Title: Scott v. Industrial Comm'n
Citation: N/A
Docket Number: 84427
State: Illinois
Issuer: Illinois Supreme Court
Date: October 22, 1998

Scott v. Ind. Comm'n (Ill. S.Ct.) 

Docket No. 84427-Agenda 18-March 
1998.
EMMA SCOTT, Appellee, v. THE INDUSTRIAL 
COMMISSION et al. (Travelers Insurance Company, Appellant).
Opinion filed October 22, 1998.
JUSTICE MILLER delivered the opinion of the 
court:
Hughie Scott, Jr. (decedent), was employed as a laborer by 
Illinois Wrecking Company. Illinois Wrecking subcontracted to perform demolition 
work for Capitol Construction Group, a division of Capitol Construction 
Companies, Inc. (general contractor). On March 19, 1986, the building in which 
decedent was working collapsed. Decedent suffered severe injuries and on May 6, 
1986, died as a result of those injuries.
Prior to decedent's death, Emma Scott, as wife and next 
friend of decedent, filed a claim under the Workers' Compensation Act (Act) 
(Ill. Rev. Stat. 1985, ch. 48, par. 138.1 et seq.) for medical expenses 
and temporary total disability benefits against Illinois Wrecking (No. 
86-WC-17126). Following decedent's death, Emma Scott, as decedent's widow, filed 
additional claims for burial expenses and surviving spouse benefits against 
Illinois Wrecking (No. 86-WC-21114), Capitol Construction (No. 86-WC-21115), and 
Travelers Insurance Company (workers' compensation insurer for Illinois 
Wrecking) (No. 86-WC-39385).
In addition, Dartha Osley (decedent's sister), as 
administrator of decedent's estate, filed claims on behalf of the estate for 
workers' compensation benefits against Illinois Wrecking (No. 86-WC-39382), 
Capitol Construction (No. 86- WC-39383), and Travelers (No. 86-WC-39384). The 
arbitrator consolidated the claims filed by Emma Scott and Dartha 
Osley.
The arbitrator dismissed Osley as a party because no award 
to an estate is permissible where the surviving spouse has filed a claim. The 
arbitrator also dismissed Travelers as a party, finding that the workers' 
compensation insurance policy between Travelers and Illinois Wrecking had been 
canceled prior to decedent's accident.
The arbitrator then found Illinois Wrecking (the employer) 
liable for medical expenses, temporary total disability benefits, burial 
expenses, and surviving spouse benefits. See Ill. Rev. Stat. 1985, ch. 48, pars. 
138.7(a), (f), 138.8(a), (b). The arbitrator also found Illinois Wrecking liable 
for statutory penalties and attorney fees because, the arbitrator believed, 
Illinois Wrecking had unreasonably failed to pay any of the expenses or 
benefits. See Ill. Rev. Stat. 1985, ch. 48, pars. 138.16, 138.16a, 138.19(k), 
(l).
Further, because Illinois Wrecking was found by the 
arbitrator to have been uninsured at the time of decedent's accident, the 
arbitrator found that Capitol Construction (the general contractor) was also 
liable for the expenses and benefits assessed against Illinois Wrecking. See 
Ill. Rev. Stat. 1985, ch. 48, par. 138.1(a)(3) (providing for the liability of a 
general contractor where the subcontractor is without workers' compensation 
insurance). The arbitrator found that Capitol Construction was additionally 
liable for the statutory penalties and attorney fees assessed against Illinois 
Wrecking.
Emma Scott (Scott) and Capitol Construction filed petitions 
for review with the Industrial Commission (Commission). Illinois Wrecking had 
declared bankruptcy and was not represented before the Commission. Scott and 
Capitol Construction argued that the workers' compensation insurance policy 
between Travelers and Illinois Wrecking was in effect at the time of decedent's 
accident. Further, Scott argued that statutory penalties and attorney fees 
should be assessed against Travelers for Travelers' failure to pay expenses and 
benefits under the Act. Travelers, however, argued that the arbitrator correctly 
found that the insurance policy was canceled and properly dismissed Travelers at 
the conclusion of the arbitration proceedings.
