NOTICE

Decision filed 03/10/15. The text of this decision may be NOS. 5-14-0267, 5-14-0279 cons. changed or corrected prior to the filing of a Peti ion for Rehearing or the disposition of IN THE the same.

APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT ________________________________________________________________________

PATTON BRADLEY, ) Appeal from the ) Circuit Court of Plaintiff and Counterdefendant-Appellant ) Williamson County. and Cross-Appellee, ) ) v. ) No. 13-MR-82 ) THE CITY OF MARION, ILLINOIS, and ) THE ILLINOIS PUBLIC RISK FUND, ) ) Honorable Defendants and Counterplaintiffs- ) Brad K. Bleyer, Appellees and Cross-Appellants. ) Judge, presiding. ________________________________________________________________________

JUSTICE STEWART delivered the judgment of the court, with opinion. Justices Schwarm and Moore concurred in the judgment and opinion.

OPINION

¶1 The plaintiff, Patton Bradley, filed a complaint for a declaratory judgment against

his employer, the City of Marion, Illinois, and its workers' compensation insurer, the

Illinois Public Risk Fund (collectively referred to as the defendants). The defendants

filed a counterclaim for declaratory judgment. The plaintiff and the defendants asked the

circuit court to decide whether the plaintiff could seek additional benefits under the

Illinois Workers' Compensation Act (the Act) (820 ILCS 305/1 et seq. (West 2012)),

following the plaintiff's settlement of a third-party tort claim that arose from the 1 workplace accident. The circuit court, sua sponte, held that it lacked subject matter

jurisdiction to decide the controversy. Both the plaintiff and the defendants appeal the

circuit court's ruling. We affirm.

¶2 BACKGROUND

¶3 The complaint and counterclaim stem from a work-related vehicle accident in

which a third party was at fault. As a result of the accident, the plaintiff filed a claim

with the Illinois Workers' Compensation Commission (the Commission) seeking workers'

compensation benefits under the Act and also filed a third-party lawsuit in federal court

against the driver of the vehicle who caused the accident. The defendants paid the

plaintiff workers' compensation benefits and intervened in the plaintiff's federal lawsuit to

protect their lien against any funds the plaintiff recovered against the third party. 1

¶4 In August 2012, the plaintiff settled his third-party claim against the driver for

$650,000, and the defendants were reimbursed $190,112.89 for benefits they had paid on

behalf of the plaintiff because of his injuries. That amount represented 75% of the total

lien amount they claimed. On October 19, 2012, the defendants signed a release of lien

in conjunction with the settlement. At the time of this third-party settlement, the

claimant's workers' compensation claim was still pending. The plaintiff moved to

1 Section 5(b) of the Act (820 ILCS 305/5(b) (West 2012)) "grants an employer a

lien on an employee's recovery against a third-party tortfeasor, up to the amount of the

workers' compensation benefits paid to the employee." Taylor v. Pekin Insurance Co.,

,

(2008).

2 voluntarily dismiss his workers' compensation claim, which the Commission granted on

November 7, 2012. On December 12, 2012, the plaintiff refiled the compensation claim.

¶5 A dispute arose between the plaintiff and the defendants concerning the effect of

the settlement of the third-party lawsuit and the release of lien signed by the defendants.

The defendants maintained that the plaintiff's settlement of the third-party claim included

a waiver of any further claim to workers' compensation benefits from the defendants.

The plaintiff, however, maintained that he is entitled to pursue additional workers'

compensation benefits and that the defendants waived their right to any further credit for

such benefits from the $650,000 settlement. This dispute resulted in the plaintiff filing

the complaint for declaratory judgment and the defendants filing the counterclaim for

declaratory judgment, each party requesting the circuit court to resolve this dispute.

¶6 In his complaint for declaratory judgment, the plaintiff cited section 23 of the Act,

which states that an employee cannot waive the amount of compensation which may be

payable to the employee except after approval by the Commission. 820 ILCS 305/23

(West 2012). The plaintiff requested the circuit court to declare that he did not waive his

right to recover additional compensation benefits under the Act as a result of his

settlement of the third-party lawsuit because the Commission has not approved any

waiver. The plaintiff also requested the court to declare that the release of lien signed by

the defendants precluded them from any further reimbursement or credit from his

settlement with the third-party tortfeasor should he be awarded additional workers'

compensation benefits.

