FIRST DIVISION
April 18, 2011
No. 1-10-0114
IN THE APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
LORYANN JOHNSON, ) Appeal from the
) Circuit Court of
Plaintiff-Appellee, ) Cook County.
)
v. )
)
AYALNESH A. TIKUYE AND AMIGO ) No. 06 L 5892
DRIVING SCHOOL, )
)
Defendants )
)
(The People ex rel. The Department of )
Central Management Services, ) The Honorable
) William Maddux,
Intervening Plaintiff-Appellant). ) Judge Presiding.
)
JUSTICE LAMPKIN delivered the judgment of the court, with
opinion.
Presiding Justice Hall and Justice Hoffman concurred in the
judgment and opinion.
O P I N I O N
This case involves a worker’s compensation lien. The State
of Illinois ex rel. the Department of Central Management Services
(CMS) intervened in a negligence action brought by plaintiff,
Loryann Johnson, against third-party tortfeasors, Ayalnesh Tikuye
and Amigo Driving School, following a car accident. After
1-10-0114
Johnson was awarded proceeds in an arbitration, CMS filed a
motion to enforce its worker’s compensation lien against that
award pursuant to section 5(b) of the Workers’ Compensation Act
(Act) (820 ILCS 305/5(b) (West 2004)). The circuit court awarded
CMS limited lien recovery.
On appeal, CMS contends the circuit court erred in
conducting an evidentiary hearing to determine whether Johnson’s
injuries were work-related or attributable to another source
where no such hearing was necessary because the arbitrator
determined in an evidentiary hearing that the work-related car
accident proximately caused Johnson’s injuries and set the
arbitration award accordingly. In the alternative, CMS contends
the circuit court erred in relying on the testimony of Johnson’s
sole witness. Based on the following, we reverse and remand.
FACTS
On June 8, 2004, Johnson, a license examiner for the
Secretary of State, was injured when Tikuye backed up over a curb
and hit a light pole. Johnson sought treatment for neck and back
injuries. Johnson was diagnosed with an L5/S1 disc herniation.
Johnson continued treatment and did not return to work until
March 2007. Johnson filed a worker’s compensation claim and was
awarded a total of $123,147.53, which included $75,038.64 for
medical payments, $34,338.95 for lost wage payments, and
2
1-10-0114
$13,769.94 for settlement of the claim.
Johnson brought a negligence action against defendants,
Tikuye and Amigo Driving School.1 On June 15, 2009, a binding
arbitration was held in which Johnson sought $250,000 based on
$77,833.66 in medical bills and $84,000 in lost wages because the
“motor vehicle accident caused the L5-S1 [bulge], or at least
aggravated her degenerat[ive] facet disease.” Defendants
countered that Johnson was entitled to recover only $40,000. CMS
filed a petition to intervene to protect its worker’s
compensation lien rights in the amount of $123,147.53.
The arbitrator conducted a hearing to determine the
proximate cause of Johnson’s injuries. The hearing consisted of
the testimony of Johnson and defendants as well as “extensive
material and medical evidence.” In a written opinion, the
arbitrator concluded that the majority of Johnson’s medical
bills, namely, $42,375 for “304 visits for doctor care,” were
“excessive” in light of the diagnosis. Without elaborating, the
arbitrator further found Johnson’s lost wages, namely, $28,000
per year, were subject to reduction. The arbitrator noted that
plaintiff had a prior back injury requiring care in October 2001
and that defendants argued the “facet injections” Johnson
1
The car involved in the accident was owned by Amigo Driving
School.
3
1-10-0114
received were for a “degenerative condition.” The arbitrator
ultimately awarded plaintiff a gross amount of $118,700, but
reduced the award by 20% because of Johnson’s comparative fault
for failing to use her second brake to avoid the accident,
ultimately awarding her $94,960. The arbitrator did not provide
a breakdown of the award.
CMS filed a motion to enforce its subrogation lien
recognizing that, because Johnson was awarded less than paid in
worker’s compensation proceeds, CMS was entitled only to $71,220,
which was Johnson’s arbitration award less 25% for statutorily
prescribed attorney fees in bringing the negligence claim.
Johnson filed a response arguing that the trial court should
scrutinize the arbitration award to determine what portion was
related to her injuries resulting from the accident because CMS’s
lien could attach only to those proceeds.
On November 17, 2009, the trial court entertained arguments
regarding whether it should enforce the entirety of the lien or
adjudicate the eligible proceeds for the lien. CMS stated, on
more than one occasion, that it was willing to engage in an
evidentiary hearing even though it was unnecessary. Relying on
Fret v. Tepper, 248 Ill. App. 3d 320, 618 N.E.2d 526 (1993), and
the fact that there was no transcript from the arbitration, the
trial court ruled that it would hold an evidentiary hearing.
