Title: Glenn v. Johnson

State: illinois

Issuer: Illinois Supreme Court

Document:

Docket No. 91305-Agenda 36-September 2001.
MARY ANN GLENN, Adm'r of the Estate of William E. Glenn,								 Deceased,
Appellee, v. 
 HERSCHEL JOHNSON, Appellant.
Opinion filed January 25, 2002.

	JUSTICE KILBRIDE delivered the opinion of the court:
	This case involves the distribution and allocation of funds
received in a third-party settlement pursuant to a wrongful-death
action brought by the decedent's personal representative. We are
asked to consider: (1) the effect that an employer's right to
reimbursement from third-party settlements under the Workers'
Compensation Act (Act) (820 ILCS 305/1 et seq. (West 2000)) has
on the allocation of attorney fees; (2) the employer's credit for
future benefit payments under the Act, and the distribution of the
funds, as well as (3) the propriety of allocating a portion of the
funds for loss of consortium where the surviving spouse has not
filed an individual claim.
	After reviewing the parties' arguments, we hold that there is
insufficient evidence in the record to support a proper analysis on
the merits of these questions. Thus, we reverse the judgments of
the appellate court and the circuit court of St. Clair County and
remand the cause for further proceedings consistent with this
opinion.

BACKGROUND
	In 1996, the decedent, William E. Glenn, was killed while
working for his employer, Herschel Johnson, when the John Deere
tractor he was operating overturned. Johnson subsequently began
paying workers' compensation benefits pursuant to the Act (820
ILCS 305/1 et seq. (West 2000)).
	As special administratrix of the estate, the decedent's wife,
Mary Ann Glenn (Glenn), filed a complaint under the Wrongful
Death Act (740 ILCS 180/1, 2 (West 1996)) against several
defendants, including Johnson, Herschel Johnson Real Estate and
Development Corporation (development company), and John
Deere Company (John Deere). The development company settled
the case for $25,000. Johnson agreed that this settlement would
not be subject to his statutory right as the decedent's employer to
a workers' compensation reimbursement lien (lien). See 820 ILCS
305/5(b) (West 2000).
	Later, the case against John Deere was settled for $225,000,
and Glenn filed a petition as special administratrix to approve the
settlement. She subsequently petitioned the probate court to be
appointed the guardian of the estate and person of her minor son.
Next, Johnson intervened in the proceedings to assert his lien
against the settlement proceeds. Glenn subsequently filed a
petition nominating herself as the decedent's independent
administratrix under article 28 of the Probate Act of 1975 (755
ILCS 5/28-1 et seq. (West 2000)), and a petition seeking approval
and distribution of the settlement. The probate court granted letters
of administration and appointed Glenn independent administratrix.
Glenn's probate court case wrongful-death action were
consolidated, and Glenn was appointed the guardian of the estate
and person of her minor son for purposes of the litigation.
	The parties agreed that Johnson could seek a lien only on the
$225,000 settlement obtained from John Deere. After hearing the
parties' arguments, the trial court calculated the amount of
Johnson's lien using the following method. First, it deducted
approximately one-third, or $74,992.50, of the settlement for the
plaintiff's private contractual attorney fee, and $24,776.68 for
costs. This left a net settlement recovery of $125,230.82. Next, the
court found that Johnson was entitled to a $51,000 workers'
compensation lien, apparently based on the workers'
compensation benefits he had already paid. The court then
determined that Johnson was responsible for 40.7% of the total
costs, or $10,084.15, because $51,000 was 40.7% of the net
settlement recovery. The trial court also charged Johnson with an
additional 25% of his $51,000 lien as the mandatory 25% attorney
fee provided in the Act (see 820 ILCS 305/5(b) (West 2000)).
These deductions left Johnson with a net reimbursement lien of
$28,165.85.
	The trial court next ordered that Glenn and her minor son
share the remaining $84,314.97(1) from the settlement. The court
allocated half this amount, or $42,157.49, to Glenn for her loss of
consortium, society, and companionship and the other half to her
minor son. Since awards for loss of consortium are not subject to
an employer's lien under the Act, Johnson was eligible for a credit
toward his future benefit payments for only the $42,157.49
allocated to the minor child. The trial court then determined that
Johnson was entitled to a moratorium period of 146.44 weeks
($42,157.49 ÷ $287.89 per week = 146.44 weeks) on future
payments since he was making benefit payments of $287.89 per
week. He was, however, required to make weekly payments of
$71.97 on the 25% statutory attorney fee during this period.
	The appellate court affirmed, but modified the trial court's
judgment. 319 Ill. App. 3d 625. The court found that the trial court
erred by awarding fees for both one-third of the full settlement
under the plaintiff's private fee agreement and 25% of the
employer's lien under the statutory fee provisions in the Act (820
ILCS 305/5(b) (West 2000)). 319 Ill. App. 3d at 631. The court
stated that the total attorney fees should be limited to one-third of
the $225,000 settlement, or $75,000, and that the employer's share
of this amount should be 25% of its $51,000 lien, or $12,750. The
appellate court also reduced Johnson's share of the costs from
40.7% to 23% because his $51,000 lien represented only 23% of
the $225,000 settlement. 319 Ill. App. 3d at 631-32.
	The appellate court also rejected Johnson's argument that the
trial court erred by allocating half of the net recovery for Glenn's
loss of consortium. 319 Ill. App. 3d at 632. The court found that
the pleadings and transcripts adequately demonstrated that this
claim was made in the original complaint Glenn filed, even though
it was not set out as a separate count. In a footnote, the court stated
that even though the statute of limitations had run on Glenn's
consortium claim at the time of the settlement, it believed that the
"relation back" doctrine would have permitted her to amend "her
complaint" to separate out this claim. 319 Ill. App. 3d at 632 n.1.
	The appellate court then recalculated the net recovery for
purposes of the lien calculation to be $92,671.96 by subtracting
from the $225,000 settlement Johnson's net lien recovery of
$32,551.36, total attorney fees of $75,000, and costs of
$24,776.68. It allocated half of this net recovery ($46,335.98) for
loss of consortium. This yielded a moratorium period on benefit
payments of 160.95 weeks ($46,335.98 ÷ $287.89 per week =
160.95 weeks). During this time, Johnson was still obligated to
pay $71.97 per week for his share of the attorney fees. 319 Ill.
App. 3d at 634. Johnson filed a petition for leave to appeal, and
this court granted the petition. 177 Ill. 2d R. 315(a).

