{ "id": 4267469, "name": "EDWIN HARDER, Plaintiff-Appellee, v. TIMOTHY KELLY et al., Defendants (Hortica Insurance Company, as Subrogee of Schaeffer's Greenhouse, Inc., Intervenor-Appellant)", "name_abbreviation": "Harder v. Kelly", "decision_date": "2007-01-11", "docket_number": "No. 2\u201406\u20140404", "first_page": "937", "last_page": "943", "citations": [ { "type": "official", "cite": "369 Ill. App. 3d 937" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "143 Ill. 2d 188", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5591191 ], "year": 1991, "pin_cites": [ { "page": "195" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/143/0188-01" ] }, { "cite": "191 Ill. 2d 326", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 229713 ], "weight": 3, "year": 2000, "pin_cites": [ { "page": "331" }, { "page": "332" }, { "page": "333" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/191/0326-01" ] }, { "cite": "222 Ill. 2d 570", "category": "reporters:state", "reporter": "Ill. 2d", "year": 2006, "opinion_index": 0 }, { "cite": "367 Ill. App. 3d 293", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 4265962 ], "weight": 11, "year": 2006, "pin_cites": [ { "page": "294-96" }, { "page": "298" }, { "page": "298" }, { "page": "299" }, { "page": "299" }, { "page": "299" }, { "page": "301" }, { "page": "301" }, { "page": "301-02" }, { "page": "302" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/367/0293-01" ] }, { "cite": "356 Ill. App. 3d 546", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3748767 ], "weight": 4, "year": 2005, "pin_cites": [ { "page": "550" }, { "page": "550" }, { "page": "551" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/356/0546-01" ] } ], "analysis": { "cardinality": 624, "char_count": 13986, "ocr_confidence": 0.765, "pagerank": { "raw": 6.132669919494288e-08, "percentile": 0.3817546891729981 }, "sha256": "bf34e5af9457a670d59e3f4d62da4a5da0a773aa268e23ab8d24e97fcdcc498b", "simhash": "1:9ce1d6fae6da95d0", "word_count": 2205 }, "last_updated": "2023-07-14T20:04:07.948493+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "EDWIN HARDER, Plaintiff-Appellee, v. TIMOTHY KELLY et al., Defendants (Hortica Insurance Company, as Subrogee of Schaeffer\u2019s Greenhouse, Inc., Intervenor-Appellant)." ], "opinions": [ { "text": "JUSTICE O\u2019MALLEY\ndelivered the opinion of the court:\nHortica Insurance Company (Hortica) intervened in a personal injury lawsuit filed in the circuit court of Du Page County by plaintiff, Edwin Harder. Hortica provided workers\u2019 compensation insurance to plaintiffs employer, Schaeffer\u2019s Greenhouse, Inc. (Schaeffer\u2019s), and had paid worker\u2019s compensation benefits to plaintiff for the injuries forming the basis of the personal injury lawsuit. Hortica asserted that it was subrogated to Schaeffer\u2019s right to assert a lien under section 5(b) of the Workers\u2019 Compensation Act (Act) (820 ILCS 305/5(b) (West 2004)) on any judgment or settlement of the lawsuit. The trial court ruled, however, that Schaeffer\u2019s had forfeited the lien. Hortica appeals. We reverse and remand.\nPlaintiff filed the underlying lawsuit on August 17, 2004, naming Timothy Kelly and the Canadian National Railroad Company (CNRC) as defendants. (CNRC was misnamed in the complaint as \u201cIllinois Central Railroad Co., *** a/k/a Canadian National.\u201d) Plaintiff sought recovery for injuries allegedly suffered in a motor vehicle accident. Plaintiff alleged that while his vehicle was stopped in traffic on Interstate 55, it was struck from behind by a vehicle operated by Kelly, an employee of CNRC. Plaintiff proceeded against Kelly under a negligence theory and proceeded against CNRC under the doctrine of respondeat superior. The record reveals that on November 4, 2004, defendant settled a workers\u2019 compensation claim against Schaeffer\u2019s based on the injuries sustained in the accident. On December 5, 2005, the tort claims against Kelly and CNRC were dismissed with prejudice pursuant to a settlement agreement. On December 20, 2005, Hortica moved to intervene.