FIRST DIVISION AUGUST 10, 2015 NUNC PRO TUNC JUNE 15, 2015

No. 1-13-2252

RONALD BAYER, ) ) Appeal from the Plaintiff and Cross-Appellee, ) Circuit Court of ) Cook County. v. ) ) PANDUIT CORPORATION, ) ) No. 07 L 09877 Defendant and Third-Party Plaintiff-Appellant ) ) and ) ) AREA ERECTORS, INC., ) Honorable ) William J. Haddad, Defendant and Third-Party Defendant-Appellee and ) Judge Presiding. Cross-Appellant. )

JUSTICE CUNNINGHAM delivered the judgment of the court, with opinion. Justices Connors and Harris concurred in the judgment and opinion.

OPINION

¶1 This appeal arises from the October 5, 2012 order entered by the circuit court of Cook

County, which granted a joint motion for a good-faith finding and approval of a settlement

agreement between plaintiff Ronald Bayer (Bayer) and third-party defendant Area Erectors, Inc.

(Area) in a negligence action, thereby dismissing with prejudice Area as a party in a contribution

claim initiated by defendant and third-party plaintiff Panduit Corporation (Panduit). This appeal

also arises from the circuit court's July 18, 2013 order granting Bayer's motion for attorney fees

and costs against Area in a separate claim under the Workers' Compensation Act (820 ILCS

305/1 et seq. (West 2012)). On appeal, Panduit appeals from the circuit court's October 5, 2012 1-13-2252

ruling, and argues that the court erred in approving the settlement agreement between Bayer and

Area and that Panduit's contribution claim against Area should not have been dismissed with

prejudice. On appeal, Area appeals from the circuit court's July 18, 2013 order granting Bayer's

motion for attorney fees and costs against Area in a separate workers' compensation claim. For

the following reasons, we affirm in part and reverse in part the judgment of the circuit court of

Cook County. We have jurisdiction pursuant to Illinois Supreme Court Rule 301 (eff. Feb. 1,

1994).

¶2 BACKGROUND

¶3 Panduit is an electrical components manufacturer and owner of a warehouse facility

located in Dekalb, Illinois. In June 2007, Panduit, acting as its own general contractor, entered

into an agreement with Garbe Iron Works, Inc. (Garbe) for the expansion of the warehouse

facility. In the agreement, Panduit agreed to pay almost $3 million for Garbe to fabricate and

erect structural steel for the expansion project. The agreement specified that Garbe was

responsible for "initiating, maintaining and supervising all safety precautions and programs,

including all those required by law in connection with the performance of the [a]greement," and

that Garbe was required to comply with all Occupational Safety & Health Administration

(OSHA) standards. Pursuant to the agreement, Garbe was required to include Panduit as an

additional insured on Garbe's commercial general liability insurance policy. The agreement

allowed Garbe to hire subcontractors, who must also be subjected to the same insurance

requirements as Garbe.

¶4 Pursuant to a "purchase order," Garbe subcontracted Area to "[f]urnish all labor and

equipment (including supervision) to upload and erect" structural steel, in exchange for

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$520,485. The purchase order specified that Area would name Garbe and Panduit as additional

insureds on a $2 million insurance policy.

¶5 On June 20, 2007, Bayer, an employee of Area, was working as an ironworker on the

construction site when he allegedly fell and sustained injuries. As a result of those injuries,

Bayer became a quadriplegic. Thereafter, Bayer filed a workers' compensation claim against

Area.

¶6 On September 19, 2007, Bayer filed a lawsuit against Panduit for negligence. On March

24, 2008, Bayer filed a first amended complaint to include Garbe as a defendant. 1

¶7 On April 30, 2009, Panduit filed a third-party complaint for contribution against Area,

alleging that Area was also negligent in failing to ensure the safety of its employees, including

Bayer. The third-party complaint for contribution requested that, in the event Panduit is held

liable to Bayer, Panduit be awarded judgment against Area "in an amount commensurate with

the relative degree of fault attributable to Area" in causing Bayer's injuries. On May 15, 2009,

Area filed an answer and affirmative defenses to Panduit's third-party complaint for contribution.

¶8 On October 1, 2012, Area and Bayer filed a joint motion for a good-faith finding and

approval of a settlement agreement between Bayer and Area (motion for a good-faith finding).

The motion for a good-faith finding alleged that Bayer had filed a workers' compensation claim

against his employer, Area; that Area has honored Bayer's workers' compensation claim and

Bayer had been paid and continued to be paid temporary total disability and medical expenses;

that the amount of workers' compensation lien to date totaled $5,275,585.57; that Bayer and

Area, through Area's insurer Arch Insurance Company, have entered into a settlement agreement

1 Tylk Gustafson Reckers Wilson Andrews, LLC (Tylk), as structural engineer, was also named as a defendant. However, Tylk was subsequently dismissed as a defendant at the summary judgment stage of the case on June 16, 2010.

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through an arm's length bargaining process; and that the settlement agreement was supported by

consideration. A copy of the settlement agreement was attached to the motion for a good-faith

finding.

¶9 On October 1, 2012 and October 4, 2012, a hearing on the motion for a good-faith

finding was held. On October 5, 2012, the circuit court granted the motion for a good-faith

finding, approved the settlement agreement between Area and Bayer as one made in "good

faith," and dismissed Area with prejudice as a third-party defendant in Panduit's contribution

claim. 2

¶ 10 On October 18, 2012, Bayer settled his claim against Garbe in the negligence action.

Thus, Panduit proceeded to trial as the sole remaining defendant.

¶ 11 On October 23, 2012, a jury trial commenced on Bayer's negligence action. At trial,

Bayer presented evidence that the cost of his life care plan ranged from about $17 million to over

$25 million. On November 14, 2012, the jury entered a verdict in favor of Bayer and against

Panduit in the sum of $80 million in damages, which included compensation for pain and

suffering, but reduced the $80 million in damages by 20% for Bayer's own contributory

negligence, for a total of $64 million ($80 million - 20% = $64 million). On that same day, the

circuit court entered a judgment against Panduit in the sum of $64 million plus costs. 3

¶ 12 From December 12, 2012 to January 23, 2013, the circuit court entered several orders

granting Panduit an extension of time to file a posttrial motion. On February 20, 2013, Panduit

filed a posttrial motion, arguing, inter alia, that the circuit court erred in dismissing Panduit's

2 Area was also dismissed with prejudice from a third-party contribution claim and a breach of contract claim filed by GARBE in January 2009. 3 The record suggests that Panduit and Bayer later settled the lawsuit after the jury trial; hence, the jury's findings at trial are not issues before this court on appeal.