The Commission issued two decisions; each made reference to 
the other. One decision addressed issues arising prior to decedent's death (No. 
92-IIC-0728), the other addressed issues arising after decedent's death (No. 
92-IIC-0727). The Commission affirmed the arbitrator's dismissal of the 
administrator of decedent's estate (Osley) as a party.
The Commission found that the policy between Travelers and 
Illinois Wrecking was in effect at the time of decedent's accident. The 
Commission found that even had the policy been canceled, Travelers waived any 
purported cancellation by issuing a new premium notice to Illinois Wrecking for 
the next installment period. Thus, the Commission found Travelers a proper party 
to the proceedings and jointly liable with Illinois Wrecking for Scott's award 
of expenses and benefits under section 4(g) of the Act. See Ill. Rev. Stat. 
1985, ch. 48, par. 138.4(g) (where an employer does not pay compensation, the 
employer's insurer may be made a party to the proceedings and an award may be 
entered jointly against the employer and the insurer). The Commission found that 
no expenses or benefits had yet been paid on account of decedent's accident or 
death.
In addition, the Commission found that the conduct of 
Illinois Wrecking and Capitol Construction did not justify the arbitrator's 
imposition of statutory penalties and attorney fees. Instead, the Commission 
found that only Travelers had acted unreasonably and vexatiously in refusing to 
pay compensation. The Commission also found that only Travelers had filed 
numerous frivolous motions that did not present real controversies. Thus, in 
each of its decisions, the Commission assessed statutory penalties and attorney 
fees only against Travelers.
While Scott's case was before the arbitrator, and later the 
Commission, a third-party wrongful death action filed by the administrator of 
decedent's estate was proceeding in the circuit court of Cook County. Travelers 
filed a petition to intervene in the third-party action in order to protect its 
rights under section 5(b) of the Act (Ill. Rev. Stat. 1985, ch. 48, par. 
138.5(b)).
Approximately one month after having been granted leave to 
intervene, however, Travelers filed a motion to withdraw as an intervenor. 
According to Travelers, it did not want to concede insurance coverage for 
Illinois Wrecking by asserting a lien in the circuit court while Travelers was 
contesting that coverage before the arbitrator. The trial judge allowed 
Travelers to withdraw. The third-party action settled approximately six months 
after the Commission issued its decisions and while those decisions were pending 
on review in the circuit court. In settlement of the third-party action, the 
third-party tortfeasors paid a total of $438,557.05 to decedent's estate. Of 
that amount, $139,797.50 was subject to liens held by health care 
providers.
On review of the workers' compensation case, the circuit 
court of Kane County confirmed the Commission's decisions. Both Travelers and 
Scott appealed to the appellate court, Industrial Commission division. Travelers 
argued that the Commission erred in finding the insurance policy in effect at 
the time of decedent's accident. In addition, Travelers argued that the 
Commission's decision to impose statutory penalties and attorney fees was 
against the manifest weight of the evidence. Finally, Travelers requested that 
the appellate court address the effects of the third-party settlement payment on 
the respective rights of the parties.
Scott, however, argued that the Commission erred by failing 
to impose multiple statutory penalties against Travelers for Travelers' multiple 
violations of the Act. Scott also argued that the Commission erred by excluding 
medical and burial expenses in the amounts on which penalties and attorney fees 
were calculated.
The appellate court, Industrial Commission division, 
affirmed. Scott v. Industrial Comm'n, Nos. 2-93-1110WC, 2-93-1171WC, 
2-93-1172WC cons. (August 9, 1994) (unpublished order under Supreme Court Rule 
23) (Scott I). The court found no error in the Commission's 
determination that: (1) the insurance policy was in effect at the time of 
decedent's accident; (2) Travelers was a party to the proceedings and liable for 
Scott's award of expenses and benefits; and (3) Travelers was liable for 
statutory penalties and attorney fees in the amounts determined by the 
Commission. The appellate court declined to consider the effects of the 
third-party settlement payment. The court found that the issue was "wholly 
collateral to the proceedings before the Commission and outside the record 
before us."
