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08/02/89 Robert J. Langley, v. H.K. Ferguson Company

August 2, 1989





542 N.E.2d 1200, 186 Ill. App. 3d 1036, 134 Ill. Dec. 693 1989.IL.1192

Appeal from the Circuit Court of Madison County; the Hon. Horace L. Calvo, Judge, presiding.


JUSTICE LEWIS delivered the opinion of the court. GOLDENHERSH and HOWERTON, JJ., concur.


The sole issue presented by the appellant is "whether the structured settlement entered into by the Plaintiff without the consent of his employer, adequately protects the employer's lien as imposed by the Worker's Compensation Act."

The plaintiff, Robert J. Langley, was injured while working for the appellant herein, H.K. Ferguson Company (hereafter referred to as Ferguson), as the general superintendent on a construction project. The plaintiff subsequently brought suit against a number of parties, as described in a prior appeal in this case, Langley v. J.L. Simmons Contracting Co. (1987), 152 Ill. App. 3d 899, 504 N.E.2d 1328. From his workers' compensation claim against Ferguson, who is a third-party defendant in the suit, the plaintiff received $103,364.03. Ferguson asserted a lien against any judgments or settlements obtained by the plaintiff from third parties (Ill. Rev. Stat. 1985, ch. 48, par. 138.5(b)). The plaintiff and one of the defendants, Wilbur Waggoner Equipment Rental and Excavating Company (hereafter referred to as Waggoner), negotiated a settlement agreement in the amount of $150,000. In the earlier appeal we determined that, of the settlement with Waggoner, the plaintiff was entitled to retain $46,635.97 and Ferguson was entitled to recoup $103,364.03.

Following the Disposition of the prior appeal, Ferguson moved on April 1, 1987, that the trial court enter an order compelling the plaintiff and his attorney to endorse the settlement check issued on behalf of Waggoner. In its motion Ferguson stated that the plaintiff had reached a settlement with Waggoner in the present cash value amount of $150,000, of which $75,000 was to be received as a lump-sum payment and the remaining $75,000 was to be paid by means of an annuity at the rate of $1,000 per month. The annuity was to be paid at that rate for 10 years. Ferguson stated that the amount of the lien recoverable, less attorney fees of 25%, was $77,523.02. Ferguson sought an order requiring endorsement, by plaintiff and his attorney, of the check issued on behalf of Waggoner as a lump-sum payment in the amount of $75,000. Ferguson sought as well an order compelling the plaintiff to make payments to its insurer totaling $2,523.02 from the plaintiff's next three annuity payments received pursuant to the settlement agreement. On April 30, 1987, the trial court ordered endorsement by the plaintiff of the check in question or, in the event of plaintiff's failure to comply, reissuance of the check, payable to Ferguson's insurer and to plaintiff's attorney. Another check appears to have been issued.

Thereafter, on June 30, 1987, Ferguson moved that the trial court enter an order compelling the plaintiff's attorney to endorse a check in the amount of $75,000, issued on behalf of Waggoner as the lumpsum payment, to Ferguson's insurer and plaintiff's attorney. In the motion Ferguson stated that it had not been a party to the settlement agreement between plaintiff and Waggoner and did not approve the settlement. In the motion Ferguson said:

"Plaintiff's attorney contends that he is entitled to

In its motion Ferguson stated as well:

"The Court's Order, compelling Plaintiff's attorney to endorse the [$75,000] lump sum payment to the carrier for the employer, does not leave Plaintiff's attorney without protection. [Ferguson] has filed a Non-Wage Garnishment action against the proceeds of the annuity, for the amount in excess of the [$75,000] lump sum payment, up to the full amount of the statutory lien. To the extent that garnishment proceeds can be applied to reimburse Plaintiff's attorney for the

The trial court subsequently entered an order on July 29, 1987, finding, inter alia, that plaintiff's counsel had filed the underlying lawsuit on April 5, 1982, and that Ferguson and its insurer had not availed themselves of their rights under section 5(b) of the Workers' Compensation Act (Ill. Rev. Stat. 1985, ch. 48, par. 138.5(b)) (hereafter referred to as the Act) to file suit, within three months of the action's being barred, against third parties who may have been responsible for the employee's injuries. The order required plaintiff's counsel to endorse the $75,000 check made out to him and to Ferguson's carrier and commanded payment of 25% of the $75,000 check to plaintiff's counsel. The court ordered the plaintiff to submit a list of itemized costs for the pro rata assessment of costs pursuant to section 5(b) of the Act and further ordered Ferguson and its insurer to pay 25% of all subsequent sums received as installments or payment on the workers' compensation lien to the plaintiff's attorney "until the $103,364.03 has been recovered."

Thereafter Ferguson moved that the court reconsider this order entered on July 29, 1987. Ferguson stated that plaintiff's attorney had been paid 25% of the $75,000 but that the amount of $28,364.03 of the lien remained unpaid. Ferguson asserted that the plaintiff was at that time receiving $1,000 per month "in derogation and in violation of the worker's compensation lien" held by it and that it had filed a garnishment against the ...

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