NO. 5-06-0273
NOTICE
Decision filed 11/05/07. The text of
IN THE
this decision may be changed or
corrected prior to the filing of a
APPELLATE COURT OF ILLINOIS
Peti tion for Rehearing or th e
disposition of the same.
FIFTH DISTRICT
________________________________________________________________________
JIM BURGESS, JR., and JAMES MUFFLEY, ) Appeal from the
) Circuit Court of
Plaintiffs-Appellees, ) St. Clair County.
)
v. ) No. 05-AR-248
)
TASHONDA BROOKS, )
)
Defendant )
) Honorable
(The People of the State of Illinois, Intervening ) Patrick M. Young,
Plaintiff-Appellant). ) Judge, presiding.
________________________________________________________________________
PRESIDING JUSTICE WELCH delivered the opinion of the court:
This case comes before us pursuant to a supervisory order from the Illinois Supreme
Court, which has directed us to vacate our previous opinion herein (Burgess v. Brooks, 374
Ill. App. 3d 545 (2007)) and reconsider the case in light of the supreme court's decision in
Gallagher v. Lenart, 226 Ill. 2d 208 (2007). Burgess v. Brooks, No. 104879 (September 26,
2007). We do so, and upon reconsideration we determine that a result different from that
reached in our previous opinion is warranted.
On February 27, 2003, the plaintiff, Jim Burgess, Jr., was driving a car while on duty
with the Illinois Secretary of State Police when he was "rear-ended" by a car being driven
by Tashonda Brooks. Burgess filed a claim for workers' compensation benefits against his
employer, the State of Illinois. Burgess and the State entered into a settlement agreement
that was approved by the Illinois Industrial Commission on August 23, 2004. The terms of
the settlement agreement included the following language: "This is a compromise settlement
of a disputed claim," and "Each party waives any right to ever reopen this claim under any
1
section of the [Workers' Compensation] Act." Burgess received $19,138.48 in settlement of
his workers' compensation claim.
Thereafter, on February 25, 2005, Burgess filed a complaint against Brooks in the
circuit court of St. Clair County. The complaint alleged that her negligence had caused the
accident and his resulting injuries. On April 20, 2005, the State filed a petition to intervene
based upon section 5(b) of the W orkers' Compensation Act (the Act) (820 ILCS 305/5(b)
(West 2004)), which allows an employer to join in an action by an employee to recover
damages from another party in cases where the employee has received workers'
compensation benefits. Leave to intervene was granted on July 29, 2005, and the State's
complaint in intervention was filed that date. The State sought to protect and preserve its
lien and right to reimbursement for amounts paid to Burgess in settlement of the workers'
compensation claim from any amounts recovered by Burgess from Brooks.
Burgess's complaint against Brooks was submitted to arbitration. Ultimately, after
finding that the parties had participated in the arbitration in good faith, the arbitrators found
in favor of Burgess and against Brooks and awarded Burgess damages in the amount of
$19,000.
On January 20, 2006, Burgess filed a motion to determine the amount of the State's
lien pursuant to section 5(b) of the Act. In the motion he argues that the State had waived
any such lien or right of reimbursement by virtue of the language in the settlement agreement
which provided, "Each party waives any right to ever reopen this claim under any section of
the Act." The State objected to the motion, arguing that it had not waived its lien by virtue
of the above-quoted language in the settlement agreement.
On April 10, 2006, the circuit court of St. Clair County ruled that the language
contained in the settlement agreement did constitute a waiver of the State's workers'
compensation lien under section 5(b) of the Act. On April 19, 2006, pursuant to Supreme
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Court Rule 304(a) (210 Ill. 2d R. 304(a)), the circuit court found that there was no just
reason for delaying the enforcement or appeal of the order. The State's notice of appeal was
filed May 10, 2006.
On appeal, the State argues that the circuit court erred in construing the settlement
agreement as containing a waiver of the State's workers' compensation lien, because the
quoted language refers only to Burgess's claim for benefits and not to the State's independent
statutory right to assert a lien. The State argues that its right to assert a lien is implied in the
settlement contract and that any waiver of the State's lien must be explicit. The only question
before us on appeal is the propriety of the circuit court's construction of the settlement
contract entered into by Burgess and the State, specifically, whether the contract effectively
waived the State's lien. This is a question of law, which we review de novo (In re Foreman,
365 Ill. App. 3d 608, 611 (2006)).
In our previous opinion, we discussed the two conflicting appellate court decisions
of Borrowman v. Prastein, 356 Ill. App. 3d 546 (2005), from the Fourth District, and
Gallagher v. Lenart, 367 Ill. App. 3d 293 (2006), from the First District, which addressed
the sufficiency of language in a settlement contract to waive the employer's workers'
compensation lien.
