NEWSLETTER - September 2006

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September 2006

This month we have news of our successful defense of a substantial lien in a civil case, along with a summary of caselaw directly affecting our ability to recover on worker’s compensation liens in civil cases. We also have a favorable Appellate Court ruling in a slip and fall case, and an unfortunate decision from one panel of the Commission concerning reimbursement of parking fees for medical treatment.

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• Firm Happenings
• Case Law Update
  1. Fourth District Limits Lien Recovery Rights Based On Commission Settlement Contract Language; First District Disagrees
  2. Unexplained Fall In Employee Bathroom Held Not Compensable
  3. Commission Awards Parking Expenses For Treatment At Local Hospital

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Firm Happenings

Steve Murdock recently obtained a victory in a civil case where he was protecting a workers' compensation lien from a Defendant's motion to adjudicate it to zero. The motion was based on the case of Borrowman v. Prastein, a 2005 decision from the 4th District Appellate Court. This case is recapped in our Caselaw Update below, along with a decision just last week from the 1st District that rejects Borrowman. As discussed more fully below, the 4th District found in Borrowman that where section 5(b) rights are not specifically protected in a worker's compensation settlement encompassing a “full and final settlement”, the lien is deemed waived.

In our case, we were asserting in a Cook County civil action a lien of $157,000.00 from a worker's compensation case that had settled at the Commission in 2004, prior to Borrowman. One of the defendants moved to have that lien adjudicated to zero based upon the ruling in Borrowman . In short, the argument was that the lien did not exist based upon the language of the lump sum settlement contract used in the settlement of the underlying workers' compensation case.

Mr. Murdock responded with a motion to strike that motion on the following grounds: the facts and contract language in his case were distinguishable from those in Borrowman; the Borrowman decision and opinion were erroneous as a matter of law; and the defendant did not have standing to move for an adjudication of the lien. Cook County Circuit Court Judge Locallo agreed with Mr. Murdock that the facts and contract language in our case were distinguishable from those in Borrowman .

A crucial distinction in our case was that we had asserted our client's Section 5 lien rights by filing the Intervening Petition in the civil case six months prior to the settlement of the workers' compensation claim and never executed a Release of Lien following settlement of the workers' compensation case. The Court also found that our contract language differed from that used in Borrowman . Finally, the Court adopted Mr. Murdock's argument that the Court has an obligation to protect a workers' compensation lien, not to dismiss it where there is no clear evidence that a waiver was intended.

Please note that very shortly after the Borrowman decision was issued, our firm amended its standard contract language to include, in every contract regardless of subrogation potential, an express provision preserving the respondent's Section 5 lien rights. If you would like to review our revised contract language incorporating this change, please contact Jack M. Shanahan.

It is also important to emphasize that one of the important factors in this victory was the fact that we had affirmatively asserted the respondent's lien prior to the settlement of the underlying workers' compensation case by filing an Intervening Petition and participating in pre-trial negotiations. This showed the court that the respondent intended to and was actively seeking to protect its Section 5 lien, and weighed heavily in the court's final decision.

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Case Law Update

Fourth District Limits Lien Recovery Rights Based On Commission Settlement Contract Language; First District Disagrees

Last year, the Fourth Appellate District of Illinois made a controversial ruling on a section 5(b) lien asserted by an employer in an employee's third party action arising from his work injury. In Borrowman v. Prastein , 356 Ill.App.3d 546 (4 Dist. 2005) the Court held that terms of a lump sum settlement contract entered in an underlying workers' compensation claim which stated in part, “The above constitutes a full, final and complete settlement of any and all claims…” constituted a waiver of the respondent's lien.

The court held that this language, without any express provision preserving the employer's Section 5 lien, included a full and final settlement of any claim that the respondent had with respect to its workers' compensation lien. As a result, without ever intentionally waiving its lien rights, the employer was denied an opportunity for reimbursement of its payments to the claimant under the Worker's Compensation Act from the proceeds of the claimant's civil claim.

Surprisingly, although this appears to represent a deviation from the express terms of section 5 of the Act and caselaw in general regarding liens and the waiver of rights, the respondent was not granted leave to appeal this decision to the Supreme Court. We do not agree in any way with the decision, which fortunately also appears to be fairly fact specific, but as noted above we have altered our standard contract language to avoid any such unfair results.

