Settlement Contracts Should Be Enforced in the Circuit Court, Appellate Court Holds

Millennium Knickerbocker Hotel v. Illinois Workers' Compensation Comm'n, 2017 IL App (1st) 161027WC

Signing Contract

The Illinois Workers’ Compensation Commission lacks jurisdiction to enforce a final award or settlement contract and the proper venue is the Circuit Court pursuant to section 19(g) of the Illinois Workers’ Compensation Act, according to the Appellate Court in Millennium Knickerbocker Hotel v. Illinois Workers’ Compensation Comm’n, 2017 IL App (1st) 161027WC Google Scholar | Illinois Courts PDF.

In this case, Petitioner’s claim was denied on the basis of accident and causation. While he had an unpaid chiropractic bill over sixteen thousand dollars, the parties executed a settlement contract that provided that all medical bills had been paid, the “medical expenses” section was left blank, and the additional terms seemingly released Respondent of any liability beyond the lump sum amount.

The settlement contract was approved by the Commission in 2011 and no further proceedings occurred until 2014, when Petitioner filed a “Motion to Enforce Contract and Penalties,” where he sought for Respondent to be ordered to pay the unpaid chiropractic bill and penalties and attorneys fees.

During the hearing before Commissioner Kevin Lamborn, Petitioner’s attorney denied that he was seeking penalties and attorneys’ fees.

The Commission ruled in favor of Petitioner, finding that if Respondent had not intended to pay the chiropractic bill, it should have stated that all medical bills were not paid in the settlement contract. Moreover, the Commission awarded section 19(k) penalties and section 16 attorneys’ fees for what it found was the unreasonable and vexatious refusal of Respondent to pay the bill.

The Circuit Court confirmed the Commission’s decision and Respondent appealed to the Appellate Court.

The Appellate Court first considered the limited jurisdiction of the Commission:

“The [C]ommission is an administrative body created by legislative enactment for the purpose of administering the [Act].” Trigg v. Industrial Comm’n, 364 Ill. 581 (1936).

As such, the Commission lacks the inherent powers of a court and can only make such orders as are within the powers granted to it by the legislature.

Consequently, when the Commission acts outside of its specific statutory authority, it acts without jurisdiction. Alvarado v. Industrial Commission, 216 Ill. 2d 547 (2005) Google Scholar | Illinois Courts.

Moreover, under the Act, the Commission has no power to enforce its own awards or settlement contracts, which are treated as final awards. Rather, section 19(g) of the Act provides for entry of judgment in the Circuit Court:

Except in the case of a claim against the State of Illinois, either party may present a certified copy of the award of the Arbitrator, or a certified copy of the decision of the Commission when the same has become final, when no proceedings for review are pending, providing for the payment of compensation according to this Act, to the Circuit Court of the county in which such accident occurred or either of the parties are residents, whereupon the court shall enter a judgment in accordance therewith.

In a case where the employer refuses to pay compensation according to such final award or such final decision upon which such judgment is entered the court shall in entering judgment thereon, tax as costs against him the reasonable costs and attorney fees in the arbitration proceedings and in the court entering the judgment for the person in whose favor the judgment is entered, which judgment and costs taxed as therein provided shall, until and unless set aside, have the same effect as though duly entered in an action duly tried and determined by the court, and shall with like effect, be entered and docketed.

820 ILCS 305/19(g) Illinois General Assembly | IWCC PDF.

The purpose of section 19(g) is to permit speedy entry of judgment when a Respondent refuses to pay an award. The only defense to a section 19(g) application is full payment of the final award. Aurora East School District v. Dover, 363 Ill. App. 3d 1048 (2006) Google Scholar.

Accordingly, the Appellate Court found that the Circuit Court was the appropriate venue for Petitioner to challenge whether Respondent had made full payment according to the terms of the settlement contract. In other words, nothing in the Act granted the Commission jurisdiction to enforce its own award or approved settlement contract.

Moreover, while the Commission does have the authority to award penalties and attorneys’ fees for a respondent’s refusal to fully pay a settlement contract, the Appellate Court vacated the award of penalties and attorneys’ fees because this issue had been abandoned at the Commission hearing.

Further reading:

Flynn v. Industrial Commission, 211 Ill. 2d 546 (2004) (finding that the Illinois Workers’ Compensation Commission is authorized to assess section 19(k) penalties for nonpayment of a settlement contract) Google Scholar | Illinois Courts.

Loyola University of Chicago v. Illinois Workers’ Compensation Comm’n, 2015 IL App (1st) 130984WC (noting that the Commission could not decide if the assessment of penalties and attorney fees was proper without first interpreting the terms of the settlement contract to determine if the respondent was liable for the reimbursement amount, found that the Commission is authorized to assess penalties and attorney fees under the Act against a party who fails to comply with the terms of a final settlement contract approved by the Commission) Google Scholar | Illinois Courts PDF.

This article does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.