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Gillen v. State Farm Mutual Automobile Insurance Co.

June 25, 2004

[5] TERESA GILLEN, SPECIAL ADMINISTRATOR OF THE ESTATE OF SCOTT GILLEN, DECEASED, PLAINTIFF-APPELLANT,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, DEFENDANT-APPELLEE.



[6] Appeal from the Circuit Court of Cook County. No. 02 CH 20723. The Honorable William Maki, Judge Presiding.

[7] The opinion of the court was delivered by: Justice Fitzgerald Smith

[8]  Plaintiff-appellant Teresa Gillen, as special administrator of the estate of Scott Gillen, deceased (Teresa), brought a declaratory judgment action against defendant-appellee State Farm Mutual Automobile Insurance Company (State Farm). State Farm moved for judgment on the pleadings and the trial court granted this motion, thereby dismissing the cause in its favor with prejudice. Teresa appeals, contending that the trial court should have denied State Farm's motion; accordingly, she asks that we reverse the trial court's decision below. For the following reasons, we reverse.

[9]  BACKGROUND

[10]   Teresa and Scott Gillen purchased an automobile liability insurance policy from State Farm in early 2000. Contained in the policy was a clause providing for uninsured motorist coverage and listing as the policy limit under this coverage an amount of $100,000 per person insured. Teresa and Scott personally and consistently paid all premiums on the policy to State Farm, and the policy remained in effect as their primary automobile coverage. Paragraph 2 of the uninsured motorist coverage provision, entitled "Limits on Liability," stated:

[11]   "Any amount payable under this coverage shall be reduced by any amount paid or payable to or for the insured under any worker's compensation, disability benefits, or similar law."

[12]   (Emphasis omitted).

[13]   On December 23, 2000, Scott, a City of Chicago firefighter/paramedic, was on duty and responded to an accident on Interstate 94. While working at the site, he was struck by an uninsured motorist. He was taken to a hospital and treated, but died the same day. His medical bills totaled $76,612.10. Because of Scott's employment, he was entitled to a pension from the City of Chicago. Accordingly, under the Illinois Pension Code (40 ILCS 5/1-101 et seq. (West 1998)), the City of Chicago paid all of Scott's medical expenses as part of his pension.

[14]   Teresa then made a claim with State Farm under her and Scott's automobile insurance policy for $100,000, the policy limit with respect to their uninsured motorist coverage. Employing paragraph 2 of the uninsured motorist coverage provision, State Farm "set off" the amount the City of Chicago paid for Scott's medical bills from the policy limit and gave Teresa a check for $23,387.90 as payment in full.

[15]   Teresa brought a declaratory judgment action seeking a declaration that State Farm was not entitled to set off the full amount of the policy against Scott's pension because paragraph 2 of the insurance policy did not apply to pensions as paid by her husband's employer and because allowing such a setoff violated public policy. State Farm answered and moved for judgment on the pleadings. Conceding that Scott's medical bills were paid not from "worker's compensation" or "disability benefits" but, rather, from benefits relating to his pension, State Farm asserted that this payment nevertheless fell under the auspices of paragraph 2's setoff provision contained in the Gillens' automobile insurance policy. The trial court granted State Farm's motion, entered judgment on the insurer's behalf and dismissed the cause with prejudice.

[16]   ANALYSIS

[17]   On appeal, Teresa argues much in the same manner as she did in the trial court below. That is, her principle assertion is that State Farm is prohibited from "setting off" the amount of medical benefits the City of Chicago paid pursuant to Scott's pension from the full policy limit of $100,000 found in the uninsured motorist clause of the Gillens' automobile insurance policy with State Farm. Teresa supports her position by arguing that paragraph 2 of the policy containing the setoff provision does not list medical payments made pursuant to a pension as a setoff option, and by arguing that to allow a setoff of such pension benefits would violate public policy. In response, State Farm relies principally on the case of State Farm Mutual Automobile Insurance Co. v. Murphy, 263 Ill. App. 3d 100 (1994), and its citations to Ullman v. Wolverine Insurance Co., 48 Ill. 2d 1 (1970), for the proposition that our court (as well as our state supreme court) has already addressed and rejected the arguments Teresa now brings, and accordingly, we are bound to hold the same. It is our view that Teresa's arguments prevail, and to the extent Murphy presses to the contrary, it must be abrogated.

