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Credit Where Credit Is Due; Proper Determination of the Section 8(e)17 Credit
One of the rare pleasures in defending workers’ compensation cases is the ability to apply a credit towards permanent partial disability on specific losses. Section 8(e)17 states that,
“In computing the compensation to be paid to any employee who, before the accident for which he claims compensation, had before that time sustained an injury resulting in the loss by amputation or partial loss by amputation of any member, including hand, arm, thumb or fingers, leg, foot or any toes, such loss or partial loss of any such member shall be deducted from any award made for the subsequent injury. For the permanent loss of use or the permanent partial loss of use of any such member or the partial loss of sight of an eye, for which compensation has been paid, then such loss shall be taken into consideration and deducted from any award for the subsequent injury.” (Emphasis added.) 820 ILCS 305/8(e)17 (West 2022).
In 2005, the Illinois legislature increased the maximum benefits allowed for scheduled losses under Section 8(e). For example, the maximum weeks for loss of the hand increased from 190 to 205 weeks. The maximum weeks for the leg increased from 200 weeks to 215 weeks. As a result, 20% loss of the leg would be 38 weeks under the “old” Act and 43 weeks under the amended Act. A question arose as to whether credits should be based on the weeks of the credit or the percentage.
In General Motors Corp v. Industrial Commission, 62 Ill.2d 106, 113 (1975), the Illinois Supreme Court agreed with the Circuit Court that an employer was entitled to a credit for a previous settlement, but reversed the Circuit Court’s decision finding that the credit was limited to the amount of money paid in the prior settlement.
Neither Section 8(e)17 of the Act or General Motors stated that credit shall be calculated by subtracting the percentage of the present value of the injury minus the percentage of the credit Respondent has from prior injuries to the same body part.
In 2002, the Appellate Court in Keil v. Industrial Commission, 331 Ill.App.3d 478, 481 (2002), explained that Section 8(e)17 of the Act: “does not restrict the Commission as to how it should determine the proper amount of credit. Instead, it requires only that the Commission take the prior loss into consideration and deduct it from any subsequent award. This gives the Commission the necessary flexibility to address each situation on a case-by-case basis in order to achieve the remedial purpose of the statute while achieving a result that is just and equitable.”
How the Commission approached application of Section 8(e)17 is exemplified in McBride. On review of the Arbitrator Decision, the Commission held that,
“[S]ince General Motors was decided, the Illinois Workers’ Compensation Act was amended and the maximum number of weeks payable for loss of use of the hand has been increased from 190 weeks to 205 weeks. Under Petitioner’s prior settlement, Petitioner received 17% loss of use of the hand totaling 32.3 weeks. If the Commission were to award credit of 17% loss of use of the hand under the current Act, Respondent would receive a credit for 34.85 weeks even though Petitioner was never paid that amount. It would be inequitable to provide Respondent with a credit for 2.55 weeks of compensation that Petitioner never received. Therefore, the Commission finds that the appropriate means of determining the prior amount of credit, consistent with the humane and remedial purposes of the Act, is to award Respondent credit for the amount of weeks actually paid Petitioner and not the percentage of loss provided for in the prior settlement.” McBride v. State of Illinois-Ludeman Dev. Ctr., (09 IWCC 000914; 06 WC 28019).
The Appellate Court recently considered this issue in DeJarnatt v. Illinois Workers’ Compensation Commission, 2024 IL App (5th) 230624WC-U. Petitioner, DeJarnatt, received an award of 22.5% loss of use of the right hand and 20% loss of use of the left hand. Previously, she received an award of benefits of 17.5% loss of use of both hands. The Arbitrator applied credit from the prior settlement by subtracting the 17.5% previously awarded for each hand, which resulted in a net award of 5% loss of use of the right hand and 2.5% loss of use of the left hand.
Initially, the Petitioner argued that Section 8(e)17 was ambiguous suggesting that prior awards only needed to be “taken into consideration.” The Appellate Court dispensed with this argument citing Village of Niles v. Illinois Workers’ Compensation Comm’n, 2023 IL App (1st) 221617WC-U, which found no ambiguity in Section 8(e)17. The Court held noted that by its plain language, Section 8(e)17 provides that, for the permanent or partial loss of use of a specified member for which compensation has been paid, the prior loss shall be deducted from any award for a subsequent injury to the same member.
Petitioner next argued that Section 8(e)17 is ambiguous because the Commission issued previous decisions using both a “weeks” and “percentages” method when determining the proper amount of credit to deduct for a subsequent injury. The Court noted that since it had determined Section 8(e)17 was unambiguous, it did not need to consider the Commission’s use of “weeks” and “percentages.”
The Court concluded that the credit to be deducted from any award made for a subsequent injury to the same member is mandatory. Dorsey v. Illinois Workers’ Compensation Comm’n, 2016 IL App (1st) 143044WC, ¶ 22. Accordingly, the Court held that since it was undisputed that the Petitioner, DeJarnatt, previously received 17.5% permanent partial loss of use of her right and left hands pursuant to a prior settlement, when applying the clear, unambiguous language of Section 8(e)17 to the facts of the present case, Petitioner’s prior settlement of 17.5% loss of use of her left hand should be deducted from the award of 20% loss of use of her left hand from the recent injury. The remaining 2.5% is then multiplied by the 190 weeks of benefits provided by Section 8(e)9 of the Act. Similarly, claimant’s prior settlement of 17.5% loss of use of her right hand should be deducted from the award of 22.5% loss of use of her left hand from the recent injury. The remaining 5% is then multiplied by the 190 weeks of benefits provided by Section 8(e)9 of the Act.
From a practical perspective, there is no “shelf life” on PPD benefits awarded or paid as part of a settlement. The holding in the DeJarnatt case removes the need to determine whether the prior benefits were before or after the amendment of Section 8(e). Instead, credit is based upon the percentage and not the weeks. Unfortunately, this case only applies to specific losses under Section 8(e). There is no statutory provision for credit under Section 8(d)2. Such a credit will require amending the Act. With the current Illinois legislative configuration, it is unlikely such a credit will become a reality any time soon.