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Raul Sanchez v. Rental Service Corporation

March 10, 2011

RAUL SANCHEZ,
PLAINTIFF-APPELLEE,
v.
RENTAL SERVICE CORPORATION, DEFENDANT AND THIRD PARTY PLAINTIFF PAUL'S WELDING SERVICE, INC.,
THIRD-PARTY DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County No. 08 L 6319 Honorable Jennifer Duncan-Brice, Judge Presiding.

The opinion of the court was delivered by: Justice Pucinski

(cons.)

JUSTICE PUCINSKI delivered the judgment of the court, with opinion. Presiding Justice Gallagher and Justice Lavin concur in the judgment and opinion.

OPINION

Third-party defendant Paul's Welding Service, Inc. (PWS), appeals from an order of the circuit court restricting its recovery on a workers' compensation lien against the proceeds of a settlement obtained by its former employee, plaintiff Raul Sanchez. The order limited PWS's recovery to the amount paid by the Illinois Insurance Guaranty Fund (the Fund), but barred recovery of the amount paid by PWS's workers' compensation carrier, Legion Insurance Company (Legion), before Legion went into liquidation. On appeal, PWS contends the court should have enforced the entire lien. We agree and reverse and remand.

I. BACKGROUND

This case has previously been before this court on a ruling concerning PWS's attempt to recover on its lien. The factual background was fully set forth in our earlier order, Sanchez v. Rental Service Corp., No. 1-06-2915 (2008) (unpublished order under Supreme Court Rule 23), and the facts here are undisputed. We provide here only the facts necessary to an understanding of this appeal.

In sum, after plaintiff was injured in 2001, he filed a claim for workers' compensation benefits and he also filed a personal injury action against defendant Rental Service Corporation (RSC), the company that rented to PWS the piece of equipment involved in his accident. Ultimately, plaintiff received a workers' compensation settlement from PWS in the amount of $265,205. Of that amount, $145,019 was paid by Legion, which subsequently went into liquidation. The Fund assumed responsibility for Legion's outstanding claims and paid plaintiff $120,186. Plaintiff later received $300,000 in settlement of his personal injury action against RSC.

Pursuant to its statutory lien, PWS moved to recover from the $300,000 settlement the $262,205 it had paid to plaintiff in workers' compensation benefits. Plaintiff filed a motion to extinguish PWS's lien, which the court granted, finding waiver of the lien. PWS appealed and this court reversed and remanded in an order pursuant to Gallagher v. Lenart, 226 Ill. 2d 208, 239 (2007), in which the supreme court held that any such waiver of a workers' compensation lien must be explicitly stated in the settlement agreement.

On remand, PWS again moved to enforce its statutory lien in the amount of $265,205 less attorney fees and expenses. Plaintiff moved to strike, arguing, among other things, that there was no statutory authority for the Fund or PWS, acting on behalf of the Fund, to recover the amount paid by the liquidated carrier, Legion. On October 29, 2008, the court issued an order enforcing part of PWS' statutory lien. In that order, the court allowed PWS to recover the amount paid by the Fund, $120,186, but barred recovery of the money paid by Legion, $145,019, finding no statutory authority for such recovery. On December 19, 2008, the court issued an order disposing of the case and ruling on attorney fees and costs, finding that the Illinois Insurance Guaranty Fund Act (215 ILCS 5/532 et seq. (West 2008)) did not provide for recovery of attorney fees or costs.

PWS filed three separate notices of appeal. First, on December 1, 2008 (appeal No. 1-08-3304), it appealed the October 29 ruling "out of an abundance of caution" concerning questions about the finality of the order. PWS then filed a second notice of appeal on January 16, 2009 (appeal No. 1-09-0165), to include the order of December 19 on attorney fees. On January 20, 2009, PWS's co-counsel filed a third notice of appeal (No. 1-09-0188) to preserve the timeliness of its appearance. The appeals were later consolidated.

Plaintiff later filed a cross-appeal of both the October 29 and December 19 orders.

II. ANALYSIS

PWS contends that the court improperly adjudicated its workers' compensation lien on remand. It contends that section 5(b) of the controlling statute, the Workers' Compensation Act (Act), provides for recovery to the employer of the amount of compensation paid regardless of the identity of the ...


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