3 ¶7 In their counterclaim, the defendants alleged a count for breach of contract and a

count requesting a declaratory judgment. The defendants alleged that during the

settlement conference in the federal third-party lawsuit, the parties agreed that the

settlement of that case would include a settlement and closure of the pending workers'

compensation claim, effectively closing out the benefits under the Act that would be

payable to the plaintiff by the defendants. According to the defendants, this agreement

was memorialized both during the conference call with the federal magistrate and in

subsequent correspondence between the parties' attorneys. The defendants alleged that

they agreed to accept a fraction of their total lien amount in exchange for the plaintiff's

waiver of any future rights to benefits under the pending workers' compensation claim.

In their declaratory judgment count, they requested the circuit court to establish that the

settlement of the federal case extinguished all avenues of recovery for the plaintiff

stemming from the vehicle accident, including any further benefits under the Act. 2

¶8 At a pretrial hearing, the circuit court, sua sponte, raised an issue concerning its

jurisdiction to address the merits of the parties' dispute. The circuit court stated that the

issues concern whether the plaintiff can continue to seek benefits in a pending workers'

2 The defendants' counterclaim also included a count III, purporting to be a third-

party complaint against Moorman Farms, Inc., as a necessary party. Moorman Farms,

Inc., was a defendant in the plaintiff's federal lawsuit and was a party to the settlement of

that case.

4 compensation claim or whether his right to further compensation benefits was waived

pursuant to the settlement reached in the third-party proceeding. The court believed that

the issue of whether the plaintiff can continue to pursue workers' compensation benefits

in a pending claim involves "weighing credibility of witnesses and applying applicable

law pursuant to the [Act]." The circuit court believed that the Commission was in the

best position to resolve the contested issues.

¶9 The court, therefore, dismissed the plaintiff's complaint and the declaratory

judgment count in the defendants' counterclaim. The court stayed any further

proceedings on the defendants' breach of contract counterclaim pending further

proceedings before the Commission. The court made a finding pursuant to Illinois

Supreme Court Rule 304(a) (eff. Feb. 26, 2010) that there is no just reason for delaying

an appeal of the dismissal order. The plaintiff appealed, and the defendants cross-

appealed.

¶ 10 On appeal, all of the parties request this court to reverse the circuit court's order

and remand for further proceedings on their respective requests for declaratory

judgments. For the following reasons, we affirm the circuit court's dismissal order due to

a lack of subject matter jurisdiction over the parties' controversy.

¶ 11 ANALYSIS

¶ 12 Initially, we note that the circuit court dismissed the declaratory judgment

complaint and counterclaim after determining that it lacked jurisdiction. It did not

address the merits of the complaint or the counterclaim. Therefore, the only issue before

us in this appeal concerns the jurisdiction of the circuit court to consider the merits of the 5 parties' controversy. Nestle USA, Inc. v. Dunlap,

,

(2006). We review de novo the question of whether a circuit court has subject

matter jurisdiction. McCormick v. Robertson,

,

, appeal allowed, No. 118230 (Ill. Oct. 7, 2014).

¶ 13 All of the parties in this appeal have filed briefs in support of reversing the circuit

court's decision with respect to its jurisdiction. However, the parties' united stance

against the circuit court's ruling does not require us to reverse the ruling. Illinois courts

have an independent duty to consider subject matter jurisdiction. In re Rico L.,

,

. Subject matter jurisdiction cannot be waived,

stipulated to, or consented to by the parties. Dig Right In Landscaping v. Illinois

Workers' Compensation Comm'n,

,

.

The circuit court can raise the issue sua sponte at any time, as it did in the present case,

because the lack of subject matter jurisdiction deprives the trial court of all power except

to dismiss the action. Brandon v. Bonell,

,

(2006). Likewise, Illinois appellate courts also have an independent obligation to

consider matters that go to the jurisdiction of the circuit court. Baldwin v. Illinois

Workers' Compensation Comm'n,

,

(2011). Accordingly, we are obligated to independently analyze the circuit court's

subject matter jurisdiction even though the parties are allied in favor of the circuit court

exercising original subject matter jurisdiction over their controversy.

