Title: Silva v. Electrical Systems, Inc.

State: illinois

Issuer: Illinois Supreme Court

Document:

Silva v. Electrical Systems Inc., No. 84356 (9/24/98) 
                              Docket No. 84356--Agenda 37--May 1998. 
           RUDOLPH SILVA, Appellee, v. ELECTRICAL SYSTEMS, 
                              INC. (Midwest Conveyor Company, Inc., Appellant). 
 
             JUSTICE HARRISON delivered the opinion of the court: 
             Under section 5(b) of the Workers' Compensation Act (820 
           ILCS 305/5(b) (West 1992)), an employer who is reimbursed for 
           its workers' compensation payments out of the proceeds of the 
           employee's action against a third party is required to pay the 
           employee's attorney "25% of the gross amount of such 
           reimbursement." The issue in this appeal is how the fee award 
           should be computed where the third party has brought a 
           successful action against the employer under the Joint Tortfeasor 
           Contribution Act (Contribution Act) (740 ILCS 100/0.01 et seq. 
           (West 1992)). The employer contends that its contribution 
           liability should be deducted from the reimbursement amount and 
           that it should be required to pay attorney fees only on the 
           difference. Both the circuit court of Cook County and the 
           appellate court rejected that contention, holding that the 
           employer was not entitled to a credit for its contribution 
           liability. We granted the employer's petition for leave to appeal 
           (166 Ill. 2d R. 315) and now affirm. 
             The record before us shows that Rudolph Silva was 
           employed as an iron worker by Midwest Conveyor Company, 
           Inc. While working for Midwest Conveyor on a renovation 
           project at a Ford Motor Company factory, Silva tripped and fell 
           over some electrical conduit that was scattered across one of the 
           aisles. The conduit was owned and maintained by Electrical 
           Systems, Inc. (ESI), another contractor on the renovation 
           project.   At the time of his fall, Silva had a degenerative 
           problem with his spine. The fall caused Silva's condition to 
           become symptomatic and necessitated that he undergo a series 
           of back surgeries. Silva received benefits from Midwest 
           Conveyor in accordance with the Workers' Compensation Act 
           (820 ILCS 305/1 et seq. (West 1992)), to compensate him for 
           his lost earnings and medical expenses. Silva also brought a 
           common law negligence action against Ford and ESI to recover 
           damages for his injuries.[fn1]  Ford and ESI, in turn, asserted 
           claims against Midwest Conveyor under the Contribution Act. 
             Silva settled his claims against Ford for $66,000. The matter 
           subsequently proceeded to a jury trial on Silva's negligence 
           claim against ESI and on ESI's claim for contribution against 
           Midwest Conveyor. At the conclusion of the trial, the jury 
           returned a verdict in favor of Silva. It found that Silva's total 
           damages amounted to $472,710.26, but that his comparative 
           fault was 19%, reducing his recoverable damages to 
           $382,895.31. The court reduced this award by the amount paid 
           by Ford in settlement (see 740 ILCS 100/2(c) (West 1992)), 
           leaving a difference of $316,895.31. 
             With respect to ESI's contribution claim, the jury found in 
           favor of ESI and against Midwest Conveyor. The jury 
           apportioned fault between ESI and Midwest Conveyor based 
           upon their relative culpability. Using the jury's findings, the 
           circuit court determined that ESI was entitled to recover from 
           Midwest Conveyor 32.09% of the $316,895.31 award owed to 
           Silva. That figure was calculated to be $101,719.46. 
             Pursuant to section 5(b) of the Workers' Compensation Act 
           (820 ILCS 305/5(b) (West 1992)), Midwest Conveyor was 
           entitled to reimbursement of its workers' compensation 
           payments out of the proceeds of Silva's action against ESI. At 
           the time of trial, Midwest Conveyor's workers' compensation 
           payments totalled approximately $400,000. Because that amount 
           exceeded the $316,895.31 award recovered by Silva, Midwest 
           Conveyor was entitled to recoup the full amount of the award. 
             Midwest Conveyor's ability to recoup workers' 
           compensation payments meant that the company was obligated 
           by section 5(b) of the Workers' Compensation Act to pay a pro 
           rata share of Silva's litigation expenses, plus attorney fees. The 
           circuit court determined that Midwest Conveyor's share of the 
           costs was $15,290.73 and that it owed attorney fees to Silva's 
           counsel at section 5(b)'s statutory rate of 25% on the full 
           amount of the $316,895.31 award. The court rejected the notion 
           that Midwest Conveyor should be excused from paying attorney 
           fees on $101,719.46 of the award, the amount Midwest had to 
           pay ESI in contribution. The court further held that Silva's 
           attorneys were entitled to receive 33 % of the $66,000 in 
           settlement proceeds Silva received from its settlement with Ford. 
