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Heyl, Royster, Voelker & Allen
25th Annual Claims Handling Seminars
Fighting The Strategic Battle To Win The War
Casualty & Property
Thursday, May 20, 2010
Bloomington, Illinois
A Century of Service
Heyl, Royster, Voelker & Allen • 1910-2010
© 2010 Heyl, Royster, Voelker & Allen
Peoria
Suite 600
Chase Building
124 S.W. Adams Street
Peoria, IL 61602
Telephone: 309.676.0400
Fax: 309.676.3374
Springfield
Suite 575, National City Center
1 North Old State Capitol Plaza
P.O. Box 1687
Springfield, IL 62705
Telephone: 217.522.8822
Fax: 217.523.3902
Urbana
Suite 300
102 E. Main Street
P.O. Box 129
Urbana, IL 61803
Telephone: 217.344.0060
Fax: 217.344.9295
Rockford
2nd Floor
120 West State Street
P.O. Box 1288
Rockford, IL 61105
Telephone: 815.963.4454
Fax: 815.963.0399
Edwardsville
Mark Twain Plaza III, Suite 100
105 West Vandalia Street
P.O. Box 467
Edwardsville, IL 62025
Telephone: 618.656.4646
Fax: 618.656.7940
www.heylroyster.com
May 20, 2010
IN RE: 25th Annual Claims Handling Seminars
Dear Seminar Attendee:
On behalf of the firm, I want to welcome you to our 25th Annual Claims Handling Seminars. Our
attorneys have endeavored to prepare materials and presentations which will benefit you in your
daily work, whether you are a claims professional, risk manager, corporate counsel or employer.
Please be sure to fill out the database update and evaluation form which is with your materials.
Your feedback regarding this seminar and your suggestions for future topics are very important
to us. We also ask that you be sure to provide your e-mail address since we are now distributing
publications such as our Quarterly Review of Recent Decisions and Below the Red Line, our
workers’ compensation newsletter, via e-mail.
In order to receive Continuing Education verification, be sure to sign the attendance sheet at the
registration table both before the session begins and immediately following the conclusion of
our sessions this afternoon. Attendance verification certificates will be e-mailed only to those
who sign the attendance sheet both at the beginning and end of the seminar.
This is a memorable year for Heyl Royster. In addition to presenting our seminars today, we are
celebrating 100 years of service to our clients. In 1910, when Clarence Heyl began our law firm in
Peoria, his goal was to provide his clients with excellent legal representation. Over the past 100
years, we have grown to more than 100 lawyers and have five offices located strategically
throughout the state of Illinois. While much has changed, our commitment to excellence has
remained constant. As we begin our second hundred years, we would like to thank you for the
privilege of representing you and the opportunity to advocate on your behalf.
Once again, we appreciate your taking the time to join us today, and thank you for your
confidence in selecting us as your attorneys.
HEYL, ROYSTER, VOELKER & ALLEN
By:
Gary D. Nelson
Managing Partner
309.676.0400
[email protected]
Casualty & Property Agenda
Fighting The Strategic Battle To Win The War
Thursday, May 20, 2010
1:00 - 4:30 p.m.
Bloomington, Illinois
1:00 p.m.
Welcome and Introductions
– Gary Nelson, Peoria
1:05 p.m.
Property Insurance Update
– Scott Salemi, Rockford
1:20 p.m.
Protect Your Blind Side: Potential Liability for Sports Injuries
– Matt Hefflefinger, Peoria
1:35 p.m.
Insurance Coverage Update
– Patrick Cloud, Edwardsville
1:50 p.m.
What Can the Plaintiff Recover? Damages Update
– Renee Monfort, Urbana
2:00 p.m.
Informal Discovery: Google, Facebook, and Beyond
– Matt Booker, Springfield
2:15 p.m.
Tort Law Update
– Dan Simmons, Springfield
2:30 p.m.
Break
2:50 p.m.
What’s on the Horizon? Cases Pending in the Illinois Supreme Court
– Karen Kendall, Peoria
3:10 p.m.
Uninsured and Underinsured Motorist Update
– Mark McClenathan, Rockford
3:20 p.m.
Third-Party Liability: Contribution, Indemnity, and Set-Offs
– Joe Feehan, Peoria
3:40 p.m.
When Do You Need An Expert Witness?
– Doug Heise, Edwardsville
3:55 p.m.
Medicare and Future Medical Expenses: Does the “Super Lien” Apply?
– Brad Peterson, Urbana
4:10 p.m.
Computer Forensics for the Claims Handler
– Jim Feehan, Consultant
4:30 p.m.
Cocktail Reception
Casualty and Property
Contact Attorneys
Rockford
Chicago
Peoria
Gary D. Nelson
[email protected]
(309) 676-0400
ILLINOIS
Springfield
Fredrick P. Velde
[email protected]
(217) 522-8822
Peoria
Urbana
Urbana
Edward M. Wagner
[email protected]
(217) 344-0060
Springfield
St. Louis
Edwardsville
Rockford
Douglas J. Pomatto
[email protected]
(815) 963-4454
Edwardsville
Robert H. Shultz, Jr.
[email protected]
(618) 656-4646
www.heylroyster.com
CASUALTY & PROPERTY
FIGHTING THE STRATEGIC BATTLE TO WIN THE WAR
Welcome and Introductions .................................................................................................................................. A-1
Property Insurance Update .....................................................................................................................................B-1
Protect Your Blind Side: Potential Liability for Sports Injuries .................................................................. C-1
Insurance Coverage Update ................................................................................................................................... D-1
What Can the Plaintiff Recover? Damages Update ........................................................................................ E-1
Informal Discovery: Google, Facebook, and Beyond ..................................................................................... F-1
Tort Law Update ......................................................................................................................................................... G-1
What’s on the Horizon? Cases Pending in the Illinois Supreme Court .................................................. H-1
Uninsured and Underinsured Motorist Update ................................................................................................ I-1
Third-Party Liability: Contribution, Indemnity, and Set-Offs .......................................................................J-1
When Do You Need An Expert Witness? ...........................................................................................................K-1
Medicare and Future Medical Expenses: Does the “Super Lien” Apply? ................................................ L-1
Computer Forensics for the Claims Handler ................................................................................................... M-1
The cases and materials presented here are in summary and outline form. To be certain of their applicability and use
for specific claims, we recommend the entire opinions and statutes be read and counsel consulted.
WELCOME AND INTRODUCTIONS Presented and Prepared by:
Gary D. Nelson
[email protected]
Peoria, Illinois • 309.676.0400
PEORIA • SPRINGFIELD • URBANA • ROCKFORD • EDWARDSVILLE
15567811_1.DOCX
A-1
Gary D. Nelson
- Managing Partner
Gary currently serves as the Managing Partner of the
firm. He began his legal career with Heyl Royster in
1977 and became a partner with the firm in 1985.