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third-party contribution claim against Area upon its approval of the settlement agreement

between Area and Bayer, where the settlement agreement was neither supported by good faith

nor consideration.

¶ 13 On June 13, 2013, following a hearing on Panduit's posttrial motion, the circuit court

denied the motion. In its ruling, the court incorporated by reference its prior findings at the

October 2012 hearing on the motion for a good-faith finding. On June 13, 2013, the court

entered an agreed order in which Bayer and Area, on behalf of its insurer Arch Insurance

Company, agreed to extend workers' compensation benefits to Bayer until July 15, 2013.

¶ 14 Meanwhile, on March 5, 2013, while Panduit's posttrial motion was pending before the

court, Bayer filed a motion for attorney fees and costs (motion for attorney fees) against his

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

The motion for attorney fees, citing section 5(b) of the Workers' Compensation Act (820 ILCS

305/5(b) (West 2012)) and the holding in Zuber v. Illinois Power Co.,

(1990),

requested the court to enter an order compelling Area to pay attorney fees in an amount

representing 25% of future workers' compensation benefits for Bayer that had been suspended by

statute as a result of the underlying settlements in the negligence action. On June 27, 2013, Area

filed an amended response to Bayer's motion for attorney fees, requesting that the court deny

Bayer's motion with respect to future medical or disability payments, or any future workers'

compensation payments. On July 8, 2013, Bayer filed a reply in support of his motion for

attorney fees.

¶ 15 On July 11, 2013, a hearing on Bayer's motion for attorney fees was held.

¶ 16 On July 12, 2013, Panduit filed a notice of appeal, appealing from the circuit court's

October 5, 2012 order approving the settlement agreement between Bayer and Area, and

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dismissing with prejudice Panduit's third-party contribution claim against Area. Panduit also

appeals from the circuit court's June 13, 2013 order denying its posttrial motion.

¶ 17 On July 18, 2013, the circuit court granted Bayer's motion as to attorney fees relating to

future workers' compensation payments and denied the motion as to costs relating to future

workers' compensation payments. In its ruling, the court required Area to pay 25% attorney fees

to Bayer's counsel, the law firm of Horwitz, Horwitz & Associates, Ltd., "for future medical

bills, lost wages, long term care, and any other compensation and benefit compensable under the

Illinois Worker's Compensation Act incurred on or after July 16, 2013." The court also ordered

that "medical bills and/or loss wage statements or any other claims of compensation are to be

submitted to [Area's] insurance company, Arch Insurance Company, for reimbursement of

twenty-five percent (25%) of attorney's fees on said medical bills, wage loss, long term care, and

compensation and benefits by [Bayer] in a reasonably timely manner and paid in a reasonably

timely manner by [Area's] insurance carrier, Arch Insurance [Company]." The order further

stated that there "shall be no double recovery of attorney's fees. Recovery shall go to assist

[Bayer] in the one-third (1/3) payment of attorney's fees being paid pursuant to the [c]ontractual

[a]greement between [Bayer] and his attorneys, Horwitz, Horwitz & Associates, Ltd. pursuant to

In Re: Dierkes,

(2000)." The July 18, 2013 order also stated that the court "finds

no just reason to delay enforcement or appeal of this order."

¶ 18 On July 24, 2013, Panduit filed a supplemental notice of appeal to postdate the court's

final order entered on July 18, 2013.

¶ 19 On July 31, 2013, Area filed a cross-notice of appeal, appealing from the court's July 18,

2013 ruling. On February 19, 2014, this court granted Area's motion to amend the cross-appeal

to label it as a "separate appeal," and granted Area leave to file an amended docketing statement.

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¶ 20 ANALYSIS

¶ 21 We determine the following issues on appeal: (1) whether the circuit court erred in

approving the settlement agreement between Bayer and Area and in dismissing with prejudice,

Panduit's third-party contribution claim against Area in the negligence action; and (2) whether

the circuit court erred in granting Bayer's motion for attorney fees against his employer, Area, in

the workers' compensation claim.

¶ 22 We first determine whether the circuit court erred in approving the settlement agreement

between Bayer and Area and, in dismissing with prejudice, Panduit's third-party contribution

claim against Area in the negligence action. We review the circuit court's decision under an

abuse of discretion standard. Johnson v. United Airlines,

(2003); Dubina v.

Mesirow Realty Development, Inc.,

(2001). "An abuse of discretion occurs

when the ruling is arbitrary, fanciful, or unreasonable, or when no reasonable person would take

the same view." Favia v. Ford Motor Co.,

(2008).

¶ 23 Panduit argues that the circuit court erred in approving the settlement agreement between

Bayer and Area and in dismissing with prejudice Panduit's third-party contribution claim against

Area. Specifically, Panduit argues that the settlement agreement entered into by Bayer and Area

was not made in good faith, where Area had paid nothing to Bayer as consideration for its release

from the pending legal action. Panduit contends that consideration was lacking by pointing out

that Area had a statutory lien under the Workers' Compensation Act representing the amount of

past and future workers' compensation payments to Bayer; that Area did not waive its statutory

lien on a portion of the proceeds that Bayer is to receive from Panduit; and that, as a result of the

jury verdict against Panduit, Area's entire statutory lien remained available for recoupment.

Panduit further argues that, by not waiving any portion of its lien, Area "has been wrongly

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allowed to shift its entire statutory liability" to Panduit and, thus, Area has not paid any "net"

consideration to support a finding of good faith. Moreover, Panduit argues that Area's $2 million

insurance policy, under which Panduit and Garbe were listed as insureds, did not constitute

"consideration" for the settlement agreement because the policy limits were made available to

satisfy Panduit's liability under the judgment, not Area's liability. Panduit further asserts that it

was unfairly prejudiced by the dismissal of its contribution claim against Area, where Area

specified the trip hazard in the construction plans, provided inadequate fall protection, and failed

to supervise Bayer at the time of the accident.