¶ 14 Subject matter jurisdiction concerns the authority of the court "to hear and

determine cases of the general class to which the proceeding in question belongs." 6 (Internal quotation marks omitted.) In re M.W.,

,

(2009). In Illinois, circuit courts have original jurisdiction over all justiciable

matters. Hastings Mutual Insurance Co. v. Ultimate Backyard, LLC,

,

. However, the legislature may vest exclusive original

jurisdiction in administrative agencies "when it has explicitly enacted a comprehensive

statutory administrative scheme."

¶ 15 Section 18 of the Act (820 ILCS 305/18 (West 2012)) states as follows: "All

questions arising under this Act, if not settled by agreement of the parties interested

therein, shall, except as otherwise provided, be determined by the Commission." Section

19(f) of the Act (820 ILCS 305/19(f) (West 2012)), in turn, limits the role of the circuit

court in workers' compensation proceedings to appellate review only. Hartlein v. Illinois

Power Co.,

,

(1992). Under this comprehensive

statutory administrative scheme, the legislature has vested exclusive original jurisdiction

in the Commission over matters involving an injured worker's rights to benefits under the

Act and an employer's defenses to claims under the Act.

¶ 16 For example, in Hartlein, an injured employee who had filed a claim for workers'

compensation benefits brought an action in the circuit court seeking to enjoin his

employer from discharging him from employment.

,

. When

the claimant was injured, he began receiving temporary total disability (TTD) benefits in

accordance with the Act.

,

. A dispute arose between the

employee and the employer concerning his rehabilitation and ability to work.

at 148-

49,

. During the course of this dispute, the employee's attorney became 7 concerned that the employer intended to discharge the claimant from employment.

,

. The employer sent a letter to the claimant directing him to

start a job search, and the employee alleged in his complaint requesting injunctive relief

that the letter directing him to begin a job search was the start of "the process of

retaliatory discharge." (Internal quotation marks omitted.)

,

.

At a hearing, a representative of the employer testified that the employer did not intend to

terminate the employee but intended on terminating TTD benefits in accordance with the

Act if the employee did not make a bona fide effort to find another job.

,

.

¶ 17 The circuit court entered a preliminary injunction that prevented the employer

from discharging the injured worker, "changing the status quo," or discontinuing any

"rights or benefits or privileges" of his employment. (Internal quotation marks omitted.)

,

. The circuit court added that it was not enjoining the

employer from "applying or petitioning *** the *** Commission on any matter."

(Internal quotation marks omitted.)

,

. On appeal, the

supreme court addressed the circuit court's subject matter jurisdiction to enter this

preliminary injunction.

¶ 18 The supreme court began its analysis by holding that in workers' compensation

proceedings, the circuit court's role is limited under section 19(f) of the Act to "appellate

only."

,

. The court stated: "The circuit courts have no

original jurisdiction over workers' compensation proceedings, wherein benefits are

determined, under the Act. Under section 19(f) of the Act, the circuit courts exercise a 8 special statutory jurisdiction and have only the powers that are conferred by statute."

,

.

¶ 19 In analyzing the circuit court's jurisdiction to enter the preliminary injunction, the

court held that any right of the injured employee to a continuation of his TTD benefits is

within the province of the Commission under the Act's statutory scheme. Id at 157-58,

. The supreme court stated that the appellate court recognized that it

lacked jurisdiction to enjoin the employer from discontinuing workers' compensation

benefits and narrowly construed the trial court's injunction to enjoining only the

employee's discharge.

,

. The supreme court disagreed with

that analysis, however, because it believed that the preliminary injunction prohibited the

employer from discontinuing the employee's "workers' compensation benefits as well,

despite the limiting language contained in the trial court's order, which pertained to the

absence of restraints upon the *** Commission."

,

. The

court noted that the employee interpreted the injunction as restraining the employer from

terminating his TTD benefits.

,

. The Hartlein court

concluded that "to the extent that the order is susceptible to interpretation as enjoining

[the employer] from discontinuing [the employee's] workers' compensation benefits, such

an order is beyond the scope of the trial court's authority."