In a decision issued just last week, and which is therefore not established law just yet, it appears that the 1st District concurs with our disagreement with Borrowman. In Gallagher v. Lenart, which, again, is still awaiting publication and may be subject to revision or withdrawal, we are pleased to see that the 1st District ruled against a Defendant's motion to adjudicate its worker's compensation lien to zero based on Borrowman . As part of its holding the 1st District stated as follows:

We find this [Borrowman] holding unsupported by case law, contrary to several principles behind the Act, and at odds with general contract law. Accordingly, we reject it.

We could not agree more, and will monitor this case until it becomes established precedent.

Unexplained Fall In Employee Bathroom Held Not Compensable

In First Cash Financial Services vs. Industrial Commission (1-05-3403WC) , the Appellate Court reversed the Circuit Court and Commission in finding that an employee's slip and fall in an employee bathroom did not arise out of her employment. The petitioner was a loan teller who entered the employee bathroom when getting ready to leave work, in order to retrieve a personal lunch container. The bathroom had a ceramic tile floor and was not accessible to the general public. When she entered the bathroom, she slipped and fell injuring her left arm.

The Petitioner testified at trial that she did not know what caused her to slip and did not observe anything on the floor. She also did not faint or blackout. She was wearing open toe sandals with three to four inch heels. Four co-workers testified that they did not observe any debris or water on the bathroom floor that day. One stated the only thing one might be able to notice would be possibly hair on the floor. An engineering consultant also testified for the Respondent that the slip resistance of the tiles was within national safety standards, and he provided photographic evidence of the condition of the floors. The Arbitrator found for the petitioner, holding that there was no evidence presented showing that the bathroom tiles were dry or free of hair, dust, debris, or other possible substances. The Arbitrator ordered TTD and medical benefits. On Review the Commission affirmed. The decision was also then affirmed by the Circuit Court.

On appeal the Court first determined that there were no real material facts in dispute and therefore the case could be reviewed de novo as a question of law regarding whether the injury arose out of the claimant's employment. The Court next determined that this was not an idiopathic fall, since there was no evidence of any risk or condition personal to the claimant. The Court then held that in order to consider this a risk of employment, the petitioner has an affirmative duty to present evidence which supports a reasonable inference that the fall occurred as a result of some risk associated with her employment.

The Court observed that the petitioner did not in fact present direct evidence explaining the cause of her fall. She did not know why she fell, and no one witnessed the fall. The Court noted that the Arbitrator had improperly shifted the burden of proof to the respondent to disprove the existence of a defect in the bathroom floor. According to the Court, it is the petitioner who has the burden of proving that the injury arose out of her employment, not the Respondent. The Court noted that there was only circumstantial evidence supporting an inference that the bathroom floor was dirty on the date of the incident. It concluded that the testimony regarding the existence or non-existence of a dirty bathroom was inconclusive either way, and amounted to insufficient speculation, surmise and conjecture. Therefore, the Court reversed the Circuit Court and Commission decision. The Illinois Supreme Court has just denied further appeal of the case, so it will stand as favorable legal precedent for employers facing unexplained fall claims.

Commission Awards Parking Expenses For Treatment At Local Hospital

Recently, the Sherman panel of the Commission reversed an Arbitrator's denial of a claim for $300 in parking expenses incurred as a result of treatment at a hospital in Chicago. The petitioner argued that such expenses were part of the “incidental” expenses related to treatment for the work injury, as used in section 8(a) of the Act. Respondent relied on General Tire v. Industrial Commission , 221 Ill.App.3d 641 (5 Dist. 1991) to argue against this claim, and the Arbitrator agreed.

On review, the Commission reversed and awarded the parking expenses, relying on General Tire. In truth, the General Tire court did award the travel expenses claimed by the claimant there, but based on the fact that the Mount Vernon claimant had already had a personal physician located approximately 100 miles away, and that his need to see this doctor increased due to the work injury. Thus, even though there was another local doctor the petitioner could have seen, the Court found that the petitioner was entitled to see his own personal physician if he chose, and narrowly interpreted the “incidental expenses” provision of section 8(a).

In Soto v. Home Depot, 6 IWCC 246, the Commission found that treatment of a Chicago resident at a Chicago hospital nevertheless was in line with General Tire and awarded reimbursement of his parking fees at the hospital. The Arbitrator had specifically noted that General Tire would not have allowed for this result given the unique facts in that case, but the Commission did not so limit the holding in General Tire .

It bears watching whether this case will be used by petitioner's attorneys to justify other claims for mileage, gas, lunch, etc. for claimants entitled to treatment for injuries under the Act. We certainly would recommend fighting such claims and bringing this issue back before the Commission or the courts above for a more reasoned consideration of this issue.

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