The appellate court rejected Scott's argument that the 
Commission should have imposed multiple statutory penalties on Travelers. The 
court also found that the Commission correctly excluded medical and burial 
expenses in calculating statutory penalties and attorney fees. The court noted 
that medical and burial expenses are not lost-wage compensation subject to 
penalties under the Act.
There was no appeal from the appellate court's decision in 
Scott I, and the mandate issued on November 18, 1994.
THE PRESENT CASE
Approximately one month after the appellate court's mandate 
issued in Scott I, Travelers sent three checks to Scott totaling 
$281,259.34. The checks were accompanied by a letter and calculation statement 
which explained how Travelers arrived at its figures. Instead of paying Scott 
the entire amount due under the final award affirmed by the appellate court in 
Scott I, Travelers unilaterally withheld an amount equal to the medical 
expenses ($139,797.50) already paid through the third-party settlement to 
lien-holding health care providers. In its letter to Scott, Travelers claimed 
that it was entitled to a credit for this amount.
In addition, Travelers unilaterally withheld portions of the 
statutory penalties, statutory interest, and attorney fees awarded to Scott in 
Scott I. Travelers argued that while it was before the arbitrator, the 
arbitrator had determined that Travelers was not a party when these particular 
amounts were awarded. We note that Travelers' argument claiming that it was not 
a party was previously rejected by both the Commission and the appellate court 
in Scott I. Finally, Travelers claimed the right to a credit for any 
third-party settlement amounts that represented surviving spouse benefits. 
Travelers, however, made no withholding on this basis.
At the same time, Travelers filed with the Industrial 
Commission a petition for leave to file a special and limited appearance for the 
purpose of presenting two motions. In the motions, Travelers sought: (1) a 
determination of credits for amounts received by Scott in the third-party 
settlement; and (2) a determination that Travelers was not liable for the 
amounts it withheld from Scott's award of statutory penalties, statutory 
interest, and attorney fees previously affirmed in Scott I.
Scott responded by filing a motion to strike Travelers' 
petition for leave to file a special and limited appearance. Scott argued that 
Travelers' motions raised issues already decided by the Commission and affirmed 
by the appellate court in Scott I. Although the credit issue was not 
previously decided by the Commission, Scott claimed that Travelers could have 
raised the issue before the Commission in the proceedings that culminated in 
Scott I, but failed to do so. Scott contended that Travelers' petition 
and motions were frivolous and that Travelers intentionally underpaid her award. 
Scott requested a second set of statutory penalties and attorney fees in 
addition to those assessed against Travelers in Scott I.
The Commission denied Travelers' petition for leave to file 
a special and limited appearance. In Scott I, Travelers was adjudicated 
a party under section 4(g) of the Act. The Commission found that Travelers 
remained a party in this subsequent proceeding and thus could not appear on a 
special and limited basis.
The Commission then addressed the merits of Travelers' 
motions. The Commission found that its previous decisions were clear regarding 
Travelers' liability for Scott's award. Travelers and Illinois Wrecking were 
jointly liable for medical expenses, temporary total disability benefits, burial 
expenses, and weekly surviving spouse benefits. Travelers alone was liable for 
all of the statutory penalties and attorney fees previously assessed. These 
determinations were affirmed by the appellate court in Scott I. Thus, 
Travelers was liable for all of the previously assessed statutory penalties, 
interest, and attorney fees and any withholding was improper.
In addition, the Commission found that the circuit court and 
not the Commission was the proper forum to determine credits for amounts 
received in a third-party settlement. The Commission further found that 
Travelers had ample time (approximately six months) to return to the circuit 
court following the Commission's original decisions and reassert a lien under 
section 5(b) prior to the settlement of the third-party action. Accordingly, the 
Commission denied Travelers' motions without determining whether Travelers was 
entitled to credits.
Because the Commission believed that the petition and 
motions filed by Travelers were frivolous, the Commission awarded Scott 
additional compensation (section 19(k)) and attorney fees (sections 16, 16a) 
under the Act. See 820 ILCS 305/16, 16a, 19(k) (West 1994). The Commission 
determined the amounts of the additional compensation and attorney fees by 
setting a base figure from which a percentage could be calculated. See 820 ILCS 
305/16a(B) (20% for attorney fees); 19(k) (50% for additional compensation) 
(West 1994).
