Bayer v. Panduit Corporation

Illinois Official Reports
Appellate Court
Bayer v. Panduit Corp., 2015 IL App (1st) 132252
Appellate Court RONALD BAYER, Plaintiff and Cross-Appellee, v. PANDUIT
Caption CORPORATION, Defendant and Third-Party Plaintiff-Appellant
(Area Erectors, Inc., Defendant and Third-Party Defendant-Appellee
and Cross-Appellant).
District & No. First District, First Division
Docket No. 1-13-2252
Filed August 10, 2015
Decision Under Appeal from the Circuit Court of Cook County, No. 07-L-09877; the
Review Hon. William J. Haddad, Judge, presiding.
Judgment Affirmed in part; reversed in part.
Counsel on Patton & Ryan, LLC (John W. Patton, Jr., and Michael G. Vranicar, of
Appeal counsel), Hinshaw & Culbertson, LLP (David R. Creagh and David J.
Richards, of counsel), and Clausen Miller, P.C. (Edward M. Kay and
Paul V. Esposito, of counsel), all of Chicago, for appellant.
Querrey & Harrow, Ltd., of Chicago (Kevin J. Caplis, David M.
Lewin, and Joshua T. Barney, of counsel), for appellee and
cross-appellant.
Horwitz, Horwitz & Associates, Ltd., of Chicago (Clifford W.
Horwitz, Thomas A. Kelliher, and Jay R. Luchsinger, of counsel), for
cross-appellee.
Panel JUSTICE CUNNINGHAM delivered the judgment of the court, with
opinion.
Justices Connors and Harris concurred in the judgment and opinion.
OPINION
¶1 This appeal arises from the October 5, 2012 order entered by the circuit court of Cook
County, which granted a joint motion for a good-faith finding and approval of a settlement
agreement between plaintiff Ronald Bayer (Bayer) and third-party defendant Area Erectors,
Inc. (Area), in a negligence action, thereby dismissing with prejudice Area as a party in a
contribution claim initiated by defendant and third-party plaintiff Panduit Corporation
(Panduit). This appeal also arises from the circuit court’s July 18, 2013 order granting Bayer’s
motion for attorney fees and costs against Area in a separate claim under the Workers’
Compensation Act (820 ILCS 305/1 et seq. (West 2012)). On appeal, Panduit appeals from the
circuit court’s October 5, 2012 ruling, and argues that the court erred in approving the
settlement agreement between Bayer and Area and that Panduit’s contribution claim against
Area should not have been dismissed with prejudice. On appeal, Area appeals from the circuit
court’s July 18, 2013 order granting Bayer’s motion for attorney fees and costs against Area in
a separate workers’ compensation claim. For the following reasons, we affirm in part and
reverse in part the judgment of the circuit court of Cook County. We have jurisdiction pursuant
to Illinois Supreme Court Rule 301 (eff. Feb. 1, 1994).
¶2 BACKGROUND
¶3 Panduit is an electrical components manufacturer and owner of a warehouse facility
located in De Kalb, Illinois. In June 2007, Panduit, acting as its own general contractor, entered
into an agreement with Garbe Iron Works, Inc. (Garbe), for the expansion of the warehouse
facility. In the agreement, Panduit agreed to pay almost $3 million for Garbe to fabricate and
erect structural steel for the expansion project. The agreement specified that Garbe was
responsible for “initiating, maintaining and supervising all safety precautions and programs,
including all those required by law in connection with the performance of the [a]greement,”
and that Garbe was required to comply with all Occupational Safety & Health Administration
(OSHA) standards. Pursuant to the agreement, Garbe was required to include Panduit as an
additional insured on Garbe’s commercial general liability insurance policy. The agreement
allowed Garbe to hire subcontractors, who must also be subjected to the same insurance
requirements as Garbe.
¶4 Pursuant to a “purchase order,” Garbe subcontracted Area to “[f]urnish all labor and
equipment (including supervision) to upload and erect” structural steel, in exchange for
$520,485. The purchase order specified that Area would name Garbe and Panduit as additional
insureds on a $2 million insurance policy.
¶5 On June 20, 2007, Bayer, an employee of Area, was working as an ironworker on the
construction site when he allegedly fell and sustained injuries. As a result of those injuries,
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Bayer became a quadriplegic. Thereafter, Bayer filed a workers’ compensation claim against
Area.
¶6 On September 19, 2007, Bayer filed a lawsuit against Panduit for negligence. On March
24, 2008, Bayer filed a first amended complaint to include Garbe as a defendant.1
¶7 On April 30, 2009, Panduit filed a third-party complaint for contribution against Area,
alleging that Area was also negligent in failing to ensure the safety of its employees, including
Bayer. The third-party complaint for contribution requested that, in the event Panduit is held
liable to Bayer, Panduit be awarded judgment against Area “in an amount commensurate with
the relative degree of fault attributable to Area” in causing Bayer’s injuries. On May 15, 2009,
Area filed an answer and affirmative defenses to Panduit’s third-party complaint for
contribution.
¶8 On October 1, 2012, Area and Bayer filed a joint motion for a good-faith finding and
approval of a settlement agreement between Bayer and Area (motion for a good-faith finding).
The motion for a good-faith finding alleged that Bayer had filed a workers’ compensation
claim against his employer, Area; that Area has honored Bayer’s workers’ compensation claim
and Bayer had been paid and continued to be paid temporary total disability and medical
expenses; that the amount of workers’ compensation lien to date totaled $5,275,585.57; that
Bayer and Area, through Area’s insurer Arch Insurance Company, have entered into a
settlement agreement through an arm’s-length bargaining process; and that the settlement
agreement was supported by consideration. A copy of the settlement agreement was attached
to the motion for a good-faith finding.
¶9 On October 1, 2012 and October 4, 2012, a hearing on the motion for a good-faith finding
was held. On October 5, 2012, the circuit court granted the motion for a good-faith finding,
approved the settlement agreement between Area and Bayer as one made in “good faith,” and
dismissed Area with prejudice as a third-party defendant in Panduit’s contribution claim.2
¶ 10 On October 18, 2012, Bayer settled his claim against Garbe in the negligence action. Thus,
Panduit proceeded to trial as the sole remaining defendant.