¶ 24 Area counters that the settlement agreement was entered into in good faith, arguing that

multiple consideration existed to support the agreement. Area argues that the settlement

agreement stated that the $2 million from its primary insurance policy was Panduit and Garbe's

money, however, Area "controlled that amount due to the fact that Area had a $500,000

deductible." Area argued that because it had "some control" over the $2 million, this supported

the circuit court's finding, after hearing extensive arguments by the parties, that consideration

existed. Area further argues that the lack of waiver of its workers' compensation lien did not

constitute bad faith, and that Illinois courts have consistently rejected challenges to settlement

agreements based on the argument that they shifted a disproportionate share of liability to a

nonsettling tortfeasor, like Panduit, which received an unfavorable verdict at trial. Area further

argues that, even without a lien waiver, Bayer received very tangible benefits from the

settlement—including the right to continue living in a house that had been outfitted to suit his

physical needs, as agreed to in his workers' compensation case, as well as the continuation of

workers' compensation benefits to Bayer until the negligence action was fully resolved despite

Area's right under Illinois law to suspend workers' compensation payments to Bayer once he had

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received any amount of money paid by another party in the lawsuit. Area further contends that it

had an excess insurance policy of $25 million that was issued by insurer, "Chartis/AIG

Insurance," under which Panduit and Garbe were also named as additional insureds. Area notes

that Chartis/AIG Insurance was the same insurer as Panduit's own insurer. Area claims that the

entire $25 million had been triggered and exhausted to pay for Garbe's settlement, as well as,

Panduit's posttrial settlement with Bayer which, consequently, left Area with no additional

insurance coverage "to satisfy any contribution counterclaim or judgment."

¶ 25 The Joint Tortfeasor Contribution Act (Contribution Act) (740 ILCS 100/1 et seq. (West

2010)) "creates a statutory right of contribution in actions 'where 2 or more persons are subject to

liability in tort arising out of the same injury to person or property, or the same wrongful death'

(740 ILCS 100/1, 2(a) (West 1996)), to the extent that a tortfeasor pays more than his pro rata

share of the common liability." Johnson,

. Section 2 of the Contribution Act

states, in relevant parts, as follows:

"(c) When a release or covenant not to sue or not to enforce

judgment is given in good faith to one or more persons liable in

tort arising out of the same injury or the same wrongful death, it

does not discharge any of the other tortfeasors from liability for the

injury or wrongful death unless its terms so provide but it reduces

the recovery on any claim against the others to the extent of any

amount stated in the release or the covenant, or in the amount of

the consideration actually paid for it, whichever is greater.

(d) The tortfeasor who settles with a claimant pursuant to

paragraph (c) is discharged from all liability for any contribution to

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any other tortfeasor." (Emphasis added.) 740 ILCS 100/2(c), (d)

(West 2010).

Although the term "good faith" is not defined by the Contribution Act, a settlement "will not be

found to be in good faith if it is shown that the settling parties engaged in wrongful conduct,

collusion, or fraud," or "if it conflicts with the terms of the [Contribution] Act or is inconsistent

with the policies underlying the [Contribution] Act." Johnson,

. The two

public policies underlying the Contribution Act include "the encouragement of settlements and

the equitable apportionment of damages among tortfeasors."

.

¶ 26 Here, Panduit does not argue on appeal that any wrongful conduct, collusion, or fraud

occurred to undermine the circuit court's finding of good faith. Nor does it argue that the public

policy of the Contribution Act which is to encourage settlement was violated. Rather, Panduit

argues that the settlement agreement entered into between Bayer and Area was inconsistent with

the second purpose of the Contribution Act, which is promoting the equitable apportionment of

damages among tortfeasors. Panduit argues that Area's relative culpability was high and its

settlement with Bayer shifted its entire liability to Panduit at trial. Thus, our relevant inquiry is

whether the circuit court abused its discretion in finding good faith in approving the settlement

agreement.

¶ 27 In order to prove whether a settlement was negotiated in good faith within the meaning of

the Contribution Act, the settling parties carry the initial burden of making a preliminary

showing of good faith.

. Once a preliminary showing of good faith is made by the

settling parties, the burden of proof shifts to the nonsettling party, who challenges the good faith

of the settlement. That party must prove "the absence of good faith by a preponderance of the

evidence."

" 'Ultimately, however, whether a settlement satisfies the good faith requirements

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as contemplated by the [Contribution Act] is a matter left to the discretion of the trial court based

upon the court's consideration of the totality of the circumstances.' " Cellini v. Village of

Gurnee,

(2010) (quoting Johnson,

).

¶ 28 In the instant case, a copy of the settlement agreement was attached to Area and Bayer's

October 1, 2012 joint motion for a good-faith finding, which detailed the release terms to which

Bayer and Area agreed. Thus, we find that Area sufficiently made a preliminary showing of

good faith, and the burden of proof shifted to Panduit to show an absence of good faith by a

preponderance of the evidence. See Johnson,

(a settling party must show the

existence of a legally valid settlement agreement); Cellini,

(settling

tortfeasor made a preliminary showing of good faith where it submitted to the circuit court a

copy of the "full and final release and satisfaction agreement"); see generally Snoddy v. Teepak,

Inc.,

(1990) (a preliminary showing of good faith was evidenced by the

settling parties' "release" and the circuit court properly presumed that the settlement was valid).

However, we note that not all legally valid settlements satisfy the good-faith requirements of the

Contribution Act. See Johnson,

; Bowers v. Murphy & Miller, Inc.,

(1995).

¶ 29 The terms of the settlement agreement between Bayer and Area provided as follows:

"For the sole consideration of the payment to [Bayer] at this time

of the sum of:

1. Arch/Area represents that the workers' compensation lien for

medical and indemnity as of today's date is $5,275,985.57. If the

civil case or any portion thereof settles before a verdict is rendered,

Arch/Area *** agrees to waive its entire workers' compensation

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lien pursuant to 5(b) of the Illinois Workers' Compensation [A]ct

as it relates to said settlement. (For example, if [Bayer] settles

with only one party before a verdict, then the lien is waived as to

that settlement only, but the lien remains as to any verdict or

recovery arising out of the verdict as stated below. Or, if [Bayer]

settles with both Panduit and [Garbe] before a jury verdict, then the

entire 5(b) lien is waived.)