The base figure consisted of Scott's temporary total 
disability award ($1,790.42) and her accrued surviving spouse benefits 
($121,563.38) calculated as of the Commission's final hearing on review 
(February 7, 1995). The Commission also included old penalties from Scott 
I in the base figure: $13,501.12 in section 16 attorney fees; $33,752.82 in 
section 19(k) additional compensation; and $2,500 in section 19(l) additional 
compensation.
The Commission calculated the total ($173,107.74) and 
awarded Scott $86,553.87 in section 19(k) additional compensation (50% of 
$173,107.74) and $17,310.77 in section 16 attorney fees (20% of $86,553.87). 
Thus, a portion of Scott's award included "penalties on penalties." The 
Commission did not include medical and burial expenses in its 
calculations.
Both Travelers and Scott appealed to the circuit court of 
Du Page County. Travelers argued that the Commission is the proper forum 
for determining third-party settlement credits. In addition, Travelers claimed 
that the Commission's finding that Travelers waived its rights under section 
5(b) was against the manifest weight of the evidence. Travelers next argued that 
the Commission erred in finding that Travelers was liable for the amounts it 
withheld from Scott's previous award of statutory penalties, interest, and 
attorney fees affirmed in Scott I.
Travelers further argued that the Commission erred in 
finding its petition and two motions frivolous, thus subjecting Travelers to a 
second set of penalties and attorney fees in addition to those awarded in 
Scott I. Finally, Travelers claimed that it should not be subjected to 
a second set of penalties and attorney fees on amounts it had already paid or 
for which it was entitled to credits. Even assuming that a penalty and attorney 
fees were appropriate, Travelers argued that the Commission erred by including 
statutory penalties and attorney fees from Scott I in its new 
calculations of section 19(k) additional compensation and section 16 attorney 
fees.
Scott claimed that Travelers was attempting to collaterally 
attack the Commission's final decisions affirmed in Scott I. Scott 
argued that no provision in the Workers' Compensation Act and no Commission rule 
allowed Travelers to file a petition and motions with the Commission following a 
final affirmed award. In addition, Scott argued that res judicata 
prohibited Travelers from claiming that it was not liable for the withheld 
penalties, interest, and attorney fees previously awarded in Scott 
I.
Further, Scott argued that Travelers waived its claim for 
third-party settlement credits by failing to raise this issue before the 
arbitrator or the Commission during the proceedings that culminated in Scott 
I. Scott believed the Commission properly assessed a second set of 
statutory penalties and attorney fees against Travelers. Scott argued, however, 
that the Commission erred by excluding medical and burial expenses in its 
calculations of section 19(k) additional compensation and section 16 attorney 
fees.
The circuit court confirmed the Commission's decision. The 
court found that the Commission does not have the authority to consider the 
third-party settlement credits claimed by Travelers. The court also found that 
the Commission's determination that Travelers' petition and motions were 
frivolous was not against the manifest weight of the evidence.
In addition, the court found that penalties and attorney 
fees from Scott I were properly included in the basis for the 
Commission's award of section 19(k) additional compensation and section 16 
attorney fees. The court confirmed the Commission's award of penalties, an award 
that did not account for amounts already paid by Travelers to Scott or amounts 
for which Travelers claimed credits. The court rejected Scott's contention that 
the Commission erred by failing to include medical and burial expenses in 
calculating her award of additional compensation and attorney fees. Because of 
its holding on the merits, the court did not address whether Travelers' claims 
were barred by either res judicata or waiver.
Travelers and Scott again appealed to the appellate court, 
Industrial Commission division. The parties presented their respective arguments 
regarding the determination of third-party settlement credits and Travelers' 
liability for the withheld penalties, interest, and attorney fees. The parties 
also presented their respective arguments regarding the assessment and 
calculation of section 19(k) additional compensation and section 16 attorney 
fees. The appellate court affirmed. 292 Ill. App. 3d 290.
