Loyola Univ. of Chi. v. Ill. Workers' Comp. Comm'n

31 N.E.3d 905

LOYOLA UNIVERSITY OF CHICAGO, Plaintiff–Appellee

v.The ILLINOIS WORKERS' COMPENSATION COMMISSION and Anne Mikesh, Defendants–Appellants.

No. 1–13–0984 WC.

Appellate Court of Illinois, First District, Workers' Compensation Commission Division.

May 1, 2015.

Mark A. DePaolo and Megan C. Kivisto, both of Corti, Aleksy & Castaneda, of Chicago, for appellant.

Mark A. Braun, of Braun Lorenz & Bergin, P.C., of Chicago, for appellee.

OPINION

Justice HUDSON delivered the judgment of the court, with opinion.

¶ 1 Claimant, Anne Mikesh, appeals from the judgment of the circuit court of Cook County finding that the Illinois Workers' Compensation Commission (Commission) did not have jurisdiction to construe the settlement contract entered into by her and respondent, Loyola University of Chicago. For the reasons set forth below, we affirm the judgment of the circuit court in part, reverse in part, and reinstate the decision of the Commission as modified.

¶ 2 I. BACKGROUND

¶ 3 The facts underlying this appeal are not in dispute. Claimant worked for respondent as a secretary in the cardiology department of Loyola University Medical Center. Claimant filed two applications for adjustment of claim pursuant to the Workers' Compensation Act (Act) (820 ILCS 305/1 et seq. (West 2002)) alleging injuries to her back and left lower extremity while moving patient records on December 1, 2003, and February 16, 2005. During the pendency of the case, respondent did not pay any temporary total disability benefits and claimant applied for both long-term disability benefits and social security disability benefits. In conjunction with her application for long-term disability benefits, claimant signed a “Reimbursement Agreement.” The Reimbursement Agreement provided that under the terms of the policy governing long-term disability, claimant's benefits may be reduced by any other benefits that she receives, such as social security disability. The Reimbursement Agreement further provided:

“If I later receive Other Benefits for myself or my dependents, if applicable, I agree to reimburse the full amount of any overpayment within 30 days after receiving the award. In addition, I understand that the Insurance Company, at is [sic ] option, will retain any future benefits payable, including Minimum Monthly Benefits, and use it to reduce the overpayment not refunded within 30 days. The Insurance Company reserves the right to obtain lump payment to recover an overpayment even if future benefits are being withheld.”

In a letter dated September 16, 2005, CIGNA Group Insurance (CIGNA) notified claimant that her request for long-term disability benefits had been approved. The letter also reiterated that the award would be reduced by any other benefits claimant receives.

¶ 4 Meanwhile, claimant's workers' compensation case proceeded to arbitration. On February 21, 2006, the arbitrator determined that claimant's condition of ill-being was causally related to the February 16, 2005, work injury. The arbitrator awarded claimant temporary total disability benefits (see 820 ILCS 305/8(b) (West 2002)) and reasonable and necessary medical expenses (see 820 ILCS 305/8(a) (West 2002)). Both parties sought review before the Commission. On December 24, 2007, the Commission affirmed and adopted the decision of the arbitrator and remanded the matter for further proceedings pursuant to Thomas v. Industrial Comm'n, 78 Ill.2d 327, 35 Ill.Dec. 794, 399 N.E.2d 1322 (1980). Thereafter, respondent sought judicial review in the circuit court of Cook County.

¶ 5 In August 2008, while claimant's case was pending in the circuit court, claimant was notified that she had been approved for social security disability benefits. During this time, the parties also engaged in settlement negotiations. On January 20, 2009, the Commission approved the parties' settlement contract lump-sum petition and order (settlement contract). The terms of the settlement contract are set forth in an exhibit attached thereto. Those terms provide in relevant part:

“Respondent offers and [claimant] accepts $318,651.44 in a lump sum and other good and valuable consideration herein recited in a full, final, and complete settlement of all claims of any nature or kind, whatsoever, known or unknown, resulting or to result from the described accidental injuries of December 1, 2003 and February 16, 2005, and any other accident, incident, aggravation, or exposure during the period of [claimant's] employment by the Respondent, to and including the date of this contract.

The additional consideration for the settlement and the total and complete release of the employer from any and all possible liability is the Respondent's obligation to hold [claimant] harmless from any claim for reimbursement by any entity, which provided long term or short term disability payments, made as a result of the previously described accidental injuries at anytime from the date of the claimed accidents to the date of the approval of this contract.