¶ 11 On October 23, 2012, a jury trial commenced on Bayer’s negligence action. At trial, Bayer
presented evidence that the cost of his life care plan ranged from about $17 million to over $25
million. On November 14, 2012, the jury entered a verdict in favor of Bayer and against
Panduit in the sum of $80 million in damages, which included compensation for pain and
suffering, but reduced the $80 million in damages by 20% for Bayer’s own contributory
negligence, for a total of $64 million ($80 million - 20% = $64 million). On that same day, the
circuit court entered a judgment against Panduit in the sum of $64 million plus costs.3
¶ 12 From December 12, 2012 to January 23, 2013, the circuit court entered several orders
granting Panduit an extension of time to file a posttrial motion. On February 20, 2013, Panduit
filed a posttrial motion, arguing, inter alia, that the circuit court erred in dismissing Panduit’s
1
Tylk Gustafson Reckers Wilson Andrews, LLC (Tylk), as structural engineer, was also named as a
defendant. However, Tylk was subsequently dismissed as a defendant at the summary judgment stage
of the case on June 16, 2010.
2
Area was also dismissed with prejudice from a third-party contribution claim and a breach of
contract claim filed by Garbe in January 2009.
3
The record suggests that Panduit and Bayer later settled the lawsuit after the jury trial; hence, the
jury’s findings at trial are not issues before this court on appeal.
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third-party contribution claim against Area upon its approval of the settlement agreement
between Area and Bayer, where the settlement agreement was neither supported by good faith
nor consideration.
¶ 13 On June 13, 2013, following a hearing on Panduit’s posttrial motion, the circuit court
denied the motion. In its ruling, the court incorporated by reference its prior findings at the
October 2012 hearing on the motion for a good-faith finding. On June 13, 2013, the court
entered an agreed order in which Bayer and Area, on behalf of its insurer Arch Insurance
Company, agreed to extend workers’ compensation benefits to Bayer until July 15, 2013.
¶ 14 Meanwhile, on March 5, 2013, while Panduit’s posttrial motion was pending before the
court, Bayer filed a motion for attorney fees and costs (motion for attorney fees) against his
employer, Area, under the Workers’ Compensation Act (820 ILCS 305/1 et seq. (West 2012)).
The motion for attorney fees, citing section 5(b) of the Workers’ Compensation Act (820 ILCS
305/5(b) (West 2012)) and the holding in Zuber v. Illinois Power Co., 135 Ill. 2d 407 (1990),
requested the court to enter an order compelling Area to pay attorney fees in an amount
representing 25% of future workers’ compensation benefits for Bayer that had been suspended
by statute as a result of the underlying settlements in the negligence action. On June 27, 2013,
Area filed an amended response to Bayer’s motion for attorney fees, requesting that the court
deny Bayer’s motion with respect to future medical or disability payments, or any future
workers’ compensation payments. On July 8, 2013, Bayer filed a reply in support of his motion
for attorney fees.
¶ 15 On July 11, 2013, a hearing on Bayer’s motion for attorney fees was held.
¶ 16 On July 12, 2013, Panduit filed a notice of appeal, appealing from the circuit court’s
October 5, 2012 order approving the settlement agreement between Bayer and Area, and
dismissing with prejudice Panduit’s third-party contribution claim against Area. Panduit also
appeals from the circuit court’s June 13, 2013 order denying its posttrial motion.
¶ 17 On July 18, 2013, the circuit court granted Bayer’s motion as to attorney fees relating to
future workers’ compensation payments and denied the motion as to costs relating to future
workers’ compensation payments. In its ruling, the court required Area to pay 25% attorney
fees to Bayer’s counsel, the law firm of Horwitz, Horwitz & Associates, Ltd., “for future
medical bills, lost wages, long term care, and any other compensation and benefit compensable
under the Illinois Workers’ Compensation Act incurred on or after July 16, 2013.” The court
also ordered that “medical bills and/or loss wage statements or any other claims of
compensation are to be submitted to [Area’s] insurance company, Arch Insurance Company,
for reimbursement of twenty-five percent (25%) of attorney’s fees on said medical bills, wage
loss, long term care, and compensation and benefits by [Bayer] in a reasonably timely manner
and paid in a reasonably timely manner by [Area’s] insurance carrier, Arch Insurance
[Company].” The order further stated that there “shall be no double recovery of attorney’s fees.
Recovery shall go to assist [Bayer] in the one-third (1/3) payment of attorney’s fees being paid
pursuant to the [c]ontractual [a]greement between [Bayer] and his attorneys, Horwitz, Horwitz
& Associates, Ltd. pursuant to In Re: Dierkes, 191 Ill. 2d 326 (2000).” The July 18, 2013 order
also stated that the court “finds no just reason to delay enforcement or appeal of this order.”
¶ 18 On July 24, 2013, Panduit filed a supplemental notice of appeal to postdate the court’s final
order entered on July 18, 2013.
¶ 19 On July 31, 2013, Area filed a cross-notice of appeal, appealing from the court’s July 18,
2013 ruling. On February 19, 2014, this court granted Area’s motion to amend the cross-appeal
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to label it as a “separate appeal,” and granted Area leave to file an amended docketing
statement.
¶ 20 ANALYSIS
¶ 21 We determine the following issues on appeal: (1) whether the circuit court erred in
approving the settlement agreement between Bayer and Area and, in dismissing with
prejudice, Panduit’s third-party contribution claim against Area in the negligence action; and
(2) whether the circuit court erred in granting Bayer’s motion for attorney fees against his
employer, Area, in the workers’ compensation claim.
¶ 22 We first determine whether the circuit court erred in approving the settlement agreement
between Bayer and Area and, in dismissing with prejudice, Panduit’s third-party contribution
claim against Area in the negligence action. We review the circuit court’s decision under an
abuse of discretion standard. Johnson v. United Airlines, 203 Ill. 2d 121, 135 (2003); Dubina v.
Mesirow Realty Development, Inc., 197 Ill. 2d 185, 192 (2001). “An abuse of discretion occurs
when the ruling is arbitrary, fanciful, or unreasonable, or when no reasonable person would
take the same view.” Favia v. Ford Motor Co., 381 Ill. App. 3d 809, 815 (2008).
¶ 23 Panduit argues that the circuit court erred in approving the settlement agreement between
Bayer and Area and in dismissing with prejudice Panduit’s third-party contribution claim
against Area. Specifically, Panduit argues that the settlement agreement entered into by Bayer
and Area was not made in good faith, where Area had paid nothing to Bayer as consideration
for its release from the pending legal action. Panduit contends that consideration was lacking
by pointing out that Area had a statutory lien under the Workers’ Compensation Act
representing the amount of past and future workers’ compensation payments to Bayer; that
Area did not waive its statutory lien on a portion of the proceeds that Bayer is to receive from
Panduit; and that, as a result of the jury verdict against Panduit, Area’s entire statutory lien
remained available for recoupment. Panduit further argues that, by not waiving any portion of
its lien, Area “has been wrongly allowed to shift its entire statutory liability” to Panduit and,
thus, Area has not paid any “net” consideration to support a finding of good faith. Moreover,
Panduit argues that Area’s $2 million insurance policy, under which Panduit and Garbe were
listed as insureds, did not constitute “consideration” for the settlement agreement because the
policy limits were made available to satisfy Panduit’s liability under the judgment, not Area’s
liability. Panduit further asserts that it was unfairly prejudiced by the dismissal of its
contribution claim against Area, where Area specified the trip hazard in the construction plans,
provided inadequate fall protection, and failed to supervise Bayer at the time of the accident.
