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Jackson v. Thatcher





APPEAL from the Circuit Court of Cook County; the Hon. JAMES C. MURRAY, Judge, presiding.


The Illinois Department of Public Aid (the Department) has appealed the order of the trial court adjudicating an 88% reduction in a welfare lien asserted by the Department as an intervenor in plaintiff's original malpractice cause of action. On appeal, the Department contends that the court's adjudication order was an abuse of discretion and should be reversed.

On December 27, 1974, plaintiff, Marie Jackson, filed a medical malpractice claim in the circuit court of Cook County alleging that negligent treatment by Dr. Harold Thatcher had resulted in a gangrenous condition requiring the amputation of her entire right leg and part of her left leg. The Department supplied medical and general cash assistance during plaintiff's illness and, after perfecting its lien charge in accordance with section 11-22 of the Illinois Public Aid Code (Ill. Rev. Stat. 1977, ch. 23, par. 11-22), entered the case as an intervenor on February 25, 1976 (see Ill. Rev. Stat. 1977, ch. 23, par. 11-22a).

In November of 1977, plaintiff and defendant agreed to a $62,500 settlement. Plaintiff then filed a petition with the trial court to adjudicate the public aid lien. At the first evidentiary hearing plaintiff testified to her diabetes, amputations, and need for constant care. She also stated that since she was unable to walk extended distances or to use public transportation, she relied on Medicar for necessary travel. Plaintiff added that she had received $6000 from her former employer because the initial injury, which precipitated the amputations, occurred at her place of employment. Under further examination by the court, plaintiff testified that her injury necessitated the purchase of items which would diminish her need for normal mobility, such as a freezer and washing machine.

At the second hearing plaintiff called the defendant's two attorneys, each from a different law firm, to testify. The first attorney stated that although the plaintiff may have had a prima facie case of negligence sufficient to get to the jury, it was one of very limited if not nonexistent liability. However, he decided to settle based upon the possibility of a runaway jury verdict grounded not in negligence but in jury sympathy for plaintiff's obvious disfigurement and injury. He speculated that an adverse verdict could go as high as $400,000 to $600,000, if liability were assumed. He added that in his mind the entire settlement was for non-economic rather than economic loss. The second attorney's testimony basically affirmed that of the first attorney although his estimate of the possible jury verdict was $400,000 to $700,000.

It was stipulated that the total public aid lien was $23,602.95, of which $21,612.71 went for medical assistance and $1,990.24 for general maintenance. During plaintiff's presentation of the defense attorneys' testimony, the Department objected, stating that it was not the nature of evidence described in Illinois cases as bearing on lien reduction.

The trial court adjudicated the lien and reduced the medical portion to $2,552.55 but retained the full general assistance lien of $1,990.24. Thus the total lien was reduced by $19,060 and the total charge was adjudicated at $4,542.79. The court issued an accompanying opinion detailing the various bases for its adjudication. In respect to the legislative policy of preventing unjust enrichment or double recovery by the plaintiff, whose medical bills are paid by public aid prior to tort recovery, the trial court stated that these considerations were not factors in the case at bar for two reasons. First, the recovery was only $62,500, not the $400,000 to $700,000 that plaintiff might have received had liability been clear; and secondly, in the light of the testimony of defendant's attorneys, there was no double recovery because medical expenses were not considered in the ultimate settlement offer.

Further, since this was a malpractice case, the court could not determine if plaintiff would have had to pay all those expenses paid by the State if she were not on public aid. The court also objected to the extent of the Department's lien, which would amount to almost two-thirds of plaintiff's net recovery. Since an Illinois statute limits hospital and doctor liens to not more than one-third of the sums due the injured party, the court viewed the Department as indirectly claiming more than the doctors and hospital could reach if they were imposing direct liens. The trial court concluded that the Department was entitled to 11% of the amounts paid as medical bills since plaintiff's settlement ($62,500) was 11% of the total injury (presumably the $600,000 figure cited by one of defendant's attorneys) in terms of dollars. The court found no basis to reduce the general assistance charge and awarded the full amount to the Department. From that adjudication, the Department has taken this appeal challenging both the legal bases upon which the trial judge made his findings and the resulting 88% reduction in the medical portion of the public aid lien.