ANALYSIS
	The parties in this case present three issues for consideration
by this court: (1) the proper allocation of attorney fees when an
employer seeks reimbursement of amounts payable under the Act
from a third-party settlement; (2) the availability of an employer's
credit for future workers' compensation benefit payments; and (3)
the propriety of allocating a portion of a third-party settlement for
loss of consortium where the decedent's spouse did not file a
complaint as an individual.

I. Calculation of Attorney Fees
	Johnson claims that the appellate court erred by calculating
his statutory 25% share of the plaintiff's attorney fees as 25% of
the attorney's private contractual fee of 33% of the gross
settlement. He contends that the calculation is controlled by our
holding in In re Estate of Dierkes, 191 Ill. 2d 326, 331-32 (2000).
In Dierkes, this court held that where the employer's lien is greater
than the third-party settlement, the Act limits attorney fees to 25%
of the settlement amount, regardless of the amount stated in the fee
agreement. Dierkes, 191 Ill. 2d  at 335.
	We note that in Dierkes the parties agreed that the net present
value of the workers' compensation benefits due far exceeded the
settlement amount. Dierkes, 191 Ill. 2d  at 329. Here, no evidence
was taken regarding the net present value of Johnson's payment
obligation. The trial court apparently determined Johnson's share
of attorney fees based solely on the arguments presented by the
parties' counsel and took no testimony and admitted no evidence
at the hearing. Without any basis for determining the net present
value of Johnson's future benefit payments, the trial court could
not properly determine the applicability of Dierkes. Thus, we
reverse the judgments of the trial court and the appellate court and
remand the cause to the trial court for a determination of the net
present value of Johnson's liability for workers' compensation
benefit payments. After making this determination, the trial court
should consider the applicability of Dierkes and recalculate
Johnson's share of the attorney fees.

