Opinion ID: 1276729
Heading Depth: 1
Heading Rank: 3

Heading: Ensign was entitled to waive its workers' compensation lien and the contribution claims against it should have been dismissed.

Text: Because this is a diversity case governed by Illinois law, we must resolve this matter how we think the Illinois Supreme Court would. See Allstate Ins. Co. v. Menards, Inc., 285 F.3d 630, 637 (7th Cir.2002). If there is no prevailing authority from that court, we give great weight to the holdings of the Illinois appellate courts. Id. The primary precedent at issue here is the Illinois Supreme Court's decision in LaFever v. Kemlite Co., 185 Ill.2d 380, 235 Ill.Dec. 886, 706 N.E.2d 441 (1998). Similar to this case, the employee in LaFever suffered a workplace injury and sued a third party, who in turn sued the employer for contribution. After a jury found that both the third party and the employer were liable, the trial court permitted the employer to waive its workers' compensation lien and have the contribution claim against it dismissed. Id. at 444-46. The Illinois Supreme Court approved of the trial court's decision and held that an employer can wait and see how a jury verdict goes before deciding whether to waive its lien. Id. at 453 (noting that nothing in 820 Ill. Comp. Stat. 305/5(b) required [the employer] to waive the lien by a date certain). Here, the district court did not allow Ensign to waive its lien because it felt that allowing a post-verdict waiver would more than partially frustrate the purpose of the Contribution Act. We understand the court's apparent belief that it would be unfair to allow a post-verdict waiver, given that Ensign decided to waive the lien only after the jury found it to be significantly liable for the accident. (Presumably Ensign would not have waived the lien if the jury had instead found it minimally liable or not liable at all.) But LaFever required the district court to grant Ensign's late waiver. Indeed, LaFever expressly indicated that an employer can engage in this kind of strategic decisionmaking. Id. (noting there was nothing unfair in the employer's strategy of waiting until after trial to waive its lien and stating that the court was reluctant to dictate trial strategy to any litigant when that strategy is entirely consistent with controlling statutes and prior decisions of this court). Still, the Baltzells and the defendants contend that LaFever is distinguishable from this case. In LaFever, the employer had already paid out the workers' compensation benefits that it owed the employee and it was not required to make any future payments. By contrast, Ensign estimates that it still owes about $3 million in future workers' compensation payments to the Baltzells. Illinois courts, however, have never suggested that we should distinguish between paid and future benefits when deciding whether an employer can waive its workers' compensation lien. Indeed, Illinois law is clear that an employer's lien encompasses both paid and future workers' compensation benefits. For example, the IWCA states that from the money the employee receives from a third-party suit, there shall be paid to the employer the amount of compensation paid or to be paid by him to such employee.  820 Ill. Comp. Stat. 305/5(b) (emphasis added). And the LaFever court itself noted that an employer may claim a lien on the worker's recovery, in an amount equal to the amount of workers' compensation due the worker. LaFever, 235 Ill.Dec. 886, 706 N.E.2d at 451 (emphasis added); see also Ramsey v. Morrison, 175 Ill.2d 218, 222 Ill.Dec. 100, 676 N.E.2d 1304, 1313 (1997) (noting that the workers' compensation lien is equal to the amount of the workers' compensation benefits paid or owed.  (emphasis added)); cf. Zuber v. Ill. Power Co., 135 Ill.2d 407, 142 Ill.Dec. 871, 553 N.E.2d 385, 386 (1990) (noting that reimbursement to an employer may take the form of a lien, on past payments of compensation, or a credit, on future payments). Moreover, Illinois courts have allowed employers to waive their liens even when they owed future payments. See generally Branum v. Slezak Constr. Co., Inc., 289 Ill.App.3d 948, 225 Ill.Dec. 88, 682 N.E.2d 1165 (1997) (not questioning a trial court's decision to permit an employer to waive its lien even though the employer still owed workers' compensation). For example, in Kim v. Alvey, Inc., 322 Ill.App.3d 657, 255 Ill.Dec. 267, 749 N.E.2d 368, 372, 377 (2001), an Illinois appellate court indicated that a trial court properly allowed an employer to waive its lien in a post-trial motion, even though the amount of its workers' compensation obligation (and hence, the value of the lien) had not yet been determined. Similarly, we conclude that the district court should have allowed Ensign to waive its lien on the Baltzells' recovery in their lawsuit against the defendants. Thereafter, the court should have dismissed the contribution claims against Ensign.