Vandygriff v. Commonwealth Edison Co., 68 Ill. App. 3d 396

Summary

The Illinois Appellate Court held that, under section 5(b) of the Illinois Workmen's Compensation Act, an employer's reimbursement-related attorney fee is limited to 25% of the total third-party settlement absent an agreement with the employer. The court reversed and remanded the order concerning attorney fees and the employer's credit for future compensation payments, directing that the credit be calculated using 25% of the $260,000 settlement.

Holdings

1. Where an employer is reimbursed from a third-party recovery under section 5(b) of the Illinois Workmen's Compensation Act, the employer's obligation to pay the employee's attorney is limited to the statutory 25 percent fee absent an agreement between the employer and the employee or the employee's attorney. The employee's 40 percent fee agreement does not control.
2. The statutory 25 percent attorney fee must be calculated on the entire third-party settlement, here $260,000, rather than on the settlement reduced by workers' compensation benefits already paid.
3. Newberg was entitled to a credit for future permanent-total-disability and medical payments, but the credit was to be capped at $176,323.84 after deducting the workers' compensation benefits already paid, costs, and the statutory attorney fee from the $260,000 settlement.

Questions Presented

1. Whether the attorney fees payable from the employer's reimbursement under section 5(b) of the Illinois Workmen's Compensation Act are limited to the statutory 25 percent fee or may be calculated under the employee's 40 percent fee agreement.
2. Whether the statutory 25 percent attorney fee must be calculated on the entire $260,000 third-party settlement or only on the amount of workers' compensation benefits already paid and reimbursed to the employer.
3. Whether Newberg's credit for future permanent-total-disability and medical payments should be calculated using the corrected settlement deductions and capped at $176,323.84.

Disposition

reversed_and_remanded