The appellate court, relying on Freer v. Hysan 
Corp., 108 Ill. 2d 421 (1985), believed that the Commission correctly 
determined that the Commission does not have the authority to enforce a lien and 
the court refused to grant Travelers credits for the amount paid to Scott by the 
third-party tortfeasors. See 292 Ill. App. 3d at 298. The court also affirmed 
the Commission's determination that Travelers was liable for the statutory 
penalties, interest, and attorney fees assessed in Scott I and that 
Travelers' withholding of any portion of these amounts was improper.
The appellate court next determined it was not against the 
manifest weight of the evidence for the Commission to find that Travelers' 
petition and motions were frivolous and that the award was therefore subject to 
additional statutory penalties and an award of attorney fees. The court found 
that the old penalties and attorney fees from Scott I were properly 
included in calculating the new award of section 19(k) additional compensation 
and section 16 attorney fees. The court did not discuss whether Travelers was 
liable for section 19(k) additional compensation and section 16 attorney fees on 
amounts already paid by Travelers to Scott or on amounts for which Travelers 
claimed credits for payments to Scott by the third-party tortfeasors.
The appellate court further rejected Scott's argument that 
she was entitled to multiple penalties because she had established more than one 
statutory factor under section 19(k). The court reasoned that Scott's injury-the 
withholding of due compensation-is a single injury regardless of the fact that 
the injury may have been caused by several factors.
The court also rejected Scott's argument that the Commission 
should have included medical and burial expenses in its calculations. Relying on 
Childress v. Industrial Comm'n, 93 Ill. 2d 144, 148-51 (1982), the 
court found that medical and burial expenses are not "compensation" as the term 
is used in the Act for the purpose of awarding penalties.
Travelers filed in the appellate court a petition for 
rehearing or, in the alternative, a motion for a statement by one of the five 
Industrial Commission appellate judges "that the case in question involves a 
substantial question which warrants consideration by the Supreme Court." 166 
Ill. 2d R. 315(a). Pursuant to Travelers' request, one judge filed a 
"substantial question" statement.
The "substantial question" statement filed by one judge 
under Rule 315(a) became moot, however, when the five-judge panel, sua 
sponte, issued a certificate of importance under Supreme Court Rule 316 
(155 Ill. 2d R. 316). Thus, the case is before us on a certificate of importance 
from the appellate court. See Ill. Const. 1970, art. VI, §4(c); 155 Ill. 2d R. 
316; Yellow Cab Co. v. Jones, 108 Ill. 2d 330, 338 
(1985).
DISCUSSION
Travelers raises here a number of questions relating to the 
Commission's failure to determine third-party settlement credits; the 
Commission's failure to find Travelers not liable for the withheld amounts of 
statutory penalties, interest, and attorney fees assessed in Scott I; 
and the Commission's decision to assess additional statutory penalties and 
attorney fees and the amounts of those penalties and fees following the 
appellate court's decision in Scott I.
Travelers first argues that the Commission may determine 
third-party settlement credits when section 5(b) lien rights have not been, and 
can no longer be, adjudicated in the circuit court. Scott argues, however, that 
neither the Workers' Compensation Act nor the rules of the Commission provide 
the Commission with the authority to entertain a request for credits once a 
final award has been entered and affirmed on appeal. In any event, Scott claims 
that Travelers has waived its ability to obtain a determination of credits by 
failing to seek such a determination before the Commission in Scott 
I.
The first paragraph of section 5(b) of the Workers' 
Compensation Act provides that if an employee or the employee's representative 
obtains a judgment or settlement from a third party,
"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 including 
amounts paid or to be paid pursuant to paragraph (a) of Section 8 of this Act 
[medical expenses]." 820 ILCS 305/5(b) (West 1994).
Thus, section 5(b) provides the employer with a right to 
recover certain amounts paid or to be paid to an employee where the employee has 
obtained a third-party judgment or settlement, regardless of whether a lien has 
been asserted.
In order to assist an employer in recovering these amounts, 
section 5(b) further provides that an employer may claim a lien on the proceeds 
of a third-party action and that "[t]he employer may, at any time [after the 
filing of a third-party action] join in the action upon his motion so that all 
orders of court after hearing and judgment shall be made for his protection." 