 II. Employer's Credit for Future Benefit Payments
	Johnson next argues that he is entitled to recover the entire
settlement from John Deere because his liability under the Act
exceeds the settlement amount. See Dierkes, 191 Ill. 2d  at 333. He
contends that the appellate court erred by merely awarding him a
$51,000 lien against the settlement, representing only past benefits
paid, without any credit for his future payment obligation.
	An employer may seek from any third-party recovery both a
lien for workers' compensation benefits already paid and a credit
for future payments owed pursuant to section 5(b) of the Act (820
ILCS 305/5(b) (West 2000)). Zuber v. Illinois Power Co., 135 Ill. 2d 407, 411 (1990). This court has recognized the crucial role that
the reimbursement of an employer from any third-party recovery
plays in the overall scheme of the Act. Dierkes, 191 Ill. 2d  at 331-34. Reimbursement serves to balance the interests and rights of the
employer and the employee in the settlement funds. It allows
employers to recoup " 'so much of the negligence recovery as is
necessary to reimburse it for its compensation outlay, and to give
the employee the excess,' " while providing the employee with
fuller compensation for actual damages than is available under the
Act alone. Dierkes, 191 Ill. 2d  at 332, quoting 6 A. Larson & L.
Larson, Larson's Workers' Compensation Laws §110.02, at 110-3
to 110-4 (1999).
	Here, the trial court set the amount of Johnson's recovery
without the benefit of any evidence admitted at the hearing. We
have already determined that this cause must be remanded for a
new hearing on the net present value of Johnson's payment
obligation and the recalculation of his share of the attorney fees
pursuant to Dierkes. This change will inevitably alter the other
calculations relevant to the trial court's determination of Johnson's
recovery from the settlement, requiring the court to perform its
analysis again. Thus, on remand, we additionally direct the trial
court to reevaluate Johnson's right to a credit for future payments
consistent with this court's decisions in Dierkes, 191 Ill. 2d 326,
and Zuber, 135 Ill. 2d 407.

