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In re Rexroad

Court of Appeals of Illinois, Fifth District

May 15, 2018

In re ESTATE OF ARNOLD O. REXROAD, SR. (Estate of Arnold O. Rexroad, Sr., Appellee,
v.
Mid-West Truckers Risk Management Association, Intervenor-Appellant).

          Appeal from the Circuit Court of Effingham County. No. 12-P-57 Honorable Daniel E. Hartigan, Judge, presiding.

          Attorneys for Appellant James M. Kelly, Jason W. Jording, James Kelly Law Firm, 7817 Knoxville Avenue, Peoria, IL 61614

          Attorneys for Appellee Brian M. Wendler, Angie M. Zinzilieta, Paul E.H. Rademacher, Wendler Law, P.C., 900 Hillsboro Avenue, Suite No. 10, Edwardsville, IL 62025

          JUSTICE MOORE delivered the judgment of the court, with opinion. Justices Honorable Thomas M. Welch, J., and Honorable David K. Overstreet, J., Concurred in the judgment and opinion.

          OPINION

          Honorable James R. Moore, J.

         ¶ 1 The intervenor, Mid-West Truckers Risk Management Association (MTRMA), appeals the August 4, 2017, order of the circuit court of Effingham County, which struck in its entirety MTRMA's lien, pursuant to section 5(b) of the Workers' Compensation Act (Act) (820 ILCS 305/5(b) (West 2016)), which it claimed from the proceeds of a wrongful death settlement recovered by the estate of Arnold O. Rexroad, Sr. (Estate). For the following reasons, we reverse and remand with directions that the circuit court adjudicate MTRMA's lien pursuant to statute and reconsider, in light of this opinion, MTRMA's request for sanctions pursuant to Illinois Supreme Court Rule 137 (eff. July 1, 2013).

         ¶ 2 FACTS

         ¶ 3 On August 1, 2012, the Estate filed a probate action in the circuit court of Effingham County, requesting letters of administration and a supervised administration of the decedent's estate. On October 4, 2012, the circuit court entered an order appointing specified heirs of the Estate to serve as special administrators to pursue a wrongful death action arising from the death of the decedent (Indiana action). On December 5, 2014, MTRMA filed a petition to intervene in the probate action, making the following allegations.

         ¶ 4 MTRMA alleged that, at the time of his death, the decedent was employed by Hetzels Overland Transport, Inc. (Hetzels), and was killed in the course of his employment. At that time, Hetzels was a member of MTRMA, which is a self-insured pool association licensed and doing business in Illinois to provide workers' compensation benefits for its members and employees. One of the administrators of the Estate, Cathy Rexroad as decedent's widow, duly applied for, has received, and continued to receive workers' compensation benefits for the death of the decedent from MTRMA. MTRMA had been made aware of a partial settlement of the Indiana action and requested intervention in the probate matter for the purposes of protecting its lien pursuant to section 5(b) of the Act. 820 ILCS 305/5(b) (West 2014). Furthermore, MTRMA requested that it be allowed to participate in the probate court's approval of any settlement of the Indiana action.

         ¶ 5 On September 25, 2015, the Estate filed a motion for authorization to distribute statutory attorney fees. According to the motion, the Estate's claim against one of the defendants in the Indiana action, Lindsay Measel, settled for $100, 000 (Measel settlement). The Estate requested authorization to disburse $25, 000 from the proceeds of this settlement to the attorney for the Estate. On October 5, 2015, MTRMA filed a response to this motion, stating that it did not object to the attorney fee disbursement but it did claim a lien of $72, 695.73, representing 75% of the workers' compensation benefits it had paid up to the date of the motion, pursuant to section 5(b) of the Act. 820 ILCS 305/5(b) (West 2014). The motion also recognized that, in addition to the 25% reduction for attorney fees in procuring the settlement, this lien amount was subject, pursuant to the same section, to a setoff for prorated costs incurred by the Estate. MTRMA requested a distribution of $72, 695.73 minus the costs the Estate was entitled to pursuant to section 5(b) of the Act, in partial satisfaction of its workers' compensation lien.