* * *

[Claimant] waives any and all rights under the * * * Act, including, but not limited to Sections 8(a) and 19(h), except as to enforcement of the terms of this [settlement contract].”

Neither party sought review of the Commission's approval of the settlement contract.

¶ 6 In a letter dated February 3, 2009, CIGNA wrote claimant regarding an overpayment of long-term disability benefits which occurred as a result of her social security disability award. The letter provided in pertinent part as follows:

“We received notification that you were awarded Social Security Disability benefits in the monthly amount of $901.00 effective as of September 1, 2005. Per your policy, Social Security Disability benefits are considered ‘Other Income’ and must reduce your Long Term Disability benefits. Therefore, effective in your February check, your Long Term Disability benefits will be reduced to $618.00. Additionally, because we paid benefits to you from September 1, 2005 through September 11, 2008 with no reduction for the Social Security Disability benefits, your claim is overpaid in the amount of $32,766.36.

* * *

In addition, the Long Term Disability benefits that are due for the time frame September 12, 2008 through January 11, 2009 have been applied towards the current overpayment balance. This reduces your overpayment to $29,676.36.”

After receiving CIGNA's letter, claimant's attorney contacted respondent and demanded that it tender a check in the amount of the overpayment. Respondent refused to provide reimbursement.

¶ 7 On September 22, 2009, claimant filed a petition for penalties pursuant to sections 19(k) and 19(l ) of the Act (820 ILCS 305/19(k), 19(l ) (West 2008)) and attorney fees pursuant to section 16 of the Act (820 ILCS 305/16 (West 2008) ). The petition, to which claimant later filed an “addendum,” alleged that respondent's refusal to reimburse CIGNA on her behalf constituted a breach of the settlement contract. Claimant asked the Commission to order respondent to tender the reimbursement amount and to assess penalties and fees against respondent. Respondent filed an answer denying that it failed to comply with the terms of the settlement contract. According to respondent, it had fully performed its obligations under the settlement contract. Respondent further asserted that the Commission lacked jurisdiction to consider claimant's petition and that the circuit court, pursuant to section 19(g) of the Act (820 ILCS 305/19(g) (West 2008)), was the appropriate venue to address an allegation of failure to comply with the provisions of a settlement contract.

¶ 8 Claimant's petition was heard before Commissioner Lamborn on March 18, 2010. The Commission issued a written order on July 26, 2012. At the outset, the Commission briefly addressed the jurisdictional issue, stating:

“Asked of the Appellate Court in Flynn v. Industrial Commission, was, ‘[I]s the Commission authorized to award section 19(k) penalties following approval of a lump-sum settlement contract?’ Flynn v. Industrial Commission, 94 Ill.App.3d 844, 845 [50 Ill.Dec. 418, 419 N.E.2d 526 (1981) ]. The court succinctly stated, ‘[W]e hold that under section 19(k) the settlement contract has the same legal effect as an award.’ Flynn, 94 Ill.App.3d at 849 [50 Ill.Dec. 418, 419 N.E.2d 526]. Accordingly, the Commission finds it has jurisdiction to entertain [claimant's] petition.”

The Commission then addressed whether respondent was liable for the reimbursement of payments made to claimant by CIGNA. The Commission initially noted that respondent drafted the settlement contract. Emphasizing that respondent expressly agreed to hold petitioner harmless “from any and all possible claims for reimbursement by any entity, which provided long term or short term disability benefits” (emphasis added), the Commission determined that respondent, in the settlement contract, “failed to limit its liability as it seeks to do so now.” Accordingly, the Commission ordered that respondent be held liable in the amount of $32,766.36, representing the overpayment of benefits received by claimant. In addition, the Commission denied claimant's petition for penalties and attorney fees, citing two reasons. First, the Commission found that it lacked jurisdiction to consider penalties and attorney fees because the settlement contract contained language explicitly waiving claimant's right to them. Second, the Commission determined that claimant failed to prove that respondent's interpretation of the settlement contract was unreasonable or vexatious as “there was a reasonable and arguable difference of opinion * * * concerning which party was liable for reimbursement to CIGNA.”

¶ 9 Commissioner Tyrrell authored a separate concurring opinion. He agreed with all parts of the Commission's decision except for the finding that it lacked jurisdiction to consider claimant's petition for penalties and attorney fees. Citing Flynn, 94 Ill.App.3d at 849–50, 50 Ill.Dec. 418, 419 N.E.2d 526...