Court Opinion

ID: 3141241
Source: CourtListenerOpinion
Date Created: 2015-10-22 17:53:37.660993+00
Date Added: 2024-06-11T11:54:44.360863
License: Public Domain

NO. 5-06-0273
                   NOTICE

 Decision filed 11/05/07. The text of
                                                       IN THE
 this decision may be changed or

 corrected prior to the filing of a
                                            APPELLATE COURT OF ILLINOIS
 Peti tion   for    Rehearing   or   th e

 disposition of the same.
                             FIFTH DISTRICT
________________________________________________________________________

JIM BURGESS, JR., and JAMES MUFFLEY, ) Appeal from the
                                                  ) Circuit Court of
   Plaintiffs-Appellees,                          ) St. Clair County.
                                                  )
v.                                                ) No. 05-AR-248
                                                  )
TASHONDA BROOKS,                                  )
                                                  )
   Defendant                                      )
                                                  ) Honorable
(The People of the State of Illinois, Intervening ) Patrick M. Young,
Plaintiff-Appellant).                             ) Judge, presiding.
________________________________________________________________________

             PRESIDING JUSTICE WELCH delivered the opinion of the court:

             This case comes before us pursuant to a supervisory order from the Illinois Supreme

Court, which has directed us to vacate our previous opinion herein (Burgess v. Brooks, 374

Ill. App. 3d 545 (2007)) and reconsider the case in light of the supreme court's decision in

Gallagher v. Lenart, 226 Ill. 2d 208 (2007). Burgess v. Brooks, No. 104879 (September 26,

2007). We do so, and upon reconsideration we determine that a result different from that

reached in our previous opinion is warranted.

             On February 27, 2003, the plaintiff, Jim Burgess, Jr., was driving a car while on duty

with the Illinois Secretary of State Police when he was "rear-ended" by a car being driven

by Tashonda Brooks. Burgess filed a claim for workers' compensation benefits against his

employer, the State of Illinois. Burgess and the State entered into a settlement agreement

that was approved by the Illinois Industrial Commission on August 23, 2004. The terms of

the settlement agreement included the following language: "This is a compromise settlement

of a disputed claim," and "Each party waives any right to ever reopen this claim under any

                                                         1
section of the [Workers' Compensation] Act." Burgess received $19,138.48 in settlement of

his workers' compensation claim.

       Thereafter, on February 25, 2005, Burgess filed a complaint against Brooks in the

circuit court of St. Clair County. The complaint alleged that her negligence had caused the

accident and his resulting injuries. On April 20, 2005, the State filed a petition to intervene

based upon section 5(b) of the W orkers' Compensation Act (the Act) (820 ILCS 305/5(b)

(West 2004)), which allows an employer to join in an action by an employee to recover

damages from another party in cases where the employee has received workers'

compensation benefits. Leave to intervene was granted on July 29, 2005, and the State's

complaint in intervention was filed that date. The State sought to protect and preserve its

lien and right to reimbursement for amounts paid to Burgess in settlement of the workers'

compensation claim from any amounts recovered by Burgess from Brooks.

       Burgess's complaint against Brooks was submitted to arbitration. Ultimately, after

finding that the parties had participated in the arbitration in good faith, the arbitrators found

in favor of Burgess and against Brooks and awarded Burgess damages in the amount of

$19,000.

       On January 20, 2006, Burgess filed a motion to determine the amount of the State's

lien pursuant to section 5(b) of the Act. In the motion he argues that the State had waived

any such lien or right of reimbursement by virtue of the language in the settlement agreement

which provided, "Each party waives any right to ever reopen this claim under any section of

the Act." The State objected to the motion, arguing that it had not waived its lien by virtue

of the above-quoted language in the settlement agreement.

       On April 10, 2006, the circuit court of St. Clair County ruled that the language

contained in the settlement agreement did constitute a waiver of the State's workers'

compensation lien under section 5(b) of the Act. On April 19, 2006, pursuant to Supreme

                                               2
Court Rule 304(a) (210 Ill. 2d R. 304(a)), the circuit court found that there was no just

reason for delaying the enforcement or appeal of the order. The State's notice of appeal was

filed May 10, 2006.

       On appeal, the State argues that the circuit court erred in construing the settlement

agreement as containing a waiver of the State's workers' compensation lien, because the

quoted language refers only to Burgess's claim for benefits and not to the State's independent

statutory right to assert a lien. The State argues that its right to assert a lien is implied in the

settlement contract and that any waiver of the State's lien must be explicit. The only question

before us on appeal is the propriety of the circuit court's construction of the settlement

contract entered into by Burgess and the State, specifically, whether the contract effectively

waived the State's lien. This is a question of law, which we review de novo (In re Foreman,

365 Ill. App. 3d 608, 611 (2006)).

       In our previous opinion, we discussed the two conflicting appellate court decisions

of Borrowman v. Prastein, 356 Ill. App. 3d 546 (2005), from the Fourth District, and

Gallagher v. Lenart, 367 Ill. App. 3d 293 (2006), from the First District, which addressed

the sufficiency of language in a settlement contract to waive the employer's workers'

compensation lien.

