Appeal from the Circuit Court of Cook County; the Hon. Alan E.
Morrill, Judge, presiding.
JUSTICE WHITE DELIVERED THE OPINION OF THE COURT:
Rehearing denied August 15, 1983.
Aetna Casualty & Surety Company of Illinois (Aetna), the worker's compensation insurance carrier for Kenneth Brock's employer, appeals from an order of the circuit court of Cook County distributing the proceeds from the settlement of a lawsuit and temporarily suspending future workers' compensation payments by Aetna to the conservator of Brock's estate. The issues presented are: whether the circuit court properly determined the amount of credit against payment of future workers' compensation benefits to which Aetna is entitled; whether the conservator's attorney fees were properly assessed against this credit; and whether litigation costs assessed against Aetna should have been charged against the credit.
The relevant facts are largely undisputed. Kenneth Brock suffered severe injuries while in the course of his employment with Park-Ohio Industries, Inc., a division of Bennett Industries, Inc., and he was treated for these injuries by certain physicians at Riverside Hospital in Kankakee, Illinois. Subsequently, plaintiff, Cora Lee Lewis, conservator of the estate of Kenneth Brock, brought an action sounding in professional medical negligence and strict liability against the treating physicians, Riverside Hospital, and certain manufacturers of equipment used in Brock's treatment. Since Aetna was the workers' compensation insurance carrier for Brock's employer, it was permitted to intervene so that it could protect its subrogation rights under section 5 of the Workers' Compensation Act (Ill. Rev. Stat. 1981, ch. 48, par. 138.5).
The aforementioned lawsuit was settled for $2,100,000. At the time of the settlement, the lien for workers' compensation benefits already paid by Aetna was $539,929.36, and as part of the settlement it was agreed that $350,000 would be paid to Aetna as the net recovery on its lien for benefits already paid. This $350,000 was a net figure, arrived at after deducting from the lien amount statutory attorney fees that would have otherwise been due on the lien amount and after deducting a portion of the pending lien amount which Aetna agreed to compromise in an effort to achieve the settlement.
The final order from which this appeal is taken requires Aetna to pay to an attorney for the conservator the sum of $20,678.65, the amount expended by the conservator's attorneys in preparation and presentation of the case. This order also calculates the amount of the proceeds that should be paid to the conservator as follows:
(a) Pay to [Aetna] in accordance with its agreement to accept $350,000.00 net on its lien for $540,000.00 already expended 350,000
(b) Pay Plaintiff's attorneys' fees 700,000
Net Proceed to the Conservator $1,050,000.00"
The order also fixes this $1,050,000 as the amount of credit to which Aetna was entitled against the payment of future workers' compensation payments. The order states: "[A]ll compensation payments by [Aetna] to the disabled person shall be suspended, and no payment shall be necessary to be made by [Aetna] to the disabled person, until the amount of expenses for compensation and care and maintenance of the disabled person equals the amount of the net sum recovered by the Conservator on behalf of the disabled person, namely $1,050,000.00, when at which time [Aetna] will resume payments as provided in the decision of the Industrial Commission in the proceedings entitled, `Cora Lee Lewis, guardian of the Estate of Kenneth Brock v. Bennett Industries, Industrial Commission No. 74 WC 11450,'* * *."
Aetna contends that the circuit court's calculation of the amount of the credit against future workers' compensation benefits is improper. In doing so, it relies upon Jones v. Melroe Division, Clark Equipment Co. (1981), 102 Ill. App.3d 1103, 430 N.E.2d 1385, and that court's construction of section 5(b) of the Workers' Compensation Act (Ill. Rev. Stat. 1981, ch. 48, par. 138.5(b)). 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 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 ...