Court Opinion

ID: 3147803
Source: CourtListenerOpinion
Date Created: 2015-10-22 18:37:28.981495+00
Date Added: 2024-06-11T12:14:57.711782
License: Public Domain

FIRST DIVISION
                                                April 18, 2011

                            No. 1-10-0114

                  IN THE APPELLATE COURT OF ILLINOIS
                        FIRST JUDICIAL DISTRICT

LORYANN JOHNSON,                            )   Appeal from the
                                            )   Circuit Court of
     Plaintiff-Appellee,                    )   Cook County.
                                            )
v.                                          )
                                            )
AYALNESH A. TIKUYE AND AMIGO                )   No. 06 L 5892
DRIVING SCHOOL,                             )
                                            )
     Defendants                             )
                                            )
(The People ex rel. The Department of       )
Central Management Services,                )   The Honorable
                                            )   William Maddux,
     Intervening Plaintiff-Appellant).      )   Judge Presiding.
                                            )

     JUSTICE LAMPKIN delivered the judgment of the court, with
opinion.
     Presiding Justice Hall and Justice Hoffman concurred in the
judgment and opinion.

                            O P I N I O N

     This case involves a worker’s compensation lien.    The State

of Illinois ex rel. the Department of Central Management Services

(CMS) intervened in a negligence action brought by plaintiff,

Loryann Johnson, against third-party tortfeasors, Ayalnesh Tikuye

and Amigo Driving School, following a car accident.    After
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Johnson was awarded proceeds in an arbitration, CMS filed a

motion to enforce its worker’s compensation lien against that

award pursuant to section 5(b) of the Workers’ Compensation Act

(Act) (820 ILCS 305/5(b) (West 2004)).   The circuit court awarded

CMS limited lien recovery.

     On appeal, CMS contends the circuit court erred in

conducting an evidentiary hearing to determine whether Johnson’s

injuries were work-related or attributable to another source

where no such hearing was necessary because the arbitrator

determined in an evidentiary hearing that the work-related car

accident proximately caused Johnson’s injuries and set the

arbitration award accordingly.   In the alternative, CMS contends

the circuit court erred in relying on the testimony of Johnson’s

sole witness.   Based on the following, we reverse and remand.

FACTS

     On June 8, 2004, Johnson, a license examiner for the

Secretary of State, was injured when Tikuye backed up over a curb

and hit a light pole.   Johnson sought treatment for neck and back

injuries.   Johnson was diagnosed with an L5/S1 disc herniation.

Johnson continued treatment and did not return to work until

March 2007.   Johnson filed a worker’s compensation claim and was

awarded a total of $123,147.53, which included $75,038.64 for

medical payments, $34,338.95 for lost wage payments, and

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$13,769.94 for settlement of the claim.

     Johnson brought a negligence action against defendants,

Tikuye and Amigo Driving School.1      On June 15, 2009, a binding

arbitration was held in which Johnson sought $250,000 based on

$77,833.66 in medical bills and $84,000 in lost wages because the

“motor vehicle accident caused the L5-S1 [bulge], or at least

aggravated her degenerat[ive] facet disease.”      Defendants

countered that Johnson was entitled to recover only $40,000.         CMS

filed a petition to intervene to protect its worker’s

compensation lien rights in the amount of $123,147.53.

     The arbitrator conducted a hearing to determine the

proximate cause of Johnson’s injuries.      The hearing consisted of

the testimony of Johnson and defendants as well as “extensive

material and medical evidence.”     In a written opinion, the

arbitrator concluded that the majority of Johnson’s medical

bills, namely, $42,375 for “304 visits for doctor care,” were

“excessive” in light of the diagnosis.      Without elaborating, the

arbitrator further found Johnson’s lost wages, namely, $28,000

per year, were subject to reduction.      The arbitrator noted that

plaintiff had a prior back injury requiring care in October 2001

and that defendants argued the “facet injections” Johnson

     1
         The car involved in the accident was owned by Amigo Driving

School.

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received were for a “degenerative condition.”      The arbitrator

ultimately awarded plaintiff a gross amount of $118,700, but

reduced the award by 20% because of Johnson’s comparative fault

for failing to use her second brake to avoid the accident,

ultimately awarding her $94,960.       The arbitrator did not provide

a breakdown of the award.

     CMS filed a motion to enforce its subrogation lien

recognizing that, because Johnson was awarded less than paid in

worker’s compensation proceeds, CMS was entitled only to $71,220,

which was Johnson’s arbitration award less 25% for statutorily

prescribed attorney fees in bringing the negligence claim.

Johnson filed a response arguing that the trial court should

scrutinize the arbitration award to determine what portion was

related to her injuries resulting from the accident because CMS’s

lien could attach only to those proceeds.