He became the firm's managing partner in 2010.
Professional Recognition
 Martindale-Hubbell AV Rated
 Selected as a Leading Lawyer in Illinois. Only
five percent of lawyers in the state are
named as Leading Lawyers.
 Named to the Illinois Super Lawyers list
(2008-2010). The Super Lawyers selection
process is based on peer recognition and
professional achievement. Only five percent
of the lawyers in each state earn this
designation.
 Illinois State Bar Association, Past Chair,
Insurance Law Section Council
 American Bar Association, Past Chair, SelfInsurers & Risk Managers Committee
 American Bar Association, Past Chair,
Insurance Law Coverage Committee
 Illinois Association of Defense Trial Counsel,
Past Chair, Insurance Coverage Committee
 Abraham Lincoln American Inn of Court
(Master)
Gary is also the Chair of our state-wide Insurance
Coverage Practice Group. He concentrates his practice
on liability insurance coverage cases for CGL,
umbrella/excess, automobile, home, life, health and
disability policies, as well as civil litigation in trial and
ADR settings with a special focus on trucking and
common carrier disputes, construction litigation, and
architect/engineer professional liability claims.
He has represented more than 100 insurers and selfinsureds in over 1,000 cases in his career.
He has litigated a wide range of coverage issues in
both the state and federal courts, including the
defense of insurance carriers in bad faith and
vexatious refusal to pay cases as well as representing
insurance agents in errors and omissions claims. He
has also had the opportunity to represent several
trucking companies and construction companies in
catastrophic injury cases, utilizing accident
reconstruction and animation techniques, defending
against fatigue, distraction, and conspicuity issues, as
well as the medical and biomechanical issues
confronted in those types of catastrophic injury cases.
Professional Associations
 Federation of Defense and Corporate
Counsel
 Defense Research Institute
 Illinois Association of Defense Trial Counsel
 Trucking Industry Defense Association
 American Bar Association
 Illinois State Bar Association
 Peoria County Bar Association
Gary is a frequent speaker on insurance issues to bar
and industry groups, both in Illinois and nationally, as
well as addressing motor carrier groups and counsel
and design professionals on issues unique to those
industries. He has authored a chapter on "Other
Insurance" in The Law & Practice of Insurance
Coverage Litigation published by West Group and has
published a chapter on "The Intentional Act Exclusion"
in the Illinois Institute of Continuing Legal Education
handbook on Commercial and Professional Liability
Insurance.
Court Admissions
 State Courts of Illinois
 United States District Court, Central District
of Illinois (trial bar)
 United States Courts of Appeals, Seventh
Circuit
 United States Supreme Court
Education
 Juris Doctor, University of Illinois, 1977
 Bachelor of Arts-Political Science, University
of Illinois, 1972
Gary served in the U.S. Army in Korea from 1972-1974.
A-2
Learn more about our speakers at www.heylroyster.com
PROPERTY INSURANCE UPDATE Presented and Prepared by:
Scott G. Salemi
[email protected]
Rockford, Illinois • 815.963.4454
Prepared with the Assistance of:
Bhavika D. Amin
[email protected]
15482989_8.DOCX
B-1
PROPERTY INSURANCE UPDATE
I.
CONCURRENT CAUSATION .....................................................................................................................B-3
A.
B.
Illinois Concurrent Causation Analysis ..................................................................................B-3
Anti-Concurrent Causation Clause .........................................................................................B-5
II.
MATERIAL MISREPRESENTATION ..........................................................................................................B-8
III.
INCREASE IN RISK ..................................................................................................................................... B-10
IV.
CONTAMINANTS ...................................................................................................................................... B-10
B-2
PROPERTY INSURANCE UPDATE
I.
CONCURRENT CAUSATION
The concurrent cause rule holds that if two or more events cause a loss, with one being
excluded under the policy terms and the other being covered, the policy should provide
coverage for the loss. As a modification of the concurrent cause rule, some courts have
developed the efficient proximate cause rule. This rule permits recovery for a loss caused by
both a covered cause of loss and an excluded cause of loss if the covered cause was the efficient
proximate cause, that is, either the dominant cause or the cause which set the other causes in
motion that, in an unbroken sequence, produced the result for which recovery is sought. (It
should be noted that there is no clear consensus on the precise definition of efficient proximate
cause).
A.
Illinois Concurrent Causation Analysis
The state courts of Illinois have long followed the concurrent cause analysis. This issue, however,
has never been addressed by the Illinois Supreme Court. The Seventh Circuit has more recently
rejected that analysis, indicating that the importation of tort principles of proximate cause into
the construction of insurance policies is inappropriate.
Mattis v. State Farm Fire and Cas. Co., 118 Ill. App. 3d 612, 454 N.E.2d 1156, 73 Ill. Dec. 907 (5th
Dist. 1983) - The Mattises had an all-risk homeowner’s insurance policy that was invoked when
they found structural damage to their home on approximately May 15, 1979. A policy provision
excluded coverage for loss “caused by settling, cracking, shrinking, bulging, or expansion of
walls,” and State Farm relied upon this provision to deny coverage. The Mattises, however,
argued that the cracked or bulged wall was not the cause of the loss, but that it resulted from
the consolidation of backfill against the defectively designed or constructed north wall. State
Farm argued that the entire damage resulted from a chain reaction caused by the bulging of the
basement wall. The trial court held that if more than one cause creates a loss with one cause
covered but other causes not covered, the loss will be within the coverage of an all risk policy.
The Appellate Court relied upon the trial court’s finding that the proof established contributing
causes and that one cause was inadequate or improper design or construction of the dwelling,
which was not specifically excluded by the policy. Where a policy expressly insures against loss
caused by one risk but excluded loss caused by another risk, coverage is extended to a loss
caused by the insured risk even though the excluded risk is a contributory cause. “We agree with
the trial court and conclude that a proximate and contributing cause of the loss to plaintiffs’
dwelling was inadequate or improper design or construction of the dwelling.”
Crete-Monee School Dist. v. Indiana Ins. Co., No. 96C 0275, 2000 WL 1222155 (N.D. Ill. Aug. 22,
2000) - On January 18, 1994, seven schools in the Crete-Monee School District (“District”)
suffered major damage when large portions of their roofs were destroyed in sub-zero
B-3
temperatures by a phenomenon known as “shatter.” The roofs were admittedly in poor shape
and the District had just recently created a five-year plan for repair and replacement of the
roofs.
