Bayer v. Panduit Corporation
2015 IL App (1st) 132252
Ill. App. Ct.2015Background
- Bayer, an Area Erectors employee, was injured on Panduit’s construction site and became a quadriplegic; he pursued a workers’ compensation claim against Area and a negligence suit against Panduit (and Garbe).
- Area (through its insurer Arch/Area) and Bayer executed a settlement releasing Area and including contingent waivers of Area’s workers’ compensation lien and an agreement that Area would continue benefits during litigation.
- Area and Bayer moved for a finding that the settlement was made in good faith under the Illinois Contribution Act; the trial court approved the settlement and dismissed Panduit’s third-party contribution claim against Area with prejudice.
- At trial Panduit was found liable and a jury returned an $80 million award reduced to $64 million after contributory negligence; posttrial motions followed and Panduit appealed the good-faith finding.
- Separately, Bayer sought (under 820 ILCS 305/5(b) and Zuber) 25% statutory attorney fees from Area on suspended future workers’ compensation benefits, including future medical expenses; the trial court ordered 25% fees for future compensation but the court’s order on fees for future medical payments was appealed by Area.
Issues
| Issue | Plaintiff's Argument (Bayer / settling party) | Defendant's Argument (Panduit or Area) | Held |
|---|---|---|---|
| Whether the settlement between Bayer and Area was made in good faith under the Illinois Contribution Act so as to bar Panduit’s contribution claim | Settlement contained valid consideration (contingent lien waivers, continued workers’ comp payments during litigation, policy proceeds) and was negotiated at arm’s length | Settlement lacked net consideration because Area retained full statutory lien against any verdict and thus improperly shifted liability to Panduit | Court affirmed: under totality of circumstances the trial court did not abuse its discretion in finding the settlement was in good faith and dismissing Panduit’s contribution claim |
| Whether Area must pay 25% statutory attorney fees under §5(b) on suspended future medical/related benefits (in addition to disability benefits) | §5(b) and precedent (Zuber/Dierkes) require employer contribution for fees on future compensation, and such fees reduce counsel’s contractual fee (no double recovery) | §5(b) attorney-fee obligation applies to reimbursement of compensation paid/to be paid to employee (paid to employee), but future medical is paid to providers under §8(a); thus statutory 25% does not apply to suspended future medical | Court reversed in part: employer must pay 25% on suspended future compensation/disability but not on suspended future medical payments; the trial court erred ordering fees on future medical expenses |
Key Cases Cited
- Johnson v. United Airlines, 203 Ill. 2d 121 (settlement good-faith standard under Contribution Act)
- Zuber v. Illinois Power Co., 135 Ill. 2d 407 (§5(b) permits assessment of fees/costs on past and future compensation)
- In re Estate of Dierkes, 191 Ill. 2d 326 (statutory attorney fees reduce claimant’s contractual obligation to counsel)
- Cleveringa v. J.I. Case Co., 192 Ill. App. 3d 1081 (upholding employer/claimant settlement and dismissal of contribution claims where court found good faith)
- Freer v. Hysan Corp., 108 Ill. 2d 421 (employer’s right to suspend workers’ comp payments upon third-party recovery)
- Cellini v. Village of Gurnee, 403 Ill. App. 3d 26 (burden-shifting and trial-court discretion on good-faith finding)
- Banks v. R.D. Werner Co., 201 Ill. App. 3d 762 (employer’s failure to waive a lien does not automatically show bad faith)
- Romack v. R. Gingerich Co., 314 Ill. App. 3d 1065 (settlement in good faith despite partial lien waiver)
- Spangler, Jennings & Dougherty P.C. v. Indiana Insurance Co., 729 N.E.2d 117 (Ind. Supreme Court decision rejecting statutory fee recovery on future medical expenses; cited as persuasive on medical-fee issue)