     On November 17, 2009, the trial court entertained arguments

regarding whether it should enforce the entirety of the lien or

adjudicate the eligible proceeds for the lien.      CMS stated, on

more than one occasion, that it was willing to engage in an

evidentiary hearing even though it was unnecessary.      Relying on

Fret v. Tepper, 248 Ill. App. 3d 320, 618 N.E.2d 526 (1993), and

the fact that there was no transcript from the arbitration, the

trial court ruled that it would hold an evidentiary hearing.

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     On December 1, 2009, the trial court conducted the

evidentiary hearing.   CMS’s expert, Kevin Kulczyski, a

chiropractor at the Taylor-Ogden Medical Center, testified that

he treated Johnson following her June 2004 accident.   During that

treatment period, Dr. Kulczyski referred Johnson to Dr. Gale

Rosseau for an electromyography and a nerve conduction velocity

test and to Dr. Fink, an orthopedic spine surgeon.   Dr. Kulczyski

testified that the referrals were necessary and reasonable due to

Johnson’s L5/S1 injury, which he described as “the worst

condition for the disc.”   Dr. Kulczyski saw Johnson for

approximately 300 outpatient visits.   According to Dr. Kulczyski,

the 300 visits were necessary to provide Johnson with relief

while awaiting future treatment plans from the specialists.     When

asked whether Johnson’s injury resulted from a work-related

accident, Dr. Kulczyski said “[w]hen she came into my office

[Johnson] said she got hurt at work in a motor vehicle accident.

That’s all I know.”    Dr. Kulczyski submitted all of his bills to

Johnson’s employer for worker’s compensation.   Dr. Kulczyski

testified that it was reasonable and necessary for Johnson not to

return to work for three years pursuant to the injury and her job

requirements.

     On cross-examination, Dr. Kulczyski testified that he based

his opinion of the cause of Johnson’s injury on what she told

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him.       Dr. Kulczyski stated that he could not know what portion of

the condition for which he gave treatment was attributable to the

accident or to a preexisting back condition.       Dr. Kulczyski

testified that, after reviewing the medical records of the

specialists, there was an indication that Johnson had a

degenerative back condition.       Dr. Kulczyski, however, opined that

Johnson had a disc extrusion that was the “worse [sic] I have

ever seen of anything in my practicing career.”

       Johnson’s expert, Dr. Mark Sloan, a board-certified

anesthesiologist and pain physician, testified that he reviewed

Johnson’s medical file in connection with the underlying case.2

Dr. Sloan opined that Johnson sustained a soft tissue injury,

which is a cervical or lumbar sprain, as a result of the June

2004 accident.       According to Dr. Sloan, such an injury required

five to six weeks of physical therapy.       Physical therapy at the

Taylor-Ogden Medical Center for the recommended five- to six-week

period would cost $4,625.       Dr. Sloan opined that Johnson’s

additional treatments were not related to the accident.       Dr.

Sloan based his opinion on “preexistence and the fact of the

nature of the type of findings on MRI and subsequent diagnostic

tests that do not correlate with a soft tissue injury.”       Based on

       2
           Dr. Sloan provided a medical report to defendants in the

arbitration proceeding.

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his review of Johnson’s medical records, Dr. Sloan opined that

she had a degenerative disc disease of the lumbar and cervical

spine prior to the June 2004 accident.

     On cross-examination, Dr. Sloan testified that he did not

treat Johnson for any injuries.     Dr. Sloan said he was not an

orthopedic physician.

     The trial court issued a written opinion finding CMS’s lien

recovery was $42,286.88.     The trial court calculated its award

based on the arbitrator having awarded Johnson 47.5% of her

requested negligence damages, i.e., she was awarded $118,700 when

she requested $250,000.     “Applying the same reduction,” the trial

court found that it was “fair and reasonable” to reduce CMS’s

requested lien3 by 47.5%, thereby awarding $42,286.88.

DECISION

I. Adjudication of Liability

     The question before us is whether the trial court erred in

conducting a further evidentiary hearing in order to adjudicate

CMS’s lien.     CMS contends that the statute does not provide for

such a hearing where the arbitrator already conducted an

evidentiary hearing and awarded proceeds based on its findings of

eligible work-related costs.

     3
         We note that the trial court’s order incorrectly represents

that CMS’s requested recovery was $89,025.

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     Resolution of this issue involves statutory interpretation,

which is a question of law we review de novo.   In re Estate of

Dierkes, 191 Ill. 2d 326, 330, 730 N.E.2d 1101 (2000).

     It is well established that the primary goal of statutory

interpretation is to ascertain and give effect to the

legislature’s intent by reading the plain language of the statute

as a whole and giving the language its practical and liberal

interpretation.   Id. at 331.

