administrative rule under a plethora of legal theories, it does not negate the fact that the invalidation must be by the court," it said.

The panel also "emphatically" disagreed with the groups' contention that there's no practical difference between invalidation of the rule "by the court" and "because of the court."

"A significant difference exists between invalidation 'by the court' and 'because of the court,' and—especially given our mandate to strictly construe statutes allowing for attorney fees—we will not read plaintiffs' suggested broader meaning into the language of the statute," the court said.

The emergency rule in question defined "first responders" and "frontline workers" and created a rebuttable presumption that any exposure of those workers to the virus during a COVID-19-related disaster proclamation from Illinois Gov. J.B. Pritzker was connected to "the hazards or exposures of the [person's] COVID-19 first responder or frontline worker employment."

It was put in place in April of last year, when the commission amended its "rules of evidence" for arbitration proceedings in its administrative regulations after growing concern as to whether workers' compensation benefits would be available to the workers most susceptible to exposure to coronavirus on the job, according to the panel's opinion.

The Illinois Manufacturers' Association and the Illinois Retail Merchants Association filed suit seeking a TRO and preliminary injunction later that month.

In July 2020, after determining the claims were moot and dismissing the case, the circuit court ordered the agency to reimburse the trade groups for roughly a month of legal work and costs, $97,699 in total, prompting this appeal.

A spokesman for the Illinois Workers' Compensation Commission declined to comment. Representatives of the other parties could not be immediately reached for comment Thursday.

Justices Robert Steigmann, James Knecht and Craig DeArmond sat on the panel for the appellate court. 

Counsel information for the parties could not be immediately determined Thursday.

The case is Illinois Manufacturers' Association et al. v. Illinois Workers' Compensation Commission et al., case number 4-20-0397, in the Appellate Court of Illinois, Fourth District.

--Editing by Kelly Duncan.

Update: This story has been updated with response from one of the parties. 

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