           The 33 % rate was based on Silva's contingency fee contract 
           with his attorneys. 
             Silva, Midwest Conveyor, and ESI all appealed. The 
           appellate court affirmed all aspects of the circuit court's 
           judgment except the award of attorney fees and costs. Nos. 1-- 
           95--1024, 1--95--1450, 1--95--1662 cons. (unpublished order 
           under Supreme Court Rule 23). The court agreed that Midwest 
           Conveyor was obligated to pay 25% of $316,895.31 as fees to 
           Silva's lawyers under section 5(b) of the Workers' 
           Compensation Act and was not entitled to a credit for its 
           contribution liability. The court held, however, that Silva's 
           counsel were not entitled to 33 % of the $66,000 in settlement 
           proceeds Silva received from its settlement with Ford. In the 
           appellate court's view, the settlement proceeds were subject to 
           section 5(b)'s lower statutory rate of 25%. The appellate court 
           further held that the settlement proceeds were subject to the cost 
           reimbursement provisions of section 5(b). Because it could not 
           tell whether the costs awarded by the circuit court included costs 
           associated with the settlement, the appellate court remanded for 
           the limited purpose of determining whether Silva's attorneys 
           were entitled to an additional award of costs for their work in 
           procuring the settlement. 
             We allowed Midwest Conveyor's petition for leave to 
           appeal to consider the limited question of whether the circuit 
           and appellate courts were correct in holding that the company 
           was required to pay fees to Silva's attorneys under section 5(b) 
           of the Workers' Compensation Act based on the full 
           $316,895.31 award, unreduced by the amount the company was 
           obliged to pay in contribution. No other aspects of the circuit 
           and appellate courts' judgments are contested. The mandate as 
           to the remainder of the case has already issued to the circuit 
           court for proceedings on remand as directed by the appellate 
           court and for enforcement of the remainder of the judgment. 
             The relationship between section 5(b)'s attorney fee 
           provision and the Contribution Act was addressed by this court 
           in Ramsey v. Morrison, 175 Ill. 2d 218 (1997). In Ramsey, the 
           employer's contribution liability to the third party, as found by 
           the jury, exceeded its liability under the Workers' Compensation 
           Act. The amount of contribution the employer actually had to 
           pay was reduced to a sum equal to the employer's workers' 
           compensation liability. The reduction was necessary because, 
           under Kotecki v. Cyclops Welding Corp.,  146 Ill. 2d 155  (1991), 
           an employer cannot be liable in contribution for more than the 
           amount of its workers' compensation liability. 
             The question presented in Ramsey was whether the 
           employer's contribution liability should be further reduced by 
           the amount of fees and costs it was required to pay plaintiff's 
           attorneys under section 5(b) of the Workers' Compensation Act. 
           The employer argued that its payments for attorney fees and 
           costs should be credited against the amount of contribution it 
           owed because without such a credit, it would end up having to 
           pay an amount equal to 125% of its workers' compensation 
           liability. In the employer's view, such a result would violate 
           Kotecki. 
             We rejected the employer's contention. We construed 
           Kotecki to mean that an employer's liability for contribution 
           should be limited only by the amount of workers' compensation 
           benefits paid. In our view, an employer's liability for attorney 
           fees and costs under section 5(b) is not a component of its 
           workers' compensation liability. As we stated, an employer's 
           liability for attorney fees and costs under section 5(b) 
             "is irrelevant to the determination of the employer's 
                        workers' compensation liability, and is therefore irrelevant 
                        to the determination of the employer's contribution 
                        liability." Ramsey, 175 Ill. 2d  at 239. 
           Accordingly, we concluded that an employer is not entitled to 
           a reduction of his contribution liability based on his section 5(b) 
           share of attorney fees and costs. 
             Such a conclusion, we held, was the only one consistent 
           with the language of section 5(b). Reducing the amount of 
           contribution recoverable by the third party to reflect section 5(b) 
           fees and costs would have the effect of shifting the obligation 
           to pay such fees and costs from the employer to the third party. 
           Under the statute, however, it is not the third party's 
           responsibility to pay those fees and costs. That responsibility 
           lies with the employer. Ramsey, 175 Ill. 2d  at 239. 
             We further held in Ramsey that reducing the amount of 
           contribution by the employer's section 5(b) share of fees and 