     Pursuant to section 5(b) of the Act, an employer has a right

to reimbursement for compensation paid to an employee when the

employee sustained an injury as a result of a third party and

recovers from that party.   Porro v. M.W. Powell Co., 224 Ill.

App. 3d 175, 177, 586 N.E.2d 458 (1991).   In relevant part,

section 5(b) provides:

     “Where the injury or death for which compensation is

     payable under this Act was caused under circumstances

     creating a legal liability for damages on the part of

     some person other than his employer to pay damages,

     then legal proceedings may be taken against such other

     person to recover damages notwithstanding such

     employer’s payment of or liability to pay compensation

     under this Act.   In such case, however, if the action

     against such other person is brought by the injured

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    employee or his personal representative and judgment is

    obtained and paid, or settlement is made with such

    other person, either with or without suit, 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 ***. ***

            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 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.

            If the injured employee or his personal

    representative agrees to receive compensation from the

    employer or accept from the employer any payment on

    account of such compensation, or to institute

    proceedings to recover the same, the employer may have

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       or claim a lien upon any award, judgment or fund out of

       which such employee might be compensated from such

       third party.”   820 ILCS 305/5(b) (West 2004).

       In other words, the statute “grants the employer a lien on

the recovery equal to the amount of workers’ compensation

benefits paid or owed.”     In re Estate of Dierkes, 191 Ill. 2d at

328.    The practical and liberal operation of the Act provides

prompt and equitable compensation to employees that have suffered

an injury while working regardless of fault, yet allows both the

employee and employer to recover from the true offender while

preventing the employee from obtaining double recovery.         Id. at

331-32.

       The supreme court has succinctly stated:

            “There is nothing in the statute that suggests a

       limitation on the employee’s obligation of

       reimbursement from the third-party recovery.     If an

       employer has made workers’ compensation payments, the

       obligation of reimbursement exists regardless of the

       amount that the employee recovers.    [Citation.]   Thus,

       if the amount of compensation paid by the employer

       exceeds the employee’s third-party recovery, then the

       employer is entitled to the entire recovery, less fees

       and costs.   [Citation.]   Clearly, ‘[i]t is of utmost

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     importance that the trial court protect an employer’s

     [workers’ compensation] lien.’ [Citation.]”    Id. at

     332-33.

     Simply stated, CMS’s lien should have been enforced without

reduction, other than for reasonable fees and costs, where

Johnson recovered from defendants Tikuye and Amigo Driving

School.   CMS compensated Johnson for more than the third-party

recovery and CMS adjusted its lien accordingly.    In order to

protect CMS and prevent Johnson from receiving double recovery,

the trial court should have provided CMS with $94,960, the amount

Johnson recovered from defendants, less the 25% statutory

reduction for Johnson’s attorney fees and reasonably necessary

costs and expenses.

     The statute does not provide for the arbitrary lien

reduction imposed by the trial court here.   “[T]he legislature

removed impediments to the employer’s full reimbursement, and

specified setoffs thereto only for costs, expenses, and attorney

fees.   Had the legislature intended the employer’s reimbursement

to be subject to additional setoffs, the legislature would have

supplied them.”   Id. at 334.   The trial court’s decision to

conduct an evidentiary hearing to determine whether there was a

portion of the arbitration award not related to the injury was

not provided for by statute.    See Smith v. Louis Joliet

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Shoppingtown L.P., 377 Ill. App. 3d 5, 877 N.E.2d 789 (2007) (the

trial court lacked the authority to adjudicate the employer’s

lien in an amount less than the employee’s recovery from a

negligence suit).    Moreover, the trial court’s decision to reduce

the lien recovery by a percentage equal to the amount the

arbitrator reduced Johnson’s requested relief was baseless.   The

arbitrator determined that Johnson’s original recovery request

from defendants was excessive in light of the testimony, reports

from treating physicians, and expert evidence, and reduced the

award accordingly.   There was no basis upon which the trial court

should have further reduced the arbitration award when that award

accounted for the excessive nature of Johnson’s requested

recovery and the evidence of Johnson’s degenerative condition.

     We recognize that there are instances where it is necessary

for a trial court to conduct an evidentiary hearing; however,

those instances occur where settlement proceeds are not allocated

among competing claims.   See Glenn v. Johnson, 198 Ill. 2d 575,

764 N.E.2d 47 (2002) (where a settlement did not allocate among

various claims, including loss of consortium, and the trial court

reduced the worker’s compensation lien without any factual basis,

the case was remanded for an evidentiary hearing to determine the

proper allocation of the settlement proceeds); Fret, 248 Ill.