\nThe settlement of plaintiff\u2019s workers\u2019 compensation claim is memorialized in a settlement contract lump-sum petition and order (settlement contract) prepared on a form supplied by the Illinois Industrial Commission (now known as the Illinois Workers\u2019 Compensation Commission). The settlement contract provides, in pertinent part:\n\u201c[Schaeffer\u2019s] agrees to pay and [plaintiff] agrees to accept $16,634.25 in a lump sum in full and final settlement of all claims for compensation, medical, hospital and other expenses, past, present or future, arising out of the accident described and under the terms of the [Act]. *** Review under Section 19(h) and all rights under Sections 4, 8, 16, and 19 of the Act are expressly waived by the parties hereto. It is the responsibility of [plaintiff] to satisfy the outstanding medical charges out of the proceeds of this settlement. It is not the responsibility of [Schaeffer\u2019s] to satisfy any outstanding medical charges, known or unknown.\u201d\nThe settlement contract does not specifically mention Schaeffer\u2019s lien under section 5(b).\nThe trial court granted Hortica\u2019s motion to intervene. However, the trial court ruled that, pursuant to the decision of the Appellate Court, Fourth District, in Borrowman v. Prastein, 356 Ill. App. 3d 546 (2005), Schaeffer\u2019s had forfeited its lien. Although the trial court expressed serious doubts about the soundness of Borrowman\u2019s reasoning, the trial court concluded that, in the absence of any contrary authority, it was bound by Borrowman\u2019s holding. Accordingly, the trial court entered an order denying Hortica\u2019s claim of a hen under section 5(b). This appeal followed.\nSection 5(b) of the Act provides, in pertinent part:\n\u201cWhere the injury or death for which compensation is payable under this Act was caused under circumstances creating a legal liability for damages on the part of some person other than his employer to pay damages, then legal proceedings may be taken against such other person to recover damages notwithstanding such employer\u2019s payment of or liability to pay compensation under this Act. In such case, however, if the action against such other person is brought by the injured employee or his personal representative and judgment is obtained and paid, or settlement is made with such other person, either with or without suit, then from the amount received by such employee or personal representative there shall be paid to the employer the amount of compensation paid or to be paid by him to such employee or personal representative ***. ***\nIf the injured employee or his personal representative agrees to receive compensation from the employer or accept from the employer any payment on account of such compensation, or to institute proceedings to recover the same, the employer may have or claim a lien upon any award, judgment or fund out of which such employee might be compensated from such third party.\u201d (Emphasis added.) 820 ILCS 305/5(b) (West 2004).\nSection 5(b) further provides that the employer must receive notice of such a lawsuit and that the employer may join in the action. 820 ILCS 305/5(b) (West 2004).\nIn Borrowman, the employee fractured his heel in a work-related accident on April 7, 1995. After surgery to repair the fracture, the employee developed an infection. Antibiotics prescribed to treat the infection caused the employee to suffer irreversible inner ear damage, and he brought a medical malpractice suit against the physician who prescribed them. While the medical malpractice lawsuit was pending, the employee settled a workers\u2019 compensation claim against his employer. Thereafter the employee settled his medical malpractice lawsuit and filed a petition to adjudicate the employer\u2019s lien under section 5(b) of the Act. The trial court ruled that the employer was entitled to a lien for a portion of the workers\u2019 compensation settlement. Presumably that portion represented the amount of compensation paid to the employee that was attributable to the medical malpractice rather than the foot injury. On appeal, however, the Appellate Court, Fourth District, reversed, holding that the employer was not entitled to a lien.