2. If any portion of the case is tried to verdict and recovery is made

by reason of the verdict and an amount is paid that would satisfy

the workers' compensation lien or any part of the *** lien, [Bayer]

agrees to pay back the workers' compensation lien subject to

section 5(b) of the [W]orkers' [C]ompensation [A]ct.

3. During the pendency of this matter and before the matter is

resolved with all parties by either settlement or trial, Arch/Area

*** agrees to continue to leave open all benefits under the

Workers' Compensation Act as they are today.

4. If the case is settled with all parties prior to verdict then

Arch/Area *** would stop workers' compensation payments once

the settlement funds are received by [Bayer]. In addition, under

said circumstance, [Bayer] and his attorneys would waive their

statutory attorneys' fees in regards to future workers' compensation

payments.

5. Arch to pay [$2 million] which it represents to be its policy

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limits on the primary commercial liability policy issued to [Area]

as the named insured wherein [Panduit] and [Garbe] are additional

insureds under said policy.

This [$2 million] is to be credited towards any settlement or

verdict, until it is exhausted, against [Panduit] and [Garbe].

Subject to provision 6, this [$2 million] payment is not intended as

and will not act as an advance on [w]orkers' [c]ompensation

benefits, is not being paid pursuant to the Workers' Compensation

Act, will not be utilized as to setoff for any future payments under

the Workers' Compensation Act and Area/Arch waives its 5(b)

lien. This settlement represents a good faith settlement between

[Bayer] and Arch/Area in the civil action, and is not a settlement of

the [w]orkers' [c]ompensation action with Area. This is not a

settlement with [Garbe] and [Panduit].

6. If [Bayer] recovers [$4 million] (or less) as a result of the verdict

in the civil action then Arch/Area *** will waive its Section 5(b)

lien as it relates to said [$2 million] referenced in paragraph 5 and

waives any right to take said [$2 million] referenced in paragraph 5

as a set-off as to future workers' compensation payments.

However, if [Bayer] recovers more than [$4 million] as a result of

the verdict in the civil action then Arch does not waive any 5(b)

lien (including any rights to set-off under the [W]orkers'

[C]ompensation [A]ct) with regard to said [$2 million] referenced

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in paragraph 5.

7. The 'occupancy agreement' between [Bayer] and Arch

Insurance, as agreed to in the workers' compensation case, shall

not be interfered with by any settlement or jury verdict in the civil

case. The rights as contained in that agreement survive the third

party case and [Bayer] shall maintain the right to live in the

premises as delineated in the 'occupancy agreement.'

8. The above stated offer of compromise and settlement is strictly

contingent on the dismissal of [Area] as a party to this litigation. A

joint motion on behalf of [Bayer] and [Area] for a good faith

finding pursuant to the Illinois Contribution Act will be made. The

settlement is contingent upon the granting of that motion and the

dismissal of [Area] as a party defendant in [the civil case]."

¶ 30 As noted, on October 1, 2012 and October 4, 2012, a hearing on the motion for a good-

faith finding was held. During the hearing, counsel for Area presented the terms of the

settlement agreement and the circuit court heard arguments from the parties. In finding good

faith, the circuit court posed questions to the parties regarding the settlement terms, posed

different hypothetical scenarios to the parties in examining the effects of various contingencies

listed in the settlement agreement, and heard the parties' arguments about whether valid

consideration supported the settlement agreement.

¶ 31 Under the facts and the record before us, we find that Panduit failed to demonstrate, by a

preponderance of the evidence, any showing of bad faith by the settling parties. The bulk of

Panduit's argument before the circuit court centered around the perceived unfairness Panduit

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would face if the settlement agreement were approved, noting that a disproportionate amount of

liability would be shifted to Panduit at trial and that the settlement agreement was supported by

"illusory" consideration that did not satisfy the good-faith requirements of the Contribution Act.

However, the record supports the circuit court's finding that the settlement agreement was

supported by valid consideration. Section 5(b) of the Workers' Compensation Act gives an

employer the right to recover the amount of past or future compensation payments from any

money judgment or settlement received by the injured employee in an action brought by the

injured employee against another party who is legally liable for the injury. See 820 ILCS

305/5(b) (West 2010). Under the settlement agreement, Bayer and Area agreed to multiple

contingency lien waivers by Area which could be triggered under different scenarios. Area and

its insurer, Arch Insurance Company, agreed to waive the entirety of its workers' compensation

lien against Bayer as to any portion of the negligence action that was settled before a verdict was

rendered. Area further agreed that if Bayer recovered $4 million or less as a result of the trial

verdict, then the workers' compensation lien would be waived as to the $2 million primary

insurance proceeds that would be paid towards Panduit's and Garbe's liability in the negligence

action. However, Bayer agreed that if he recovered more than $4 million as a result of the trial

verdict, Area's workers' compensation lien would not be waived as to the $2 million primary

insurance proceeds that would be paid towards Panduit's and Garbe's liability in the action. At

the hearing on the motion for a good-faith finding, counsel for Area clarified that Area had also

paid a $500,000 deductible on the policy in order to ensure that the $2 million policy proceeds

would be triggered and paid towards Panduit's and Garbe's liability as the policy insureds.

Although it is now known to us that Panduit eventually proceeded to trial as the sole defendant

and that on November 14, 2012, the jury rendered a verdict of $64 million against Panduit—

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which consequently triggered the provision in the settlement agreement allowing Area to recoup

the entirety of its workers' compensation lien against the verdict amount—hindsight is not the

appropriate criteria for determining what was valid consideration at the time circuit court made

its finding of good-faith and approved the settlement agreement on October 5, 2012. Indeed, at

the June 13, 2013 hearing on Panduit's posttrial motion, the circuit court denied the motion by

correctly noting that "[t]he question of consideration is one that has been discussed in many

contexts, and in this case, the issue of public policy and the need looking at the time that this

agreement was made there was consideration that would support what occurred." We further

found that, aside from Area's contingency lien waivers, paragraph 3 of the settlement agreement

alone was sufficient as valid consideration between Bayer and Area. Under Illinois law, an

employer has a right to suspend workers' compensation payments to an injured employee once

any amount of money is received by the injured employee from a third-party tortfeasor for the

same injury. See Freer v. Hysan Corp.,

(1985); 820 ILCS 305/5(b)

(West 2010). Under paragraph 3, Area agreed not to suspend workers' compensation payments

to Bayer at any time prior to the final resolution of the litigation against all parties. The effect of

this specific provision allowed Bayer to continue receiving workers' compensation payments,

even though Bayer had settled the lawsuit with Garbe for a specified sum only 14 days after the

hearing on the motion for a good-faith finding. Had the trial issues not been fully resolved by

Panduit's posttrial settlement with Bayer, pursuant to paragraph 3 of the settlement agreement,

Bayer would have continued to receive workers' compensation payments during the appeals

process—payments which would have been crucial to Bayer as a quadriplegic needing around

the clock nursing care.