¶ 24 Area counters that the settlement agreement was entered into in good faith, arguing that
multiple considerations existed to support the agreement. Area argues that the settlement
agreement stated that the $2 million from its primary insurance policy was Panduit and
Garbe’s money, however, Area “controlled that amount due to the fact that Area had a
$500,000 deductible.” Area argued that because it had “some control” over the $2 million, this
supported the circuit court’s finding, after hearing extensive arguments by the parties, that
consideration existed. Area further argues that the lack of waiver of its workers’ compensation
lien did not constitute bad faith, and that Illinois courts have consistently rejected challenges to
settlement agreements based on the argument that they shifted a disproportionate share of
liability to a nonsettling tortfeasor, like Panduit, which received an unfavorable verdict at trial.
Area further argues that, even without a lien waiver, Bayer received very tangible benefits
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from the settlement–including the right to continue living in a house that had been outfitted to
suit his physical needs, as agreed to in his workers’ compensation case, as well as the
continuation of workers’ compensation benefits to Bayer until the negligence action was fully
resolved despite Area’s right under Illinois law to suspend workers’ compensation payments to
Bayer once he had received any amount of money paid by another party in the lawsuit. Area
further contends that it had an excess insurance policy of $25 million that was issued by
insurer, “Chartis/AIG Insurance,” under which Panduit and Garbe were also named as
additional insureds. Area notes that Chartis/AIG Insurance was the same insurer as Panduit’s
own insurer. Area claims that the entire $25 million had been triggered and exhausted to pay
for Garbe’s settlement as well as Panduit’s posttrial settlement with Bayer which,
consequently, left Area with no additional insurance coverage “to satisfy any contribution
counterclaim or judgment.”
¶ 25 The Joint Tortfeasor Contribution Act (Contribution Act) (740 ILCS 100/1 et seq. (West
2010)) “creates a statutory right of contribution in actions ‘where 2 or more persons are subject
to liability in tort arising out of the same injury to person or property, or the same wrongful
death’ (740 ILCS 100/1, 2(a) (West 1996)), to the extent that a tortfeasor pays more than his
pro rata share of the common liability.” Johnson, 203 Ill. 2d at 128. Section 2 of the
Contribution Act states, in relevant parts, as follows:
“(c) When a release or covenant not to sue or not to enforce judgment is given in
good faith to one or more persons liable in tort arising out of the same injury or the
same wrongful death, it does not discharge any of the other tortfeasors from liability for
the injury or wrongful death unless its terms so provide but it reduces the recovery on
any claim against the others to the extent of any amount stated in the release or the
covenant, or in the amount of the consideration actually paid for it, whichever is
greater.
(d) The tortfeasor who settles with a claimant pursuant to paragraph (c) is
discharged from all liability for any contribution to any other tortfeasor.” (Emphasis
added.) 740 ILCS 100/2(c), (d) (West 2010).
Although the term “good faith” is not defined by the Contribution Act, a settlement “will not
be found to be in good faith if it is shown that the settling parties engaged in wrongful conduct,
collusion, or fraud,” or “if it conflicts with the terms of the [Contribution] Act or is inconsistent
with the policies underlying the [Contribution] Act.” Johnson, 203 Ill. 2d at 134. The two
public policies underlying the Contribution Act include “the encouragement of settlements and
the equitable apportionment of damages among tortfeasors.” Id. at 133.
¶ 26 Here, Panduit does not argue on appeal that any wrongful conduct, collusion, or fraud
occurred to undermine the circuit court’s finding of good faith. Nor does it argue that the
public policy of the Contribution Act which is to encourage settlement was violated. Rather,
Panduit argues that the settlement agreement entered into between Bayer and Area was
inconsistent with the second purpose of the Contribution Act, which is promoting the equitable
apportionment of damages among tortfeasors. Panduit argues that Area’s relative culpability
was high and its settlement with Bayer shifted its entire liability to Panduit at trial. Thus, our
relevant inquiry is whether the circuit court abused its discretion in finding good faith in
approving the settlement agreement.
¶ 27 In order to prove whether a settlement was negotiated in good faith within the meaning of
the Contribution Act, the settling parties carry the initial burden of making a preliminary
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showing of good faith. Id. at 132. Once a preliminary showing of good faith is made by the
settling parties, the burden of proof shifts to the nonsettling party, who challenges the good
faith of the settlement. That party must prove “the absence of good faith by a preponderance of
the evidence.” Id. “ ‘Ultimately, however, whether a settlement satisfies the good faith
requirement as contemplated by the [Contribution Act] is a matter left to the discretion of the
trial court based upon the court’s consideration of the totality of the circumstances.’ ” Cellini v.
Village of Gurnee, 403 Ill. App. 3d 26, 37 (2010) (quoting Johnson, 203 Ill. 2d at 135).
¶ 28 In the instant case, a copy of the settlement agreement was attached to Area and Bayer’s
October 1, 2012 joint motion for a good-faith finding, which detailed the release terms to
which Bayer and Area agreed. Thus, we find that Area sufficiently made a preliminary
showing of good faith, and the burden of proof shifted to Panduit to show an absence of good
faith by a preponderance of the evidence. See Johnson, 203 Ill. 2d at 132 (a settling party must
show the existence of a legally valid settlement agreement); Cellini, 403 Ill. App. 3d at 37
(settling tortfeasor made a preliminary showing of good faith where it submitted to the circuit
court a copy of the “full and final release and satisfaction agreement”); see generally Snoddy v.
Teepak, Inc., 198 Ill. App. 3d 966, 969 (1990) (a preliminary showing of good faith was
evidenced by the settling parties’ “release” and the circuit court properly presumed that the
settlement was valid). However, we note that not all legally valid settlements satisfy the
good-faith requirements of the Contribution Act. See Johnson, 203 Ill. 2d at 132; Bowers v.
Murphy & Miller, Inc., 272 Ill. App. 3d 606, 610 (1995).
¶ 29 The terms of the settlement agreement between Bayer and Area provided as follows:
“For the sole consideration of the payment to [Bayer] at this time of the sum of:
1. Arch/Area represents that the workers’ compensation lien for medical and
indemnity as of today’s date is $5,275,985.57. If the civil case or any portion thereof
settles before a verdict is rendered, Arch/Area *** agrees to waive its entire workers’
compensation lien pursuant to [section] 5(b) of the Illinois Workers’ Compensation
[A]ct as it relates to said settlement. (For example, if [Bayer] settles with only one party
before a verdict, then the lien is waived as to that settlement only, but the lien remains
as to any verdict or recovery arising out of the verdict as stated below. Or, if [Bayer]
settles with both Panduit and [Garbe] before a jury verdict, then the entire [section] 5(b)
lien is waived.)