In Borrowman, 356 Ill. App. 3d at 550-51, the Fourth District of the appellate court
held that where an employer knew of the existence of the employee's action against a
negligent third party prior to entering into a workers' compensation settlement agreement
with the employee and where the employer did not explicitly reserve its right to a lien against
the proceeds of the third-party action in the settlement agreement but agreed that the
settlement was " 'full, final[,] and complete,' " it had effectively waived its statutory lien by
not explicitly reserving it.
In Gallagher, 367 Ill. App. 3d at 298, the First District of the appellate court rejected
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the holding of Borrowman, finding it to be "unsupported by case law, contrary to several
principles behind the Act, and at odds with general contract law." The Gallagher court held
that the absence of any reference to an employer's lien in a settlement agreement, without
more, cannot constitute a waiver of that lien but that such a waiver must be explicitly and
affirmatively stated in the agreement and cannot simply be implied by a lack of any reference
to that lien. Gallagher, 367 Ill. App. 3d at 302-03.
In our previous opinion, we found it unnecessary to determine which of these two
holdings was, in our opinion, correct. We concluded that even were we to adopt the holding
of Gallagher, it would not aid the State because, unlike Gallagher, the settlement agreement
in the case at bar does contain an explicit and affirmative waiver of the State's lien rights.
The settlement agreement in Gallagher does not contain any language even remotely similar
to that contained in the agreement in the case at bar and on which the circuit court relied.
In the settlement agreement in Gallagher, only the employee explicitly waived any rights–his
rights to review under sections 19(h) and 8(a) of the Act (820 ILCS 305/19(h), 8(a) (West
2000)). In Gallagher, there is no explicit waiver of any rights by the employer. In the case
at bar, however, the settlement agreement provides, "Each party w aives any right to ever
reopen this claim under any section of the Act." In our previous opinion, we found this
language to be sufficiently explicit and affirmative with respect to the State's waiver of its
statutory lien pursuant to section 5(b) of the Act. Accordingly, we affirmed the judgment
of the circuit court of St. Clair County.
Nevertheless, in its recent decision in Gallagher v. Lenart, 226 Ill. 2d 208 (2007), the
supreme court has made clear that, in order for an employer to waive its workers'
compensation lien in a settlement agreement, general language of release or waiver will not
suffice. On the contrary, the court held that the waiver of a workers' compensation lien must
be explicitly stated. The contract must explicitly mention the workers' compensation lien and
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indicate the employer's desire to waive it. The court stated that its ruling "will have the
salutary effect of placing both the parties and the courts in workers' compensation cases on
notice that a specific reference to the lien in a waiver provision is required before the lien
can be deemed waived." (Emphasis added.) Gallagher, 226 Ill. 2d at 239. The supreme
court explicitly overruled the holding in Borrowman. Gallagher, 226 Ill. 2d at 241.
The waiver provision of the settlement agreement in the case at bar, while appearing
to cover "any right" to "this claim under any section" of the Act, fails to specifically mention
the employer's right to a lien pursuant to section 5(b) of the Act. Accordingly, the language
of the settlement agreement is insufficient to constitute a waiver, and the employer's workers'
compensation lien cannot be deemed waived. The judgment of the circuit court of St. Clair
County that the subject language did constitute a waiver of the State's workers' compensation
lien under section 5(b) of the Act is hereby reversed.
For the foregoing reasons, the judgment of the circuit court of St. Clair County is
hereby reversed.
Reversed.
WEXSTTEN and STEWART, JJ., concur.
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NO. 5-06-0273
IN THE
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
___________________________________________________________________________________
JIM BURGESS, JR., and JAMES MUFFLEY, ) Appeal from the
) Circuit Court of
Plaintiffs-Appellees, ) St. Clair County.
)
v. ) No. 05-AR-248
)
TASHONDA BROOKS, )
)
Defendant )
) Honorable
(The People of the State of Illinois, Intervening ) Patrick M. Young,
Plaintiff-Appellant). ) Judge, presiding.
___________________________________________________________________________________
Opinion Filed: November 5, 2007
___________________________________________________________________________________
Justices: Honorable Thomas M. Welch, P.J.
Honorable James M. Wexstten, J., and
Honorable Bruce D. Stewart, J.,
Concur
___________________________________________________________________________________
Attorney Lisa Madigan, Attorney General, State of Illinois, Jan E. Hughes, Assistant Attorney
for General, 100 West Randolph Street, 12th Floor, Chicago, IL 60601
Appellant
___________________________________________________________________________________
Attorney Eric Kirkpatrick, Kirkpatrick Law Offices, P.C., #3 Executive W oods Court, Suite
for 100, Belleville, IL 62226
Appellees
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