Silva v. Electrical Systems, Inc.

Silva v. Electrical Systems Inc., No. 84356 (9/24/98)
Docket No. 84356--Agenda 37--May 1998.
RUDOLPH SILVA, Appellee, v. ELECTRICAL SYSTEMS,
INC. (Midwest Conveyor Company, Inc., Appellant).

JUSTICE HARRISON delivered the opinion of the court:
Under section 5(b) of the Workers' Compensation Act (820
ILCS 305/5(b) (West 1992)), an employer who is reimbursed for
its workers' compensation payments out of the proceeds of the
employee's action against a third party is required to pay the
employee's attorney "25% of the gross amount of such
reimbursement." The issue in this appeal is how the fee award
should be computed where the third party has brought a
successful action against the employer under the Joint Tortfeasor
Contribution Act (Contribution Act) (740 ILCS 100/0.01 et seq.
(West 1992)). The employer contends that its contribution
liability should be deducted from the reimbursement amount and
that it should be required to pay attorney fees only on the
difference. Both the circuit court of Cook County and the
appellate court rejected that contention, holding that the
employer was not entitled to a credit for its contribution
liability. We granted the employer's petition for leave to appeal
(166 Ill. 2d R. 315) and now affirm.
The record before us shows that Rudolph Silva was
employed as an iron worker by Midwest Conveyor Company,
Inc. While working for Midwest Conveyor on a renovation
project at a Ford Motor Company factory, Silva tripped and fell
over some electrical conduit that was scattered across one of the
aisles. The conduit was owned and maintained by Electrical
Systems, Inc. (ESI), another contractor on the renovation
project. At the time of his fall, Silva had a degenerative
problem with his spine. The fall caused Silva's condition to
become symptomatic and necessitated that he undergo a series
of back surgeries. Silva received benefits from Midwest
Conveyor in accordance with the Workers' Compensation Act
(820 ILCS 305/1 et seq. (West 1992)), to compensate him for
his lost earnings and medical expenses. Silva also brought a
common law negligence action against Ford and ESI to recover
damages for his injuries.[fn1] Ford and ESI, in turn, asserted
claims against Midwest Conveyor under the Contribution Act.
Silva settled his claims against Ford for $66,000. The matter
subsequently proceeded to a jury trial on Silva's negligence
claim against ESI and on ESI's claim for contribution against
Midwest Conveyor. At the conclusion of the trial, the jury
returned a verdict in favor of Silva. It found that Silva's total
damages amounted to $472,710.26, but that his comparative
fault was 19%, reducing his recoverable damages to
$382,895.31. The court reduced this award by the amount paid
by Ford in settlement (see 740 ILCS 100/2(c) (West 1992)),
leaving a difference of $316,895.31.
With respect to ESI's contribution claim, the jury found in
favor of ESI and against Midwest Conveyor. The jury
apportioned fault between ESI and Midwest Conveyor based
upon their relative culpability. Using the jury's findings, the
circuit court determined that ESI was entitled to recover from
Midwest Conveyor 32.09% of the $316,895.31 award owed to
Silva. That figure was calculated to be $101,719.46.
Pursuant to section 5(b) of the Workers' Compensation Act
(820 ILCS 305/5(b) (West 1992)), Midwest Conveyor was
entitled to reimbursement of its workers' compensation
payments out of the proceeds of Silva's action against ESI. At
the time of trial, Midwest Conveyor's workers' compensation
payments totalled approximately $400,000. Because that amount
exceeded the $316,895.31 award recovered by Silva, Midwest
Conveyor was entitled to recoup the full amount of the award.
Midwest Conveyor's ability to recoup workers'
compensation payments meant that the company was obligated
by section 5(b) of the Workers' Compensation Act to pay a pro
rata share of Silva's litigation expenses, plus attorney fees. The
circuit court determined that Midwest Conveyor's share of the
costs was $15,290.73 and that it owed attorney fees to Silva's
counsel at section 5(b)'s statutory rate of 25% on the full
amount of the $316,895.31 award. The court rejected the notion
that Midwest Conveyor should be excused from paying attorney
fees on $101,719.46 of the award, the amount Midwest had to
pay ESI in contribution. The court further held that Silva's
attorneys were entitled to receive 33 % of the $66,000 in
settlement proceeds Silva received from its settlement with Ford.
