Summary
The Illinois Appellate Court, Third District, addressed an employer workers' compensation insurer's right to reimbursement and credit against future benefits from an employee's recovery from a third-party tortfeasor. The court held that the insurer was entitled to reimbursement for prior benefits and full credit for future weekly benefits, after deduction of costs and a 25% attorney fee from the gross recovery. The trial court's declaratory judgment was reversed.
Topics
Practice areas
Questions Presented
- Whether the workers' compensation carrier's credit and lien against a third-party settlement or judgment should be limited to 75 percent of its past and future compensation obligations.
- How the third-party recovery should be allocated among reimbursement of past workers' compensation benefits, litigation costs, the statutory 25-percent attorney fee, the plaintiff, and the carrier's future compensation obligation.
- Whether the carrier's obligation to pay the widow $160 per week for life continued despite a recovery from the third-party tortfeasor.
Holdings
- When an employee or personal representative obtains a third-party settlement or judgment, the workers' compensation carrier is entitled to reimbursement for all compensation benefits previously paid, subject to the statutory deductions for costs, litigation expenses, and the employee's attorney fee, and the remaining net recovery operates as an advance payment of future compensation.
- The carrier remains obligated to pay the widow $160 per week, but it receives full credit of $160 per week against that obligation until the third-party recovery is exhausted; during that period, the carrier may cease making the weekly payments, and thereafter it must resume paying $160 per week without a lien.
Key quotations
“We conclude, therefore, that the method established in the Vandygriff case be utilized in the instant case.” (98 Ill. App. 3d 87)
“Home should receive full credit of $160 weekly until the third-party recovery is exhausted. At such time Home will resume their $160 weekly payments to the plaintiff.” (98 Ill. App. 3d 87)
Factual background
Charles V. Denius was severely injured in a motor vehicle accident while driving a bakery truck for Haas Baking Company and later died from those injuries. Haas's workers' compensation carrier, The Home Insurance Company, paid medical, surgical, burial, and temporary compensation benefits and was ordered to pay Denius's widow $160 per week for life. Denius's estate sued third-party tortfeasors, while Haas and Home intervened to assert reimbursement and lien rights against any recovery.
Procedural history
After Charles V. Denius was injured in a motor vehicle accident while driving an employer's bakery truck and later died, the workers' compensation carrier paid benefits and was ordered to pay his widow $160 per week for life. The estate sued alleged third-party tortfeasors, and the employer and carrier intervened to protect their lien and reimbursement rights. The La Salle County Circuit Court entered a declaratory judgment establishing a reimbursement formula, including a 75-percent lien on future payments. The employer and carrier appealed, and the estate cross-appealed.