,

. The court continued, "Any right [the employee] might have had to continued TTD

benefits was not properly protectible by means of the preliminary injunction."

,

.

9 ¶ 20 In Hollywood Trucking, Inc. v. Watters,

,

(2008), the court addressed the circuit court's subject matter jurisdiction to hear a case by

an employer against an employee alleging fraudulent misrepresentation during a medical

examination. The court cited Hartlein and held that the circuit court lacked subject

matter jurisdiction because the employer's claim concerned the employee's right to

workers' compensation benefits.

,

.

¶ 21 In that case, the employee was a truck driver who injured his back in a work-

related accident and filed a workers' compensation claim.

,

.

The employer initially paid benefits under the Act, but later maintained that the employee

was not eligible for workers' compensation benefits.

The employer argued that, at the

time it hired the employee and prior to his work accident, the employee improperly

obtained a medical examiner's certificate stating that he was physically qualified to

operate and control a commercial motor vehicle.

The Department of Transportation

requires commercial truck drivers to obtain this medical certificate, and according to the

employer, the employee fraudulently obtained his certificate by making false

representations to the medical examiner concerning his medical condition, specifically

conditions involving his back.

¶ 22 The employer filed the complaint against the employee seeking repayment of the

workers' compensation benefits it had paid; the employer alleged a fraud theory that was

based on the employee's misrepresentation of his physical condition at the time he was

hired.

,

. The Hollywood Trucking court affirmed the trial

10 court's dismissal of the claim against the employee due to a lack of subject matter

jurisdiction.

,

.

¶ 23 On appeal, the employer argued that there were no provisions in the Act

concerning restitution or the repayment of compensation benefits; therefore, it could

bring the action only in the circuit court as a common law action for fraud.

,

. The appellate court, however, disagreed. Citing Hartlein, the court

stated, "The Illinois Supreme Court has determined that the circuit courts have no

original jurisdiction in cases involving a determination of workers' compensation

benefits."

,

. The court stated that the allegations against

the employee "involve factual issues regarding accident, causal connection, the nature

and extent of the injury, and the employer's potential defenses, and these are proper

subjects for the Commission in the first instance."

,

. "In cases

involving a determination of an employee's entitlement to workers' compensation benefits

and the employer's defenses to the claim, the circuit court's role is appellate only."

¶ 24 In the present case, the plaintiff's complaint alleges that the defendants are

attempting to improperly deny workers' compensation benefits based on the settlement of

the third-party proceeding. The plaintiff cites the provision in section 23 of the Act that

requires approval of the Commission before an employer may enter into any payment

purporting to compromise or settle an employee's right to benefits under the Act. 820

ILCS 305/23 (West 2012). The plaintiff also cites section 5(b) of the Act in reference to

the effect of the release of lien signed by the defendants with respect to their rights to

further credits. 820 ILCS 305/5(b) (West 2012). In response, the defendants asked the 11 court to establish that the plaintiff is not entitled to any further benefits under the Act

because of the "global settlement" of the third-party lawsuit.

¶ 25 The substance of these arguments concerns the plaintiff's entitlement to workers'

compensation benefits and the defendants' defenses to the plaintiff's workers'

compensation claim. Therefore, these issues fall squarely within the purview of the

Commission's exclusive jurisdiction under the comprehensive statutory administrative

scheme established by the legislature. The plaintiff has a workers' compensation claim

pending, and the Commission is charged with resolving disputes, legal and factual, that

determine a claimant's rights to compensation benefits. In Hartlein, the supreme court

held that a trial court's preliminary injunction improperly enjoined an employer from

discontinuing an injured employee's compensation benefits. Likewise, in the present

case, a declaratory judgment by the circuit court would improperly determine whether the

plaintiff can or cannot seek benefits under the Act. The circuit court does not have

original jurisdiction to make this determination; its jurisdiction in this type of case is

"appellate only." Hartlein,

,

. In the present case,

"[a]ny right [the plaintiff] might have *** to continued [workers' compensation] benefits

[is] not properly protectible by means of [a declaratory judgment]."

,

.