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¶ 32 In Cleveringa v. J.I. Case Co., a reviewing court upheld the circuit court's finding that a

settlement agreement between an injured worker, his employer, and a manufacturer was entered

into in good faith, and upheld the court's dismissal of all pending claims, including the

contribution claims, against these settling parties. Cleveringa,

(1989). Pursuant to the settlement agreement, the injured worker agreed to release both a

manufacturer and his employer from all further liability, in exchange for a total of $1.1 million.

. At time of the settlement, the employer's workers' compensation insurance carrier,

Home Insurance Company (Home), had paid the injured worker approximately $275,000 in

compensation benefits and held a lien in that amount against any settlement or judgment

obtained by the injured worker.

The settlement agreement included a term which provided

that Home agreed to waive enforcement of its workers' compensation lien against the settling

parties, but expressly reserved the right to enforce its lien against funds received by the injured

worker against a non-settling party, J.I. Case Company (Case).

Case argued that the

settlement was not in good faith and should be set aside because Case may be subject to a

judgment which was greater than that which Case believed was appropriate for settlement.

. In rejecting this argument, the Cleveringa court stated that "[s]uch a possibility always

exists when parties to litigation contemplate settlement. A party who refuses to settle a case on

agreed terms always risks that he will be exposed to enhanced liability by that refusal. This is

the essence of settlement negotiations. A party either compromises in return for the certainty of

a fixed result, or gambles that he will obtain a more favorable result by submitting the case to a

jury."

. The Cleveringa court further noted that accepting Case's argument would

in effect "defeat the public policy favoring settlements and would allow one party to veto any

settlement unless all parties had agreed on their respective liabilities."

. In upholding

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the circuit court's finding of good faith, the Cleveringa court found that the record contained no

evidence of collusion, fraud, or tortious conduct; that the trial court was aware of and considered

all of the circumstances surrounding the settlement agreement; that the trial court conducted a

full hearing at which each party was represented by counsel and the court determined that the

parties to the agreement acted in good faith; and that "the good faith of a settlement is not judged

by the obstacles it creates for the nonsettling tortfeasor."

¶ 33 In the instant case, the facts presented before us are remarkably similar to those in

Cleveringa. Here, Bayer and Area entered into a settlement agreement by which Bayer agreed to

release Area from further liability and Area would be dismissed as a third-party to the litigation,

in exchange for various contingency lien waivers that benefitted Bayer. At the time of the

settlement, Arch Insurance Company, on behalf of Area as the employer, had paid over $5

million in workers' compensation and held a statutory lien in that amount against any settlement

or judgment obtained by Bayer. However, as part of consideration, like Cleveringa, the

settlement agreement included provisions stating that "Arch/Area" agreed to waive enforcement

of its workers' compensation lien against any settling parties, but expressly reserved the right to

enforce its lien against funds received by Bayer against any nonsettling parties. In addition,

"Arch/Area" agreed not to exercise its lawful right to suspend workers' compensation payments

to Bayer at any time prior to the final resolution of the litigation against all parties, even if, in the

interim, Bayer receives money of any kind from a third-party tortfeasor for the same injury. See

generally Ross v. May Co.,

(2007) ("the essential element of

consideration is a bargained-for exchange of promises or performances that may consist of a

promise, an act, a forbearance, or the creation, modification, or destruction of a legal relation"

(emphasis added). Like Cleveringa, there was no evidence of collusion, fraud, or tortious

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conduct by the parties in reaching settlement. Like Case, as the nonsettling party in Cleveringa,

Panduit, as the nonsettling party in the case at bar, argues that the settlement was not entered into

in good faith because Area had retained the right to enforce its entire workers' compensation lien

against Panduit's judgment amount, and thus, Area "has been wrongly allowed to shift its entire

statutory liability" to Panduit and has not paid any "net" consideration to support a finding of

good faith. However, applying the principles in Cleveringa, we reject this contention. First, as

discussed, paragraph 3 of the settlement agreement by which Area agreed to forbear its right to

suspend workers' compensation payments to Bayer at any time prior to the final resolution of the

litigation against all parties, was alone sufficient and valid consideration. The settlement

agreement also set forth provisions which waived the entirety of Area's workers' compensation

lien as to any funds received by Bayer as settlement with other parties in the negligence action.

Second, the record shows that the circuit court was aware of and considered all of the

circumstances surrounding the settlement agreement, conducted a full hearing at which each

party was represented by counsel, and the court was well informed when it determined that the

parties to the agreement acted in good faith. As the Cleveringa court noted, "the good faith of a

settlement is not judged by the obstacles it creates for the nonsettling tortfeasor." Cleveringa,

. Thus, we reject Panduit's argument that the settlement was not made in

good faith. See also Banks v. R.D. Werner Co.,

(1990) (failure of an

employer to waive a workers' compensation lien does not ipso facto render a settlement invalid

as having been made in bad faith); Romack v. R. Gingerich Co.,

(2000) (settlement agreement entered into in good faith where employer only partially waived

workers' compensation lien against injured employee and expressly reserved its right to enforce

the lien against any funds received from the nonsettling party). Accordingly, we hold that, under

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the totality of the circumstances, the circuit court did not abuse its discretion in finding good

faith and in approving the settlement agreement.