       In Borrowman, 356 Ill. App. 3d at 550-51, the Fourth District of the appellate court

held that where an employer knew of the existence of the employee's action against a

negligent third party prior to entering into a workers' compensation settlement agreement

with the employee and where the employer did not explicitly reserve its right to a lien against

the proceeds of the third-party action in the settlement agreement but agreed that the

settlement was " 'full, final[,] and complete,' " it had effectively waived its statutory lien by

not explicitly reserving it.

       In Gallagher, 367 Ill. App. 3d at 298, the First District of the appellate court rejected

                                                 3
the holding of Borrowman, finding it to be "unsupported by case law, contrary to several

principles behind the Act, and at odds with general contract law." The Gallagher court held

that the absence of any reference to an employer's lien in a settlement agreement, without

more, cannot constitute a waiver of that lien but that such a waiver must be explicitly and

affirmatively stated in the agreement and cannot simply be implied by a lack of any reference

to that lien. Gallagher, 367 Ill. App. 3d at 302-03.

       In our previous opinion, we found it unnecessary to determine which of these two

holdings was, in our opinion, correct. We concluded that even were we to adopt the holding

of Gallagher, it would not aid the State because, unlike Gallagher, the settlement agreement

in the case at bar does contain an explicit and affirmative waiver of the State's lien rights.

The settlement agreement in Gallagher does not contain any language even remotely similar

to that contained in the agreement in the case at bar and on which the circuit court relied.

In the settlement agreement in Gallagher, only the employee explicitly waived any rights–his

rights to review under sections 19(h) and 8(a) of the Act (820 ILCS 305/19(h), 8(a) (West

2000)). In Gallagher, there is no explicit waiver of any rights by the employer. In the case

at bar, however, the settlement agreement provides, "Each party w aives any right to ever

reopen this claim under any section of the Act." In our previous opinion, we found this

language to be sufficiently explicit and affirmative with respect to the State's waiver of its

statutory lien pursuant to section 5(b) of the Act. Accordingly, we affirmed the judgment

of the circuit court of St. Clair County.

       Nevertheless, in its recent decision in Gallagher v. Lenart, 226 Ill. 2d 208 (2007), the

supreme court has made clear that, in order for an employer to waive its workers'

compensation lien in a settlement agreement, general language of release or waiver will not

suffice. On the contrary, the court held that the waiver of a workers' compensation lien must

be explicitly stated. The contract must explicitly mention the workers' compensation lien and

                                              4
indicate the employer's desire to waive it. The court stated that its ruling "will have the

salutary effect of placing both the parties and the courts in workers' compensation cases on

notice that a specific reference to the lien in a waiver provision is required before the lien

can be deemed waived." (Emphasis added.) Gallagher, 226 Ill. 2d at 239. The supreme

court explicitly overruled the holding in Borrowman. Gallagher, 226 Ill. 2d at 241.

       The waiver provision of the settlement agreement in the case at bar, while appearing

to cover "any right" to "this claim under any section" of the Act, fails to specifically mention

the employer's right to a lien pursuant to section 5(b) of the Act. Accordingly, the language

of the settlement agreement is insufficient to constitute a waiver, and the employer's workers'

compensation lien cannot be deemed waived. The judgment of the circuit court of St. Clair

County that the subject language did constitute a waiver of the State's workers' compensation

lien under section 5(b) of the Act is hereby reversed.

       For the foregoing reasons, the judgment of the circuit court of St. Clair County is

hereby reversed.

       Reversed.

       WEXSTTEN and STEWART, JJ., concur.

                                               5
                                           NO. 5-06-0273

                                              IN THE

                                APPELLATE COURT OF ILLINOIS

                                  FIFTH DISTRICT
___________________________________________________________________________________

      JIM BURGESS, JR., and JAMES MUFFLEY, ) Appeal from the
                                                        ) Circuit Court of
         Plaintiffs-Appellees,                          ) St. Clair County.
                                                        )
      v.                                                ) No. 05-AR-248
                                                        )
      TASHONDA BROOKS,                                  )
                                                        )
         Defendant                                      )
                                                        ) Honorable
      (The People of the State of Illinois, Intervening ) Patrick M. Young,
      Plaintiff-Appellant).                             ) Judge, presiding.
___________________________________________________________________________________

Opinion Filed:        November 5, 2007
___________________________________________________________________________________

Justices:           Honorable Thomas M. Welch, P.J.

                 Honorable James M. Wexstten, J., and
                 Honorable Bruce D. Stewart, J.,
                 Concur
___________________________________________________________________________________

Attorney         Lisa Madigan, Attorney General, State of Illinois, Jan E. Hughes, Assistant Attorney
for              General, 100 West Randolph Street, 12th Floor, Chicago, IL 60601
Appellant
___________________________________________________________________________________

Attorney         Eric Kirkpatrick, Kirkpatrick Law Offices, P.C., #3 Executive W oods Court, Suite
for              100, Belleville, IL 62226
Appellees
___________________________________________________________________________________