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Pike v. Premier Transportation & Warehousing, Inc.

United States District Court, N.D. Illinois, Eastern Division

March 10, 2017

CARLOS R. PIKE, Plaintiff,
v.
PREMIER TRANSPORTATION & WAREHOUSING, INC. and DANIEL DUBEN SR., Defendants.

          MEMORANDUM OPINION AND ORDER

          MARY M. ROWLAND, UNITED STATES MAGISTRATE JUDGE

         Pike brought this personal injury action against Defendants, alleging that Duben was negligent in operating a semi-trailer truck owned by Premier. The parties have consented to the jurisdiction of the United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). In November 2016, the case proceeded to trial. While the jury was deliberating, the parties informed the Court that they had entered into a high-low settlement agreement, [1] pursuant to which they settled the underlying claim. Pike now moves the Court to strike or reduce the lien amount of $165, 950.61 requested by nonparty Chicago Regional Council of Carpenters Welfare Fund (the Fund). As discussed more fully below, the motion is denied.

         I. BACKGROUND

         The Fund is a self-funded, multiemployer ERISA employee welfare benefit plan (the Plan). Pike is a covered individual and a participant in the Plan. The Plan provides for an equitable right of reimbursement for any recovery from a third-party tortfeasor. (Dkt. 90, Ex. 1). The Plan further provides that the participant is responsible for payment of any attorneys' fees. (Id.). The Fund is under no obligation to pay benefits to covered individuals if the claim is caused by a third party and will provide benefits only in reliance on the participant's obligation to reimburse the Fund upon conclusion of the third-party claim. (Id.).

         Pike was injured in a motor-vehicle accident in September 2012 and filed the instant cause of action against Defendants for injuries he sustained. (Dkt. 84 at ¶ 1; Dkt. 90 at 2). As a precondition for payment of medical expenses related to the accident, Pike executed a Reimbursement Agreement as required by the Plan, wherein he agreed to grant the Fund an equitable lien on any recovery, waive the common-fund doctrine, and assume responsibility for all attorneys' fees incurred in pursuit of his claim against Defendants. (Dkt. 90, Ex. 2, Reimbursement Agreement). The Fund has paid out $165, 950.61 in medical and disability benefits covering the injuries Pike sustained in the September 2012 accident. (Dkt. 90, Ex. 4 (Galindo Decl.) at ¶ 7 & Ex. E).

         The case proceeded to trial on November 14, 2016. (Dkt. 68). On November 17, while the jury was deliberating, the parties informed the Court that they had entered into a high-low settlement agreement (Settlement Agreement). (Dkt. 77; Dkt. 84 at ¶ 3). The jury returned a verdict in favor of Defendants and against Plaintiff (Dkt. 81), which triggered the Settlement Agreement's minimum award. (Dkt. 84 at ¶ 3). After failed settlement discussions between Pike and the Fund (Dkt. 84 at ¶ 4 & Ex. A), Pike filed the instant motion.

         II. DISCUSSION

         Pike contends that the Fund is not entitled to any reimbursement because the jury “‘diminished' the claim to zero based upon (among other things) Mr. Pike's own negligence.” (Dkt. 84 at ¶ 7). Pike argues that because the jury reduced his claim to zero, the Fund's subrogation claims should be reduced as well. (Id. ¶¶ 6-7). But the verdict indicates only that the jury found for Defendants and against Pike. (Dkt. 81). If the jury made a comparative fault calculation, it was not recorded. Pike suggests that the Court should consider the jury's post-verdict discussions with the Court and counsel. (Dkt. 84 at ¶ 7). However, such discussions were not recorded and, more importantly, are inadmissible. Fed.R.Evid. 606(b)(1) (“During an inquiry into the validity of a verdict or indictment, a juror may not testify about any statement made or incident that occurred during the jury's deliberations; the effect of anything on that juror's or another juror's vote; or any juror's mental processes concerning the verdict or indictment. The court may not receive a juror's affidavit or evidence of a juror's statement on these matters.”).

         Further, the jury verdict was supplanted by the parties' Settlement Agreement. Illinois courts have long recognized that high-low agreements are settlement agreements.[2] Pinske v. Allstate Prop. & Cas. Ins. Co., 2015 IL App (1st) 150537, ¶ 22 (collecting cases).

A high-low agreement, when initially reached by the parties . . . is, in fact, a conditional settlement. The condition of the agreement is that the jury render[s] a verdict that falls outside the range of the high-low agreement. When a verdict is rendered outside of the agreed-upon range, the condition is triggered and the “high” or the “low” becomes binding upon the parties as a settlement. By contrast, when a jury renders a verdict within the range of the high-low agreement, the condition is not met and the high-low agreement is rendered academic.

Id., ¶ 23 (citation omitted). Therefore, when the Pike jury returned a verdict below the range of the Settlement Agreement, “the verdict was supplanted by the parties' agreement” and triggered the minimum settlement amount. Id. (citation omitted). The settlement award “was not determined by the jurors, but rather, by the parties themselves.” Id. (citation omitted). And the Reimbursement Agreement between Pike and the Plan clearly applies when a settlement is reached between a Plan participant and a third-party tortfeasor, as occurred in this case. (Reimbursement Agreement ¶ 5).

         Pike also relies on the jury verdict to assert that the Illinois Health Care Services Lien Act (Lien Act) precludes the Fund from receiving any reimbursement from the settlement proceeds, or, at a minimum that the Fund must “bear its pro rate share of attorney fees and costs under the statute.” (Dkt. 84 at ¶¶ 6-7). The Lien Act addresses subrogation claims in pertinent part as follows:

If a subrogation claim . . . that arises out of the payment of medical expenses . . . with respect to a claim for personal injury . . ., ...

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