The 33 % rate was based on Silva's contingency fee contract
with his attorneys.
Silva, Midwest Conveyor, and ESI all appealed. The
appellate court affirmed all aspects of the circuit court's
judgment except the award of attorney fees and costs. Nos. 1--
95--1024, 1--95--1450, 1--95--1662 cons. (unpublished order
under Supreme Court Rule 23). The court agreed that Midwest
Conveyor was obligated to pay 25% of $316,895.31 as fees to
Silva's lawyers under section 5(b) of the Workers'
Compensation Act and was not entitled to a credit for its
contribution liability. The court held, however, that Silva's
counsel were not entitled to 33 % of the $66,000 in settlement
proceeds Silva received from its settlement with Ford. In the
appellate court's view, the settlement proceeds were subject to
section 5(b)'s lower statutory rate of 25%. The appellate court
further held that the settlement proceeds were subject to the cost
reimbursement provisions of section 5(b). Because it could not
tell whether the costs awarded by the circuit court included costs
associated with the settlement, the appellate court remanded for
the limited purpose of determining whether Silva's attorneys
were entitled to an additional award of costs for their work in
procuring the settlement.
We allowed Midwest Conveyor's petition for leave to
appeal to consider the limited question of whether the circuit
and appellate courts were correct in holding that the company
was required to pay fees to Silva's attorneys under section 5(b)
of the Workers' Compensation Act based on the full
$316,895.31 award, unreduced by the amount the company was
obliged to pay in contribution. No other aspects of the circuit
and appellate courts' judgments are contested. The mandate as
to the remainder of the case has already issued to the circuit
court for proceedings on remand as directed by the appellate
court and for enforcement of the remainder of the judgment.
The relationship between section 5(b)'s attorney fee
provision and the Contribution Act was addressed by this court
in Ramsey v. Morrison, 175 Ill. 2d 218 (1997). In Ramsey, the
employer's contribution liability to the third party, as found by
the jury, exceeded its liability under the Workers' Compensation
Act. The amount of contribution the employer actually had to
pay was reduced to a sum equal to the employer's workers'
compensation liability. The reduction was necessary because,
under Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155 (1991),
an employer cannot be liable in contribution for more than the
amount of its workers' compensation liability.
The question presented in Ramsey was whether the
employer's contribution liability should be further reduced by
the amount of fees and costs it was required to pay plaintiff's
attorneys under section 5(b) of the Workers' Compensation Act.
The employer argued that its payments for attorney fees and
costs should be credited against the amount of contribution it
owed because without such a credit, it would end up having to
pay an amount equal to 125% of its workers' compensation
liability. In the employer's view, such a result would violate
Kotecki.
We rejected the employer's contention. We construed
Kotecki to mean that an employer's liability for contribution
should be limited only by the amount of workers' compensation
benefits paid. In our view, an employer's liability for attorney
fees and costs under section 5(b) is not a component of its
workers' compensation liability. As we stated, an employer's
liability for attorney fees and costs under section 5(b)
"is irrelevant to the determination of the employer's
workers' compensation liability, and is therefore irrelevant
to the determination of the employer's contribution
liability." Ramsey, 175 Ill. 2d at 239.
Accordingly, we concluded that an employer is not entitled to
a reduction of his contribution liability based on his section 5(b)
share of attorney fees and costs.
Such a conclusion, we held, was the only one consistent
with the language of section 5(b). Reducing the amount of
contribution recoverable by the third party to reflect section 5(b)
fees and costs would have the effect of shifting the obligation
to pay such fees and costs from the employer to the third party.
Under the statute, however, it is not the third party's
responsibility to pay those fees and costs. That responsibility
lies with the employer. Ramsey, 175 Ill. 2d at 239.
We further held in Ramsey that reducing the amount of
contribution by the employer's section 5(b) share of fees and
costs would be inconsistent with the rationale behind the statute.