¶ 34 Panduit cites cases in support of its argument that Bayer's and Area's settlement was not

entered into in good faith. However, we find these cases to be factually distinguishable from the

facts of the case at bar. Further, none of those cases nullify the analysis which we have

explained above. See also Higginbottom v. Pillsbury Co.,

(1992) (no

finding of good faith where employer retained its entire workers' compensation lien but offered

no other consideration to injured worker), abrogated on other grounds, Johnson,

.

¶ 35 Moreover, we reject Panduit's argument of bad faith premised upon the extent of the

amount of damages awarded by the jury when measured against what it claims is Area's high

relative culpability compared to Panduit's low relative fault. Courts have consistently rejected

challenges to settlements brought on this basis. See Johnson,

("the disparity

between the settlement amount and the ad damnum in the complaint is not an accurate measure

of the good faith of a settlement"); Palacios v. Mlot,

("the fact

that the settlement agreement would be 'advantageous to a party is not necessarily an indication

of bad faith' ") (quoting Johnson,

); Smith v. Texaco, Inc.,

(1992) ("[i]t has been recognized that settlements may be substantially different from

the results of litigation because damages are often speculative and the probability of liability

uncertain"); Cleveringa,

(allowing a settlement agreement to be set

aside on the basis that a nonsettling party would be subject to a judgment greater than that which

he believed was appropriate would in effect "defeat the public policy favoring settlements and

would allow one party to veto any settlement unless all parties had agreed on their respective

liabilities"). Panduit's dissatisfaction with the settlement agreement between Bayer and Area is

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simply insufficient to establish bad faith. Accordingly, the circuit court did not err in dismissing

with prejudice, pursuant to section 2(d) of the Contribution Act, Panduit's third-party

contribution claim against Area in the negligence action. See 740 ILCS 100/2(d) (West 2010)

("[t]he tortfeasor who settles with a claimant *** is discharged from all liability for any

contribution to any other tortfeasor").

¶ 36 We next determine whether the circuit court erred in granting Bayer's motion for attorney

fees in his workers' compensation claim against his employer, Area.

¶ 37 On March 5, 2013, Bayer filed a motion for attorney fees in his workers' compensation

claim against his employer, Area. The motion for attorney fees, citing section 5(b) of the

Workers' Compensation Act (820 ILCS 305/5(b) (West 2012)) and the holding in Zuber,

, requested the circuit court to enter an order compelling Area to pay attorney fees in an

amount representing 25% of future workers' compensation benefits for Bayer that had been

suspended by statute as a result of the underlying settlements 4 in the negligence action. On June

13, 2013, the court entered an agreed order in which Bayer and Area, on behalf of its insurer

Arch Insurance Company, agreed to extend workers' compensation benefits to Bayer until July

15, 2013. 5 On June 27, 2013, Area filed an amended response to Bayer's motion for attorney

fees. On July 8, 2013, Bayer filed a reply in support of his motion for attorney fees. On July 11,

2013, a hearing on Bayer's motion for attorney fees was held. On July 18, 2013, the circuit court

granted Bayer's motion as to attorney fees relating to future workers' compensation payments and

4 As discussed, GARBE settled with Bayer prior to trial, and Panduit settled with Bayer at some point after the jury trial. 5 As a result, workers' compensation benefits were officially suspended as of July 16, 2013. See Freer,

(an employer has a right to suspend workers' compensation payments to an injured employee once any amount of money is received by the injured employee from a third-party tortfeasor for the same injury).

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denied the motion as to costs relating to future workers' compensation payments. In its ruling,

the court required Area to pay 25% attorney fees to Bayer's counsel, the law firm of Horwitz,

Horwitz & Associates, Ltd., "for future medical bills, lost wages, long term care, and any other

compensation and benefit compensable under the Illinois Workers' Compensation Act incurred

on or after July 16, 2013." The court also ordered that "medical bills and/or loss wage

statements or any other claims of compensation are to be submitted to [Area's] insurance

company, Arch Insurance Company, for reimbursement of twenty-five percent (25%) of

attorney's fees on said medical bills, wage loss, long term care, and compensation and benefits

by [Bayer] in a reasonably timely manner and paid in a reasonably timely manner by [Area's]

insurance carrier, Arch Insurance [Company]." The order further stated that there "shall be no

double recovery of attorney's fees. Recovery shall go to assist [Bayer] in the one-third (1/3)

payment of attorney's fees being paid pursuant to the [c]ontractual [a]greement between [Bayer]

and his attorneys, Horwitz, Horwitz & Associates, Ltd. pursuant to In Re: Dierkes,

(2000)."

¶ 38 On appeal, Area does not dispute the payment of attorney fees for Bayer's permanent

total disability benefits, but does dispute the payment of attorney fees "for suspended medical

bills, long-term care, or other compensable benefits." Area contends that neither the Workers'

Compensation Act nor Zuber supports the notion that an injured employee is entitled to recovery

of attorney fees for suspended future medical payments. Area further argues that because the

$64 million jury verdict was partly comprised of an amount ($25 million - 20% contributory

negligence = $20 million) for future medical expenses, of which Bayer's counsel was entitled to

one-third in fees pursuant to his attorney-client contract with Bayer, allowing Bayer's counsel

now to receive a fee on suspended future medical payments would amount to a double recovery

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of attorney fees. Area argues that Illinois court have not directly addressed this issue and urges

this court to turn to Indiana courts for guidance, which have rejected the same exact argument for

the recovery of attorney fees for suspended future medical payments.

¶ 39 Bayer argues that, under the Workers' Compensation Act and the holding in Zuber, he is

entitled to a recovery of attorney fees for suspended future medical expenses. Bayer argues that

Area's references to section 16 of the Workers' Compensation Act, which deals only with

attorney fees sought by the workers' compensation attorneys against their own clients in pursuing

the initial or original workers' compensation claim, did not apply to the situation at hand. Rather,

Bayer contends that an employer's obligation to pay attorney fees and costs out of the

reimbursements recovered from third-party actions are specifically provided for in section 5(b)

of the Workers' Compensation Act. Bayer further argues that Area is liable to pay attorney fees

for suspended future medical expenses regardless of whether the Industrial Commission enters a

final order requiring the payment of such attorney fees. Bayer argues that, pursuant to In re

Estate of Dierkes,

(2000), the statutory 25% attorney fees required of Area is a

contribution toward Bayer's attorney fees that is owed to his legal counsel; that there is no risk of

"double recovery" by Bayer's counsel because it merely reduces the total amount of fees that

Bayer owes his own attorney; and that such contribution is necessary because Area directly

benefitted from the work performed by Bayer's counsel in securing settlement funds in the

negligence action. Bayer further argues that Indiana court decisions do not assist this court in

resolving this issue.

