In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13‐3869
DEANNE BERREY,
Plaintiff‐Appellant,
v.
TRAVELERS INDEMNITY COMPANY
OF AMERICA,
Defendant‐Appellee.
____________________
Appeal from the United States District Court for the
Central District of Illinois.
No. 3:11‐cv‐03426 — Sue E. Myerscough, Judge.
____________________
ARGUED SEPTEMBER 26, 2014 — DECIDED OCTOBER 22, 2014
____________________
Before FLAUM, MANION, and KANNE, Circuit Judges.
FLAUM, Circuit Judge. Deanne Berrey was injured in an
automobile accident at work. The at‐fault driver, who did
not work with Berrey, carried liability insurance, but the cost
of Berrey’s injuries exceeded the insurance policy’s limit.
Berrey received partial compensation under her employer’s
workers’ compensation scheme but, because her employer
was not legally responsible for the accident, state law granted
2 No. 13‐3869
the workers’ compensation carrier a lien on any recovery
Berrey received from the at‐fault driver. To satisfy that lien,
the at‐fault driver’s liability insurer paid its full policy limit
directly to the workers’ compensation carrier.
Defendant Travelers Indemnity Company of America
provided underinsured motorist coverage to Berrey’s em‐
ployer. The policy covered an employee injured by a third‐
party tortfeasor who did not carry adequate auto insurance
to fully compensate the employee for her loss. Pursuant to
this policy, Travelers paid Berrey the difference between her
total calculated damages and the at‐fault driver’s policy lim‐
it. Berrey claims that Travelers improperly deducted the at‐
fault driver’s insurance payment from the total it owed to
Berrey because that payment was made directly to the work‐
ers’ compensation carrier rather than to Berrey herself. She
argues that the language of Travelers’s underinsured motorist
policy precludes such a deduction. Because we read the lan‐
guage of the policy to support Travelers’s calculation and be‐
cause Berrey’s reading would undermine the purpose of un‐
derinsured motorist coverage, we disagree and affirm the dis‐
trict court’s grant of summary judgment in favor of Travelers.
I. Background
On March 26, 2009, Berrey, an employee of Curry Ice &
Coal, Inc., was on duty when her vehicle collided with an‐
other driven by Sheri A. Campbell. Campbell, who was not
employed by Curry Ice, was found at fault for the accident.
An arbitral panel constituted pursuant to an agreement be‐
tween Berrey and Curry Ice issued a binding opinion, which
calculated Berrey’s total damages at $310,000, inclusive of all
medical expenses.
No. 13‐3869 3
Berrey, an Illinois resident, initiated three independent
proceedings to recover for her injuries: (1) a workers’ com‐
pensation claim against Curry Ice; (2) a liability claim against
Campbell; and (3) an underinsurance claim against Travel‐
ers, a Connecticut corporation which provided underinsured
motorist (“UIM”) coverage to Curry Ice for the vehicle that
Berrey was driving at the time of the accident.
Berrey first received $103,224.02 in workers’ compensa‐
tion benefits.1 Pursuant to § 5(b) of the Illinois Workers’
Compensation Act, 820 Ill. Comp. Stat. 305, Curry Ice ac‐
quired a workers’ compensation lien against any recovery
that Berrey subsequently obtained from Campbell.2 Camp‐
bell’s liability insurance carried a policy limit of $100,000,
which her insurer paid directly to Curry Ice to satisfy the
workers’ compensation lien.
1 This figure includes $51,535.27 in medical bills; $26,106.25 in temporary
total disability benefit payments; and $25,582.50 in permanent partial
disability benefit payments.