4
1-10-0114
On December 1, 2009, the trial court conducted the
evidentiary hearing. CMS’s expert, Kevin Kulczyski, a
chiropractor at the Taylor-Ogden Medical Center, testified that
he treated Johnson following her June 2004 accident. During that
treatment period, Dr. Kulczyski referred Johnson to Dr. Gale
Rosseau for an electromyography and a nerve conduction velocity
test and to Dr. Fink, an orthopedic spine surgeon. Dr. Kulczyski
testified that the referrals were necessary and reasonable due to
Johnson’s L5/S1 injury, which he described as “the worst
condition for the disc.” Dr. Kulczyski saw Johnson for
approximately 300 outpatient visits. According to Dr. Kulczyski,
the 300 visits were necessary to provide Johnson with relief
while awaiting future treatment plans from the specialists. When
asked whether Johnson’s injury resulted from a work-related
accident, Dr. Kulczyski said “[w]hen she came into my office
[Johnson] said she got hurt at work in a motor vehicle accident.
That’s all I know.” Dr. Kulczyski submitted all of his bills to
Johnson’s employer for worker’s compensation. Dr. Kulczyski
testified that it was reasonable and necessary for Johnson not to
return to work for three years pursuant to the injury and her job
requirements.
On cross-examination, Dr. Kulczyski testified that he based
his opinion of the cause of Johnson’s injury on what she told
5
1-10-0114
him. Dr. Kulczyski stated that he could not know what portion of
the condition for which he gave treatment was attributable to the
accident or to a preexisting back condition. Dr. Kulczyski
testified that, after reviewing the medical records of the
specialists, there was an indication that Johnson had a
degenerative back condition. Dr. Kulczyski, however, opined that
Johnson had a disc extrusion that was the “worse [sic] I have
ever seen of anything in my practicing career.”
Johnson’s expert, Dr. Mark Sloan, a board-certified
anesthesiologist and pain physician, testified that he reviewed
Johnson’s medical file in connection with the underlying case.2
Dr. Sloan opined that Johnson sustained a soft tissue injury,
which is a cervical or lumbar sprain, as a result of the June
2004 accident. According to Dr. Sloan, such an injury required
five to six weeks of physical therapy. Physical therapy at the
Taylor-Ogden Medical Center for the recommended five- to six-week
period would cost $4,625. Dr. Sloan opined that Johnson’s
additional treatments were not related to the accident. Dr.
Sloan based his opinion on “preexistence and the fact of the
nature of the type of findings on MRI and subsequent diagnostic
tests that do not correlate with a soft tissue injury.” Based on
2
Dr. Sloan provided a medical report to defendants in the
arbitration proceeding.
6
1-10-0114
his review of Johnson’s medical records, Dr. Sloan opined that
she had a degenerative disc disease of the lumbar and cervical
spine prior to the June 2004 accident.
On cross-examination, Dr. Sloan testified that he did not
treat Johnson for any injuries. Dr. Sloan said he was not an
orthopedic physician.
The trial court issued a written opinion finding CMS’s lien
recovery was $42,286.88. The trial court calculated its award
based on the arbitrator having awarded Johnson 47.5% of her
requested negligence damages, i.e., she was awarded $118,700 when
she requested $250,000. “Applying the same reduction,” the trial
court found that it was “fair and reasonable” to reduce CMS’s
requested lien3 by 47.5%, thereby awarding $42,286.88.
DECISION
I. Adjudication of Liability
The question before us is whether the trial court erred in
conducting a further evidentiary hearing in order to adjudicate
CMS’s lien. CMS contends that the statute does not provide for
such a hearing where the arbitrator already conducted an
evidentiary hearing and awarded proceeds based on its findings of
eligible work-related costs.
3
We note that the trial court’s order incorrectly represents
that CMS’s requested recovery was $89,025.
7
1-10-0114
Resolution of this issue involves statutory interpretation,
which is a question of law we review de novo. In re Estate of
Dierkes, 191 Ill. 2d 326, 330, 730 N.E.2d 1101 (2000).
It is well established that the primary goal of statutory
interpretation is to ascertain and give effect to the
legislature’s intent by reading the plain language of the statute
as a whole and giving the language its practical and liberal
interpretation. Id. at 331.
Pursuant to section 5(b) of the Act, an employer has a right
to reimbursement for compensation paid to an employee when the
employee sustained an injury as a result of a third party and
recovers from that party. Porro v. M.W. Powell Co., 224 Ill.
