Opinion ID: 3134382
Heading Depth: 2
Heading Rank: 6

Heading: Ill App. 3d 618, 621 (1994). Section 5(b) further provides as

Text: follows: 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  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. (Emphasis added.) 820 ILCS 305/5(b) (West 1992). This provision requires an employer to pay, out of any reimbursement received from the employee, its pro rata share of the employee's costs and expenses and, unless otherwise agreed, 25% of the gross amount of the reimbursement as fees to the employee's attorney, if the attorney's services substantially contributed to the reimbursement.  `The plain purpose of this provision  [is] to require an employer to contribute to the necessary costs of the employee's recovery against a negligent third party where the employer is to receive reimbursement from the recovery for workmen's compensation payments made or to be made to the employee.'  In re Estate of Callahan, 144 Ill. 2d 32, 46 (1991), quoting Reno v. Maryland Casualty Co., 27 Ill. 2d 245, 247 (1962). The employer argues that, pursuant to Kotecki, he may not be required to pay both contribution to Morrison in an amount equal to the workers' compensation benefits paid, and section 5(b) attorney fees to the plaintiff or his attorney. The employer notes that, if he is required to pay both, his reimbursement from the plaintiff will be reduced by 25% for attorney fees and he will obtain a reimbursement of only 75% of the workers' compensation benefits paid. However, he will also be required to pay an amount equal to 100% of the benefits in contribution to Morrison. Thus, he asserts, he will ultimately be paying an amount equal to 125% of his workers' compensation liability, in violation of Kotecki. The trial court agreed with the employer and held, in effect, that the amount of contribution owed by the employer should be limited to 75% of the workers' compensation benefits. We agree with the appellate court that the trial court erred in limiting Morrison's contribution judgment to 75% of the workers' compensation benefits paid. We hold that the employer's liability for contribution should be limited only by the amount of workers' compensation benefits paid, with no reduction for the employer's section 5(b) share of attorney fees and costs. In Kotecki, we determined that an employer's contribution liability is limited to the amount of the employer's workers' compensation liability. Kotecki, 146 Ill. 2d at 164-65. The employer's workers' compensation liability clearly denotes the amount of benefits the employer owes under the Workers' Compensation Act, not the amount of reimbursement the employer is entitled to recover from the employee. The fact that the employer may also have to pay section 5(b) attorney fees and costs 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. This is the only conclusion that is consistent with the language of section 5(b). Reducing the amount of contribution recoverable by the third party to reflect section 5(b) fees would, in effect, shift the obligation to pay attorney fees under section 5(b) from the employer to the third party. The attorney fees and costs provision of section 5(b) is an obligation imposed on the employer, however. There is no basis in section 5(b) for shifting this obligation to the third party. See Thies v. Korte-Plocher Construction Co., 268 Ill. App. 3d 217, 219-22 (1994); Corley v. James McHugh Construction Co., 266 Ill. App. 3d 618, 622-25 (1994). Moreover, the rationale for imposing this obligation on the employer is that the employer receives a benefit as a result of the employee's having prosecuted the third-party action, namely, reimbursement. The third party, on the other hand, clearly receives no benefit as a result of having been sued by the employee. The Minnesota Supreme Court has reached this same conclusion with regard to a provision in the Minnesota workers' compensation statute which reduced the employer's reimbursement from the employee's recovery by a portion of the employee's attorney fees in pursuing suit against the third party. Kordosky v. Conway Fire & Safety, Inc., 304 N.W.2d 616 (Minn. 1981). As noted, in Kotecki this court adopted the Minnesota rule espoused in Lambertson v. Cincinnati Corp., 312 Minn. 114, 257 N.W.2d 679 (1977). Kotecki, 146 Ill. 2d at 164. We therefore deem it appropriate to examine how the Minnesota Supreme Court has resolved this issue. In Kordosky v. Conway Fire & Safety, Inc., 304 N.W.2d 616 (Minn. 1981), the Minnesota Supreme Court considered whether, under Lambertson, the employer's liability for contribution was the full amount of workers' compensation benefits, or should be reduced in the same manner as the employer's reimbursement from the employee would be reduced for attorney fees. The Kordosky court rejected the argument that the employer's contribution liability should be reduced to only that amount which the employer will obtain in reimbursement from the employee. The court reasoned: In Lambertson, this court attempted to balance the interests of the employee, employer and third party. As the court noted, `the third party's interest is that of any other cotortfeasor--to limit its liability to no more than its established fault.' [Citation.] In order to vindicate this interest, the court allowed the third party to obtain contribution from the employer up to the amount of the employer's workers' compensation liability. [Citation.] If the court adopted [this] solution, the contribution that the third party is able to obtain from the employer, already severely limited in many cases, will be further reduced. Moreover, since the reduction mandated [by the workers' compensation statute] reflects attorneys fees expended by the employee to obtain the recovery from the third party, to pass this reduction on to the third party would be to require the third party to pay for the privilege of being sued. This is not consistent with the equitable principles that form the basis of the Lambertson holding. Kordosky, 304 N.W.2d at 621. We agree with the Minnesota Supreme Court that the third party should not be required to pay for the privilege of being sued. The trial court therefore erred in reducing the employer's contribution liability to 75% of the workers' compensation benefits paid. We note that the employer also argues that, if he is required to pay contribution to Morrison 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. The employer would thus deprive the plaintiff and his attorney of section 5(b) fees and costs in this case. We do not address whether the employer may avoid his section 5(b) obligation to pay fees and costs to the plaintiff in this case. The issue we are called upon to decide is the amount of contribution that Morrison is entitled to recover from the employer. We have held that Morrison is entitled to recover contribution in an amount equal to 100% of the workers' compensation benefits paid, and that whether the employer must pay section 5(b) fees to the plaintiff is irrelevant to this determination. The employer's argument that he should not be required to pay section 5(b) fees in this case would impact the recovery of the plaintiff and his attorney. The plaintiff is not a party to this appeal, and issues regarding the employer's obligations to the plaintiff or his attorney are not before us. We decline to address this issue without the benefit of argument on the plaintiff's behalf. We therefore hold only that Morrison is entitled to recover contribution from the employer in an amount equal to 100% of the workers' compensation benefits paid, regardless of the employer's obligation to pay fees and costs under section 5(b). To the extent that the appellate court's judgment may have addressed the issue of whether the employer must pay section 5(b) fees to the plaintiff or his attorney, that holding is vacated. Accordingly, we reverse the circuit court's ruling that the employer's contribution liability to Morrison is limited to 75% of the workers' compensation benefits paid. On remand, the circuit court is directed to enter an order holding the employer liable for contribution to Morrison in the full amount of workers' compensation benefits paid by the employer.