\nThe Borrowman court focused on the language of the workers\u2019 compensation settlement agreement, which stated, in pertinent part:\n\u201c \u2018The above constitutes a full, fmal[,] and complete settlement of any and all claims for temporary total disability, permanent partial and/or permanent total disability incurred or to be incurred by [the employee] by reason of an industrial injury occurring on or about April 7, 1995, or by reasons of any claim or cause of action by [the employee] against [the employer] of any nature whatsoever.\u2019 \u201d Borrowman, 356 Ill. App. 3d at 550.\nThe court noted that although the employer was aware of the pending medical malpractice lawsuit, the agreement did not \u201crefer to, or contain any reservation of rights (or waiver) with regard to, [the] malpractice action.\u201d Borrowman, 356 Ill. App. 3d at 550. The court reasoned:\n\u201cBecause [the employer] was aware of [the employee\u2019s] allegations against [his physician] ***, it is reasonable to conclude, by the lack of any reference thereto, that [the employer] forfeited its lien rights in its \u2018full, fmal[,] and complete settlement\u2019 with [the employee]. It is also reasonable to assume, due to the fact it was not mentioned in the agreement, [the employer\u2019s] claim of a potential lien was not an issue during the negotiations surrounding the workers\u2019 compensation settlement. We find nothing in the record to refute the fact that all concerned negotiated and bargained (1) in good faith and (2) with full knowledge of the then-current circumstances and their impendent rights.\nFor this court to hold that [the employer] was entitled to a lien against [the employee\u2019s] malpractice settlement proceeds when [the employer] (1) failed to reserve its right in its workers\u2019 compensation settlement *** and (2) knew of the pending malpractice action at the time would completely nullify both parties\u2019 good-faith dealings. Such a holding would have [the employee] return to [the employer] the money that [the employer] previously agreed to give [the employee] without a change in circumstances. It would not only belie Illinois\u2019s public policy of encouraging settlements [citation] but would effectively serve as a repudiation of the agreement. We hold that [the employer] should be bound by the terms of its agreement and is not entitled to a section 5(b) lien on the malpractice case.\u201d Borrowman, 356 Ill. App. 3d at 551.\nDuring the pendency of this appeal, in Gallagher v. Lenart, 367 Ill. App. 3d 293 (2006), appeal allowed, 222 Ill. 2d 570 (2006), the Appellate Court, First District, specifically rejected the analysis in Borrow-man. The facts in Gallagher are similar to the facts in this case. The employee settled a workers\u2019 compensation claim for injuries sustained in a work-related motor vehicle accident. The employee then filed a personal injury lawsuit against the other driver involved in the accident. The employee settled the personal injury claim and the employer intervened to enforce its lien under section 5(b). Relying on Borrowman, the trial court ruled that the employer was not entitled to claim a lien. Gallagher, 367 Ill. App. 3d at 294-96. The appellate court reversed, concluding that the holding o\u00ed Borrowman was \u201cunsupported by case law, contrary to several principles behind the Act, and at odds with general contract law.\u201d Gallagher, 367 Ill. App. 3d at 298.\nThe Gallagher court initially noted that Borrowman provided no support for its analysis. Gallagher, 367 Ill. App. 3d at 298. Examining the policy considerations behind the Act, the court stated that \u201c[a]n employer\u2019s reimbursement of workers\u2019 compensation payments from an employee\u2019s third-party recovery is crucial to the workers\u2019 compensation scheme.\u201d Gallagher, 367 Ill. App. 3d at 299, citing In re Estate of Dierkes, 191 Ill. 2d 326, 331 (2000). The court observed that reimbursing an employer (who is subject to no-fault liability under the Act) \u201caccords with \u2018 \u201cthe moral idea that the ultimate loss from wrongdoing should fall upon the wrongdoer.\u201d \u2019 \u201d Gallagher, 367 Ill. App. 3d at 299, quoting Dierkes, 191 Ill. 2d at 332, quoting 6 L. Larson, Larson\u2019s Workers\u2019 Compensation Law \u00a7110.01, at 110 \u2014 2 (1999). The court also pointed out that section 5(b) advances the Act\u2019s policy of preventing an injured worker from receiving a double recovery (Gallagher, 367 Ill. App. 3d at 299) and that our supreme court has emphasized that \u201c \u2018 \u201c[i]t is of the utmost importance that the trial court protect an employer\u2019s [workers\u2019 compensation] lien.