[18]   The parties do not dispute the applicable standard of review here. As noted earlier, this cause arrives before us upon the grant of State Farm's motion for judgment on the pleadings. A trial court may properly enter such a judgment only where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. See H & M Commercial Driver Leasing, Inc. v. Fox Valley Containers, Inc., 209 Ill. 2d 52, 57 (2004); accord M.A.K. v. Rush-Presbyterian-St. Luke's Medical Center, 198 Ill. 2d 249, 255 (2001). In the instant case, the trial court was required to examine the pleadings and determine whether there was an issue of fact or whether the controversy was resolvable as a matter of law. See Employers Reinsurance Corp. v. E. Miller Insurance Agency, Inc., 332 Ill. App. 3d 326, 334 (2002). On appeal, we, as the reviewing court, must ascertain whether that court correctly determined that the pleadings presented no such issue and whether State Farm, as the movant, was in fact entitled to the judgment it received. See H & M Commercial, 209 Ill. 2d at 57; Employers Reinsurance, 332 Ill. App. 3d at 334. The appropriate standard of review for this is de novo. See H & M Commercial, 209 Ill. 2d at 57; Employers Reinsurance, 332 Ill. App. 3d at 334.

[19]   We find no better place to begin than a direct disagreement with Murphy and State Farm's reliance upon it. It is true that the facts of Murphy are very similar to those of the instant case. There, while on duty, Chicago fire department employee Jessie Stewart was struck by a car driven by an uninsured motorist and sustained severe permanent bodily injuries. At the time of the accident, Stewart was covered by an automobile liability policy he had purchased from State Farm and upon which he had personally paid premiums. The policy contained an uninsured motorist clause with a coverage limit of $100,000, as well as the exact same language effecting a "set off provision" found in paragraph 2 of the policy at issue in this case, namely, that any amount payable under the coverage "shall be reduced by any amount paid or payable to or for the insured *** under any worker's compensation, disability benefits, or other similar law." As in the instant case, the City of Chicago provided medical payments pursuant to Stewart's pension under the Illinois Pension Code (40 ILCS 5/1-101 et seq. (West 1992)) for his healthcare expenses, amounting to a total in excess of the $100,000 policy limit. Stewart then submitted a claim to State Farm for uninsured motorist coverage, and State Farm moved for summary judgment. State Farm relied on the setoff provision in the policy and declared that it was not required to provide any amount because the payments made by the city under Stewart's pension offset the coverage limits, thereby leaving no uninsured motorist coverage available to Stewart since he had received the full policy limit. The trial court agreed with State Farm and Stewart appealed. See Murphy, 263 Ill. App. 3d at 102-03.

[20]   Upon review, the Murphy court immediately turned to a discussion of the Illinois Supreme Court case of Ullman v. Wolverine Insurance Co., 48 Ill. 2d 1 (1970) (Ward and Schaefer, JJ., dissenting). In Ullman, the issue was a narrow one: whether an insurer could properly deduct worker's compensation payments made to an insured by his employer in determining its liability to the insured under a policy providing for uninsured motorist coverage. See Ullman, 48 Ill. 2d at 2. There, the plaintiff's decedent was killed by an uninsured motorist and the decedent's employer paid $14,000 in worker's compensation benefits. The decedent also had an automobile insurance policy containing an uninsured motorist clause with coverage in the amount of $10,000, as well as the same setoff provision found in Murphy and the instant case allowing the insurer to offset any amount paid to the insured from " 'any workmen's compensation law, disability benefits law or any similar law.' " Ullman, 48 Ill. 2d at 6. The plaintiff sought to recover the full policy amount, but the insurer maintained that it was entitled to offset the worker's compensation benefits against its liability and, because that amount exceeded the policy, it owed nothing. A divided supreme court held for the insurer, basing its decision exclusively on the specific characteristics accompanying worker's compensation. See Ullman, 48 Ill. 2d at 7. It noted that the setoff provision in the policy expressly mentioned that any amount paid to the injured person as worker's compensation could be set off by the insurer. The Ullman court also highlighted the fact that the Workers' Compensation Act (Ill. Rev. Stat. 1969, ch. 48, para. 138.5(b)) requires an employee who receives compensation under that act to reimburse the employer for any recovery he receives from a third party. See Ullman, 48 Ill. 2d at 7. In the unique situation when worker's compensation is paid to an injured employee, a lien in favor of the employer for the amount of the benefits is created and, thus, the employee cannot retain both compensation from his employer and identical damages from the tortfeasor. See Ullman, 48 Ill. 2d at 7. If ...


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