2. If any portion of the case is tried to verdict and recovery is made by reason of the
verdict and an amount is paid that would satisfy the workers’ compensation lien or any
part of the *** lien, [Bayer] agrees to pay back the workers’ compensation lien subject
to section 5(b) of the [W]orkers’ [C]ompensation [A]ct.
3. During the pendency of this matter and before the matter is resolved with all
parties by either settlement or trial, Arch/Area *** agrees to continue to leave open all
benefits under the Workers’ Compensation Act as they are today.
4. If the case is settled with all parties prior to verdict then Arch/Area *** would
stop workers’ compensation payments once the settlement funds are received by
[Bayer]. In addition, under said circumstance, [Bayer] and his attorneys would waive
their statutory attorneys’ fees in regards to future workers’ compensation payments.
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5. Arch to pay [$2 million] which it represents to be its policy limits on the primary
commercial liability policy issued to [Area] as the named insured wherein [Panduit]
and [Garbe] are additional insureds under said policy.
This [$2 million] is to be credited towards any settlement or verdict, until it is
exhausted, against [Panduit] and [Garbe].
Subject to provision 6, this [$2 million] payment is not intended as and will not act
as an advance on [w]orkers’ [c]ompensation benefits, is not being paid pursuant to the
Workers’ Compensation Act, will not be utilized as to setoff for any future payments
under the Workers’ Compensation Act and Area/Arch waives its [section] 5(b) lien.
This settlement represents a good faith settlement between [Bayer] and Arch/Area in
the civil action, and is not a settlement of the [w]orkers’ [c]ompensation action with
Area. This is not a settlement with [Garbe] and [Panduit].
6. If [Bayer] recovers [$4 million] (or less) as a result of the verdict in the civil
action then Arch/Area *** will waive its Section 5(b) lien as it relates to said [$2
million] referenced in paragraph 5 and waives any right to take said [$2 million]
referenced in paragraph 5 as a set-off as to future workers’ compensation payments.
However, if [Bayer] recovers more than [$4 million] as a result of the verdict in the
civil action then Arch does not waive any [section] 5(b) lien (including any rights to
set-off under the [W]orkers’ [C]ompensation [A]ct) with regard to said [$2 million]
referenced in paragraph 5.
7. The ‘occupancy agreement’ between [Bayer] and Arch Insurance, as agreed to in
the workers’ compensation case, shall not be interfered with by any settlement or jury
verdict in the civil case. The rights as contained in that agreement survive the third
party case and [Bayer] shall maintain the right to live in the premises as delineated in
the ‘occupancy agreement.’
8. The above stated offer of compromise and settlement is strictly contingent on the
dismissal of [Area] as a party to this litigation. A joint motion on behalf of [Bayer] and
[Area] for a good faith finding pursuant to the Illinois Contribution Act will be made.
The settlement is contingent upon the granting of that motion and the dismissal of
[Area] as a party defendant in [the civil case].”
¶ 30 As noted, on October 1, 2012 and October 4, 2012, a hearing on the motion for a good-faith
finding was held. During the hearing, counsel for Area presented the terms of the settlement
agreement and the circuit court heard arguments from the parties. In finding good faith, the
circuit court posed questions to the parties regarding the settlement terms, posed different
hypothetical scenarios to the parties in examining the effects of various contingencies listed in
the settlement agreement, and heard the parties’ arguments about whether valid consideration
supported the settlement agreement.
¶ 31 Under the facts and the record before us, we find that Panduit failed to demonstrate, by a
preponderance of the evidence, any showing of bad faith by the settling parties. The bulk of
Panduit’s argument before the circuit court centered around the perceived unfairness Panduit
would face if the settlement agreement were approved, noting that a disproportionate amount
of liability would be shifted to Panduit at trial and that the settlement agreement was supported
by “illusory” consideration that did not satisfy the good-faith requirements of the Contribution
Act. However, the record supports the circuit court’s finding that the settlement agreement was
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supported by valid consideration. Section 5(b) of the Workers’ Compensation Act gives an
employer the right to recover the amount of past or future compensation payments from any
money judgment or settlement received by the injured employee in an action brought by the
injured employee against another party who is legally liable for the injury. See 820 ILCS
305/5(b) (West 2010). Under the settlement agreement, Bayer and Area agreed to multiple
contingency lien waivers by Area which could be triggered under different scenarios. Area and
its insurer, Arch Insurance Company, agreed to waive the entirety of its workers’
compensation lien against Bayer as to any portion of the negligence action that was settled
before a verdict was rendered. Area further agreed that if Bayer recovered $4 million or less as
a result of the trial verdict, then the workers’ compensation lien would be waived as to the $2
million primary insurance proceeds that would be paid toward Panduit’s and Garbe’s liability
in the negligence action. However, Bayer agreed that if he recovered more than $4 million as a
result of the trial verdict, Area’s workers’ compensation lien would not be waived as to the $2
million primary insurance proceeds that would be paid toward Panduit’s and Garbe’s liability
in the action. At the hearing on the motion for a good-faith finding, counsel for Area clarified
that Area had also paid a $500,000 deductible on the policy in order to ensure that the $2
million policy proceeds would be triggered and paid toward Panduit’s and Garbe’s liability as
the policy insureds. Although it is now known to us that Panduit eventually proceeded to trial
as the sole defendant and that on November 14, 2012, the jury rendered a verdict of $64 million
against Panduit–which consequently triggered the provision in the settlement agreement
allowing Area to recoup the entirety of its workers’ compensation lien against the verdict
amount–hindsight is not the appropriate criteria for determining what was valid consideration
at the time the circuit court made its finding of good-faith and approved the settlement
agreement on October 5, 2012. Indeed, at the June 13, 2013 hearing on Panduit’s posttrial
motion, the circuit court denied the motion by correctly noting that “[t]he question of
consideration is one that has been discussed in many contexts, and in this case, the issue of
public policy and the need looking at the time that this agreement was made there was
consideration that would support what occurred.” We further found that, aside from Area’s
contingency lien waivers, paragraph 3 of the settlement agreement alone was sufficient as
valid consideration between Bayer and Area. Under Illinois law, an employer has a right to
suspend workers’ compensation payments to an injured employee once any amount of money
is received by the injured employee from a third-party tortfeasor for the same injury. See Freer
v. Hysan Corp., 108 Ill. 2d 421, 426-27 (1985); 820 ILCS 305/5(b) (West 2010). Under
paragraph 3, Area agreed not to suspend workers’ compensation payments to Bayer at any time
prior to the final resolution of the litigation against all parties. The effect of this specific
provision allowed Bayer to continue receiving workers’ compensation payments, even though
Bayer had settled the lawsuit with Garbe for a specified sum only 14 days after the hearing on
the motion for a good-faith finding. Had the trial issues not been fully resolved by Panduit’s
posttrial settlement with Bayer, pursuant to paragraph 3 of the settlement agreement, Bayer
would have continued to receive workers’ compensation payments during the appeals
process–payments which would have been crucial to Bayer as a quadriplegic needing around
the clock nursing care.
