The issue of the attorneys’
fees and expenses owed by employers workers’ compensation subrogation liens in
third party cases continues to evolve. In
Zuber v. Illinois Power Co., 135 Ill. 2d 407 (1990), the Illinois
Supreme Court held that the gross amount of reimbursement subject to attorney
fees under this statute includes not only workers' compensation benefits
already paid at the time of the third-party recovery but also the amount of
such benefits the employer will be relieved from having to pay in the future by
reason of the worker's recovery in the third-party action.. The question of
whether the value of future medical care should be included in this calculation
was decided in the recent case of Bayer
v. Panduit Corp.
Ronald Bayer had suffered
work related injuries for which his employer, Area Erectors, had paid $5,275,585.57
in indemnity and medical expenses.The employer received reimbursement for
amounts paid prior to the third party judgement of $64,000,000.The employer was then entitled to suspend the
its obligation to make future payments to Mr. Bayer until the credit against
the recovery obtained by the worker from a third party has been exhausted.While recognizing that an attorney’s fee
would be owed based on indemnity payments which will not be made because of the
credit, a dispute arose over whether the employer would owe a 25% attorney’s
fee on future medical expenses for which it would take a credit against the
unused portion of the third party recovery.
In overruling the Appellate
Court, the Supreme Court ruled that the attorney fees would be owed on future
medical payments for which credit is taken.The Court pointed out that:
So long
as the amount of the judgment against Panduit is not exhausted, Area
Erectors
will continue to receive reimbursement for workers' compensation
payments,
including payments for medical expenses, it is required to make to Bayer in the
future. This reimbursement, which as we have explained includes the amount of
benefits Area Erectors will be relieved from having to pay as a result of the third-party
recovery, directly benefits Area Erectors by reducing its financial
obligations
with respect to Bayer's injuries. Allowing Area Erectors to reap that
benefit
without having to share inany
of the responsibility for compensating the attorneys who made it possible would
result in precisely the type of unjust
enrichment
that section 5(b) of the Workers' Compensation Act (820 ILCS
305/5(b)
(West 2006)) was designed to prevent. Because Area Erectors has no fee
agreement
with Bayer or Bayer's lawyers, the section 5(b) statutory 25% fee rate
controls.
Because the Supreme Court did
not address the issue of how the legal fees are to be paid we cannot be sure
how it would rule if that issue was presented but it did affirm the Circuit
Court decision.The Circuit Court order
provided 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…
The significant take-away
from this case is that whenever you have a case in which the subrogation lien I
less than the third party recovery and in which future indemnity or medical
payments are expected, your calculation of future expenses must include a 25%
attorney’s fee for any future indemnity or medical obligations that are
relieved by the credit taken against the third party recovery.