¶ 40 This issue before us requires the interpretation of provisions under the Workers'

Compensation Act, which is a question of law requiring de novo review. See Taylor v. Pekin

Insurance Co.,

(2008). The primary object in interpreting a statute is to give

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effect to the intent of the legislature.

The most reliable indicator of the legislature's intent is

the language of the statute, which must be given its plain and ordinary meaning.

Statutory

language that is unambiguous must be applied as written, without resorting to other aids of

construction.

We may not depart from the plain language of an unambiguous statute by

reading into it exceptions, limitations, or conditions not expressed by the legislature.

¶ 41 Section 5(b) of the Workers' Compensation Act (the Act) provides in pertinent part as

follows:

"(b) Where the injury *** 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's 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 *** 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

*** there shall be paid to the employer the amount of

compensation paid or to be paid by him to such employee ***

including amounts paid or to be paid pursuant to paragraph (a) of

Section 8 of this Act." (Emphasis added.) 820 ILCS 305/5(b)

(West 2010).

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The above italicized portion of the Act concerns the employer's right of reimbursement under the

Act, thus allowing the enforcement of the workers' compensation lien by the employer against

funds recovered by an injured worker in any third-party negligence action for the same injury.

Section 5(b) then continues to include the following:

"Out of any reimbursement received by the employer

pursuant to this Section the employer shall pay his pro rata share

of all costs and reasonably necessary expenses in connection with

such third-party claim, action or suit and where the services of an

attorney at law of the employee *** have resulted in or

substantially contributed to the procurement by suit, settlement or

otherwise of the proceeds out of which the employer is reimbursed,

then, in the absence of other agreement, the employer shall pay

such attorney 25% of the gross amount of such reimbursement."

(Emphases added.)

¶ 42 Area does not dispute that it owed Bayer 25% attorney fees for the suspended permanent

total disability benefits to which Area had a right of reimbursement under the Act. Rather, Area

argues only that it is not required under section 5(b) to pay 25% attorney fees on suspended

future "medical bills, long-term care, or other compensable benefits."

¶ 43 Based on the plain language of section 5(b), we find that the Act does not require an

employer to pay attorney fees for suspended future medical payments. Under section 5(b), the

pool of money from which an employer has a right to reimbursement is "the amount of

compensation paid or to be paid by him to such employee *** including amounts paid or to be

paid pursuant to paragraph (a) of Section 8 of this Act." (Emphasis added.) 820 ILCS 305/5(b)

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(West 2010). In support of his argument that Area was required to pay attorney fees on the

suspended future medical expenses, Bayer directs this court's attention to the term

"compensation" as detailed in section 8 of the Act, and argues that "compensation" includes both

wages and medical expenses. However, section 8(a) requires the payment of medical services to

be made "to the provider on behalf of the employee," rather than directly to the employee.

(Emphasis added.) 820 ILCS 305/8(a) (West 2010). Thus, because section 5(b) provides that an

employer shall pay 25% attorney fees to the employee's attorney "[o]ut of any reimbursement

received by the employer pursuant to this Section" and "the proceeds out of which the employer

is reimbursed" (820 ILCS 305/5(b) (West 2010)) we find that, construing both sections 5(b) and

8(a) together, the plain language of the Act does not require the employer to pay attorney fees on

suspended future medical expenses. Had the legislature intended for fees under section 5(b) to

include future medical expenses, the legislature could easily have drafted section 5(b) to say that

the employer's right to reimbursement included the amount of compensation paid or to be paid

by the employer to or on behalf of the employee, which would have encompassed the medical

expenses paid "to the provider on behalf of the employee" under section 8(a) of the Act. (820

ILCS 305/8(a) (West 2010)). We cannot depart from the plain language of the statute by reading

into it exceptions, limitations, or conditions not expressed by the legislature. See Taylor,

.

¶ 44 As additional support for its argument that the statutory 25% attorney fees do not apply to

suspended future medical expenses, Area points to section 16a of the Act, which states that "[n]o

attorney fees shall be charged with respect to compensation for undisputed medical expenses."

820 ILCS 305/16a(D) (West 2010). However, we find section 16a to be inapposite to the case at

bar, where the section pertains to attorney fees sought by an attorney from his own client in

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pursuing any "initial or original claim" under the Act. As the circuit court correctly found in the

July 11, 2013 hearing on Bayer's motion for attorney fees, citation to section 16a as authority

was not proper because it "deals with the establishment or approval of attorney fees in relation to

claims brought strictly under the [Act]." Thus, we find Area's references to section 16a, as well

as case law relating to section 16a, to be irrelevant to the facts in the case at bar. See Augustine

v. Industrial Comm'n,

(1992) (appealing from judgment pertaining to an

award of attorney fees to the claimant's counsel in workers' compensation claim); Spinak,

Levinson & Associates v. Industrial Comm'n,

(1990) (appealing from

Industrial Commission's award of $100 nominal attorney fees to law firm for its representation of

claimant in underlying workers' compensation proceeding).

¶ 45 On the other hand, in support of his argument that Area was required to pay attorney fees

for suspended future medical expenses pursuant to section 5(b), Bayer relies primarily on the

holding in Zuber,

. However, we do not find Zuber to be helpful in advancing

Bayer's position. In Zuber, the Industrial Commission awarded a widow workers' compensation

benefits in the amount of $224.41 per week for a period 20 years, for the decedent's death in the

course of employment.

. The widow filed a wrongful death action against a third-party

tortfeasor, which resulted in a settlement providing her with a lump sum payment of $302,466.54

and an annuity in the amount of $900 per month for life (the cost of the annuity was $86,529).

. Following settlement of the wrongful death action, the widow and the employer were

unable to agree on the amount of attorney fees and costs owed by the employer pursuant to

section 5(b) of the Act.