Both parties agreed that two forces acted on the District’s roofs to cause the shatter. First, the
roofs were deteriorating and losing plasticizer. Second, the extreme cold on January 18, 1994
made the PVC membranes contract. The parties differed, however, on the proper application of
Indiana’s insurance policy to these facts. The District argued that the presence of a covered
cause (weather) creates coverage as a matter of law even in the presence of an excluded cause
(deterioration). Indiana argued that either the court or a jury must determine which cause was
the ‘efficient’ or dominant cause and then determine coverage with reference to that cause
alone (in Indiana’s opinion, deterioration was the dominant cause and hence the loss excluded).
The court found that Illinois law supports the District’s approach. The court cited the holding
from Mattis v. State Farm: “Where a policy expressly insured against loss caused by one risk but
excludes loss caused by another risk, coverage is extended to a loss caused by the insured risk
even though the excluded risk is a contributory cause.” Here the court held that the
deterioration and temperature worked together to cause the roofs to shatter, and neither one of
these causes could have independently caused the shatter. Because cold temperature was not
expressly excluded in the policy, the loss is a covered loss despite the contribution of
deterioration. The court also disposed of Indiana Insurance’s argument by indicating that Illinois
does not appear to use the efficient cause doctrine.
Spearman Industries, Inc. v. St. Paul Fire and Marine Ins. Co., 138 F. Supp. 2d 1088 (N.D. Ill.
2001) - Plaintiff Spearman Industries owned the Lake Bluff Racquet Club, which was insured by
St. Paul Fire and Marine Insurance Company. In January of 1999, Chicago experienced a severe
storm that involved about twenty-two inches of snow, sixty mile-per-hour winds, and belowzero temperatures. During the storm, the roof sustained damage and as a result, Spearman filed
a claim.
The parties agreed that a portion of the roof was covered by the insurance policy. However, the
parties disputed whether the insurance policy covered the damage to the rest of the roof, worth
over $200,000. Spearman maintained that the entire roof was damaged solely by the storm and,
thus, all the roof damage was covered by the policy. Meanwhile, St. Paul maintained that a
portion of roof damage was caused or worsened by pre-existing wear and tear, deterioration, or
defective installation, design, maintenance or repair, and thus the damage to the remainder of
the roof was excluded under the policy. Spearman’s motion for summary judgment in this
regard was denied.
On Spearman’s motion to reconsider before the Appellate Court, Spearman submitted that the
court denied its motion for summary judgment due to a mistaken notion that there is no
precedential support in Illinois law for Spearman’s position regarding the importation of
proximate cause principles into the construction of an insurance contract. Spearman cited Mattis
v. State Farm in support of its position.
B-4
This court, however, found that Mattis was not controlling law. In its discussion, it points out that
the Illinois Supreme Court has not resolved the dispute of whether proximate cause analysis is
applicable in the context of insurance contracts. The Seventh Circuit, on the other hand, has
previously addressed this issue in Transamerica Ins. Co. v. South, 125 F. 3d 392 (7th Cir. 1997):
Illinois case law on the interpretation of insurance exclusions was confusing,
with disparate results reached in similar cases. Since that time, Illinois law
has been clarified immensely by two recent Illinois appellate court
decisions. Oakley Transport, Inc. v. Zurich Insurance Co., 271 Ill. App. 3d 716,
208 Ill.Dec. 177, 648 N.E.2d 1099 (1 Dist. 1995); Allstate Insurance Co. v.
Smiley, 276 Ill. App. 3d 971, 213 Ill.Dec. 698, 659 N.E.2d 1345 (2 Dist. 1995).
We believe the approach of these courts is likely to be followed by the
Illinois Supreme Court. These two cases conclude that the importation of
tort principles of proximate cause into the construction of insurance
policies is inappropriate.
Rather, the court suggests that policies should be interpreted in accordance with contract
principles, so as to give effect to the intent of the parties. Therefore, policies should be
construed according the plain meaning of the terms. Accordingly, the court denied Spearman’s
motion for reconsideration because there remains a genuine issue of material fact as to the
cause of damage to the roof.
B.
Anti-Concurrent Causation Clause
The insurance industry, however, has developed its own answer to the issue of concurrent
causation: the anti-concurrent causation clause. This clause, found in standard property policies,
attempts to keep excluded causes of loss excluded so that even if two causes of loss occur
simultaneously, the loss due to the excluded cause of loss is not covered, regardless of the
circumstances. Most anti-concurrent causation clauses read similarly to this: ”We will not pay for
loss or damage caused directly or indirectly by any of the following. Such loss or damage is
excluded regardless of any other cause or event that contributes concurrently or in any
sequence to the loss.”
Corban v. United Services Auto. Ass’n, 20 So. 3d 601 (Miss. 2009) - The Corbans lived on East
Beach Boulevard, Long Beach, Mississippi, several hundred feet from the Mississippi Gulf Coast.
This property was insured by two policies, a homeowner’s policy and a flood policy, each
procured from USAA. The Corbans’ property suffered significant damage during Hurricane
Katrina and they sought indemnity for their losses. The Corbans received the full amount
recoverable under the flood policy and sought additional recovery under the homeowner’s
policy. This policy excluded loss caused by flooding with an accompanying anti-concurrent
causation clause (“ACC”) which read: “We do not insure for loss caused directly or indirectly by
any of the following [flooding]. Such loss is excluded regardless of any other cause or event
contributing concurrently or in any sequence to the loss.” Accordingly, USAA determined that
B-5
the majority of the damage was caused by flooding and paid for only the small portion of
damage determined to have been caused by the wind.
The circuit judge found that the water damage exclusion and the ACC clause were unambiguous
and therefore, coverage under the policy for any damage caused by water as defined in the
policy or caused concurrently or sequentially by wind and water in combination was barred. The
Mississippi Supreme Court began its analysis by looking at the language of the ACC clause. The
court concluded that the ‘in any sequence’ language in the policy cannot be used to divest the
insureds of their right to be indemnified for covered loss. Once the duty to indemnify arises by a
covered loss, it cannot be extinguished by a successive cause or event. The same applies in
reverse; loss caused by an excluded peril is not changed by a subsequent covered peril or event.
Therefore, “[o]nly when facts in a given case establish a truly ‘concurrent’ cause, i.e., wind and
flood simultaneously converging and operating in conjunction to damage the property, would
we find, under Mississippi law, that there is an ‘indivisible’ loss which would trigger application
of the ACC clause.” The court found that based on the evidence presented thus far, the same
loss with multiple causes was not at issue here. For that reason, a finder of fact must determine
what losses, if any, were caused by the wind, and what losses, if any, were caused by flood.
