Appeal from the Circuit Court of Kane County, Sixteenth
Judicial District; the Hon. JOHN A. KRAUSE, Judge, presiding.
Affirmed in part and reversed in part and remanded with
MR. JUSTICE SEIDENFELD DELIVERED THE OPINION OF THE COURT.
Rehearing denied and opinion modified July 17, 1970.
MODIFIED OPINION ON DENIAL OF PETITION FOR REHEARING
Ashok Railkar filed suit for personal injuries against Janice Boll and recovered a trial judgment in the amount of $5,000. P.F. Collier, Inc., as Railkar's employer, and Hartford Accident and Indemnity Co., as the workmen's compensation carrier, were given leave to intervene to protect the lien of workmen's compensation paid to Railkar in the amount of $9,800.
Petitioner, Philip E. Howard, an attorney, had represented Railkar in the injury suit. He also represented Railkar in a prosecution of an appeal of that suit on the issue of damages only. The judgment was affirmed in Railkar v. Boll, 109 Ill. App.2d 277, 248 N.E.2d 521 (1969).
Thereafter, a petition for adjudication of liens was filed by the plaintiff, reciting that the $5,000 judgment had been increased by $375 in accumulated interest; that plaintiff's attorney has a contract providing for 50% of any amount owing; and that expenses had been incurred in the amount of $2,137.89. The petitioner further recited that plaintiff's attorney had been served with liens as follows: Interveners $9,800; and hospital and doctors' expenses totaling $3,730.97.
Interveners answered, denying any attorney fee contract beyond that specified by section 5 of the Workmen's Compensation Act (Ill Rev Stats 1967, c 48, § 138.5), which provides for "payment to the attorney of 25% of the gross amount reimbursed"; and alleged the superiority of the workmen's compensation lien to any other lien.
The trial court disbursed the $5,375 personal injury judgment as follows: $2,137.89 to plaintiff's counsel for expenses of litigation; $806.27 to plaintiff's counsel based upon 25% of the judgment as reduced by the litigation expenses; and $2,430.84 to interveners, as the balance.
It is from this order that the appeal is taken.
Howard argues that he is entitled to 50% of the gross personal injury judgment, basing his claim on his contingent fee contract with Railkar and upon the provisions of the Attorney's Lien Act (Ill Rev Stats 1967, c 13, § 14). Alternatively, he claims that, if we determine that he is limited to the 25% statutory fee provided in the Workmen's Compensation Act (§ 138.5(b)), the percentage must be applied to the gross amount of the personal injury judgment.
Interveners counter that the only authority requiring payment by employer of an employee's attorney's fees in actions by an employee against a third person is found in the Workmen's Compensation Act and is limited to 25% of the amount reimbursed to the employer. They argue that the other expenses of the litigation do not comprise reimbursement to the employer.
We agree with interveners' contention that the provisions of the Workmen's Compensation Act for a 25% fee provide the only basis for recovery of plaintiff's attorney's fees as against the employer. There was no contractual relationship between the employee Railkar or his attorney Howard and the interveners. The inclusion of the provision of payment by the employer of a prorata share of costs, together with attorney's fees in section 5 of the Workmen's Compensation Act as amended in 1957, constitutes the only basis of the employer's liability to share the employee's burden of expenditures for recovery against a third party. Hardwick v. Munsterman, 15 Ill.2d 564, 567, 155 N.E.2d 638 (1959). Prior to that amendment, the employer was entitled to complete reimbursement of the fund recovered from such third party without any statutory or common-law requirement to bear any part of the employee's costs or fees incurred in a proceeding in which the employer was not a party. Manion v. Chicago, R.I. & P.R. Co., 2 Ill. App.2d 191, 119 N.E.2d 498 (1954).
The validity of the amendment to section 5 of the Workmen's Compensation Act was upheld in Reno v. Maryland Cas. Co., 27 Ill.2d 245, 248, 249, 188 N.E.2d 657 (1962). There, the Supreme Court noted that the purpose of the subrogation section as originally enacted was to prevent the employee from obtaining unjust enrichment in the nature of a double recovery for the same injury; and that the purpose of the provision requiring the employer to pay a proportionate share of the expenses of securing a fund out of which the employer could be subrogated, was to prevent the employer from being unjustly enriched.
No authority, other than the statute, has been furnished by either side on the question of whether the plaintiff's attorney's fees apply to the entire recovery in a personal injury action or only to the amount which the interveners actually receive after the deduction of the litigation expenses. Nor are we aided by any reference to the purpose of the amendment to section 5. The unjust enrichment concept upon which the statutory provision is based is of no aid in deciding a case in which the subrogation fund is substantially less than the employer's lien.
The language used in the statute affords the only basis for interpretation. Ill Rev Stats, c 48, § ...