. The circuit court interpreted section 5(b) of the Act as

allowing an assessment of fees and costs only on an employer's past payments of workers'

compensation benefits and, thus, the court did not assess fees and costs on the amount of future

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compensation payments that the employer was relieved from making by virtue of the widow's

recovery in the wrongful death action.

. The appellate court held that the

employer owed fees and costs on both past and future compensation benefits, and ordered

payment of the attorney fees to be made directly to the widow rather than her attorney.

. On appeal, our supreme court affirmed the appellate court's ruling, finding that section 5(b)

allows for the assessment of fees and costs for both past and future compensation payments.

. The Zuber court specifically noted that because the source of funds from which an

employer has a right to reimbursement under section 5(b) is "the amount of compensation paid or

to be paid" by the employer to the beneficiary who succeeds in the third-party action, and that

the employer benefits from the third-party action recovery both when it is repaid and when it is

relieved of its obligation to make future compensation payments, it was appropriate to impose

fees and costs in relation to both benefits.

The Zuber court, however, ordered that the

attorney fees be paid directly to the widow's counsel, rather than to the widow herself, noting

that there was no risk of "double recovery" where the widow had not fully compensated her

attorneys under their attorney-client fee agreement.

.

¶ 46 We find nothing in Zuber to help resolve the narrow issue before us—that is, whether the

statutory 25% attorney fees imposed under section 5(b) of the Act applies to suspended future

medical expenses. Zuber concerned a wrongful death action and the Industrial Commission's

award of $224.41 per week in workers' compensation benefits for a period of 20 years, which did

not include medical payments (because the injured employee had died). The Zuber court merely

expressed the holding that section 5(b) allows for the assessment of fees and costs for both past

and future compensation payments, but makes no mention of whether those "future

compensation payments" included suspended future medical expenses. As discussed, in this case

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Area does not dispute that it was required to pay 25% attorney fees on suspended future

permanent total disability benefits pursuant to Zuber, but only disputes that it was also required

to pay suspended future medical expenses.

¶ 47 We do not find Bayer's other cases, most of which were relied upon by Zuber, to be

helpful as they do not directly address the issue before us. See Lewis v. Riverside Hospital,

(1983) (where a credit to the employer was ordered against an employee's third-

party recovery, the appeal raised only a question as to the amount of the credit); Denius v.

Robertson,

(1981) (issue on appeal concerned only the amount of credit to the

employer against a recovery by an employee from a third party); Vandygriff v. Commonwealth

Edison Co.,

(1979) (relevant issue on appeal concerned only the amount of

recovery subject to a credit to an employer for future compensation payments against the amount

of a third-party recovery); Sands v. J.I. Case Co.,

(1992) (holding that

employer is subject to contribution under the Contribution Act to the extent of its reasonably

projected liability for future workers' compensation medical benefits, but makes no mention of

whether employer owes statutory legal fees on suspended future medical expenses).

¶ 48 Bayer further cites In re Estate of Dierkes,

, in arguing that the statutory

25% statutory attorney fees required of Area on the suspended future medical expenses would

not be duplicative of the legal fees which Bayer's counsel was entitled to receive from Bayer

pursuant to their attorney-client fee agreement. Bayer argues that the statutory attorney fees

imposed upon Area merely reduces the total amount of fees that Bayer owes his own attorney,

and that such contribution by Area is necessary because Area directly benefitted from the work

performed by Bayer's counsel in securing settlement funds in the negligence action. However,

we find nothing in In re Estate of Dierkes to suggest that an employer is required under section

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5(b) of the Act to pay attorney fees for any suspended future medical expenses. In re Estate of

Dierkes involved a workers' compensation claim for a wrongful death situation which, like

Zuber, involved no future medical payments. The In re Dierkes court neither ruled, nor was it

asked to rule, on the issue of attorney fees for suspended future medical expenses. Thus, we find

Bayer's reliance on In re Dierkes to be unavailing in its attempt to analogize its analysis to the

facts of this case.

¶ 49 As we have already determined, because the plain language of the Act does not require an

employer to pay attorney fees on suspended future medical expenses, we find that Area owed no

obligation to pay 25% attorney fees on Bayer's suspended future medical expenses under the Act.

Though Illinois courts have not specifically addressed the issue at bar, we note that our sister

state, Indiana, when faced with the same issue, held that an employer in a workers' compensation

claim was not required to pay attorney fees to an injured worker's attorneys on future medical

expenses that the employer would have paid but for the third-party tort action. See Spangler,

Jennings & Dougherty P.C. v. Indiana Insurance Co.,

(Ind. 2000) (finding that

future medical expenses were part of the verdict that attorneys had won for claimant and upon

which attorneys negotiated post-verdict settlements, and attorneys were not entitled to double

recovery of attorney fees for the same damages).

¶ 50 While we do not necessarily adopt Spangler's precise reasoning in reaching this

conclusion, we find it instructive. Similar to the injured worker in Spangler, Bayer is a

quadriplegic whose medical expenses will be ongoing. Although the jury in this case awarded

Bayer about $20 million ($25 million – 20% contributory negligence = $20 million) for the

present cash value of Bayer's future medical expenses, which was reduced in an overall posttrial

settlement, this alone cannot be a basis upon which to impose attorney fees against the employer

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for suspended future medical expenses under the Act. See generally Cherney v. Soldinger,

(1998) ("[s]tatutes that are in derogation of the common law will be

strictly construed and nothing will be read into such statutes by intendment or implication");

Kolacki v. Verink,

(2008) (Illinois Workers' Compensation Act establishes

system of liability without fault, in derogation of the common law, where traditional common

law defenses available to employer are abrogated in exchanged for prohibition of common law

suits against employer). Thus, we hold that the circuit court erred, in its July 18, 2013 order, in

ruling that Area was required to pay 25% attorney fees to Bayer's counsel for suspended future

medical expenses. Accordingly, in light of our holding, we reject Bayer's argument for the

imposition of sanctions against Area under Illinois Supreme Court Rule 375(b) (eff. Feb. 1,

1994) (sanctions for frivolous appeals or other action not taken in good faith or for an improper

purpose).

¶ 51 For the foregoing reasons, we affirm in part and reverse in part the judgment of the

circuit court of Cook County.

¶ 52 Affirmed in part; reversed in part.

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