The Illinois Appellate Court recently entered a ruling on whether or not the payment of a workers’ compensation lien cancels out a party’s contribution claim. The court found that while a contribution claim is not eliminated when a workers’ compensation lien is waived following a jury verdict, it is null and void when the lien is waived following a settlement. Scott McMackin v. Weberpal Roofing.pdf.
Scott McMackin owned and operated his own construction company, McMackin Construction Company. In August 2006, Scott was working on a construction site when he was injured. Scott sued Weberpal Roofing, the construction contractor, for negligence in causing his construction site injury. In turn, Weberpal Roofing filed a third-party contribution claim against McMackin Construction under the Illinois Joint Tortfeasor Contribution Act.
And while Scott’s personal injury case against Weberpal Roofing settled for $450,000; Weberpal’s claim against McMackin remained unsettled. However, following Scott’s settlement, McMackin Construction sought to dismiss Weberpal’s claim by filing an affirmative defense. In its filing, McMackin Construction pointed to the fact that it had waived its workers’ compensation lien following Scott’s settlement with Weberpal. Because Scott worked for McMackin Construction, it had been responsible for paying Scott $134,797 under the Illinois Workers’ Compensation Act for the injury he sustained while at work.
According to McMackin Construction’s defense, the $134,797 was the maximum amount that Weberpal was entitled to recover from McMackin under its third-party contribution claim. However, Weberpal had relinquished its right to recover those funds when McMackin waived its workers’ compensation lien for Weberpal’s settlement. The trial court agreed with McMackin and dismissed Weberpal’s third-party claim; however, Weberpal appealed this decision to the Illinois Appellate Court.
Weberpal’s primary argument seemed to be that it was still entitled to its third-party claim against McMackin Construction. This concept seemed to be based on Weberpal’s insistence that McMackin’s waiver of its workers’ compensation lien should have been set-off in Weberpal’s settlement payment to Scott. When an employee waives its workers’ compensation lien, a defendant/third-party plaintiff typically receives a setoff from the underlying plaintiff after damages are awarded at trial and fault is apportioned. Branum v. Sleezak Construction.pdf.
Weberpal argued that in order for the workers’ compensation waiver to cancel out its claim against McMackin, McMackin would have had to decrease the total settlement Weberpal was required to pay to Scott. And while the workers’ compensation waiver increased the amount of money Scott was able to retain, it did not decrease the amount of money Weberpal paid out. Therefore, Weberpal felt it was still entitled to compensation from McMackin under its third-party claim.
However, the appellate court disagreed. The court maintained that if the Scott personal injury lawsuit had gone to trial that the double recovery doctrine would apply. Kim v. Alvey.pdf. However, the court clarified that the double recovery doctrine does not apply to lawsuits settled prior to a jury verdict because all parties willingly enter into a settlement. Whereas a judgment is ordered by the court a settlement is a contract entered in good faith by all parties.
Therefore, unless the workers’ compensation set-off was included in the settlement agreement, McMackin was excused from Weberpal’s third-party claim. The settlement between Scott and Weberpal did not provide for a setoff; there was no a payment required pursuant to a judgment after trial on the plaintiff’s case. Therefore, the Illinois Appellate Court affirmed the order granting McMackin Construction Company’s motion to dismiss in that it waived its workers’ compensation lien extinguishing Weberpal’s contribution claim.
Kreisman Law Offices has been handling Illinois construction site injury cases for individuals and families for more than 35 years in and around Chicago, Cook County, and surrounding areas, including Long Grove, Bolingbrook, Tinley Park, Palos Heights, and Oak Lawn.
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