App. 3d 175, 177, 586 N.E.2d 458 (1991). In relevant part,
section 5(b) provides:
“Where the injury or death for which compensation is
payable under this Act was caused under circumstances
creating a legal liability for damages on the part of
some person other than his employer to pay damages,
then legal proceedings may be taken against such other
person to recover damages notwithstanding such
employer’s payment of or liability to pay compensation
under this Act. In such case, however, if the action
against such other person is brought by the injured
8
1-10-0114
employee or his personal representative and judgment is
obtained and paid, or settlement is made with such
other person, either with or without suit, then from
the amount received by such employee or personal
representative there shall be paid to the employer the
amount of compensation paid or to be paid by him to
such employee or personal representative ***. ***
Out of any reimbursement received by the employer
pursuant to this Section the employer shall pay his pro
rata share of all costs and reasonably necessary
expenses in connection with such third-party claim,
action or suit and where the services of an attorney at
law of the employee or dependents have resulted in or
substantially contributed to the procurement by suit,
settlement or otherwise of the proceeds out of which
the employer is reimbursed, then, in the absence of
other agreement, the employer shall pay such attorney
25% of the gross amount of such reimbursement.
If the injured employee or his personal
representative agrees to receive compensation from the
employer or accept from the employer any payment on
account of such compensation, or to institute
proceedings to recover the same, the employer may have
9
1-10-0114
or claim a lien upon any award, judgment or fund out of
which such employee might be compensated from such
third party.” 820 ILCS 305/5(b) (West 2004).
In other words, the statute “grants the employer a lien on
the recovery equal to the amount of workers’ compensation
benefits paid or owed.” In re Estate of Dierkes, 191 Ill. 2d at
328. The practical and liberal operation of the Act provides
prompt and equitable compensation to employees that have suffered
an injury while working regardless of fault, yet allows both the
employee and employer to recover from the true offender while
preventing the employee from obtaining double recovery. Id. at
331-32.
The supreme court has succinctly stated:
“There is nothing in the statute that suggests a
limitation on the employee’s obligation of
reimbursement from the third-party recovery. If an
employer has made workers’ compensation payments, the
obligation of reimbursement exists regardless of the
amount that the employee recovers. [Citation.] Thus,
if the amount of compensation paid by the employer
exceeds the employee’s third-party recovery, then the
employer is entitled to the entire recovery, less fees
and costs. [Citation.] Clearly, ‘[i]t is of utmost
10
1-10-0114
importance that the trial court protect an employer’s
[workers’ compensation] lien.’ [Citation.]” Id. at
332-33.
Simply stated, CMS’s lien should have been enforced without
reduction, other than for reasonable fees and costs, where
Johnson recovered from defendants Tikuye and Amigo Driving
School. CMS compensated Johnson for more than the third-party
recovery and CMS adjusted its lien accordingly. In order to
protect CMS and prevent Johnson from receiving double recovery,
the trial court should have provided CMS with $94,960, the amount
Johnson recovered from defendants, less the 25% statutory
reduction for Johnson’s attorney fees and reasonably necessary
costs and expenses.
The statute does not provide for the arbitrary lien
reduction imposed by the trial court here. “[T]he legislature
removed impediments to the employer’s full reimbursement, and
specified setoffs thereto only for costs, expenses, and attorney
fees. Had the legislature intended the employer’s reimbursement
to be subject to additional setoffs, the legislature would have
supplied them.” Id. at 334. The trial court’s decision to
conduct an evidentiary hearing to determine whether there was a
portion of the arbitration award not related to the injury was
not provided for by statute. See Smith v. Louis Joliet
11
1-10-0114
Shoppingtown L.P., 377 Ill. App. 3d 5, 877 N.E.2d 789 (2007) (the
trial court lacked the authority to adjudicate the employer’s
lien in an amount less than the employee’s recovery from a
negligence suit). Moreover, the trial court’s decision to reduce
the lien recovery by a percentage equal to the amount the
arbitrator reduced Johnson’s requested relief was baseless. The
arbitrator determined that Johnson’s original recovery request
from defendants was excessive in light of the testimony, reports
from treating physicians, and expert evidence, and reduced the
award accordingly. There was no basis upon which the trial court
should have further reduced the arbitration award when that award
accounted for the excessive nature of Johnson’s requested
recovery and the evidence of Johnson’s degenerative condition.
We recognize that there are instances where it is necessary
for a trial court to conduct an evidentiary hearing; however,
those instances occur where settlement proceeds are not allocated
among competing claims. See Glenn v. Johnson, 198 Ill. 2d 575,
764 N.E.2d 47 (2002) (where a settlement did not allocate among
various claims, including loss of consortium, and the trial court
reduced the worker’s compensation lien without any factual basis,
the case was remanded for an evidentiary hearing to determine the
proper allocation of the settlement proceeds); Fret, 248 Ill.