Section 5(b) is premised on the assumption that an employer
should share in the fees and costs associated with the
employee's lawsuit because the litigation benefits the employer
by providing a fund from which the employer can obtain
reimbursement of its workers' compensation payments. For the
third party there is no comparable benefit. There is no benefit
at all. Accordingly, there is no justification for requiring it to
shoulder part of the employee's litigation expenses. Ramsey, 175 Ill. 2d at 239-40.
The employer in Ramsey argued, in the alternative, that if
he had to pay contribution in an amount equal to 100% of the
workers' compensation benefits, he should not be required to
pay section 5(b) attorney fees and costs. What the employer
claimed, in effect, was that his contribution liability should be
deducted from the workers' compensation payments in
determining the amount for which he was required to contribute
attorney fees and costs under section 5(b).
Mindful of the effect such a ruling would have on the
recovery by the employee and his attorney, and lacking
argument on the employee's behalf, we declined to address the
issue. Ramsey, 175 Ill. 2d at 241. The present case differs
somewhat from Ramsey in that the employer's contribution
liability is less than the amount it can recover as reimbursement
for its workers' compensation payments. Accordingly, the
employer seeks only to have its responsibility for fees reduced,
not eliminated completely. The principles involved, however, are
the same. Here, as in Ramsey, the employer argues that the
amount it receives in reimbursement for its workers'
compensation payments should be offset by its contribution
liability in calculating its share of attorney fees under section
5(b).
The circumstances which caused us to defer consideration
of the issue in Ramsey are not present in this case. The
employee is a party to this appeal, and the issue has been fully
briefed and argued by the employee as well as the employer.
Accordingly, we shall address the issue on the merits.
The obligation of the employer to pay attorney fees is
defined by the terms of section 5(b) of the Workers'
Compensation Act. The portion of section 5(b) relevant to this
appeal provides that where an employer is able to obtain
reimbursement for the workers' compensation benefits it has
paid, as Midwest Conveyor did here,
"and where the services of an attorney at law of the
employee or dependents 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." 820 ILCS 305/5(b) (West 1996).
In applying this statute to the facts of this case, both the
circuit and appellate courts concluded that "the gross amount"
of reimbursement recovered by Midwest Conveyor was
$316,895.31. We agree. The Workers' Compensation Act does
not define what constitutes "the gross amount" of reimbursement
for purposes of section 5(b), so the phrase must be given its
ordinary and popularly understood meaning. See People v.
Sheehan, 168 Ill. 2d 298, 306 (1995). When describing an
amount, the term "gross" is generally understood to mean the
overall total prior to any deductions or adjustments. Webster's
Third New International Dictionary 1002 (1986). Here, the
overall total reimbursed to Midwest Conveyor, prior to
deductions and adjustments, was $316,895.31. Accordingly, the
circuit and appellate courts were correct in using that figure to
compute Midwest Conveyor's attorney fee liability under section
5(b).
The circuit and appellate courts properly rejected Midwest
Conveyor's assertion this sum should be reduced by the
company's $101,719.46 contribution liability. An employer's
negligence has nothing to do with the employer's statutory right
to recover full reimbursement for its workers' compensation
payments to the employee. Carver v. Grossman, 55 Ill. 2d 507,
516 (1973). Correspondingly, Midwest Conveyor's payments
under the Contribution Act were independent of its
reimbursement under the Workers' Compensation Act. The
$101,719.46 was not a credit against either ESI's payments to
Silva or Silva's reimbursement to Midwest Conveyor. ESI had
to pay Silva the $316,895.31 Silva had won in its tort action,
and Silva, in turn, was required to pay Midwest Conveyor the
$316,895.31 as reimbursement for the workers' compensation
payments. It was then up to ESI to enforce the $101,719.46
contribution judgment against Midwest Conveyer. There is
nothing in the language of section 5(b) that would authorize a
reduction of the reimbursement amount by that sum, and we
have no authority to depart from the plain language of the
statute by reading into it exceptions, limitations, or conditions
that the legislature did not express. Solich v. George & Anna
Portes Cancer Prevention Center of Chicago, Inc., 158 Ill. 2d 76, 83 (1994).