If the property suffered damage from wind, and separately was damaged by flood, the insured is
entitled to be compensated for those losses caused by the wind. Any loss caused by flood
damage is excluded. If the property first suffers damage from the wind, resulting in a loss,
whether additional flood damage occurs is of no consequence, as the insured has suffered a
compensable wind-damage loss. Conversely, if the property first suffers damage from flood,
resulting in a loss, and then wind damage occurs, the insured can only recover for losses
attributable to wind.
Builders Mut. Ins. Co. v. Glascarr Properties, Inc., 688 S.E.2d 508 (N.C. 2010) - In August of 2007,
Defendant learned that vandals had broken into the insured property at issue and left water taps
running, causing extensive damage. Defendant submitted a claim under the policy for damage
arising from the vandalism in October of 2007, which was paid and settled by Builders Mutual.
Later, the defendant discovered mold in the house, allegedly caused by the vandals’ water
damage, and submitted an additional claim for mold remediation. Plaintiff denied the claim and
filed a declaratory action. The trial court ruled in favor of the plaintiff, finding that the policy did
not contain coverage for mold remediation. On appeal, the trial court’s decision was affirmed.
The policy included an anti-concurrent causation clause that read in pertinent part: “We will not
pay for a ‘loss’ caused directly or indirectly by any of the following [mold]. Such ‘loss’ is excluded
regardless of any other cause or event that contributes concurrently or in any sequence to the
‘loss.’” The reviewing court found that in this case, the plain language of the policy unequivocally
excludes payment for losses caused “directly or indirectly by” mold, and this exclusion applies
“regardless of any other cause or event that contributes concurrently or in any sequence to the
‘loss.’”
B-6
The defendant argued that because the policy covered claims arising from vandalism, it also
covered losses caused by mold, provided that the mold itself was caused by a covered cause of
loss. In support of this position, however, the defendant cited only cases in which the policy did
not contain an ACC clause that specifically excluded coverage for certain types of loss,
regardless of the interplay between covered and non-covered losses.
Bishops, Inc. v. Penn Nat. Ins., 984 A.2d 982 (Pa. 2009) - Bishops’ claim arose out of sewer and
drain back-up followed by extensive flooding of its business premises on September 17, 2004,
during Hurricane Ivan. Because of the significant rainfall, Bishops’ place of business was
damaged due to water and sewage back-up. Subsequent to the initial back-up of sewage, the
rainfall also caused outside flood waters to rise and enter Bishops’ building. The Bishops’ basic
policy contained the following relevant provisions:
B.
Exclusions
1.
We will not pay for loss or damage caused directly or indirectly by any of
the following. Such loss or damage is excluded regardless of any other
cause or event that contributes concurrently or in any sequence to the loss.
***
g.
Water
***
(3)
Water that backs up or overflows from a sewer, drain or
sump
Bishops had also purchased the Penn Pac Endorsement which specifically provides for additional
coverage for the back-up of sewers and drains. Penn National acknowledged the Penn Pac
Endorsement but declined to extend coverage, asserting that the damage Bishops suffered was
caused concurrently by generalized flooding, which is excluded as a covered cause of loss under
the basic policy. The Superior Court of Pennsylvania found in favor of Bishops and held that the
ACC clause was inapplicable in conjunction to the Penn Pac Endorsement.
The court found it significant that the Penn Pac Endorsement covered damage caused by sewer
and drain back-up without qualification. Significantly, this language removed Exclusion B.1.g.(3)
of the basic policy as a bar to coverage for damage caused by sewer and drain back-up and
made no effort to restate the language that bars coverage on the ground of concurrent
causation by another excluded cause of loss. “[W]e can discern no reason why an insured who
purchased the Penn Pac Endorsement in reliance on the sewer and drain back-up it provided
might not conclude, quite reasonably, that the elimination of ‘Exclusion B.1.g.(3)’ should not
include elimination of the concurrent cause language as it applies to sewer and drain back-up.”
B-7
The court also focused on the equitable reasons that called for finding coverage for Bishops’
loss. The insured purchased additional coverage ostensibly to make up for the deficiencies in the
basic policy only to find its claim denied not by virtue of any limitation on the coverage it
bought, but because ancillary language in the basic policy barred coverage for another excluded
loss. “Such a result strikes us as a variant of the ‘sleight of hand’ we rejected in Betz, allowing an
insurer to create the appearance of coverage using an amendatory endorsement tailored to
cover a stated risk only to deny coverage when that risk comes to fruition by citing language not
suggested by the endorsement.”
II.
MATERIAL MISREPRESENTATION
Seneca Specialty Ins. Co. v. West Chicago Property Co., LLC, No. 08-12335, 2010 WL 431734 (E.D.
Mich. Feb. 2, 2010) - West Chicago was formed by Mike Kaskorkis, Aboud Kaskorkis, and Faouk
Kenaya for the purpose of purchasing a building in Detroit, Michigan. In August of 2004, West
Chicago leased the Building to Jel Sert, who remained in the building for approximately a year.
From October 16, 2005, until the Jel Sert lease expired on September 1, 2006, the building was
vacant, although Jel Sert continued to pay rent, maintain insurance coverage, and pay a former
employee to regularly inspect the building.
On July 17, 2006, the building suffered theft and vandalism resulting in loss and damage of
approximately $75,000. Jel Sert made a claim for the loss through a policy it maintained through
Liberty Mutual. Of the $75,000 total loss to the building, Jel Sert paid for approximately $5,000
in repairs itself and paid $70,000 directly to West Chicago. West Chicago subsequently arranged
for the building to be repaired in anticipation of a new tenant.
The new tenant moved into the building in October 2006, but fell behind on the rent and was
evicted in March 2007, leaving the building vacant. In May 2007, Kenaya discovered damage due
to vandalism/theft. A claim and this suit followed.
On August 21, 2006, West Chicago applied to Seneca for vacant building insurance through the
Danno Insurance Agency, who submitted the application to Seneca on behalf of West Chicago.
The insurance application was prepared by Danno Insurance Agency and signed by Mike
Kaskorkis as an authorized representative of West Chicago. The application indicated that there
had been no claims, losses, or occurrences giving rise to a claim within the last five years.
Kaskorkis also signed a “Vacant Property Supplement” that indicated that no property owned by
the insured suffered any loss during the past 36 months.
Seneca moved for summary judgment seeking to rescind the insurance policy based on material
misrepresentations made in West Chicago’s application for insurance. In Michigan, it is well
settled “that where an insured makes a material misrepresentation in the application for
insurance . . . the insurer is entitled to rescind the policy and declare it void ab initio.”