¶ 26 The parties argue that the circuit court has jurisdiction because the disputed issues

concern questions of law. The circuit court disagreed and believed that the issues also

raised questions of fact. We need not determine whether the declaratory judgment

12 complaint and counterclaim raise only issues of law. Our analysis of the circuit court's

jurisdiction does not hinge on whether the parties have raised only questions of law.

¶ 27 Section 18 of the Act provides, "All questions arising under this Act, if not settled

by agreement of the parties interested therein, shall, except as otherwise provided, be

determined by the Commission." (Emphasis added.) 820 ILCS 305/18 (West 2012).

Section 19 further states that "[a]ny disputed questions of law or fact shall be

determined" by the Commission. (Emphasis added.) 820 ILCS 305/19 (West 2012).

Therefore, the legislature's comprehensive statutory administrative scheme does not carve

out exceptions to the Commission's exclusive jurisdiction for declaratory judgment

actions raising only questions of law arising under the Act. Instead, the Commission's

exclusive jurisdiction includes all questions, law and fact, arising under the Act. The

Commission "shall" decide these issues. As noted above, the questions presented by the

parties in the present case are questions that directly concern the plaintiff's right to seek

benefits under the Act.

¶ 28 The parties cite Employers Mutual Cos. v. Skilling,

,

(1994), as authority establishing the circuit court's jurisdiction.

The Skilling court analyzed a circuit court's jurisdiction to consider the merits of an issue

that is dissimilar to the disputed issues presented by the parties in the present case.

Skilling, therefore, is not applicable.

¶ 29 In Skilling, an injured worker filed two workers' compensation claims against his

employer. The employer's workers' compensation carrier contended that its policy did

not provide coverage because the injuries did not occur in Wisconsin.

, 644 13 N.E.2d at 1164. The insurance company filed a declaratory judgment action in the circuit

court against the employer and the employee, requesting the court to declare that it had

no obligation to defend or indemnify with respect to the employee's claim. Id. at 285-86,

. The employee moved to dismiss the declaratory judgment action on

the basis that the insurance company had not exhausted its administrative remedies

available before the Commission.

,

. The circuit court

granted the motion to dismiss.

¶ 30 On appeal, the supreme court addressed two issues. First, it had to determine

whether the Commission had exclusive jurisdiction over the dispute or whether it had

concurrent jurisdiction with the circuit court.

,

. Second, if

the circuit court had concurrent jurisdiction, it had to decide whether the court properly

exercised its jurisdiction under the doctrine of primary jurisdiction.

,

.

¶ 31 With respect to the first issue, the court concluded that the determination of the

coverage of a workers' compensation insurance contract was an issue over which both the

circuit court and the Commission had concurrent jurisdiction.

,

. The court noted that although the legislature may vest exclusive original

jurisdiction in an administrative agency, the enactment divesting the circuit court of

jurisdiction must do so explicitly.

The court looked at the language of section 18 of

the Act and concluded that the statutory language was insufficient to divest the circuit

courts of jurisdiction "to hear the insurance coverage issue raised" in that case.

The

court cited People v. NL Industries,

,

(1992), in which the 14 supreme court held that "the Pollution Control Board had concurrent jurisdiction to

decide the issues presented in that case, finding that no language in the Environmental

Protection Act specifically excluded the circuit courts from deciding such cases."

(Emphasis added.) Skilling,

,

(citing NL Industries,

,

). In citing NL Industries, the Skilling court held that

exclusionary language was "similarly absent" from the Act; therefore, the court

"reach[ed] the same conclusion herein."

¶ 32 We believe that the Skilling court's holding with respect to the circuit court's

concurrent jurisdiction was limited to "the issues presented in that case," i.e., "the

insurance coverage issue raised."

The construction of an insurance contract is not a

determination of an employee's right to seek benefits under the Act or an employer's

defenses to an employee's claim to benefits. It is a collateral issue governed by the

principles of contract construction. In contrast to Skilling, the issues presented in

Hartlein and Hollywood Trucking were directly related to injured workers' rights to seek

benefits under the Act. In each case, the courts held that the Commission had exclusive

jurisdiction. Likewise, in the present case, the issues involved in the declaratory

judgment pleadings directly concern the determination of the plaintiff's right to seek

additional workers' compensation benefits and the defendants' defenses to his claim.

