Lewis v. Riverside Hospital, 116 Ill. App. 3d 845

Summary

The Illinois Appellate Court reviewed the calculation of a workers' compensation insurer's credit against future benefits following a settlement of a medical negligence and strict liability action. The court held that previously paid workers' compensation benefits should not be added to the settlement amount, applied the statutory 25% attorney-fee allocation, and apportioned litigation costs between the reimbursement and future-benefit credit. The court reversed and remanded for recalculation of the credit.

Holdings

1. Under section 5(b), the settlement amount must be reduced by workers' compensation benefits already paid; benefits already paid are not added to the settlement amount to determine the gross reimbursement or future-benefit credit.
2. Absent an agreement between the employer or intervenor and the employee or the employee's attorney, section 5(b) requires a 25 percent attorney fee on the gross amount of the reimbursement; the fee must be allocated between reimbursement for benefits already paid and the credit for future benefits.
3. Aetna was responsible only for its pro rata share of the litigation costs attributable to the reimbursement it received; the remaining costs were deductible in calculating Aetna's credit against future benefits.
4. The proper net credit against future workers' compensation benefits was $1,154,750.78.

Questions Presented

1. How should the credit against future workers' compensation benefits be calculated under section 5(b) of the Workers' Compensation Act?
2. Whether the statutory attorney fee should be calculated at 25 percent of the gross reimbursement rather than the 33 1/3 percent effectively used by the circuit court.
3. Whether Aetna should bear all of the litigation costs or only its pro rata share, with the remainder deducted in calculating its future-benefit credit.

Disposition

reversed_and_remanded