2 When an Illinois employee is injured by a third party while acting with‐
in the scope of her employment, she is entitled to workers’ compensation
from her employer but may also sue the third‐party tortfeasor for dam‐
ages. 820 Ill. Comp. Stat. 305/5(b). The Illinois Workers’ Compensation
Act grants the employer a lien on any recovery obtained from the tort‐
feasor, up to the total value of the workers’ compensation benefits paid
to the employee. Id.; see also Ullman v. Wolverine Ins. Co., 269 N.E.2d 295,
298 (Ill. 1970) (“[A]n employee who has received compensation under
the Act is required to reimburse the employer from any recovery the
employee receives from a third party legally responsible for the employ‐
ee’s injuries.”). The purpose of the legislative scheme is to “allow[] both
the employer and the employee an opportunity to reach the true offend‐
er while preventing the employee from obtaining a double recovery.” J.L.
Simmons Co. ex rel. Hartford Ins. Grp. v. Firestone Tire & Rubber Co., 483
N.E.2d 273, 276 (Ill. 1985).
4 No. 13‐3869
The underinsured motorist policy issued to Curry Ice by
Travelers (the “Policy”) carried a limit of $1 million per acci‐
dent. Travelers paid Berrey $210,000—the difference be‐
tween her total calculated damages ($310,000) and the pay‐
ment from Campbell’s insurer toward the workers’ compen‐
sation lien ($100,000).
Under the Policy, which covered all vehicles owned by
Curry Ice, Travelers agreed to “pay all sums the ‘insured
[employee]’ is legally entitled to recover as compensatory
damages from the owner or driver of an ‘underinsured motor
vehicle.’” Any recovery is subject to the following limitations:
D. Limit of Insurance … .
2. Except in the event of a “settlement
agreement,” the Limit of Insurance for this
coverage shall be reduced by all sums paid
or payable:
a. By or for anyone who is legally re‐
sponsible, including all sums paid un‐
der this Coverage Form’s Liability Cov‐
erage.
b. Under any workers’ compensation,
disability benefits or similar law … .
4. No one will be entitled to receive dupli‐
cate payments for the same elements of
“loss” under this Coverage Form and any
Liability Coverage Form.
Berrey claims that, according to these provisions, Travel‐
ers owes her an additional $100,000. She first argues that the
language of Section D.2 permits only a reduction in the policy
No. 13‐3869 5
limit (here, $1 million) equal to workers’ compensation bene‐
fits paid, not a reduction in the amount due if the insured’s
claim falls below the policy limit. Berrey also contends that,
under Section D.4, she never “receive[d]” the $100,000 pay‐
ment from Campbell because it was paid directly to Curry
Ice to satisfy the workers’ compensation lien; therefore, she
would receive no impermissible “duplicate payment[]” if
Travelers were to pay her an additional $100,000.
The district court rejected these arguments and awarded
summary judgment to Travelers, determining that the
$210,000 UIM payment fulfilled Travelers’s obligations un‐
der the Policy. The court also denied Berrey’s subsequent
motion to alter or amend the judgment, emphasizing that
Berrey received the benefit of the $100,000 paid by Camp‐
bell’s insurer toward the workers’ compensation lien and
that awarding Berrey an additional $100,000 would therefore
constitute a prohibited double recovery. Berrey appeals.
II. Discussion
We review a district court’s award of summary judgment
de novo. O’Leary v. Accretive Health, Inc., 657 F.3d 625, 630
(7th Cir. 2011). Because our jurisdiction is based on diversity
of citizenship, the resolution of substantive issues is gov‐
erned by the applicable state law. Aeroground, Inc. v. Center‐
Point Props. Trust, 738 F.3d 810, 813 (7th Cir. 2013). The par‐
ties agree that Illinois law applies.
The Illinois Supreme Court has noted that the underlying
purpose of underinsured motorist coverage is to “place the
insured in the same position he would have occupied if the
tortfeasor had carried adequate insurance.” Phoenix Ins. Co.
v. Rosen, 949 N.E.2d 639, 646 (Ill. 2011) (citation and internal
6 No. 13‐3869
quotation marks omitted). The legislative history of § 143a‐2
of the Illinois Insurance Code, 215 Ill. Comp. Stat. 5, which
establishes the parameters of UIM coverage, confirms that it
serves to “fill the gap between the claim and the amount
available from the underinsured.” Sulser v. Country Mut. Ins.