B-8
West Chicago contended that the inaccuracies were not misrepresentations justifying rescission
because they were not made intentionally. In support of this argument, West Chicago pointed to
language in the insurance contract stating that Seneca may void the contract if West Chicago
makes any intentional misrepresentations. The court found that this argument failed because
Seneca’s right to void the contract ab initio in cases of unintentional misrepresentation existed
completely separate from the terms of the contract itself. The contract’s statement that Seneca
can void the contract at any time in cases of intentional misrepresentation was merely an
additional right of rescission that was being granted to Seneca; it did not indicate that it would
provide the exclusive grounds for rescission.
Brawner v. Allstate Indem. Co., 591 F.3d 984 (8th Cir. 2010) - As of May 2006, Jon and Renea
Brawner resided at 10 Dakota Drive in Conway, Arkansas. Their house burned in a fire on
May 18, 2006. Allstate denied coverage and the Brawners filed suit.
Regions Bank held a first mortgage on the property, which was guaranteed by the Veterans
Administration. At the time of the fire, the Brawners had failed to make a mortgage payment
since December 1, 2005. As a result, before the house burned, Regions initiated a foreclosure
proceeding. The house was to be sold in a foreclosure sale on May 22, 2006.
Before the fire, Regions Bank retained a law firm to pursue the foreclosure. Beginning with
letters dated March 14, 2006, the law firm sent notices of the foreclosure through both certified
and first class mail to several addresses and addressees. Most of these notices were returned
undelivered, but five were not. In addition to the mailings, the law firm published notice of the
default in the Arkansas Democrat-Gazette newspaper and posted the notice at the Faulkner
County Courthouse.
During investigation of the fire, the Brawners indicated that they had an agreement to sell the
house to Jon’s business associate for $160,000 cash, the closing of the sale was imminent, the
VA had permitted them to defer their recent mortgage payments until the time of the sale, they
were only a few months in arrears on their mortgage payments, and they had no knowledge of
the foreclosure at the time of the fire.
At trial, Allstate presented evidence of several false and misleading statements made by the
Brawners with regard to the extent of their arrears in mortgage payments. Allstate also
presented sufficient evidence that suggested the purported sale of the house for $160,000 was a
sham and that the VA had no agreement with the Brawners to defer their mortgage payments.
The jury found for Allstate on the misrepresentation defense. On appeal, the court affirmed this
decision by holding that, “The Brawners’ assertions on May 22 that they were only a couple of
months in arrears, that they had secured a cash deal to sell the house, and that, because of the
sale, the mortgage payments were deferred suggested that their financial worries regarding the
insured property were minimal. A jury reasonably could conclude that significant discrepancy
existed between these misrepresentations and the truth, and that the misrepresentations could
have hindered Allstate’s investigation of the fire.”
B-9
III.
INCREASE IN RISK
U.S. Bank, N.A. v. Tennessee Farmers Mut. Ins. Co., 277 S.W.3d 381 (Tenn. 2009) - On February
12, 1999, Jessica Hill purchased a house in Tennessee, financed by U.S. Bank. Tennessee Farmers
issued the homeowner a personal fire and extended coverage insurance policy on the premises.
The policy contained a standard mortgage clause, under which Tennessee Farmers agreed to
protect the bank’s interest in the property and also agreed that the protection afforded the bank
under the policy would not be lost due to acts of the insured homeowner, breach of warranty,
increase in hazard, change of ownership, or foreclosure if the bank had no knowledge of these
conditions. In turn, the bank was required to notify Tennessee Farmers of “any increase in
hazard” of which the bank had knowledge. The policy does not specifically require notification of
foreclosure proceedings.
After the homeowner became delinquent on her payments, the bank began foreclosure
proceedings by notifying the homeowner of its intent to foreclose on the house. No notification
of foreclosure was given to the insurance company. Before the foreclosure process was
complete, the homeowner filed for bankruptcy, which stayed the foreclosure proceedings.
Thereafter, the house was destroyed by fire apparently caused by methamphetamine
production. The insurance company refused to pay the insurance proceeds to the bank on the
theory that the commencement of foreclosure proceedings constituted an increase in hazard of
which the bank was required to notify the insurance company under the policy. The Supreme
Court of Tennessee held that commencement of foreclosure proceedings does not constitute an
increase in risk of hazard and therefore, no notice was required to be given to the insurance
company.
The court looked to a similar case in which the court ruled that neither the existence of the
undisclosed mortgage nor notice of foreclosure invalidated the insurance coverage. It reasoned
that foreclosure proceedings were the remedy of the mortgagee for nonpayment of the debt
and the remedy is an “incident of the mortgage and a result that is brought about by the
existence of the mortgage.” Also, in similar cases involving standard mortgage clauses requiring
notice of an “increase in hazard,” courts have found that the plain meaning of those words do
not include an event such as a foreclosure proceeding, but rather, refer to physical conditions on
the insured property posing a more hazardous risk to the property. Finally, this court recognized
that a different result has been reached where policy language specifically provides that
foreclosure proceedings void the policy or require notification of such proceedings. In this case,
however, there was no such language.
IV.
CONTAMINANTS
Parks Real Estate Purchasing Group v. St. Paul Fire and Marine Ins. Co., 472 F.3d 33 (2d Cir.
2006) - Parks Real Estate owned a building at 90-100 John Street in New York City which was
insured by St. Paul. On September 11, 2001, as a result of the World Trade Center collapse, a
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cloud of noxious particulate matter spread throughout the downtown New York City area where
the insured building is located. The particulate matter apparently penetrated the building and
settled in its mechanical and electrical system. The court determined this damage was properly
considered contamination for purposes of the contamination exclusion clause in the policy and
St. Paul was entitled to deny coverage for the loss claimed by Parks. The court also found that
the dominant efficient cause of the loss was not the collapse of the World Trade Center but the
infiltration of the building by the particulate matter created by the collapse.
The exclusion at issue reads: We will not cover loss or damage caused by or made worse by any
kind of contamination of . . . products or property covered by this insuring agreement. The word
”contamination” was not defined.
The Appellate Court found that the word ”contamination,” as used in the St. Paul policy, was
ambiguous because the common definition of the term that the trial court employed – the
introduction of a foreign substance that injures the usefulness of the object or a condition of
impurity resulting from the mixture or contact with a foreign substance – would allow the
contamination exclusion in the policy to be applied in a limitless variety of situations. Because of
the virtually boundless array of possible applications of the term contamination in the
contamination exclusion provision, the court held that the parties should be allowed to
introduce evidence of what was intended by the use of this ambiguous term. Therefore, the case
was remanded since a question of material fact pertaining to the meaning of the term
contamination under the policy remained for resolution by the trier of fact.