¶ 32 In Cleveringa v. J.I. Case Co., a reviewing court upheld the circuit court’s finding that a
settlement agreement between an injured worker, his employer, and a manufacturer was
entered into in good faith, and upheld the court’s dismissal of all pending claims, including the
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contribution claims, against these settling parties. Cleveringa v. J.J. Case Co., 192 Ill. App. 3d
1081, 1083-84, 1087 (1989). Pursuant to the settlement agreement, the injured worker agreed
to release both a manufacturer and his employer from all further liability, in exchange for a
total of $1.1 million. Id. at 1084. At the time of the settlement, the employer’s workers’
compensation insurance carrier, Home Insurance Company (Home), had paid the injured
worker approximately $275,000 in compensation benefits and held a lien in that amount
against any settlement or judgment obtained by the injured worker. Id. The settlement
agreement included a term which provided that Home agreed to waive enforcement of its
workers’ compensation lien against the settling parties, but expressly reserved the right to
enforce its lien against funds received by the injured worker against a nonsettling party, J.I.
Case Company (Case). Id. Case argued that the settlement was not in good faith and should be
set aside because Case may be subject to a judgment which was greater than that which Case
believed was appropriate for settlement. Id. at 1085. In rejecting this argument, the Cleveringa
court stated that “[s]uch a possibility always exists when parties to litigation contemplate
settlement. A party who refuses to settle a case on agreed terms always risks that he will be
exposed to enhanced liability by that refusal. This is the essence of settlement negotiations. A
party either compromises in return for the certainty of a fixed result, or gambles that he will
obtain a more favorable result by submitting the case to a jury.” Id. at 1085-86. The Cleveringa
court further noted that accepting Case’s argument would in effect “defeat the public policy
favoring settlements and would allow one party to veto any settlement unless all parties had
agreed on their respective liabilities.” Id. at 1086. In upholding the circuit court’s finding of
good faith, the Cleveringa court found that the record contained no evidence of collusion,
fraud, or tortious conduct; that the trial court was aware of and considered all of the
circumstances surrounding the settlement agreement; that the trial court conducted a full
hearing at which each party was represented by counsel and the court determined that the
parties to the agreement acted in good faith; and that “the good faith of a settlement is not
judged by the obstacles it creates for the nonsettling tortfeasor.” Id.
¶ 33 In the instant case, the facts presented before us are remarkably similar to those in
Cleveringa. Here, Bayer and Area entered into a settlement agreement by which Bayer agreed
to release Area from further liability and Area would be dismissed as a third-party to the
litigation, in exchange for various contingency lien waivers that benefitted Bayer. At the time
of the settlement, Arch Insurance Company, on behalf of Area as the employer, had paid over
$5 million in workers’ compensation and held a statutory lien in that amount against any
settlement or judgment obtained by Bayer. However, as part of consideration, like Cleveringa,
the settlement agreement included provisions stating that “Arch/Area” agreed to waive
enforcement of its workers’ compensation lien against any settling parties, but expressly
reserved the right to enforce its lien against funds received by Bayer against any nonsettling
parties. In addition, “Arch/Area” agreed not to exercise its lawful right to suspend workers’
compensation payments to Bayer at any time prior to the final resolution of the litigation
against all parties, even if, in the interim, Bayer receives money of any kind from a third-party
tortfeasor for the same injury. See generally Ross v. May Co., 377 Ill. App. 3d 387, 391 (2007)
(“the essential element of consideration is a bargained-for exchange of promises or
performances that may consist of a promise, an act, a forbearance, or the creation,
modification, or destruction of a legal relation” (emphasis added)). Like Cleveringa, there was
no evidence of collusion, fraud, or tortious conduct by the parties in reaching settlement. Like
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Case, as the nonsettling party in Cleveringa, Panduit, as the nonsettling party in the case at bar,
argues that the settlement was not entered into in good faith because Area had retained the right
to enforce its entire workers’ compensation lien against Panduit’s judgment amount, and thus,
Area “has been wrongly allowed to shift its entire statutory liability” to Panduit and has not
paid any “net” consideration to support a finding of good faith. However, applying the
principles in Cleveringa, we reject this contention. First, as discussed, paragraph 3 of the
settlement agreement by which Area agreed to forbear its right to suspend workers’
compensation payments to Bayer at any time prior to the final resolution of the litigation
against all parties, was alone sufficient and valid consideration. The settlement agreement also
set forth provisions which waived the entirety of Area’s workers’ compensation lien as to any
funds received by Bayer as settlement with other parties in the negligence action. Second, the
record shows that the circuit court was aware of and considered all of the circumstances
surrounding the settlement agreement, conducted a full hearing at which each party was
represented by counsel, and the court was well informed when it determined that the parties to
the agreement acted in good faith. As the Cleveringa court noted, “the good faith of a
settlement is not judged by the obstacles it creates for the nonsettling tortfeasor.” Cleveringa,
192 Ill. App. 3d at 1086. Thus, we reject Panduit’s argument that the settlement was not made
in good faith. See also Banks v. R.D. Werner Co., 201 Ill. App. 3d 762, 771 (1990) (failure of
an employer to waive a workers’ compensation lien does not ipso facto render a settlement
invalid as having been made in bad faith); Romack v. R. Gingerich Co., 314 Ill. App. 3d 1065,
1069 (2000) (settlement agreement entered into in good faith where employer only partially
waived workers’ compensation lien against injured employee and expressly reserved its right
to enforce the lien against any funds received from the nonsettling party). Accordingly, we
hold that, under the totality of the circumstances, the circuit court did not abuse its discretion in
finding good faith and in approving the settlement agreement.
¶ 34 Panduit cites cases in support of its argument that Bayer and Area’s settlement was not
entered into in good faith. However, we find these cases to be factually distinguishable from
the facts of the case at bar. Further, none of those cases nullify the analysis which we have
explained above. See also Higginbottom v. Pillsbury Co., 232 Ill. App. 3d 240 (1992) (no
finding of good faith where employer retained its entire workers’ compensation lien but
offered no other consideration to injured worker), abrogated on other grounds, Johnson, 203
Ill. 2d 121.