820 ILCS 305/5(b) (West 1994) (third and fourth paragraphs).
By using the term "may" in the third and fourth paragraphs 
of section 5(b), the statute does not require an employer to intervene or to 
assert a lien in order to recover amounts obtained by an employee in a 
third-party proceeding. When an employer does not assert a lien, the employer 
forgoes a means of enforcing its claim. The employer does not, however, forfeit 
its right under the first paragraph of section 5(b) to recover amounts paid or 
to be paid to an employee where the employee has obtained a third-party judgment 
or settlement. See 820 ILCS 305/5(b) (West 1994) ("from the amount received by 
such employee *** there shall be paid to the employer").
We therefore believe that under section 5(b) of the Act, an 
employer may make a claim for credits following the conclusion of a third-party 
proceeding without having obtained a lien in that proceeding. We find no reason 
to afford an employer's insurer fewer protections under section 5(b) than those 
granted the employer on whose behalf compensation is paid under the Act. Thus, 
in the case before us, Travelers has waived its ability to obtain a section 5(b) 
lien; however, Travelers has not waived its ability to claim credits under 
section 5(b).
Were the rule to be otherwise, as suggested by Scott, an 
employee would be able to receive and retain a double recovery. This would be 
inconsistent with the general principle that an employee is not entitled to a 
double recovery. See Malatesta v. Mitsubishi Aircraft International, 
Inc., 275 Ill. App. 3d 370, 380 (1995); see also 6 A. Larson &amp; L. 
Larson, Larson's Workers' Compensation Law §71.20, at 14-5 (1998) ("It is 
equally elementary that the claimant should not be allowed to keep the entire 
amount both of his compensation award and of his common-law damage 
recovery").
Our result here does not conflict with this court's decision 
in Freer v. Hysan Corp., 108 Ill. 2d 421 (1985). In Freer, an 
employer was ordered to pay compensation to its employee by the Industrial 
Commission. The employee subsequently filed a third-party action in the circuit 
court. The employer intervened in the third-party action and obtained a lien 
under section 5(b) of the Act. After the third-party action settled, the 
employer filed a motion in the circuit court to enforce its lien on the proceeds 
of the settlement. The Freer court rejected the employee's argument 
that the employer should have enforced its lien through the Commission: "The 
plain meaning of section 5(b) imposes the duty of protecting the employer's lien 
upon the court." Freer, 108 Ill. 2d  at 426.
Unlike Freer, in this case Travelers' liability for 
Scott's award of compensation became final only after the appellate court 
affirmed the Commission's decisions in Scott I. By this time, however, 
the third-party action in the circuit court had settled and the third-party 
tortfeasors had already made their settlement payments. Although it was too late 
for Travelers to obtain a lien in the circuit court, Travelers did not forfeit a 
later claim for credits under the first paragraph of section 5(b) by having 
contested coverage for Illinois Wrecking through the appellate 
process.
Accordingly, we believe that the Commission, which entered 
the original compensation award, is the proper place to determine whether an 
employer or its insurer is entitled to credits for amounts received by an 
employee in a third-party proceeding when lien rights have not been adjudicated 
by the circuit court. See Selleck v. Industrial Comm'n, 233 Ill App. 3d 
17, 19-20 (1992) (finding Industrial Commission to be a proper forum for 
determining employer credits when third-party action ended prior to a 
determination that employee was entitled to compensation).
Despite Scott's argument that neither the Act nor the 
Commission's rules provide for a determination of credits by the Commission, we 
believe that the mandatory language found in the first paragraph of section 5(b) 
requires that a forum exist for such determinations. See 820 ILCS 305/5(b) (West 
1994) ("from the amount received by such employee *** there shall be paid to the 
employer"). Here, Travelers became liable for the amounts awarded by the 
Commission to Scott when the coverage question was finally resolved against 
Travelers in the appellate court in Scott I. Approximately one month 
after the appellate court's mandate issued in Scott I, Travelers sought 
a determination of credits before the Commission. We believe that Travelers has 
not waived its ability to seek a determination of credits and remand to the 
Commission to determine the credits to which Travelers is entitled for amounts 
received by Scott in the third-party settlement.
