Options to Consider to Protect Your Section 5(b) Lien and Enforce Recovery

Mar 12, 2019

 

So your Claimant was injured by the negligence of some third party and you are paying workers’ compensation benefits.  What can you do to protect your subrogation rights?

Section 5(b) of the Illinois Workers’ Compensation Act (820 ILCS 305/5(b)) allows an Employer, or its Representative, to recover 75% of the compensation paid to an injured worker, less its pro rata share of costs. These are routinely referred to as “5(b) rights.”

Whether a civil suit has been filed or not, it is a good first step to send notice of your lien rights to Claimant and her attorney if known as soon as it has been determined there may be third party liability. If the civil case settles without suit, you will have at least alerted the civil attorneys of your interests in Claimant’s recovery. This letter will also be a part of your strategy later should your subrogation interests not be protected before civil funds are disbursed.

If Petitioner has filed a lawsuit, the Illinois Code of Civil of Procedure (735 ILCS 5/2-408) in conjunction with Section 5(b) of the Act allows an employer, or its representative, to intervene in the civil suit as a matter of right.  Becoming an Intervenor gives you all the rights of a party to the suit. This means that the civil litigants must provide notice of all filings and orders to your designated representative. This in turn allows you to track the progress of the civil case, as well as gain valuable insights into the strengths or weaknesses of Plaintiff’s case, in order to make timely and informed efforts to enforce your rights. Intervention will also afford you the right to enforce your subrogation rights from any settlement or judgment by the power of the Court.

Section 5(b) also states that a civil settlement is not valid without written consent from the employer or its representative.  So in the very rare circumstance resolution of a civil case is reached but the civil parties do not resolve your subrogation rights in violation of the Act, the Employer, or its representative, can file suit against those litigants seeking reimbursement, plus costs and fees. We have unfortunately encountered this situation before and so we know that all hope is not lost if civil monies are collected and disbursed without resolution of Employer’s interest.

But if the Claimant does not file suit or reach a pre-suit settlement agreement, Section 5(b) of the Act allows an Employer, or its representative, to file against the alleged at-fault party. In such a suit, Employer steps in the shoes of the Claimant and files as her subrogee. An Employer, or its representative, is granted the right to file suit within 3 months from the expiration of the Statute of Limitations if Claimant has not already done so.

So there are a number of ways in which an Employer, or its representative, can enforce its subrogation rights. With that said, every case is different so the best method should be determined by careful consideration of the unique facts of your case. We encourage you to contact an attorney to determine what steps are most appropriate to enforce your rights under Section 5(b) of the Workers’ Compensation Act based on the specific facts of your case. This attorney is always willing to consult on your subrogation questions.

 

The NBKL blog is provided for informational purposes; we are not giving legal advice or creating an attorney/client relationship by providing this information.  Before relying on any legal information of a general nature, you may consider consulting legal counsel as to your particular facts and applications of the law.

"A strong relationship with a top-shelf law firm is critical to my organization’s success. NBKL provides just that type of partnership that has allowed my organization to be successful."

-Michael S. Baiardo, Illinois Risk Management Services & Illinois Compensation Trust

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