         ¶ 6 On February 22, 2016, the Estate filed an "Unopposed Motion For Authorization To Distribute Statutory Attorney's Fees, Costs, and Workers' Compensation Lien." Stating that its motion was based on an agreement between the Estate and MTRMA, the Estate requested an order authorizing disbursement of $25, 000 for attorney fees to counsel for the Estate, $12, 053.61 for costs to counsel for the Estate, and the balance of $62, 946.39 to MTRMA "as repayment for the workers' compensation lien." On March 10, 2016, the circuit court entered an order approving of this distribution of the proceeds of the Measel settlement.

         ¶ 7 On October 26, 2016, the Estate filed a motion to adjudicate workers' compensation lien, in which it requested that the remainder of MTRMA's workers' compensation lien be stricken in its entirety. The Estate argued that MTRMA is not entitled to the remainder of its lien due to the following allegations of wrongdoing on the part of MTRMA: (1) direct communications with the family of the decedent despite knowing the Estate was represented by counsel; (2) obstructing the Estate's counsel in investigating the wrongful death action by prohibiting the Estate from interviewing its employees, refusing to produce the truck and trailer the decedent was driving for inspection, and providing its inaccurate "alive and well" investigative reports to the defense; (3) failing to pay the decedent's widow the full amount of workers' compensation benefits owed; (4) demanding a distribution toward its lien from the Measel settlement; (5) objecting to an unspecified amount of costs claimed by the Estate as required to effect a settlement of the remainder of the Indiana action; and (6) seeking to recalculate its pro rata share of costs in light of the settlement of the remainder of the Indiana action, which the Estate characterized as a "reneg" of its prior agreement to pay its share of costs at the time of the Measel settlement.

         ¶ 8 The Estate attached several exhibits to its motion to strike the remainder of MTRMA's workers' compensation lien as corroboration for its allegations of misconduct. Exhibit A to the Estate's motion is a list of payments made by MTRMA on the decedent's widow's workers' compensation claim, including payments of $473.03 per week. Exhibit B is a letter from the Estate's counsel to Hetzels, requesting that it preserve all evidence related to the decedent's collision. Exhibit C is a letter from Hetzels' attorney notifying the Estate of his representation of Hetzels and requesting that the Estate direct any request for communications of its employees to the attorney. Exhibit D is an e-mail from counsel for the Estate to Hetzels' counsel, opposing this request on the basis that not all of Hetzels' employees are part of Hetzels' control group.

         ¶ 9 Exhibits E through J are a series of e-mails dated May 14, 2012, through October 2, 2013, whereby counsel for the Estate makes repeated requests of Hetzels for inspection of the truck and trailer the decedent was driving, as well as records regarding same. A January 11, 2013, e-mail from counsel for Hetzels indicates that he had forwarded the request for inspection to Hetzels' insurance carrier, expecting to speak with her that day and requesting that counsel for the Estate contact him to discuss the request to inspect. An October 2, 2013, e-mail from counsel for the Estate requests assistance in determining whether the truck the decedent was driving had an electrical problem that would have kept the truck's hazard lights from operating and asks if they would be unwilling or unable to supply the information informally. Exhibit K is a letter from counsel for the Estate to MTRMA's servicer, stating that, due to MTRMA's lack of cooperation in assisting with the investigation into the wrongful death claim, the Estate "will be left with no choice but to resist [the assertion of a lien] owing to the complete and total lack of cooperation, " and concluding "[h]opefully this will change soon so that [the Estate] can reconsider [its] position."

         ¶ 10 Exhibit L to the Estate's motion is an e-mail exchange between counsel for the Estate and previous counsel for MTRMA in April 2015 on several matters, including the conduct of "alive and well" checks on the decedent's widow and the agreement in relation to the Measel settlement. Exhibits M and N are "alive and well check" reports on the widow for the Estate conducted by an investigative firm at the behest of MTRMA's servicer. These reports are dated May 19, 2015, and February 9, 2016, respectively. The reports do indicate that the investigator inquired of the decedent's widow as to whether she would consider a settlement of the workers' compensation claim. Exhibit O is an exchange between counsel whereby it is memorialized that there had been an underpayment of workers' compensation benefits by MTRMA. Exhibit P is the unopposed motion to distribute the Measel settlement between counsel for the Estate and MTRMA. Exhibits Q through V are an e-mail ...


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