Interesting ruling in determining relationship between WC benefits and uninsured motorist claim.
Editor’s comment: We like the outcome and feel it presents something of a primer on this issue. In Taylor v. Pekin Insurance, (2008 WL 4943700, issued November 20, 2008), the Illinois Supreme Court was faced with a claimant who was struck by an uninsured motorist. The injured worker received $162,588.33 in workers’ compensation benefits. He went to arbitration on the UIM claim and got $250,000. The same insurer handled both WC and UIM coverage. Upon learning of the UIM decision, the carrier delivered a check to plaintiff for $87,411.67-the difference between the $250,000 arbitration award and the $162,588.33 workers’ compensation award. His total recovery was the higher of the two amounts–$250,000. Claimant, who is not a lawyer, then asked for attorney’s fees for himself!
To do so, Plaintiff filed a complaint in the circuit court of Madison County seeking a declaration that he was entitled to $40,467 from the carrier for attorney’s fees which he claimed pursuant to section 5(b) of the Act. The insurance carrier filed a motion to dismiss, arguing Plaintiff was not entitled to the $40,467 because neither the auto policy nor any statute authorizes Plaintiff to collect attorney fees. The trial court granted the motion and dismissed Plaintiff’s complaint. The appellate court reversed, finding Plaintiff was entitled to the $40,467 which would have brought his total recovery to $290,467.00.
The Supreme Court opinion noted the employee obtained recovery for his injuries through his employer’s uninsured-motorist coverage. No legal proceedings were undertaken against a third party responsible for the injuries. There was no “third-party claim, action or suit” under the express language of section 5(b). The insurance carrier’s setoff was pursuant to the contract between the parties, not pursuant to section 5(b). The Supreme Court opinion noted the dissent by Appellate Court Justice Donovan who stated: “No monies were paid back to the workers’ compensation carrier or employer. There simply was no recovery or reimbursement triggering the reduction for 25% attorney fees under section 5(b) of the Act.”
The opinion goes on to note the Appellate Court majority misconstrued the way the section 5(b) attorney fee operates. Under the court’s holding, the plaintiff would receive “the additional sum of $40,467, reflecting the 25% paid to plaintiff’s attorney in the workers’ compensation case.” We agree strongly with our highest court such result distorts the statute, for two reasons. First, plaintiff is not entitled to reimbursement for any attorney fees he may have incurred in his workers’ compensation case. The 25% fee in section 5(b) is payable to plaintiff’s attorney based on the attorney’s services in obtaining a recovery against a third-party tortfeasor in his tort claim. The fee has nothing to do with the fees owed to Petitioner’s attorney in the workers’ compensation case.
Second, under the plain language of the statute, the 25% fee is payable to an attorney, not to the plaintiff. The Court ruled “The second paragraph of section 5(b) contemplates a single recovery against a third party with the employee’s share of the attorney’s fee to be based on the part he recovers and the employer’s share of the fee to be based on the part he recovers. While the employee’s counsel is entitled to a part of his fee from the employee and a part from the employer, the total fee is in essence a single fee based on the single recovery from the third party.”
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