¶ 35 Moreover, we reject Panduit’s argument of bad faith premised upon the extent of the
amount of damages awarded by the jury when measured against what it claims is Area’s high
relative culpability compared to Panduit’s low relative fault. Courts have consistently rejected
challenges to settlements brought on this basis. See Johnson, 203 Ill. 2d at 136-37 (“the
disparity between the settlement amount and the ad damnum in the complaint is not an accurate
measure of the good faith of a settlement”); Palacios v. Mlot, 2013 IL App (1st) 121416, ¶ 31
(“the fact that the settlement agreement would be ‘advantageous to a party is not necessarily an
indication of bad faith’ ” (quoting Johnson, 203 Ill. 2d at 138-39)); Smith v. Texaco, Inc., 232
Ill. App. 3d 463, 469 (1992) (“[i]t has been recognized that settlements may be substantially
different from the results of litigation because damages are often speculative and the
probability of liability uncertain”); Cleveringa, 192 Ill. App. 3d at 1085-86 (allowing a
settlement agreement to be set aside on the basis that a nonsettling party would be subject to a
judgment greater than that which he believed was appropriate would in effect “defeat the
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public policy favoring settlements and would allow one party to veto any settlement unless all
parties had agreed on their respective liabilities”). Panduit’s dissatisfaction with the settlement
agreement between Bayer and Area is simply insufficient to establish bad faith. Accordingly,
the circuit court did not err in dismissing with prejudice, pursuant to section 2(d) of the
Contribution Act, Panduit’s third-party contribution claim against Area in the negligence
action. See 740 ILCS 100/2(d) (West 2010) (“[t]he tortfeasor who settles with a claimant ***
is discharged from all liability for any contribution to any other tortfeasor”).
¶ 36 We next determine whether the circuit court erred in granting Bayer’s motion for attorney
fees in his workers’ compensation claim against his employer, Area.
¶ 37 On March 5, 2013, Bayer filed a motion for attorney fees in his workers’ compensation
claim against his employer, Area. The motion for attorney fees, citing section 5(b) of the
Workers’ Compensation Act (820 ILCS 305/5(b) (West 2012)) and the holding in Zuber, 135
Ill. 2d 407, requested the circuit court to enter an order compelling Area to pay attorney fees in
an amount representing 25% of future workers’ compensation benefits for Bayer that had been
suspended by statute as a result of the underlying settlements4 in the negligence action. On
June 13, 2013, the court entered an agreed order in which Bayer and Area, on behalf of its
insurer Arch Insurance Company, agreed to extend workers’ compensation benefits to Bayer
until July 15, 2013.5 On June 27, 2013, Area filed an amended response to Bayer’s motion for
attorney fees. On July 8, 2013, Bayer filed a reply in support of his motion for attorney fees. On
July 11, 2013, a hearing on Bayer’s motion for attorney fees was held. On July 18, 2013, the
circuit court granted Bayer’s motion as to attorney fees relating to future workers’
compensation payments and denied the motion as to costs relating to future workers’
compensation payments. In its ruling, the court required Area to pay 25% attorney fees to
Bayer’s counsel, the law firm of Horwitz, Horwitz & Associates, Ltd., “for future medical
bills, lost wages, long term care, and any other compensation and benefit compensable under
the Illinois Workers’ Compensation Act incurred on or after July 16, 2013.” The court also
ordered that “medical bills and/or loss wage statements or any other claims of compensation
are to be submitted to [Area’s] insurance company, Arch Insurance Company, for
reimbursement of twenty-five percent (25%) of attorney’s fees on said medical bills, wage
loss, long term care, and compensation and benefits by [Bayer] in a reasonably timely manner
and paid in a reasonably timely manner by [Area’s] insurance carrier, Arch Insurance
[Company].” The order further stated that there “shall be no double recovery of attorney’s fees.
Recovery shall go to assist [Bayer] in the one-third (1/3) payment of attorney’s fees being paid
pursuant to the [c]ontractual [a]greement between [Bayer] and his attorneys, Horwitz, Horwitz
& Associates, Ltd. pursuant to In Re: Dierkes, 191 Ill. 2d 326 (2000).”
¶ 38 On appeal, Area does not dispute the payment of attorney fees for Bayer’s permanent total
disability benefits, but does dispute the payment of attorney fees “for suspended medical bills,
long-term care, or other compensable benefits.” Area contends that neither the Workers’
4
As discussed, Garbe settled with Bayer prior to trial, and Panduit settled with Bayer at some point
after the jury trial.
5
As a result, workers’ compensation benefits were officially suspended as of July 16, 2013. See
Freer, 108 Ill. 2d at 426-27 (an employer has a right to suspend workers’ compensation payments to an
injured employee once any amount of money is received by the injured employee from a third-party
tortfeasor for the same injury).
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Compensation Act nor Zuber supports the notion that an injured employee is entitled to
recovery of attorney fees for suspended future medical payments. Area further argues that
because the $64 million jury verdict was partly comprised of an amount ($25 million - 20%
contributory negligence = $20 million) for future medical expenses, of which Bayer’s counsel
was entitled to one-third in fees pursuant to his attorney-client contract with Bayer, allowing
Bayer’s counsel to now receive a fee on suspended future medical payments would amount to
a double recovery of attorney fees. Area argues that Illinois court have not directly addressed
this issue and urges this court to turn to Indiana courts for guidance, which have rejected the
same exact argument for the recovery of attorney fees for suspended future medical payments.
¶ 39 Bayer argues that, under the Workers’ Compensation Act and the holding in Zuber, he is
entitled to a recovery of attorney fees for suspended future medical expenses. Bayer argues that
Area’s references to section 16(a) of the Workers’ Compensation Act, which deals only with
attorney fees sought by the workers’ compensation attorneys against their own clients in
pursuing the initial or original workers’ compensation claim, did not apply to the situation at
hand. Rather, Bayer contends that an employer’s obligation to pay attorney fees and costs out
of the reimbursements recovered from third-party actions are specifically provided for in
section 5(b) of the Workers’ Compensation Act. Bayer further argues that Area is liable to pay
attorney fees for suspended future medical expenses regardless of whether the Industrial
Commission enters a final order requiring the payment of such attorney fees. Bayer argues
that, pursuant to In re Estate of Dierkes, 191 Ill. 2d 326 (2000), the statutory 25% attorney fees
required of Area is a contribution toward Bayer’s attorney fees that is owed to his legal
counsel; that there is no risk of “double recovery” by Bayer’s counsel because it merely
reduces the total amount of fees that Bayer owes his own attorney; and that such contribution is
necessary because Area directly benefitted from the work performed by Bayer’s counsel in
securing settlement funds in the negligence action. Bayer further argues that Indiana court
decisions do not assist this court in resolving this issue.