III. Damages for Loss of Consortium
	Finally, Johnson claims that the appellate court improperly
allowed damages for loss of consortium due to its erroneous belief
that the decedent's wife could have amended the original
complaint to add a new claim for loss of consortium in her
individual capacity. Johnson contends that, while acknowledging
that the statute of limitations had expired on this claim, the
appellate court incorrectly believed that an amendment would have
been allowed because it would have "related back" to the original
filing, making it a change "of form and not of substance." 319 Ill.
App. 3d at 632 n.1.
	Johnson maintains, however, that since Glenn had not
previously filed a complaint in her individual capacity, appending
an individual claim for loss of consortium to the original
complaint would have added a separate claim by a new party.
Under these circumstances, the amendment could not have related
back to the original complaint. See McGinnis v. A.R. Abrams, Inc.,
141 Ill. App. 3d 417 (1986).
	We believe that the relation back doctrine is irrelevant in this
case. The Wrongful Death Act (740 ILCS 180/2 (West 1996))
states: "Every [wrongful-death] action shall be brought by and in
the names of the personal representatives of such deceased person,
and, *** except as otherwise hereinafter provided ***." (Emphasis
added.) Thus, to recover damages under the Wrongful Death Act,
the decedent's personal representative must file the cause of action
alleging wrongful death. Pasquale v. Speed Products Engineering,
166 Ill. 2d 337, 360-61 (1995). The personal representative is
merely a nominal party to this action, effectively filing suit as a
statutory trustee on behalf of the surviving spouse and next of kin,
who are the true parties in interest. VanMeter v. Goldfarb, 317 Ill. 620, 622 (1925); In re Estate of Fields, 588 S.W.2d 50, 53 (Mo.
App. 1979) (applying Illinois law).
	In addition, the Wrongful Death Act provides that "the
amount recovered in every [wrongful-death] action shall be for the
exclusive benefit of the surviving spouse and next of kin of such
deceased person ***." (Emphasis added.) 740 ILCS 180/2 (West
1996). This provision is designed "to compensate the surviving
spouse and next of kin for the pecuniary losses sustained due to
the decedent's death." Elliott v. Willis, 92 Ill. 2d 530, 540 (1982).
See also Knierim v. Izzo, 22 Ill. 2d 73, 82 (1961); Hall v. Gillins,
13 Ill. 2d 26, 30 (1958). This court has recognized loss of
consortium as a compensable "pecuniary injury" under the
Wrongful Death Act. Elliott, 92 Ill. 2d  at 540.
	Here, the decedent's personal representative is the
administratrix of his estate, Glenn. As the decedent's personal
representative, Glenn properly filed a cause of action under the
Wrongful Death Act alleging, inter alia, that due to the decedent's
death his next of kin "have sustained other pecuniary damage,
including loss of his love, companionship, society, affection,
guidance, comfort and consortium." This allegation undeniably
sought damages for loss of consortium on behalf of the decedent's
surviving spouse. As the surviving spouse, Glenn was a real party
in interest in the original complaint. Thus, the amount recovered
for loss of consortium is for her exclusive benefit and not subject
to the workers' compensation lien of the decedent's employer. See
Page v. Hibbard, 119 Ill. 2d 41, 47-48 (1987).
	The identity of the personal representative who filed the
complaint is irrelevant since the representative is merely a nominal
party acting on behalf of the true beneficial plaintiffs, who include
Glenn in this case. See Wilbon v. D.F. Bast Co., 73 Ill. 2d 58, 68
(1978); VanMeter v. Goldfarb, 317 Ill. 620, 622 (1925); In re
Estate of Fields, 588 S.W.2d 50, 53 (Mo. App. 1979) (applying
Illinois law). Thus, requiring Glenn to file an amendment to the
original complaint for loss of consortium in her individual capacity
would be unnecessarily duplicative and have no substantive effect
on the cause of action. See Knierim, 22 Ill. 2d  at 82-83 (holding
that a surviving spouse may not seek damages for loss of
consortium under both the Wrongful Death Act and the common
law since the differences between the two counts are not
sufficiently significant).
	Moreover, only the decedent's personal representative is
permitted to file a claim under the Wrongful Death Act. The
statute does not authorize the filing of individual causes of action.
740 ILCS 180/2 (West 1996) ("Every such action shall be brought
by and in the names of the personal representatives of" the
decedent (emphases added)). See also Hall, 13 Ill. 2d  at 30
(recognizing that the requirement of a single action filed on behalf
of the beneficial plaintiffs avoids multiple lawsuits); Johnson v.
Village of Libertyville, 150 Ill. App. 3d 971, 974 (1986) (noting
that the Wrongful Death Act does not create any individual right
to sue). In the context of the wrongful-death action filed in the
instant case, it would be futile to require Glenn to file an
additional claim as an individual to protect her interests under the
Wrongful Death Act as the decedent's surviving spouse.
	Finally, we note that the settlement in this case did not
apportion the award between the two beneficiaries. Although trial
courts have the authority to allocate settlement proceeds among
competing claims (see Bart v. Union Oil Co., 236 Ill. App. 3d 964,
966 (1992)), such determinations must be made based on adequate
factual support (see Fret v. Tepper, 248 Ill. App. 3d 320, 328
(1993)).  In addition, the Wrongful Death Act requires the trial
judge to "conduct a hearing to determine the degree of dependency
of each beneficiary upon the decedent" prior to calculating the
damages to be awarded to each beneficiary. 740 ILCS 180/2 (West
1996).  Our review of the record in this case reveals that no such
hearing was held and that the trial court had virtually no basis for
allocating the settlement proceeds between Glenn's claim and the
claim of her minor son. The only facts in the record that are
relevant to this determination may be gleaned from comments
made during counsel's arguments at the hearing. These comments
reveal that Glenn is a registered nurse and that the decedent was
apparently working only part-time, earning relatively low wages,
at the time of his death.
	Due to this dearth of evidence, the trial court had no basis in
the record to support any allocation of the settlement. Thus, we
reverse the judgments of the appellate and trial courts and remand
the cause for further evidentiary proceedings on the proper
allocation of the settlement proceeds. On remand, the trial court
should allocate the settlement proceeds fairly and reasonably in
light of the entire settlement and taking into account that
Johnson's lien does not attach to Glenn's loss of consortium award
as well as the importance of protecting Johnson's lien rights under
section 5(b) of the Workers' Compensation Act. See Page, 119 Ill.
2d at 47-48; Bart, 236 Ill. App. 3d at 966.

CONCLUSION
	In sum, we hold that the trial court did not have a sufficient
evidentiary basis to issue an order allocating a portion of the
plaintiff's attorney fees to Johnson, setting the amount of
Johnson's lien and credit for future benefit payments, and
allocating the settlement between the claims of Glenn and her
minor son. On remand, the trial court should hear all the evidence
necessary to enter reasoned decisions on each of these issues.
	The judgments of the appellate court and the trial court are
reversed, and the cause is remanded to the circuit court of St. Clair
County for further proceedings consistent with this opinion.



Appellate court judgment reversed;
circuit court judgment reversed;
cause remanded with directions.
	CHIEF JUSTICE HARRISON took no part in the
consideration or decision of this case.
	 
	 
1.      1The trial court apparently calculated this value by subtracting
Johnson's $28,165.85 lien and the 25% statutory attorney fee of
$12,750 from the net settlement recovery of $125,230.82.