In terms of the efficient cause of the loss, the Appellate Court agreed with the trial court in that
the actual contact between the particulate and property was the efficient cause rather than the
actual collapse of the World Trade Center.
Ocean Partners, LLC v. North River Ins. Co., 546 F. Supp. 2d 101 (S.D.N.Y. 2008) - Ocean Partners
owned a building near the World Trade Center that was insured by North River Insurance
Company. The building was impacted by materials (“WTC particulate”) generated from the
collapse of the twin towers on September 11, 2001, and, subsequently, Ocean Partners
submitted a claim to North River for its property damage. North River moved for summary
judgment alleging that coverage was not available because of a pollution and/or collapse
exclusion.
North River argued that the efficient cause of the loss was the collapse of the World Trade
Center and therefore the loss was excluded from coverage under the collapse exclusion. This
argument was rejected as it was foreclosed by the holding in Parks Real Estate, which held the
efficient cause was the contact between the particulate and the building rather than the collapse
of the twin towers.
North River argued that the damage at issue was caused by or resulted from dispersal of
pollutants insofar as the policy’s definition of “pollutant” includes the word contaminant. In light
of the holding in Parks Real Estate, this court found that the term “contamination” in the present
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case was intended to exclude WTC particulate, and that such determination should be made by
the trier of fact. The court rejected North River’s argument that its expert’s referral to the WTC
particulate as a “contaminant” or “contamination” in his report constitutes proof that the WTC
particulate is, in fact, a contaminant and thus an excluded pollutant.
B-12
Scott G. Salemi
- Partner
Prior to joining Heyl Royster, Scott served as Senior
Assistant State's Attorney in Rockford, Illinois, and
later as an Assistant Illinois Attorney General, assigned
to a statewide trial assistance division. Scott is an
accomplished trial lawyer, having tried significant
litigation to verdict throughout Illinois. Scott joined
the firm in its Rockford office in January of 2003 and
became partner in 2007.
 Winnebago County Bar Association
Court Admissions
 United States District Court, Northern District of
Illinois (Trial Bar)
Scott concentrates his practice in the defense of
complex civil litigation, with an emphasis on civil
rights, medical malpractice and first-party and thirdparty property cases.
Education
 Juris Doctor, Northern Illinois University College
of Law, 1992
 Bachelor of Arts-Political Science, DePauw
University, 1989
B-13
PROTECT YOUR BLIND SIDE: POTENTIAL LIABILITY FOR SPORTS INJURIES Presented and Prepared by:
Matthew S. Hefflefinger
[email protected]
Timothy D. Gronewold
[email protected]
15528755_5.DOCX
C-1
PROTECT YOUR BLIND SIDE:
POTENTIAL LIABILITY FOR SPORTS INJURIES
I.
INJURIES TO PARTICIPANTS ................................................................................................................... C-3
A.
B.
Contact Sports Exception .......................................................................................................... C-3
Assumption of Risk ...................................................................................................................... C-5
1.
2.
II.
INJURIES TO SPECTATORS ...................................................................................................................... C-9
A.
B.
III.
Exculpatory Clauses / Agreements ......................................................................... C-5
Implied Assumption of Risk ...................................................................................... C-8
Hockey Facility Liability Act (745 ILCS 52/1 et seq.) ........................................................ C-9
Baseball Facility Liability Act (745 ILCS 38/1 et seq.) ..................................................... C-10
PROTECTION FOR VOLUNTEERS ........................................................................................................ C-10
A.
Sports Volunteer Immunity Act (745 ILCS 80/1) ............................................................ C-10
IV.
GOLF-RELATED APPLICATIONS ........................................................................................................... C-12
V.
CONCLUSION ............................................................................................................................................. C-14
C-2
PROTECT YOUR BLIND SIDE:
POTENTIAL LIABILITY FOR SPORTS INJURIES
The claims professional needs to have a working knowledge of potential liability issues involving
sports injuries for at least two reasons: first, he or she may be required to adjust a claim brought
by a participant or spectator against an insured, and second, he or she could possibly be
personally involved in a sports injury claim, either defending against a claim resulting from
personal participation in coaching or supervising youth sports leagues, or even bringing a claim
resulting from an injury suffered while participating in or watching a sporting event. The
purpose of these materials is to address some common liability scenarios involving sports
injuries and highlight some of the associated legal issues. It should be noted that the potential
liability of school districts and municipalities, and their employees, whether for allegedly failing
to supervise or to provide appropriate safety equipment to protect students from serious injury
during school-related athletic activities, is beyond the scope of this article.
I.
INJURIES TO PARTICIPANTS
Regardless of the sport, injuries are a part of nearly every game. In light of these risks, there are
two legal principles to be aware of when faced with a personal injury claim by a participant in a
sporting event: the Contact Sports Exception and Assumption of Risk.
A.
Contact Sports Exception
Illinois law recognizes an exception to ordinary negligence liability for injuries sustained by
participants of contact sports. Simply stated, the “Contact Sports Exception” is a judiciallycreated exception to ordinary negligence claims which provides that voluntary participants in a
contact sport may potentially be held liable for injuries to other participants for injuries caused
by willful and wanton or intentional conduct, but not for injuries caused by ordinary negligence.
The exception is based upon public policy considerations, taking into account the voluntary
nature of participation in games where physical contact is anticipated and where the risk of
injury caused by the contact is inherent. The rationale for the exception was explained in this
fashion by our Illinois Supreme Court in a decision rendered 15 years ago in Pfister v. Shusta,
167 Ill. 2d 417, 657 N.E.2d 1013, 212 Ill. Dec. 618 (1995), a case in which a college student was
injured during an informal game of “kick-the-can” and was barred from recovering under
ordinary negligence claims:
The contact sports exception strikes the appropriate balance between society's
interest in limiting liability for injuries resulting from physical contact inherent in a
contact sport and society's interest in allowing recovery for injuries resulting from
willful and wanton or intentional misconduct by participants. Those who
participate in soccer, football, softball, basketball, or even a spontaneous game of
can kicking, choose to play games in which physical contact among participants
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is inherent in the conduct of the game. Participants in such games assume a
greater risk of injury resulting from the negligent conduct of coparticipants.
Pfister, 167 Ill. 2d at 426.
Two years ago the Illinois Supreme Court extended the Contact Sports Exception to protect
certain sports organizations in the case of Karas v. Strevell, 227 Ill. 2d 440, 884 N.E.2d 122, 318 Ill.
Dec. 567 (2008).
In Karas, a hockey player was injured during a hockey game when he was checked from behind,
forcing him into the boards and injuring his head and neck. At the time of the accident, there
was a rule in place that prohibited body checks from behind and the word “STOP” was even
sewn onto the backs of the players’ jerseys. Following the accident, the plaintiff sued the
offending players, the opposing players’ hockey team, the hockey officials organization, and the
hockey league for negligent and willful and wanton conduct.