¶ 40 This issue before us requires the interpretation of provisions under the Workers’
Compensation Act, which is a question of law requiring de novo review. See Taylor v. Pekin
Insurance Co., 231 Ill. 2d 390, 395 (2008). The primary objective in interpreting a statute is to
give effect to the intent of the legislature. Id. The most reliable indicator of the legislature’s
intent is the language of the statute, which must be given its plain and ordinary meaning. Id.
Statutory language that is unambiguous must be applied as written, without resorting to other
aids of construction. Id. We may not depart from the plain language of an unambiguous statute
by reading into it exceptions, limitations, or conditions not expressed by the legislature. Id.
¶ 41 Section 5(b) of the Workers’ Compensation Act provides in pertinent part as follows:
“(b) Where the injury *** for which compensation is payable under this Act was
caused under circumstances creating a legal liability for damages on the part of some
person other than his employer to pay damages, then legal proceedings may be taken
against such other person to recover damages notwithstanding such employer’s
payment of or liability to pay compensation under this Act. In such case, however, if
the action against such other person is brought by the injured employee *** and
judgment is obtained and paid, or settlement is made with such other person, either
with or without suit, then from the amount received by such employee *** there shall
be paid to the employer the amount of compensation paid or to be paid by him to such
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employee *** including amounts paid or to be paid pursuant to paragraph (a) of
Section 8 of this Act.” (Emphasis added.) 820 ILCS 305/5(b) (West 2010).
The above italicized portion of the Workers’ Compensation Act concerns the employer’s right
of reimbursement under the Workers’ Compensation Act, thus allowing the enforcement of the
workers’ compensation lien by the employer against funds recovered by an injured worker in
any third-party negligence action for the same injury. Section 5(b) then continues to include
the following:
“Out of any reimbursement received by the employer pursuant to this Section the
employer shall pay his pro rata share of all costs and reasonably necessary expenses in
connection with such third-party claim, action or suit and where the services of an
attorney at law of the employee *** have resulted in or substantially contributed to the
procurement by suit, settlement or otherwise of the proceeds out of which the employer
is reimbursed, then, in the absence of other agreement, the employer shall pay such
attorney 25% of the gross amount of such reimbursement.” (Emphases added.) Id.
¶ 42 Area does not dispute that it owed Bayer 25% attorney fees for the suspended permanent
total disability benefits to which Area had a right of reimbursement under the Workers’
Compensation Act. Rather, Area argues only that it is not required under section 5(b) to pay
25% attorney fees on suspended future “medical bills, long-term care, or other compensable
benefits.”
¶ 43 Based on the plain language of section 5(b), we find that the Workers’ Compensation Act
does not require an employer to pay attorney fees for suspended future medical payments.
Under section 5(b), the pool of money from which an employer has a right to reimbursement is
“the amount of compensation paid or to be paid by him to such employee *** including
amounts paid or to be paid pursuant to paragraph (a) of Section 8 of this Act.” (Emphasis
added.) Id. In support of his argument that Area was required to pay attorney fees on the
suspended future medical expenses, Bayer directs this court’s attention to the term
“compensation” as detailed in section 8 of the Workers’ Compensation Act, and argues that
“compensation” includes both wages and medical expenses. However, section 8(a) requires
the payment of medical services to be made “to the provider on behalf of the employee,” rather
than directly to the employee. (Emphasis added.) 820 ILCS 305/8(a) (West 2010). Thus,
because section 5(b) provides that an employer shall pay 25% attorney fees to the employee’s
attorney “[o]ut of any reimbursement received by the employer pursuant to this Section” and
“the proceeds out of which the employer is reimbursed” (820 ILCS 305/5(b) (West 2010)) we
find that, construing both sections 5(b) and 8(a) together, the plain language of the Workers’
Compensation Act does not require the employer to pay attorney fees on suspended future
medical expenses. Had the legislature intended for fees under section 5(b) to include future
medical expenses, the legislature could easily have drafted section 5(b) to say that the
employer’s right to reimbursement included the amount of compensation paid or to be paid by
the employer to or on behalf of the employee, which would have encompassed the medical
expenses paid “to the provider on behalf of the employee” under section 8(a) of the Workers’
Compensation Act. 820 ILCS 305/8(a) (West 2010). We cannot depart from the plain language
of the statute by reading into it exceptions, limitations, or conditions not expressed by the
legislature. See Taylor, 231 Ill. 2d at 395.
¶ 44 As additional support for its argument that the statutory 25% attorney fees do not apply to
suspended future medical expenses, Area points to section 16a(D) of the Workers’
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Compensation Act, which states that “[n]o attorney fees shall be charged with respect to
compensation for undisputed medical expenses.” 820 ILCS 305/16a(D) (West 2010).
However, we find section 16a to be inapposite to the case at bar, where the section pertains to
attorney fees sought by an attorney from his own client in pursuing any “initial or original
claim” under the Workers’ Compensation Act. As the circuit court correctly found in the July
11, 2013 hearing on Bayer’s motion for attorney fees, citation to section 16a as authority was
not proper because it “deals with the establishment or approval of attorney fees in relation to
claims brought strictly under the [Workers’ Compensation Act].” Thus, we find Area’s
references to section 16a, as well as case law relating to section 16a, to be irrelevant to the facts
in the case at bar. See Augustine v. Industrial Comm’n, 239 Ill. App. 3d 561 (1992) (appealing
from judgment pertaining to an award of attorney fees to the claimant’s counsel in workers’
compensation claim); Spinak, Levinson & Associates v. Industrial Comm’n, 209 Ill. App. 3d
120 (1990) (appealing from Industrial Commission’s award of $100 nominal attorney fees to
law firm for its representation of claimant in underlying workers’ compensation proceeding).
¶ 45 On the other hand, in support of his argument that Area was required to pay attorney fees
for suspended future medical expenses pursuant to section 5(b), Bayer relies primarily on the
holding in Zuber, 135 Ill. 2d 407. However, we do not find Zuber to be helpful in advancing
Bayer’s position. In Zuber, the Industrial Commission awarded a widow workers’
compensation benefits in the amount of $224.41 per week for a period 20 years for the
decedent’s death in the course of employment. Id. at 409. The widow filed a wrongful death
action against a third-party tortfeasor, which resulted in a settlement providing her with a lump
sum payment of $302,466.54 and an annuity in the amount of $900 per month for life (the cost
of the annuity was $86,529). Id. at 410. Following settlement of the wrongful death action, the
widow and the employer were unable to agree on the amount of attorney fees and costs owed
by the employer pursuant to section 5(b) of the Workers’ Compensation Act. Id. at 411. The
circuit court interpreted section 5(b) of the Workers Compensation Act as allowing an
assessment of fees and costs only on an employer’s past payments of workers’ compensation
benefits and, thus, the court did not assess fees and costs on the amount of future compensation
payments that the employer was relieved from making by virtue of the widow’s recovery in the
wrongful death action. Id. at 409, 411. The appellate court held that the employer owed fees
and costs on both past and future compensation benefits, and ordered payment of the attorney
fees to be made directly to the widow rather than her attorney. Id. at 412. On appeal, our
supreme court affirmed the appellate court’s ruling, finding that section 5(b) allows for the
assessment of fees and costs for both past and future compensation payments. Id. at 415-16.