           costs would be inconsistent with the rationale behind the statute. 
           Section 5(b) is premised on the assumption that an employer 
           should share in the fees and costs associated with the 
           employee's lawsuit because the litigation benefits the employer 
           by providing a fund from which the employer can obtain 
           reimbursement of its workers' compensation payments. For the 
           third party there is no comparable benefit. There is no benefit 
           at all. Accordingly, there is no justification for requiring it to 
           shoulder part of the employee's litigation expenses. Ramsey, 175 Ill. 2d  at 239-40. 
             The employer in Ramsey argued, in the alternative, that if 
           he had to pay contribution in an amount equal to 100% of the 
           workers' compensation benefits, he should not be required to 
           pay section 5(b) attorney fees and costs. What the employer 
           claimed, in effect, was that his contribution liability should be 
           deducted from the workers' compensation payments in 
           determining the amount for which he was required to contribute 
           attorney fees and costs under section 5(b). 
             Mindful of the effect such a ruling would have on the 
           recovery by the employee and his attorney, and lacking 
           argument on the employee's behalf, we declined to address the 
           issue. Ramsey, 175 Ill. 2d  at 241. The present case differs 
           somewhat from Ramsey in that the employer's contribution 
           liability is less than the amount it can recover as reimbursement 
           for its workers' compensation payments. Accordingly, the 
           employer seeks only to have its responsibility for fees reduced, 
           not eliminated completely. The principles involved, however, are 
           the same. Here, as in Ramsey, the employer argues that the 
           amount it receives in reimbursement for its workers' 
           compensation payments should be offset by its contribution 
           liability in calculating its share of attorney fees under section 
           5(b). 
             The circumstances which caused us to defer consideration 
           of the issue in Ramsey are not present in this case. The 
           employee is a party to this appeal, and the issue has been fully 
           briefed and argued by the employee as well as the employer. 
           Accordingly, we shall address the issue on the merits. 
             The obligation of the employer to pay attorney fees is 
           defined by the terms of section 5(b) of the Workers' 
           Compensation Act. The portion of section 5(b) relevant to this 
           appeal provides that where an employer is able to obtain 
           reimbursement for the workers' compensation benefits it has 
           paid, as Midwest Conveyor did here, 
               "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." 820 ILCS 305/5(b) (West 1996). 
             In applying this statute to the facts of this case, both the 
           circuit and appellate courts concluded that "the gross amount" 
           of reimbursement recovered by Midwest Conveyor was 
           $316,895.31. We agree. The Workers' Compensation Act does 
           not define what constitutes "the gross amount" of reimbursement 
           for purposes of section 5(b), so the phrase must be given its 
           ordinary and popularly understood meaning. See People v. 
           Sheehan,  168 Ill. 2d 298 , 306 (1995). When describing an 
           amount, the term "gross" is generally understood to mean the 
           overall total prior to any deductions or adjustments. Webster's 
           Third New International Dictionary 1002 (1986). Here, the 
           overall total reimbursed to Midwest Conveyor, prior to 
           deductions and adjustments, was $316,895.31. Accordingly, the 
           circuit and appellate courts were correct in using that figure to 
           compute Midwest Conveyor's attorney fee liability under section 
           5(b). 
             The circuit and appellate courts properly rejected Midwest 
           Conveyor's assertion this sum should be reduced by the 
           company's $101,719.46 contribution liability. An employer's 
           negligence has nothing to do with the employer's statutory right 
           to recover full reimbursement for its workers' compensation 
           payments to the employee. Carver v. Grossman,  55 Ill. 2d 507 , 
           516 (1973). Correspondingly, Midwest Conveyor's payments 
           under the Contribution Act were independent of its 
           reimbursement under the Workers' Compensation Act. The 
           $101,719.46 was not a credit against either ESI's payments to 
           Silva or Silva's reimbursement to Midwest Conveyor. ESI had 
           to pay Silva the $316,895.31 Silva had won in its tort action, 
           and Silva, in turn, was required to pay Midwest Conveyor the 
           $316,895.31 as reimbursement for the workers' compensation 
           payments. It was then up to ESI to enforce the $101,719.46 
           contribution judgment against Midwest Conveyer. There is 
           nothing in the language of section 5(b) that would authorize a 
           reduction of the reimbursement amount by that sum, and we 
           have no authority to depart from the plain language of the 
           statute by reading into it exceptions, limitations, or conditions 