\u201d \u2019 \u201d Gallagher, 367 Ill. App. 3d at 301, quoting Dierkes, 191 Ill. 2d at 333, quoting Blagg v. Illinois F.W.D. Truck & Equipment Co., 143 Ill. 2d 188, 195 (1991). Thus, the court concluded that \u201cBorrowman\u2019s holding that an employer waives or forfeits its workers\u2019 compensation lien by not specifically reserving it in a settlement of the employee\u2019s workers\u2019 compensation claim when the employer knew of a pending claim against a third-party tortfeasor contravenes the Act\u2019s purposes.\u201d Gallagher, 367 Ill. App. 3d at 301.\nThe Gallagher court also noted that under general contract law principles (1) a court ordinarily cannot modify the existing terms of a contract or add new terms to which the parties do not appear to have assented and (2) where a contract purports on its face to be a complete expression of the parties\u2019 agreement, a court will not add a term about which the agreement is silent. Gallagher, 367 Ill. App. 3d at 301-02. The court reasoned:\n\u201cWith its holding, Borrowman contradicts these principles. The settlement agreement in Borrowman, like the agreement in the present case, does not contain any reference to the employer\u2019s workers\u2019 compensation lien and, specifically, does not include a waiver of that lien. Based on the general contract principles cited above, the court should presume that if the employer meant to waive its statutorily created lien as part of the settlement of the employee\u2019s workers\u2019 compensation claim, it would have specifically included such a waiver in the settlement agreement. Borrowman\u2019s holding instead rewrites the contract, which was negotiated by lawyers representing both parties, and adds a provision which the parties did not include. The plain language of the settlement agreement indicates that the parties did not intend to resolve the issue of the employer\u2019s workers\u2019 compensation lien within that settlement. The Borrowman court assumed, without any basis, that the agreement\u2019s silence on the issue of the workers\u2019 compensation lien meant that the employer chose to waive that lien and its right to recover hundreds of thousands of dollars from any future third-party recovery by the employee. Such an assumption contravenes well-established contract law in Illinois.\nFurther, waiver is the voluntary and intentional relinquishment of a known right by conduct inconsistent with an intent to enforce that right. [Citation.] The absence of any reference to an employer\u2019s lien in a settlement agreement, without more, cannot constitute such a voluntary and intentional relinquishment of that right.\u201d Gallagher, 367 Ill. App. 3d at 302.\n\u25a0 We find the reasoning in Gallagher persuasive and we choose to follow that decision rather than Borrowman. Like the court in Gallagher, we see no reason under the Act or general contract principles why an employer should be required to include an affirmative reservation of rights in a settlement agreement when there is nothing in the agreement otherwise suggestive of an intent to waive the right to a lien under section 5(b).\nFor the foregoing reasons, the judgment of the circuit court of Du Page County is reversed and the cause is remanded for further proceedings.\nReversed and remanded.\nHUTCHINSON and RAPALA, JJ., concur.", "type": "majority", "author": "JUSTICE O\u2019MALLEY" } ], "attorneys": [ "Patrick R. Grady, of Wolf & Wolfe, Ltd., of Chicago, for appellant.", "Anthony L. Russo, Jr., of Russo & Russo, Ltd., of Wheaton, for appellee." ], "corrections": "", "head_matter": "EDWIN HARDER, Plaintiff-Appellee, v. TIMOTHY KELLY et al., Defendants (Hortica Insurance Company, as Subrogee of Schaeffer\u2019s Greenhouse, Inc., Intervenor-Appellant).\nSecond District\nNo. 2\u201406\u20140404\nOpinion filed January 11, 2007.\nPatrick R. Grady, of Wolf & Wolfe, Ltd., of Chicago, for appellant.\nAnthony L. Russo, Jr., of Russo & Russo, Ltd., of Wheaton, for appellee." }, "file_name": "0937-01", "first_page_order": 953, "last_page_order": 959 }