Travelers next argues that it is not liable for all of the 
statutory penalties, interest, and attorney fees assessed against it in 
Scott I and that the Commission erred in denying its motion requesting 
this determination. Scott, however, argues that Travelers was adjudicated fully 
liable for these amounts in Scott I and that res judicata bars 
Travelers from claiming otherwise. Thus, Scott contends the Commission properly 
denied Travelers' motion.
The appellate court in Scott I rejected Travelers' 
contention that Travelers was not a party to the claims that gave rise to the 
Commission's award of statutory penalties and attorney fees. The court affirmed 
the Commission's determination that Travelers was liable in full for these 
amounts. Res judicata "is a judicially created doctrine resulting from 
the practical necessity that there be an end to litigation and that 
controversies once decided on their merits shall remain in repose." Hughey 
v. Industrial Comm'n, 76 Ill. 2d 577, 582 (1979). We believe that res 
judicata bars Travelers from relitigating here its liability for the 
penalties, interest, and attorney fees assessed against it in Scott I. 
Thus, we find that the Commission properly denied Travelers' motion requesting 
that this issue be revisited.
In addition, Travelers argues that in the event that it is 
provided credits on remand, any potential penalty or attorney fees should be 
calculated only on the amount of Travelers' outstanding liability, if any should 
exist after the credits are given. Travelers notes that after it was found 
liable in Scott I, Travelers paid Scott $281,259.34. Travelers believes 
that it will have no outstanding liability once the Commission grants it credits 
and considers its previous $281,259.34 payment.
On remand, Travelers will be liable for the portions of the 
statutory penalties, interest, and attorney fees assessed against it in 
Scott I that Travelers withheld from its payment to Scott. Thus, 
Travelers will have some outstanding liability. We agree with Travelers, 
however, that any potential penalty or attorney fees that the Commission may 
impose are to be based only on outstanding amounts.
Under section 19(k), additional compensation is based on the 
"amount payable at the time of such award." 820 ILCS 305/19(k) (West 1994). An 
assessment of section 19(k) additional compensation or section 16 attorney fees 
should therefore reflect amounts already paid by Travelers to Scott and any 
credits to which Travelers is entitled. We note that this issue was decided by 
the appellate court in Roodhouse Envelope Co. v. Industrial Comm'n, 276 
Ill. App. 3d 576, 580-84 (1995) (employer payments made prior to a finding of 
unreasonable or vexatious delay are excluded from calculating section 19(k) 
additional compensation and section 16 attorney fees). Although not binding on 
us, we agree with the result reached by the appellate court in 
Roodhouse.
In view of our finding that Travelers raised a valid claim 
regarding the determination of credits, we find that Travelers' motion for a 
determination of credits was not frivolous. This motion, however, was not 
Travelers' only filing before the Commission. Travelers also filed a petition 
for leave to file a special and limited appearance and a motion for a 
determination that it was not fully liable for amounts previously awarded in 
Scott I. The Commission denied these additional filings and also found 
them to be frivolous.
Although we find no error in the Commission's denial of 
these additional filings, we cannot determine whether the Commission would have 
assessed a statutory penalty and attorney fees on those grounds had the 
Commission found, as we have, that Travelers' motion for a determination of 
credits was proper. In light of our finding, we therefore remand to the 
Commission to determine whether Travelers is liable for a statutory penalty or 
attorney fees on compensation after accounting for credits for having filed a 
petition for leave to file a special and limited appearance and a motion for a 
determination that it was not fully liable for amounts previously awarded in 
Scott I, and if so, in what amounts. As discussed previously, any 
potential assessment of statutory penalties or attorney fees should account for 
amounts already paid by Travelers to Scott and any credits to which Travelers is 
entitled.
We note that on remand the calculation of penalties, if any, 
should be guided by our recent decision in McMahan v. Industrial 
Comm'n, No. 84057 (October 22, 1998), which overruled in part Childress 
v. Industrial Comm'n, 93 Ill. 2d 144 (1982). Still, because the section 16 
attorney fees and section 19(k) and 19(l) penalties initially assessed against 
Travelers are not compensation, but penalties, they should not be included in 
the basis for computing a subsequent award of statutory penalties and attorney 
fees.