Section 11-22 of the Public Aid Code states in relevant part:

"The Illinois Department shall have a charge upon all claims, demands and causes of action for injuries to an applicant for or recipient of financial aid under Articles III, IV and V for the total amount of medical assistance provided the recipient from the time of injury to the date of recovery upon such claim, demand or cause of action.

In each case, the notice shall be served by certified mail or registered mail, upon the party or parties against whom the applicant or recipient has a claim, demand or cause of action. The notice shall claim the charge and describe the interest the Illinois Department, the local governmental unit, or the county, has in the claim, demand, or cause of action. The charge shall attach to any verdict or judgment entered and to any money or property which may be recovered on account of such claim, demand, cause of action or suit from and after the time of the service of the notice.

On petition filed by the Illinois Department, or by the local governmental unit or county if either is claiming a charge, or by the recipient, or by the defendant, the court, on written notice to all interested parties, may adjudicate the rights of the parties and enforce the charge. The court may approve the settlement of any claim, demand or cause of action either before or after a verdict, and nothing in this Section shall be construed as requiring the actual trial or final adjudication of any claim, demand or cause of action upon which the Illinois Department, the local governmental unit or county has charge. The court may determine what portion of the recovery shall be paid to the injured person and what portion shall be paid to the Illinois Department, the local governmental unit or county having a charge against the recovery. This Section shall not affect the priority of an attorney's lien under `An Act concerning attorney's lien and for enforcement of same', filed June 16, 1909, as amended." Ill. Rev. Stat. 1977, ch. 23, par. 11-22.

• 1 Even though there was a common law tradition that charity payments once made will be forgotten (Graham, Public Assistance: The Right to Receive; The Obligation to Repay, 43 N.Y.U.L. Rev. 451, 482 (1968)), various States have passed legislation which espouses a competing public policy favoring repayment. The rationale behind this modern philosophy was explained in Beck v. Buena Park Hotel Corp. (1964), 30 Ill.2d 343, 196 N.E.2d 686. After holding the recoupment statute constitutional, our supreme court commented that "[t]he provisions in question reflect an intention to lessen the burden on taxpayers, or to enable the State to help others in need of assistance, by requiring each recipient, when he recovers this kind of a judgment, to reimburse the State for his proportionate part of the cost of medical protection." (30 Ill.2d 343, 346-47.) Similarly, the statutory scheme also attempts to prevent double recovery by or unjust enrichment of the public aid recipient who receives an award for his injuries. (Wilkins v. Department of Public Aid (1979), 73 Ill. App.3d 504, 506, 392 N.E.2d 59.) In order to be fair to the injured recipient, however, the possible harshness of such a recovery statute has been tempered both by legislative provisions for judicial discretion in apportioning the lien and in Illinois case law which describes those factors that might militate towards reduction of the lien. Thus, such balancing of the legislative policy favoring repayment and the judicial concern for those factors affecting ability to repay has developed the requirement that an evidentiary hearing be held to inquire into the proposed grounds for reduction where the basis for the lien reduction is contested by the Department and does not appear clearly on the face of the record. (See O'Donnell v. Sears, Roebuck & Co. (1979), 71 Ill. App.3d 1, 388 N.E.2d 1073; Schramer v. Wurtinger (1977), 47 Ill. App.3d 1034, 362 N.E.2d 1075.) However, the actual burden of producing evidence sufficient to support a lien reduction is on the plaintiff (Johnson v. Lynch (1977), 66 Ill.2d 242, 362 N.E.2d 345), and not on the Department.

Various factors have been delineated by prior cases which might provide guidance for a trial court's exercise of discretion in reducing the Department lien. Although those factors which would lead to a proper reduction of the lien have never been fully delineated by the legislature, it is well settled that for any reduction to be justified, there must be sufficient evidence to support the exercise of discretion. (See Johnson v. Lynch.) We have been fortunate in the instant case to have been provided for our review with an ...

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