SUPREME COURT OF ILLINOIS
518 N.E.2d 69, 119 Ill. 2d 41, 115 Ill. Dec. 544 1987.IL.1685
Appeal from the Appellate Court for the Fourth District; heard in that court on appeal from the Circuit Court of Douglas County, the Hon. Frank W. Lincoln, Judge, presiding.
JUSTICE WARD delivered the opinion of the court.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WARD
The plaintiff, William F. Page, brought an action in the circuit court of Douglas County against the defendants, Gene Hibbard and Freda Brookmeyer, to recover for personal injuries sustained in an automobile collision which occurred in the course of his employment by the Illinois Department of Law Enforcement (Department). The Department intervened in the action, claiming a lien under section 5(b) of the Workers' Compensation Act (Act) (Ill. Rev. Stat. 1985, ch. 48, par. 138.5(b)) on the ground that it had paid the plaintiff $42,495.39 in workers' compensation benefits and that under section 5(b) it was entitled to be reimbursed out of any judgment or settlement that the plaintiff obtained from the defendants. When the plaintiff and his wife, Barbara, who was not a party to the action, agreed upon a settlement with the defendants for $24,000, the Department filed a motion for summary judgment, claiming that its lien attached to the entire amount of the settlement. The trial court denied the motion, holding that Barbara Page was entitled to one-half of the settlement proceeds and that the Department should be awarded the balance. The appellate court reversed (142 Ill. App. 3d 788), holding that the Department should be awarded the entire $24,000, and we granted the plaintiff's petition for leave to appeal under Supreme Court Rule 315 (107 Ill. 2d R. 315(a)).
On May 2, 1981, while acting in his employment as a trooper of the Illinois Department of Law Enforcement, the plaintiff, William Page, was injured when a car driven by the defendant, Gene Hibbard, collided with his patrol car. The plaintiff brought an action in the circuit court of Douglas County against Hibbard and the owner of the car Hibbard was driving, Freda Brookmeyer. The Department intervened in the action, claiming the described lien in the amount of $42,495.39 on the proceeds of any settlement or judgment the plaintiff might obtain from the defendants. The Department alleged that it had paid the plaintiff that amount in workers' compensation benefits as a result of his injury in the accident, and that pursuant to section 5(b) it had a right to be reimbursed for those payments out of any recovery the plaintiff might secure from the defendants.
Section 5(b) of the Workers' Compensation Act provides in part:
"(b) 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 the amount of compensation paid or to be paid by him to such employee or personal representative including amounts paid or to be paid pursuant to paragraph (a) of Section 8 of this Act.
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 or claim a lien upon any award, judgment or fund out of which such employee might be compensated from such third party." Ill. Rev. Stat. 1985, ch. 48, par. 138.5(b).
The plaintiff and his wife, Barbara, who was not a party to the action, reached a settlement with the defendants under which they agreed to release the defendants from all claims arising from the collision, including Mrs. Page's claim for loss of consortium, in consideration for $24,000, the limits of the defendants' liability insurance policy. In the terms of the release, $12,000 was designated as payment for Mrs. Page's claim for loss of consortium, $6,000 as payment for Mr. Page's pain and suffering and the balance as payment to Mr. Page for "all other elements of damage." The Department consented to the release (see Ill. Rev. Stat. 1985, ch. 48, par. 138.5(b)) but objected to the proposed distribution of the proceeds and filed a motion for summary judgment, claiming that it should be awarded the entire $24,000. The Department claimed that its lien attached to the entire recovery, notwithstanding the terms of the release.
The circuit court denied the Department's motion, holding that Mrs. Page was entitled to $12,000 in consideration of the release of her claim for loss of consortium. The court rejected the plaintiff's assertion that he was entitled to $6,000 for pain and suffering pursuant to the terms of the release and awarded the Department the remaining $12,000. (The plaintiff had agreed that the Department was entitled to the balance of the settlement, viz., $6,000.) The appellate court reversed, holding that the Department was entitled to all of the settlement proceeds. The court stated that "the legislature intended to allow an employer's lien [under section 5(b) of the Workers' Compensation Act] to attach to any money recovered from a third-party tortfeasor as a result of an employee's injury . . . regardless of to whom the money is paid." 142 Ill. App. 3d 788, 795.
The plaintiff contends that the appellate court erred in holding that the Department's lien attached to all of the settlement proceeds. He argues that an employer's right to be reimbursed for compensation paid under the Act to an injured employee is limited to that part of the employee's recovery from the third-party tortfeasor that represents payment for those elements of damages that are compensable under the Act, such as lost wages or medical expenses (see Ill. Rev. Stat. 1985, ch. 48, par. 138.8). Therefore, he contends, because the Department is not required under the Act to compensate him for pain and suffering or his spouse for loss of ...