App. 3d 320; Bart v. Union Oil Co., 236 Ill. App. 3d 964, 603
12
1-10-0114
N.E.2d 77 (1992) (where a settlement did not allocate among
various claims, including loss of consortium, the case was
remanded because the trial court erred in providing lien recovery
for the entire settlement amount); Porro, 224 Ill. App. 3d 175
(worker’s compensation liens cannot attach to proceeds from loss
of consortium claims).
We find Fret, the case primarily relied upon by Johnson,
distinguishable from the case at bar. In Fret, the employee was
involved in a car accident that resulted in injuries for which he
received worker’s compensation. Nearly three months later, the
employee either injured or reinjured his back while on the job
and again received worker’s compensation. The employee entered
into a settlement agreement with the third-party from the
accident for $12,000. The employer sought to adjudicate its
worker’s compensation lien in excess of $20,000. Without
conducting an evidentiary hearing, the trial court reduced the
employer’s lien recovery to $2,702.96 less 25% in attorney fees.
The trial court further concluded that the second injury was a
separate incident. On appeal, this court remanded the case to
the trial court to conduct an evidentiary hearing because there
was no factual basis to support the court’s earlier findings.
This court said, “[p]ursuant to section 5(b), to the extent that
a recovery is had from a third party, an employer is entitled to
13
1-10-0114
be reimbursed for the compensation benefits paid. To hold
otherwise would be to permit the employee to receive a double
recovery, one from the third party and the other from his own
employer.” Fret, 248 Ill. App. 3d at 326. Accordingly, an
evidentiary hearing was necessary to determine whether there were
two separate, distinct injuries resulting in two distinct claims
and what amount of the settlement was attributable to the
employer’s lien. Id.
In the case before us, the primary distinction is the fact
that the arbitrator conducted an evidentiary hearing. Although
there was no transcript of that hearing, the arbitrator’s
findings were based upon testimony and medical reports and
documentation. Consequently, there was evidence to support the
arbitrator’s award. Moreover, our case did not involve a
question of two distinct injuries requiring fund allocation;
rather, the arbitrator reduced Johnson’s third-party recovery as
a result of a degenerative condition.
Overall, the statute was intended to protect against
situations like the one before us where an employee obtains
double recovery. In re Estate of Dierkes, 191 Ill. 2d at 331-32;
Fret, 248 Ill. App. 3d at 326. While litigating her negligence
claim, Johnson consistently and repeatedly reported that all of
her medical expenses and time off of work were attributable to
14
1-10-0114
the June 2004 accident. The arbitrator awarded Johnson
compensation for what was determined reasonable and related to
the June 2004 accident. Then, while CMS pursued its lien to
recover the amount expended in worker’s compensation, Johnson
argued that her medical expenses and time off of work were
minimal as related to the June 2004 accident. Johnson’s
inconsistent argument was completely disingenuous. The trial
court’s reduced lien recovery allowed Johnson to maintain that
portion of worker’s compensation that CMS overpaid in addition to
the amount of recovery from defendants that the trial court
deemed excessive.
II. Remaining Contentions
We need not address CMS’s remaining contentions.
CONCLUSION
We reverse the judgment of the trial court reducing CMS’s
worker’s compensation lien and find that CMS is entitled to lien
recovery on the entire arbitration award less 25% for attorney
fees, i.e., $94,960 less 25% or $71,220, and a pro rata share of
reasonable costs and expenses, which have yet to be determined.
Accordingly, we remand this case to the trial court to assess
reasonable costs and expenses.
Reversed; remanded with instructions.
15
1-10-0114
REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT
LORYANN JOHNSON,
Appellee,
v.
AYALNESH A. TIKUYE AND AMIGO DRIVING SCHOOL,
Defendants
(The People ex rel. The Department of Central Management
Services,
Intervening Plaintiff-Appellant).
No. 1-10-0114
Appellate Court of Illinois
First District, FIRST DIVISION
April 18, 2011
JUSTICE LAMPKIN delivered the judgment of the court, with opinion.
Presiding Justice Hall and Justice Hoffman concurred in the
judgment and opinion.
Appeal from the Circuit Court of Cook County.
The Hon. William Maddux, Judge Presiding.
16
1-10-0114
COUNSEL FOR INTERVENING PLAINTIFF-APPELLANT
Lisa Madigan, Attorney General, State of Illinois, and
Michael A. Scodro, Solicitor General, Chicago, IL 60601
OF COUNSEL: Evan Siegel, Assistant Attorney General
COUNSEL FOR APPELLEE
Frank A. Santilli & Associates, Chicago, IL 60602
OF COUNSEL: Laura Di Andrea-Iversen
17