The Zuber court specifically noted that because the source of funds from which an employer
has a right to reimbursement under section 5(b) is “the amount of compensation paid or to be
paid” by the employer to the beneficiary who succeeds in the third-party action, and that the
employer benefits from the third-party action recovery both when it is repaid and when it is
relieved of its obligation to make future compensation payments, it was appropriate to impose
fees and costs in relation to both benefits. Id. The Zuber court, however, ordered that the
attorney fees be paid directly to the widow’s counsel, rather than to the widow herself, noting
that there was no risk of “double recovery” where the widow had not fully compensated her
attorneys under their attorney-client fee agreement. Id. at 421.
¶ 46 We find nothing in Zuber to help resolve the narrow issue before us–that is, whether the
statutory 25% attorney fees imposed under section 5(b) of the Workers’ Compensation Act
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applies to suspended future medical expenses. Zuber concerned a wrongful death action and
the Industrial Commission’s award of $224.41 per week in workers’ compensation benefits for
a period of 20 years, which did not include medical payments (because the injured employee
had died). The Zuber court merely expressed the holding that section 5(b) allows for the
assessment of fees and costs for both past and future compensation payments, but makes no
mention of whether those “future compensation payments” included suspended future medical
expenses. As discussed, in this case Area does not dispute that it was required to pay 25%
attorney fees on suspended future permanent total disability benefits pursuant to Zuber, but
only disputes that it was also required to pay suspended future medical expenses.
¶ 47 We do not find Bayer’s other cases, most of which were relied upon by Zuber, to be helpful
as they do not directly address the issue before us. See Lewis v. Riverside Hospital, 116 Ill.
App. 3d 845 (1983) (where a credit to the employer was ordered against an employee’s
third-party recovery, the appeal raised only a question as to the amount of the credit); Denius v.
Robertson, 98 Ill. App. 3d 83 (1981) (issue on appeal concerned only the amount of credit to
the employer against a recovery by an employee from a third party); Vandygriff v.
Commonwealth Edison Co., 68 Ill. App. 3d 396 (1979) (relevant issue on appeal concerned
only the amount of recovery subject to a credit to an employer for future compensation
payments against the amount of a third-party recovery); Sands v. J.I. Case Co., 239 Ill. App. 3d
19 (1992) (holding that employer is subject to contribution under the Contribution Act to the
extent of its reasonably projected liability for future workers’ compensation medical benefits,
but makes no mention of whether employer owes statutory legal fees on suspended future
medical expenses).
¶ 48 Bayer further cites In re Estate of Dierkes, 191 Ill. 2d 326, in arguing that the 25% statutory
attorney fees required of Area on the suspended future medical expenses would not be
duplicative of the legal fees which Bayer’s counsel was entitled to receive from Bayer pursuant
to their attorney-client fee agreement. Bayer argues that the statutory attorney fees imposed
upon Area merely reduces the total amount of fees that Bayer owes his own attorney, and that
such contribution by Area is necessary because Area directly benefitted from the work
performed by Bayer’s counsel in securing settlement funds in the negligence action. However,
we find nothing in In re Estate of Dierkes to suggest that an employer is required under section
5(b) of the Workers’ Compensation Act to pay attorney fees for any suspended future medical
expenses. In re Estate of Dierkes involved a workers’ compensation claim for a wrongful death
situation which, like Zuber, involved no future medical payments. The In re Estate of Dierkes
court neither ruled, nor was it asked to rule, on the issue of attorney fees for suspended future
medical expenses. Thus, we find Bayer’s reliance on In re Estate of Dierkes to be unavailing in
his attempt to analogize its analysis to the facts of this case.
¶ 49 As we have already determined, because the plain language of the Workers’ Compensation
Act does not require an employer to pay attorney fees on suspended future medical expenses,
we find that Area owed no obligation to pay 25% attorney fees on Bayer’s suspended future
medical expenses under the Workers’ Compensation Act. Though Illinois courts have not
specifically addressed the issue at bar, we note that our sister state, Indiana, when faced with
the same issue, held that an employer in a workers’ compensation claim was not required to
pay attorney fees to an injured worker’s attorneys on future medical expenses that the
employer would have paid but for the third-party tort action. See Spangler, Jennings &
Dougherty P.C. v. Indiana Insurance Co., 729 N.E.2d 117 (Ind. 2000) (finding that future
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medical expenses were part of the verdict that attorneys had won for claimant and upon which
attorneys negotiated postverdict settlements, and attorneys were not entitled to double
recovery of attorney fees for the same damages).
¶ 50 While we do not necessarily adopt Spangler’s precise reasoning in reaching this
conclusion, we find it instructive. Similar to the injured worker in Spangler, Bayer is a
quadriplegic whose medical expenses will be ongoing. Although the jury in this case awarded
Bayer about $20 million ($25 million - 20% contributory negligence = $20 million) for the
present cash value of Bayer’s future medical expenses, which was reduced in an overall
posttrial settlement, this alone cannot be a basis upon which to impose attorney fees against the
employer for suspended future medical expenses under the Workers’ Compensation Act. See
generally Cherney v. Soldinger, 299 Ill. App. 3d 1066, 1072 (1998) (“[s]tatutes that are in
derogation of the common law will be strictly construed and nothing will be read into such
statutes by intendment or implication”); Kolacki v. Verink, 384 Ill. App. 3d 674 (2008) (the
Workers’ Compensation Act establishes system of liability without fault, in derogation of the
common law, where traditional common law defenses available to employer are abrogated in
exchange for prohibition of common lawsuits against employer). Thus, we hold that the circuit
court erred, in its July 18, 2013 order, in ruling that Area was required to pay 25% attorney fees
to Bayer’s counsel for suspended future medical expenses. Accordingly, in light of our
holding, we reject Bayer’s argument for the imposition of sanctions against Area under Illinois
Supreme Court Rule 375(b) (eff. Feb. 1, 1994) (sanctions for frivolous appeals or other action
not taken in good faith or for an improper purpose).
¶ 51 For the foregoing reasons, we affirm in part and reverse in part the judgment of the circuit
court of Cook County.
¶ 52 Affirmed in part; reversed in part.
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