Therefore, we are obligated to follow the supreme court's directive in Hartlein that the

circuit court's jurisdiction in this controversy is "appellate only," not concurrent.

¶ 33 Citing Skilling, the parties argue that, under the doctrine of primary jurisdiction,

the circuit court has paramount jurisdiction to decide their dispute. The parties' reliance 15 on the Skilling court's primary jurisdiction analysis is misplaced. The doctrine of primary

jurisdiction has no bearing on resolution of the circuit court's subject matter jurisdiction

over the parties' controversy in the present case.

¶ 34 As noted above, in Skilling, the supreme court engaged in a two-part analysis. The

court first held that the circuit court and the Commission had concurrent jurisdiction over

the insurance coverage dispute. The supreme court then conducted a second step in its

analysis and held that, under the primary jurisdiction doctrine, the circuit court had

"paramount" jurisdiction over the parties' insurance dispute; the court reasoned that the

issue was a question of law and that administrative agencies were "given wide latitude in

resolving factual issues but not in resolving matters of law." Id. at 288-89,

.

¶ 35 The doctrine of primary jurisdiction is a judicially created doctrine that is not

technically a question of jurisdiction, but a matter of self-restraint and relations between

the courts and administrative agencies. Price v. Philip Morris, Inc.,

,

(2005). The doctrine applies only when an administrative agency

and the circuit court have concurrent jurisdiction. Village of Itasca v. Village of Lisle,

,

(2004).

¶ 36 As noted above, we have determined that the Commission has exclusive original

jurisdiction to determine the disputed issues of law and fact in the present case, which

concern the plaintiff's right to seek further benefits under the Act and the defendants'

defenses to his claim. We cannot apply the judicially created doctrine of primary

jurisdiction in cases that the legislature has vested exclusively within the Commission's 16 original jurisdiction. The Skilling court's analysis with respect to the doctrine of primary

jurisdiction applies only when a circuit court has concurrent jurisdiction with an

administrative agency.

¶ 37 The legislature's comprehensive statutory scheme vests the Commission with

exclusive jurisdiction to determine an injured employee's rights to seek benefits under the

Act and employers' defenses to compensation claims. This exclusive jurisdiction

encompasses both questions of law and fact. The circuit court in the present case

correctly dismissed the plaintiff's complaint and the defendants' counterclaim requesting

a declaratory judgment because the parties' controversy falls within the Commission's

exclusive jurisdiction.

¶ 38 CONCLUSION

¶ 39 For the foregoing reasons, we affirm the circuit court's order and remand the

matter to the circuit court for further proceedings on the remaining issues.

¶ 40 Affirmed; cause remanded.

17

NOS. 5-14-0267, 5-14-0279 cons.

IN THE

APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT

PATTON BRADLEY, ) Appeal from the ) Circuit Court of Plaintiff and Counterdefendant-Appellant ) Williamson County. and Cross-Appellee, ) ) v. ) No. 13-MR-82 ) THE CITY OF MARION, ILLINOIS, and ) THE ILLINOIS PUBLIC RISK FUND, ) ) Honorable Defendants and Counterplaintiffs- ) Brad K. Bleyer, Appellees and Cross-Appellants. ) Judge, presiding. _____________________________________________________________________________________

Opinion Filed: March 10, 2015 _____________________________________________________________________________________

Justices: Honorable Bruce D. Stewart, J.

Honorable S. Gene Schwarm, J., and Honorable James R. Moore, J., Concur _____________________________________________________________________________________

Attorney Steven F. Hanagan, Hanagan & McGovern, P.C., 123 S. 10th for Street, Suite 601, Mt. Vernon, IL 62864 Appellant _____________________________________________________________________________________

Attorneys Gregory G. Vacala, Douglas B. Keane, Yvonne M. O'Connor, for Rusin & Maciorowski, Ltd., 10 S. Riverside Plaza, Suite 1530, Appellees Chicago, IL 60606 (attorneys for City of Marion and Illinois Public Risk Fund)

John P. Cunningham, Joseph A. Rousseau, Brown & James, P.C., Richland Plaza I, 525 W. Main Street, Suite 200, Belleville, IL 62220 (attorneys for third-party appellee–Moorman Farms, Inc.) _____________________________________________________________________________________