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06/28/89 Michael F. Schultz Et Al., v. Timothy G. Gotlund Et Al.

June 28, 1989





542 N.E.2d 53, 185 Ill. App. 3d 943, 134 Ill. Dec. 53 1989.IL.1011

Appeal from the Circuit Court of Cook County; the Hon. Thomas E. Hoffman, Judge, presiding.


PRESIDING JUSTICE FREEMAN delivered the opinion of the court. RIZZI and WHITE, JJ., concur.


On June 9, 1986, plaintiffs, Michael and Joyce Schultz, filed suit to recover for, inter alia, personal injuries sustained when Michael was struck by a car driven by defendant Timothy Gotlund and owned by defendant Richard Gotlund. The accident occurred after Michael, in a state of intoxication, left defendant Guy's Steak House, Ltd., which was owned by defendant DDB Investors, Inc. Thereafter, petitioner, Loretto Hospital, which had paid $60,885.19 in medical expenses for Michael under an employee group health insurance policy issued to Joyce, filed a petition to intervene in the action under section 2-408 of the Civil Practice Law (Ill. Rev. Stat. 1985, ch. 110, par. 2-408). Petitioner appeals the trial court's denial of the petition.

In attempting to intervene in plaintiffs' action, petitioner relied on the common-law right of subrogation since the group insurance policy it issued to Joyce did not contain an express subrogation provision. In denying the petition, the trial court ruled that, petitioner having failed to expressly contract for a right of subrogation, it would not imply such a term in the policy. Upon petitioner's motion, the trial court found that there was no just reason to delay enforcement or appeal of its order, as provided in Supreme Court Rule 304(a) (107 Ill. 2d R. 304(a)). See Chicago, Milwaukee, St. Paul & Pacific R.R. Co. v. Harris Trust & Savings Bank (1978), 63 Ill. App. 3d 1012, 380 N.E.2d 835.

On appeal, petitioner contends that it is entitled to intervene in plaintiff's action under either section 2-408(a)(2) or 2-408(b)(2) of the Civil Practice Law. (Ill. Rev. Stat. 1985, ch. 110, par. 2-408.) Petitioner predicates its argument on the ground that it has a common-law right to subrogation to plaintiffs' rights against defendants to the extent of the hospital and medical bills it paid for Michael as beneficiary of the policy issued to Joyce. In support, petitioner cites Geneva Construction Co. v. Martin Transfer & Storage Co. (1954), 4 Ill. 2d 273, 122 N.E.2d 540, and Dworak v. Tempel (1959), 17 Ill. 2d 181, 161 N.E.2d 258. Plaintiffs contend that petitioner is not entitled to intervene in their action under either provision because it does not have a common-law right of subrogation to their rights against defendants.

Section 2 -- 408(a)(2) allows intervention, as a matter of right, upon timely application when representation of the applicant's interest by existing parties is or may be inadequate and the applicant will or may be bound by an order or judgment in the action. Section 2 -- 408(b)(2) provides for permissive intervention upon timely application when the applicant's claim or defense and the main action have a question of law or fact in common. We find that, if defendants do have a common-law right of subrogation here, they would be entitled to intervene in plaintiffs' action as a matter of right under section 2 -- 408(a)(2). *fn1 We thus turn to the dispositive issue.

Prior to the decision in Geneva Construction Co., the portion of the Workmen's Compensation Act subrogating employers who, under the Act, compensated employees injured by certain third parties to the employees' rights against such parties was declared unconstitutional. The court in Geneva Construction Co. held that employers nevertheless had a common-law right of subrogation to the employees' rights against such third parties.

Plaintiffs attempt to distinguish Geneva Construction Co. on several grounds. They first assert that it involved a statutory right of subrogation and that a chief concern therein was the double recovery an employee would realize if his employer had no right of subrogation to his rights against the third-party tortfeasor. Here, in contrast, they argue, it would be difficult or impossible to separate any recovery by them into its various components because they seek to recover for losses beyond their medical expenses, including Michael's pain and suffering and lost wages and Joyce's loss of consortium. (See Ridge Tool Co. v. Silva (1986), 33 Ohio App. 3d 260, 515 N.E.2d 945.) They conclude that double recovery would be a relevant concern here only if the damages they were seeking against defendants were limited to the medical expenses paid by petitioner.

Dworak held that an insurer, which had indemnified an insured for property damage caused by a collision with an intoxicated driver, had a right of subrogation under the Liquor Control Act to the rights of its insured against the tortfeasor, notwithstanding that it did not have a claim in its own right under the Act against the tortfeasor.

Plaintiffs distinguish Dworak simply on the ground that, while courts routinely find a right of subrogation under property and casualty insurance policies (3 J. Appleman & J. Appleman, Insurance Law & Practice § 1675, at 495 (1967 & Supp. 1988)), they have not implied such a right in the area of personal insurance, which includes medical expense benefits (Frost v. Porter Leasing Corp. (1982), 386 Mass. 425, 436 N.E.2d 387).

We agree with plaintiffs that Geneva Construction Co. and Dworak are distinguishable on their facts. However, we cannot agree that the reasoning of our supreme court therein does not support or, more importantly, require the recognition of a right of subrogation in petitioner, regardless what other jurisdictions have concluded ...

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