Midwest Conveyor's assertion must also fail because it is
inconsistent with the purpose of the statute. As we have already
indicated, the principle behind the fee provision in section 5(b)
is that employers should pay their fair share of the cost of their
employees' tort recoveries against third parties because those
recoveries benefit the employers by enabling them to receive
reimbursement for their workers' compensation payments. Reno
v. Maryland Casualty Co., 27 Ill. 2d 245, 247 (1962). In this
case Midwest Conveyor benefitted by the full amount of the
$316,895.31 award recovered by Silva's attorneys in the tort
action against ESI. That is so because Midwest Conveyor was
able to obtain the full amount of that award as reimbursement
for the workers' compensation payments it had made.
Although Midwest Conveyor did have to pay ESI
$101,719.46 in contribution, the company's liability to ESI does
not alter the fact that the litigation brought by Silva's attorneys
enabled Midwest Conveyor to obtain reimbursement of a
substantial portion of it workers' compensation payments.
Silva's attorneys succeeded in procuring a $316,895.31
judgment, and Midwest Conveyor was the sole beneficiary of
their efforts. Because the award was less than the workers'
compensation payments Midwest Conveyor had made, Midwest
Conveyor was entitled to recoup the entire amount. No one else,
including Silva himself, gained any advantage from it.
To hold that the benefits received by Midwest Conveyor
were offset by its contribution liability would be flatly
inconsistent with our recent decision in Ramsey. In Ramsey we
held that the employer benefitted from the employee's action
against the third party even though the employer had to pay
contribution to the third party in an amount equal to 100% of
the employer's workers' compensation liability. Ramsey, 175 Ill. 2d at 239-40. If an employer benefits where the full amount of
the reimbursement must be paid over in contribution, there can
be no less of a benefit where, as here, the employer's
contribution liability was less than a third of the amount it was
able to obtain in reimbursement for its workers' compensation
payments.
The benefits received by Midwest Conveyor were due to the
efforts of Silva's attorneys. Those attorneys are entitled to be
fully compensated for their efforts in accordance with section
5(b). If Midwest Conveyor's position were accepted, that would
not happen. After managing to procure an award of
$316,895.31, Silva's attorneys would receive fees on only
$215,175.86. For no reason other than that Midwest Conveyor
was found to be contributorily negligent, Silva's attorneys would
get nothing for their work in securing the balance of
$101,719.46.[fn2] In effect, the attorneys would be forced to
subsidize Midwest Conveyor's lack of due care. Applied in
other cases, such a rule would mean that the more culpable the
employer was, and the greater its corresponding contribution
liability, the less the employer would have to pay in section 5(b)
attorney fees and costs. There is nothing in the language or
purpose of the Workers' Compensation Act that could justify
such an anomalous result. Just as an employer's negligence has
nothing to do with its statutory right to recovery workers'
compensation payments under section 5(b), an employers'
negligence may not be invoked to diminish or escape its
statutory obligation to pay attorney fees. See Dukes v. J.I. Case
Co., 186 Ill. App. 3d 439, 446 (1989).
For the foregoing reasons, we affirm the judgment of the
appellate court upholding the award of section 5(b) fees to
Silva's attorneys based on the $316,895.31 recovery they
obtained, without reduction for the amount Midwest Conveyor
was obliged to pay in contribution.

Affirmed.

[fn1] Silva named two additional defendants in his complaint,
but dismissed his claims against them prior to trial. Silva also
asserted claims under the Structural Work Act (Ill. Rev. Stat.
1991, ch. 48, par. 59.90 et seq., repealed by Pub. Act 89--2, eff.
February 14, 1995). The circuit court, however, entered
summary judgment against Silva on those claims, and the
propriety of that action has not been challenged.

[fn2] The attorneys could not look to Silva for payment,
because none of the money, including the $101,719.46,
benefitted him. As noted in our opinion, the full amount of the
award went to Midwest Conveyor as reimbursement for its
workers' compensation payments. Silva collected nothing.