Co., 591 N.E.2d 427, 430 (Ill. 1992) (quoting 81st Gen. As‐
semb., House Proceedings 44–45 (Ill. 1980)). UIM coverage is
not intended to permit an injured employee to collect more
than she would have been entitled to receive from the tort‐
feasor alone.
Here, if Campbell had carried liability insurance in the
amount of $310,000 (Berrey’s total damages) rather than
$100,000, Campbell’s policy would have fully compensated
Berrey for her loss. Of that hypothetical $310,000 insurance
payment, $103,224.02 would have been paid to Curry Ice to
satisfy the workers’ compensation lien and the remainder
($206,775.98) would have gone to Berrey. In reality, Berrey
has $210,000 (the UIM payment from Travelers) in her pos‐
session, and the workers’ compensation lien has been satis‐
fied via the $100,000 payment from Campbell’s insurer.3 She
is therefore already in a marginally better position than she
would have occupied had Campbell carried adequate insur‐
ance. Awarding Berrey an additional $100,000 would leave
her with $310,000 in pocket, plus the $103,224.02 she re‐
ceived in workers’ compensation benefits, for a total of over
3 Although the $100,000 payment from Campbell’s liability insurer was
slightly lower than the total value of workers’ compensation benefits
Berrey received ($103,224.02), the lien was nevertheless deemed fully
satisfied. The workers’ compensation lien operated only against pay‐
ments Berrey recovered from Campbell and the outstanding balance
($3,224.02) exceeded Campbell’s policy limit.
No. 13‐3869 7
$413,000 in damages—an unmerited windfall that far exceeds
the arbitral panel’s damages calculation. To permit such a
double recovery would flout the stated purpose behind Illi‐
nois’s underinsured motorist coverage scheme.
The plain meaning of the Policy language also contra‐
dicts Berrey’s position. Illinois law requires us to interpret an
insurance policy as a whole, taking into consideration the
type of insurance purchased, the overall purpose of the con‐
tract, and the nature of the risks involved. Am. States Ins. Co.
v. Koloms, 687 N.E.2d 72, 75 (Ill. 1997). The policy’s language
must be construed according to the general rules of contract
interpretation: so long as the language is unambiguous, it
will be enforced as written, but only to the extent that it does
not contravene public policy. Hobbs v. Hartford Ins. Co. of the
Midwest, 823 N.E.2d 561, 564 (Ill. 2005). In the event of an
ambiguity, the policy’s terms should be construed strictly
against the drafter (here, Travelers). Am. States Ins. Co., 687
N.E.2d at 75. However, a policy will be considered ambigu‐
ous only where its language is subject to more than one rea‐
sonable interpretation—we “will not strain to find an ambi‐
guity where none exists.” Hobbs, 823 N.E.2d at 564. Consid‐
ered in the context of the Policy as a whole, we conclude that
the language of Section D.4 is susceptible to only one rea‐
sonable interpretation.
As an initial matter, Berrey correctly points out that Sec‐
tion D.2 refers specifically to policy limits—that is, the max‐
imum amount of underinsurance available—not the pay‐
ment due on a claim whose value is less than the applicable
policy limit. Because here the $1 million policy limit is signif‐
icantly higher than Berrey’s total damages ($310,000), the
8 No. 13‐3869
question of limit reductions is irrelevant and Section D.2 is
inapplicable.4
Instead, Section D.4 is determinative. It specifies, “No
one will be entitled to receive duplicate payments for the
same elements of ‘loss’ under this Coverage Form and any
Liability Coverage Form.” Berrey contends that this provi‐
sion is not implicated because she never “receive[d]” the
$100,000 payment from Campbell’s insurer. Because that
amount was paid directly to Curry Ice to satisfy the workers’
compensation lien, as opposed to being paid first from
Campbell’s insurer to Berrey and then from Berrey to Curry
Ice, she claims that the requested $100,000 from Travelers
would not constitute a duplicate payment.