           that the legislature did not express. Solich v. George & Anna 
           Portes Cancer Prevention Center of Chicago, Inc., 158 Ill. 2d 76, 83 (1994). 
             Midwest Conveyor's assertion must also fail because it is 
           inconsistent with the purpose of the statute. As we have already 
           indicated, the principle behind the fee provision in section 5(b) 
           is that employers should pay their fair share of the cost of their 
           employees' tort recoveries against third parties because those 
           recoveries benefit the employers by enabling them to receive 
           reimbursement for their workers' compensation payments. Reno 
           v. Maryland Casualty Co.,  27 Ill. 2d 245 , 247 (1962). In this 
           case Midwest Conveyor benefitted by the full amount of the 
           $316,895.31 award recovered by Silva's attorneys in the tort 
           action against ESI. That is so because Midwest Conveyor was 
           able to obtain the full amount of that award as reimbursement 
           for the workers' compensation payments it had made. 
             Although Midwest Conveyor did have to pay ESI 
           $101,719.46 in contribution, the company's liability to ESI does 
           not alter the fact that the litigation brought by Silva's attorneys 
           enabled Midwest Conveyor to obtain reimbursement of a 
           substantial portion of it workers' compensation payments. 
           Silva's attorneys succeeded in procuring a $316,895.31 
           judgment, and Midwest Conveyor was the sole beneficiary of 
           their efforts. Because the award was less than the workers' 
           compensation payments Midwest Conveyor had made, Midwest 
           Conveyor was entitled to recoup the entire amount. No one else, 
           including Silva himself, gained any advantage from it. 
             To hold that the benefits received by Midwest Conveyor 
           were offset by its contribution liability would be flatly 
           inconsistent with our recent decision in Ramsey. In Ramsey we 
           held that the employer benefitted from the employee's action 
           against the third party even though the employer had to pay 
           contribution to the third party in an amount equal to 100% of 
           the employer's workers' compensation liability. Ramsey, 175 Ill. 2d  at 239-40. If an employer benefits where the full amount of 
           the reimbursement must be paid over in contribution, there can 
           be no less of a benefit where, as here, the employer's 
           contribution liability was less than a third of the amount it was 
           able to obtain in reimbursement for its workers' compensation 
           payments. 
             The benefits received by Midwest Conveyor were due to the 
           efforts of Silva's attorneys. Those attorneys are entitled to be 
           fully compensated for their efforts in accordance with section 
           5(b). If Midwest Conveyor's position were accepted, that would 
           not happen. After managing to procure an award of 
           $316,895.31, Silva's attorneys would receive fees on only 
           $215,175.86. For no reason other than that Midwest Conveyor 
           was found to be contributorily negligent, Silva's attorneys would 
           get nothing for their work in securing the balance of 
           $101,719.46.[fn2]  In effect, the attorneys would be forced to 
           subsidize Midwest Conveyor's lack of due care. Applied in 
           other cases, such a rule would mean that the more culpable the 
           employer was, and the greater its corresponding contribution 
           liability, the less the employer would have to pay in section 5(b) 
           attorney fees and costs. There is nothing in the language or 
           purpose of the Workers' Compensation Act that could justify 
           such an anomalous result. Just as an employer's negligence has 
           nothing to do with its statutory right to recovery workers' 
           compensation payments under section 5(b), an employers' 
           negligence may not be invoked to diminish or escape its 
           statutory obligation to pay attorney fees. See Dukes v. J.I. Case 
           Co., 186 Ill. App. 3d 439, 446 (1989). 
             For the foregoing reasons, we affirm the judgment of the 
           appellate court upholding the award of section 5(b) fees to 
           Silva's attorneys based on the $316,895.31 recovery they 
           obtained, without reduction for the amount Midwest Conveyor 
           was obliged to pay in contribution. 
 
           Affirmed. 
 
           [fn1]   Silva named two additional defendants in his complaint, 
           but dismissed his claims against them prior to trial. Silva also 
           asserted claims under the Structural Work Act (Ill. Rev. Stat. 
           1991, ch. 48, par. 59.90 et seq., repealed by Pub. Act 89--2, eff. 
           February 14, 1995). The circuit court, however, entered 
           summary judgment against Silva on those claims, and the 
           propriety of that action has not been challenged. 
 
           [fn2]  The attorneys could not look to Silva for payment, 
           because  none of the money, including the $101,719.46, 
           benefitted him.  As noted in our opinion, the full amount of the 
           award went to Midwest Conveyor as reimbursement for its 
           workers' compensation payments. Silva collected nothing.