As a final matter, Scott argues that she should be allowed 
to recover more than one penalty under section 19(k) if the Commission finds on 
remand that Travelers has violated more than one of the provisions contained in 
this section. We find no support for Scott's argument in the language of the 
statute. Section 19(k) provides a specific method for calculating additional 
compensation: "the Commission may award compensation additional to that 
otherwise payable under this Act equal to 50% of the amount payable at the time 
of such award." 820 ILCS 305/19(k) (West 1994). Thus, even if several violations 
of section 19(k) have occurred, the statute provides a single means of 
calculating the penalty.
CONCLUSION
For the forgoing reasons, the judgment of the appellate 
court affirming the circuit court is affirmed in part and reversed in part. The 
judgment of the circuit court confirming the Commission's decision is affirmed 
in part and reversed in part. This cause is remanded to the Commission with 
directions to: (1) determine the credits Travelers is entitled to for amounts 
received by Scott in the third-party settlement; and (2) determine whether 
Travelers is liable for penalties for having filed a petition for leave to file 
a special and limited appearance and a motion for a determination that it was 
not fully liable for amounts previously awarded in Scott I, and if so, 
in what amounts. If penalties are found to be appropriate, the Commission is 
directed to calculate those penalties consistent with the views expressed in 
this opinion.
Appellate court judgment affirmed in 
part
and reversed in part;
circuit court judgment affirmed in 
part
and reversed in part;
cause remanded.
JUSTICE HARRISON, dissenting:
The General Assembly has mandated that the circuit court is 
the proper body to protect an employer's right of reimbursement under section 
5(b) of the Workers' Compensation Act (Ill. Rev. Stat. 1985, ch. 48, par. 
138.5(b)). The law does not envisage any role for the Industrial Commission in 
the protection of such rights. Freer v. Hysan Corp., 108 Ill. 2d 421, 
426 (1985). It is a matter for the courts alone. Accordingly, the circuit and 
appellate courts were correct in holding that the Industrial Commission has no 
authority to reduce Travelers' liability under section 5(b). 
The distinction my colleagues attempt to draw between 
section 5(b) liens and section 5(b) credits is spurious. Nothing in the text of 
the law, the practice of the Industrial Commission or the precedent of this 
court supports the majority's analysis. Section 5(b) provides employers and 
their insurance companies with only one avenue for obtaining reimbursement for 
the compensation they have paid, and that is through the courts. An employer can 
assert a lien when a third-party action has been brought by or on behalf of the 
employee, or, if no such action is brought, the employer can bring his own 
third-party action and deduct from the proceeds an amount equal to what he has 
paid in compensation. There are no other alternatives under the law.
If Travelers wanted to protect its rights under section 
5(b), it should not have withdrawn as intervenor in the third-party 
wrongful-death action filed by the administrator of the decedent's estate. The 
assertion of worker's compensation liens is not compulsory. Such liens can be 
and often are waived. By withdrawing as intervenor and forsaking any other 
judicial enforcement of its lien, Travelers effectuated such a waiver. No 
equities command us to relieve the company from the consequences of its 
decision. To the contrary, Travelers' conduct in these proceedings has been 
singularly obstructionist, unreasonable and vexatious. 
Travelers' liability was fixed by the Industrial Commission, 
confirmed by the circuit court and upheld by appellate court in Scott I. 
Having withdrawn from the third-party wrongful-death action, the company 
had no lawful basis for unilaterally withholding any of the payments it was 
ordered to make. Its attempt to reinvoke the jurisdiction of the Industrial 
Commission is merely another ploy to avoid its obligations and should not be 
permitted.
The majority's disposition must fail for another reason as 
well. By authorizing the Industrial Commission to grant post-judgment credits, 
my colleagues' decision today permits an administrative agency of the executive 
branch of government to relieve a party from the obligations imposed upon it by 
valid judgments of the circuit and appellate courts. In effect, the 
administrative agency is granted the authority to modify the court's judgment. 
This is an improper intrusion on the court's constitutionally based judicial 
authority and violates the separation of powers doctrine.
JUSTICES HEIPLE and NICKELS join in this 
dissent.