However, the simple act of cutting out the middleman
cannot alter the conclusion that Berrey “receive[d]” Camp‐
bell’s payment within the meaning of Section D.4. Although
the $100,000 was not paid directly to her, she obtained the
full benefit of that payment in its satisfaction of the workers’
compensation lien. Had Campbell made the $100,000 pay‐
ment directly to Berrey, Berrey would have been obligated to
apply that payment toward the workers’ compensation lien
herself. See Sulser, 591 N.E.2d at 428. Further, according to
Illinois law, Campbell’s insurer would have risked liability
4 The district court found that although Section D.2 explicitly refers only
to policy limits, when read together with Section D.4, it “clearly [is]
meant to allow a setoff of any amounts recovered in workers’ compensa‐
tion benefits by the insured.” Berrey v. Travelers Indem. Co. of Am., 917
F Supp. 2d 873, 881 (C.D. Ill. 2013). While this may be a plausible reading
of the Policy, we need not strain the text of Section D.2 to extend to
claims like Berrey’s, where policy limits are not at issue.
No. 13‐3869 9
under the lien if it had not paid the $100,000 directly to Cur‐
ry Ice. Under the Illinois Workers’ Compensation Act, once
an insurer receives notice of a workers’ compensation lien, it
may not enter into a settlement agreement with an injured
employee without the consent of her employer. See 820 Ill.
Comp. Stat. 305/5(b) (“No release or settlement of claim for
damages by reason of [employee’s injury by a third party] …
shall be valid without the written consent of both employer
and employee … .”); see also Hartford Accident & Indem. Co. v.
D.F. Bast, Inc., 372 N.E.2d 829, 833 (Ill. App. Ct. 1977).
Given the structure of the Illinois workers’ compensation
scheme, the fact that Campbell’s insurer paid the $100,000
directly to Curry Ice—presumably as a matter of conven‐
ience—had no practical effect on the amount that Berrey
walked away with at the end of the day. To hold, based on a
mere technicality, that Berrey did not “receive” the $100,000
payment would be to unreasonably interpret Section D.4,
and Illinois law permits us to consider only reasonable in‐
terpretations of insurance policy language. See Hobbs, 823
N.E.2d at 564.
Berrey relies almost exclusively on the Illinois Appellate
Court opinion, Roberts v. Northland Insurance Co., 685 N.E.2d
371 (Ill. App. Ct. 1997), overruled on other grounds by 705
N.E.2d 762 (Ill. 1998), to support her reading of the term “re‐
ceive.” In Roberts, the court calculated the amount by which
UIM coverage providers could reduce their policy limits via
a setoff of workers’ compensation benefits paid. At first
glance, the facts appear similar to those of the instant case:
Roberts was injured on the job by an underinsured third‐
party tortfeasor and was partially compensated for his loss
through a combination of workers’ compensation benefits,
10 No. 13‐3869
the tortfeasor’s liability insurance, and underinsured motor‐
ist coverage. Id. at 372. The applicable policy provisions al‐
lowed the UIM coverage providers to reduce their policy
limits by amounts received both from workers’ compensa‐
tion and from the tortfeasor. Id. Roberts’s total estimated
damages were in excess of $1 million. 705 N.E.2d at 763. He
received $246,114.26 in workers’ compensation benefits. 685
N.E.2d at 372. The tortfeasor’s liability coverage, which was
limited to $50,000, was applied directly to the workers’ com‐
pensation lien. Id. at 374. At issue was whether the UIM pro‐
viders could deduct $246,114.26 from their policy limits as a
setoff for workers’ compensation benefits paid or whether
they were limited to a deduction of only $196,114.26—the
difference between the workers’ compensation benefits and
the $50,000 payment from the tortfeasor.
In holding that a deduction of only $196,114.26 was ap‐
propriate, the court concluded that, because Roberts “did
not actually recover the $50,000” from the tortfeasor but ra‐
ther, that amount was applied directly to the workers’ com‐
pensation lien, the trial court did not err in denying a setoff
for the full $246,114.26.5 Id.