App. 3d 320; Bart v. Union Oil Co., 236 Ill. App. 3d 964, 603

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N.E.2d 77 (1992) (where a settlement did not allocate among

various claims, including loss of consortium, the case was

remanded because the trial court erred in providing lien recovery

for the entire settlement amount); Porro, 224 Ill. App. 3d 175

(worker’s compensation liens cannot attach to proceeds from loss

of consortium claims).

     We find Fret, the case primarily relied upon by Johnson,

distinguishable from the case at bar.    In Fret, the employee was

involved in a car accident that resulted in injuries for which he

received worker’s compensation.    Nearly three months later, the

employee either injured or reinjured his back while on the job

and again received worker’s compensation.    The employee entered

into a settlement agreement with the third-party from the

accident for $12,000.    The employer sought to adjudicate its

worker’s compensation lien in excess of $20,000.    Without

conducting an evidentiary hearing, the trial court reduced the

employer’s lien recovery to $2,702.96 less 25% in attorney fees.

The trial court further concluded that the second injury was a

separate incident.   On appeal, this court remanded the case to

the trial court to conduct an evidentiary hearing because there

was no factual basis to support the court’s earlier findings.

This court said, “[p]ursuant to section 5(b), to the extent that

a recovery is had from a third party, an employer is entitled to

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be reimbursed for the compensation benefits paid.   To hold

otherwise would be to permit the employee to receive a double

recovery, one from the third party and the other from his own

employer.”   Fret, 248 Ill. App. 3d at 326.   Accordingly, an

evidentiary hearing was necessary to determine whether there were

two separate, distinct injuries resulting in two distinct claims

and what amount of the settlement was attributable to the

employer’s lien.   Id.

     In the case before us, the primary distinction is the fact

that the arbitrator conducted an evidentiary hearing.   Although

there was no transcript of that hearing, the arbitrator’s

findings were based upon testimony and medical reports and

documentation.   Consequently, there was evidence to support the

arbitrator’s award.   Moreover, our case did not involve a

question of two distinct injuries requiring fund allocation;

rather, the arbitrator reduced Johnson’s third-party recovery as

a result of a degenerative condition.

     Overall, the statute was intended to protect against

situations like the one before us where an employee obtains

double recovery.   In re Estate of Dierkes, 191 Ill. 2d at 331-32;

Fret, 248 Ill. App. 3d at 326.   While litigating her negligence

claim, Johnson consistently and repeatedly reported that all of

her medical expenses and time off of work were attributable to

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the June 2004 accident.   The arbitrator awarded Johnson

compensation for what was determined reasonable and related to

the June 2004 accident.   Then, while CMS pursued its lien to

recover the amount expended in worker’s compensation, Johnson

argued that her medical expenses and time off of work were

minimal as related to the June 2004 accident.   Johnson’s

inconsistent argument was completely disingenuous.   The trial

court’s reduced lien recovery allowed Johnson to maintain that

portion of worker’s compensation that CMS overpaid in addition to

the amount of recovery from defendants that the trial court

deemed excessive.

II.   Remaining Contentions

      We need not address CMS’s remaining contentions.

CONCLUSION

      We reverse the judgment of the trial court reducing CMS’s

worker’s compensation lien and find that CMS is entitled to lien

recovery on the entire arbitration award less 25% for attorney

fees, i.e., $94,960 less 25% or $71,220, and a pro rata share of

reasonable costs and expenses, which have yet to be determined.

Accordingly, we remand this case to the trial court to assess

reasonable costs and expenses.

      Reversed; remanded with instructions.

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              REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT

                            LORYANN JOHNSON,

                                Appellee,

                                    v.

            AYALNESH A. TIKUYE AND AMIGO DRIVING SCHOOL,

                                Defendants

    (The People ex rel. The Department of Central Management
                           Services,

                  Intervening Plaintiff-Appellant).

                          No. 1-10-0114

                     Appellate Court of Illinois

                    First District, FIRST DIVISION

                             April 18, 2011

  JUSTICE LAMPKIN delivered the judgment of the court, with opinion.

     Presiding Justice Hall and Justice Hoffman concurred in the

                            judgment and opinion.

               Appeal from the Circuit Court of Cook County.

                 The Hon. William Maddux, Judge Presiding.

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                COUNSEL FOR INTERVENING PLAINTIFF-APPELLANT

        Lisa Madigan, Attorney General, State of Illinois, and

        Michael A. Scodro, Solicitor General, Chicago, IL 60601

            OF COUNSEL: Evan Siegel, Assistant Attorney General

                           COUNSEL FOR APPELLEE

            Frank A. Santilli & Associates, Chicago, IL 60602

                    OF COUNSEL: Laura Di Andrea-Iversen

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