The Illinois Supreme Court threw out the negligence claims against all of the defendants. Once
again, the court was very concerned with public policy, noting that a rule limiting the liability of
participants in contact sports was necessary to avoid a chilling effect on the way these sports are
played as well as the need for a rule limiting liability in the sports context in order to avoid a
flood of litigation. The case held that whether the contact sports exception is applicable to a
non-participant defendant (i.e. an organizational defendant) is a policy determination that rests
on (1) the circumstances of the sport and its inherent risks; (2) the relationship of the parties to
the sport and to each other; and (3) whether imposing broader liability on the defendant “would
harm the sport or cause it to be changed or abandoned.” In reaching this conclusion, the court
noted:
As the appellate court below noted, plaintiff's essential allegation against all three
organizational defendants is that they failed to adequately enforce the rule
against bodychecking from behind. Yet, as noted earlier, rules violations are
inevitable in contact sports and are generally considered an inherent risk of
playing the game. Further, in an organized contact sport, such as the one at issue
here, the enforcement of the rules directly affects the way in which the sport is
played. Imposing too strict a standard of liability on the enforcement of those
rules would have a chilling effect on vigorous participation in the sport. Finally, as
the organizational defendants point out, coaching and officiating decisions
involve subjective decisionmaking that often occurs in the middle of a fast
moving game. It is difficult to observe all the contact that takes place during an
ice hockey game, and it is difficult to imagine activities more prone to secondguessing than coaching and officiating. Applying an ordinary negligence
standard to these decisions would open the door to a surfeit of litigation and
would impose an unfair burden on organizational defendants such as those in
the case at bar. Accordingly, we conclude that, under the facts alleged here, the
contact sports exception applies to the organizational defendants. To successfully
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plead a cause of action for failing to adequately enforce the rules in an organized
full-contact sport, plaintiff must allege that the defendant acted with intent to
cause the injury or that the defendant engaged in conduct “totally outside the
range of the ordinary activity” involved with coaching or officiating the sport.
(Internal citations omitted.)
Karas, 227 Ill. 2d at 464-465.
Several recent Appellate Court decisions have declined to expand the Contact Sports Exception
to those not actively participating in a contact sport. In Weisberg v. Chicago Steel, 397 Ill. App. 3d
310, 922 N.E.2d 489, 337 Ill. Dec. 366 (2d Dist. 2009), an athletic trainer assigned by an outside
company to provide athletic training services to a hockey team was struck in the face by a
hockey puck while in the bench area to refill water bottles during hockey practice. The Contact
Sports Exception was held not to apply because the trainer was not participating in conduct
inherent in the sport of hockey, nor was the fact that players were shooting pucks at water
bottles located in the bench area an inherent part of the sport, therefore the negligence claims
were not barred. Similarly, there is a new case out of the Fourth District, Pickel v. Springfield
Stallions, Inc., No. 4-09-0490, 2010 WL 1205959 (4th Dist. March 23, 2010), where a spectator
watching an indoor football game was injured when a player ran out of bounds and fell over a
wall separating the spectators from the playing field and collided with her. It was held that the
arena owners and operators were not insulated from liability for negligence by virtue of the
Contact Sports Exception since the spectator was not participating in the game and thus the
Contact Sports Exception does not apply.
B.
Assumption of Risk
Under certain circumstances, a plaintiff’s claim in Illinois can be barred by the doctrine of
assumption of risk. Broadly stated, assumption of risk arises whenever a plaintiff knowingly and
voluntarily assumes the risks inherent in a particular activity or situation. In other words, from a
legal point of view, when the plaintiff incurs the known dangers inherent in an activity, he agrees
to relieve the defendant of any duty to protect him against those risks. If those circumstances
are present, assumption of risk may act as a complete defense to a plaintiff’s claim.
There are two types of assumption of risk found in Illinois law: (1) express assumption of risk
(such as an exculpatory clause or other explicit agreement), and (2) implied assumption of risk
(where a plaintiff’s willingness to assume a known risk is determined from the conduct of the
parties rather than from an explicit agreement). See Duffy v. Midlothian Country Club, 135 Ill.
App. 3d 429, 481 N.E.2d 1037, 90 Ill. Dec. 237 (1st Dist. 1985). Let’s discuss those separately,
beginning with express assumption of risk.
1.
Exculpatory Clauses / Agreements
Black’s Law Dictionary defines an exculpatory clause as a contractual provision relieving a party
from liability resulting from a negligent or wrongful act. Furthermore:
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An exculpatory agreement constitutes an express assumption of risk insofar as
the plaintiff has expressly consented to relieve the defendant of an obligation of
conduct toward him. The doctrine of assumption of risk presupposes that the
danger which caused the injury was one which ordinarily accompanies the
activities of the plaintiff and that the plaintiff knew, or should have known that
both the danger and the possibility of injury existed before the occurrence.
(Internal citations omitted.)
Falkner v. Hinckley Parachute Center, Inc., 178 Ill. App. 3d 597, 602, 533 N.E.2d 941, 127 Ill. Dec.
859 (2d Dist. 1989).
Exculpatory agreements have been considered in a variety of sports and/or recreational
activities, often pertaining to more dangerous activities such as parachuting, skydiving, or racing.
For example, in Evans v. Lima Lima Flight Team, Inc., 373 Ill. App. 3d 407, 869 N.E.2d 195, 311 Ill.
Dec. 521 (1st Dist. 2007), an executor of a deceased pilot’s estate brought a wrongful death and
survival action against a formation flight team and its individual members. The Appellate Court
held that an exculpatory agreement precluded claims against the individual flight team
members:
Although exculpatory agreements are not favored and are strictly construed
against the party they benefit, parties may allocate the risk of negligence as they
see fit, and exculpatory agreements do not violate public policy as a matter of
law. An exculpatory agreement will be enforced if: “(1) it clearly spells out the
intention of the parties; (2) there is nothing in the social relationship between the
parties militating against enforcement; and (3) it is not against public policy.” . . .
[A]n exculpatory agreement need not specifically name the individuals to which it
applies. Rather, the exculpatory agreement may designate a class of beneficiaries
covered under the agreement. (Internal citations omitted.)
Evans, 373 Ill. App. 3d at 412.
In Masciola v. Chicago Metropolitan Ski Council, 257 Ill. App. 3d 313, 628 N.E.2d 1067, 195 Ill.