5 The Roberts court noted that after the tortfeasor’s $50,000 payment was
applied to the workers’ compensation lien, the workers’ compensation
benefits were “reduced by the $50,000 received from [the tortfeasor], for
a net benefit of $196,114.26.” 685 N.E.2d at 372. This calculation of “net”
benefits is questionable. The $50,000 payment may have reduced the
amount of the lien that Roberts’s employer obtained against the tortfea‐
sor, but it did not alter the value of the benefits themselves. Whether we
calculate the benefits Roberts received as $246,114.26 from workers’
compensation or as $196,114.26 from workers’ compensation plus
$50,000 from the tortfeasor’s liability insurer, the fact remains that Rob‐
erts received tangible benefits totaling $246,114.26, which perhaps the
No. 13‐3869 11
Although on appeal, the Illinois Supreme Court did not
directly address the question of whether Roberts received the
$50,000 payment from the tortfeasor’s insurance carrier, the
court noted in its recounting of the factual history that the
tortfeasor’s liability insurer had “paid [Roberts] $50,000 pur‐
suant to [the tortfeasor’s] policy.” 705 N.E.2d at 763. This
phrasing casts doubt on the appellate court’s conclusion that
Roberts did not “recover” that payment. As the district court
below correctly observed, “Nothing in the Illinois Supreme
Court’s opinion reflects the Illinois Appellate Court’s ‘find‐
ing’ that [Roberts] never received $50,000 from the tortfeasor
because it was applied to the workers’ compensation lien.”
Berrey v. Travelers Indem. Co. of Am., No. 11‐3426, at 10–11
(C.D. Ill. Nov. 20, 2013).
Further, regardless of whether we must accept the appel‐
late court’s characterization of the tortfeasor’s insurance
payment, Roberts is not controlling here. Roberts dealt with
reductions in policy limits rather than in amounts due.
There, the court grappled with the limits of coverage under a
UIM policy where the plaintiff’s actual damages exceeded
any potentially applicable policy limit. Roberts’s actual
damages totaled more than $1 million while the available
UIM coverage was limited to $820,000, before any deductions
UIM insurers should have been permitted to offset. Contrary to the sug‐
gestion of the district court below, a deduction in that amount would not
have constituted an impermissible double setoff.
The Illinois Supreme Court partially overruled Roberts, see 705
N.E.2d 762, but did not analyze the correctness of the appellate court’s
arrival at the $196,114.26 figure. However, irrespective of the accuracy of
the Illinois Appellate Court’s reasoning, Roberts presented a distinct set
of facts and, as a result, does not govern here.
12 No. 13‐3869
for workers’ compensation benefits received or payments
made by the tortfeasor. 685 N.E.2d at 372. Given a maximum
limit less than the total amount of Roberts’s damages, the
Roberts court faced a situation where, no matter how strict its
ruling on setoffs, Roberts would remain undercompensated
for his loss. Whatever the reasoning of the Roberts court’s
denial of the $50,000 setoff, that denial simply ensured that
less of Roberts’s damages went unpaid—it did not create a
scenario that placed Roberts in a better position than he
would have occupied had the tortfeasor carried liability in‐
surance sufficient to compensate him for his loss. The court’s
refusal to allow the $50,000 UIM limit reduction did not
permit Roberts a double recovery.
By contrast, Travelers’s UIM insurance policy carries a
limit of $1 million—an amount that far exceeds any actual
damages Berrey incurred. To refuse to consider the $100,000
payment from Campbell’s insurer as an amount that Berrey
“receive[d]” would lead to an impermissible double recov‐
ery, leaving Berrey better off than she would have been had
Campbell possessed sufficient insurance. The Roberts court
faced no such contravention of the purpose underlying UIM
coverage. As a result of this crucial distinction, Roberts does
not bind us here.
III. Conclusion
For the foregoing reasons, we AFFIRM the district court’s
grant of summary judgment in favor of Travelers.