Dec. 603 (1st Dist. 1993), a ski race participant brought a personal injury action against a race
sponsor. The Appellate Court affirmed a summary judgment on the negligence count, and then
went on to discuss various factual scenarios in which exculpatory agreements were found to be
valid and others which were held to be invalid:
The present case is analogous to Schlessman v. Henson (1980), 83 Ill.2d 82, 86, 46
Ill.Dec. 139, 141, 413 N.E.2d 1252, 1254, wherein this court held that a problem
with an automobile race track surface was the type of risk which the exculpatory
agreement was intended to cover. Although the parties may not have
C-6
contemplated that a section of the race track would collapse during the race, they
did contemplate a “broad range of accidents which occur in auto racing.” See
also Garrison v. Combined Fitness Centre (1990), 201 Ill.App.3d 581, 585, 147
Ill.Dec. 187, 190, 559 N.E.2d 187, 190 (exculpatory clause contained in health club
membership agreement relieved club from liability for injury caused by allegedly
defective equipment, where clause stated that each member bore the “sole risk”
of injury that might result from use of weights, equipment or other apparatus
provided); Neumann v. Gloria Marshall Figure Salon (1986), 149 Ill.App.3d 824,
827, 102 Ill.Dec. 910, 913, 500 N.E.2d 1011, 1014 (exculpatory clause which
expressly covered all risks of injury “while using any equipment” at the salon was
enforceable because an injury to plaintiff resulting from the use of the machines
was encompassed in the release).
Cases in which this court has found an exculpatory clause to be insufficient to
release a defendant from liability for personal injuries to plaintiff are
distinguishable from the present case. One line of cases wherein an exculpatory
clause has been found ineffective have involved injuries or fatalities which clearly
do not ordinarily accompany the activity which is the subject of the release. See
Simpson v. Byron Dragway, Inc. (1991), 210 Ill.App.3d 639, 649-50, 155 Ill.Dec. 398,
404-05, 569 N.E.2d 579, 585-86 (a question of fact existed as to whether or not
striking a deer while operating a race car on a drag strip was the type of risk
which ordinarily accompanies the sport of racing); Larsen v. Vic Tanny,
International (1984), 130 Ill.App.3d 574, 578, 85 Ill.Dec. 769, 772, 474 N.E.2d 729,
732 (exposure to noxious fumes which injured plaintiff's respiratory system was
not a foreseeable risk related to the use of a health club). In the present case,
however, the injuries to plaintiff resulting from a fall from a compression area in
the ski course is a risk inherent in ski racing and as such falls within the scope of
the exculpatory clause.
Another line of cases wherein this court has found that an exculpatory clause did
not shield a defendant from liability that the language of the exculpatory clause
was ambiguous with respect to which activities were covered. See Macek v.
Schooner's, Inc. (1991), 224 Ill.App.3d 103, 106, 166 Ill.Dec. 484, 486-87, 586
N.E.2d 442, 444-45 (genuine issue of material fact precluded summary judgment
for sponsors of arm wrestling contest in personal injury action brought against it
by a participant who was injured in the contest, existed as to whether the intent
of the clause was to release the promoter of liability when injury resulted from
the participant's physical condition, or when injury resulted from the promoter's
negligence); Calarco v. YMCA of Greater Metropolitan Chicago (1986), 149
Ill.App.3d 1037, 1043, 103 Ill.Dec. 247, 251, 501 N.E.2d 268, 272 (statement that
“participation in any of the activities of the YMCA” was ambiguous in that it could
be read to mean that the exculpatory clause only pertained to participating in
activities at the YMCA but not to liability from the use of equipment at the
YMCA). The language of the exculpatory clause at issue in the present case is
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explicit and unambiguous and is thus sufficient as a matter of law to relieve
defendant from liability.
Masciola, 257 Ill. App. 3d at 318-319.
Exculpatory clauses were addressed in the recent decision of Oelze v. Score Sports Venture, LLC,
No. 1-09-1476, 2010 WL 1235404 (1st Dist. March 30, 2010). In Oelze, a member of a tennis club
filed an action against the club owner for negligence and willful and wanton misconduct based
on injuries she suffered while playing tennis at the club. The trial court dismissed the negligence
count and granted summary judgment for the owner on the willful and wanton count. The
Appellate Court held that Plaintiff voluntarily waived the right to sue the owner for negligence
by signing a one-page players club membership agreement which contained a release and that
the injuries (her foot was caught in a rope ladder) fell within the release. In so doing, the court
noted that “[a]lthough the precise occurrence which caused an injury need not have been
contemplated by the parties when the release was signed, the injury must fall ‘within the scope
of possible dangers’ accompanying the activity and, thus, have been reasonably contemplated
by the plaintiff and covered by the release.” That being said, the Appellate Court further held
that there was a genuine issue of material fact as to whether the owner exhibited conscious
disregard for safety in failing to discover or pick up the rope ladder, thus precluding summary
judgment on the willful and wanton claim. The court noted that “[o]ne can, therefore, infer that
defendant’s efforts to safeguard the hallway failed . . . [b]ut there is a question of fact regarding
whether defendants’ efforts to prevent the danger caused by the errant ladder failed due to
inadvertence or due to a reckless disregard for the safety of others.”
2.
Implied Assumption of Risk
Years ago, there were two types of applied assumption of risk in Illinois. They were called
primary implied assumption of risk and secondary implied assumption of risk. Since comparative
negligence came to Illinois in the early 1980’s, however, there is no more secondary implied
assumption of risk (which used to apply where a plaintiff assumed a risk created by defendant’s
negligence) since that conduct is now subsumed within the comparative negligence analysis of
plaintiff’s negligence vis-à-vis that of the defendant.
However, primary implied assumption of risk – which applies whenever a plaintiff knowingly and
voluntarily assumes the risk inherent in a particular activity or situation – is still alive and well
and may serve as a complete bar to a plaintiff’s cause of action.
Primary implied assumption of risk requires the defendant to prove: (1) that the plaintiff
voluntarily and knowingly encountered an inherent and ordinary danger of an activity; (2) the
defendant did not create the inherent danger; (3) the danger was the cause of plaintiff’s injury;
and (4) the defendant and plaintiff had a contract or other agreement under which the plaintiff
was to participate in the activity which exposed him to the danger. See generally, Ill. Pattern Jury
Instr.-Civ. 13.00 Intro. 1 (2009 ed.). For example, it has been held to apply in Clark v. Rogers, 137
Ill. App. 3d 591, 484 N.E.2d 867, 92 Ill. Dec. 136 (4th Dist. 1985) (where a horse trainer was held
C-8
to have assumed the risk of any fall from a stallion where she had accepted her employment
knowing such horses were likely to buck or jump and knew the stallion could become excited
and uncontrollable around mares, but attempted to mount the stallion anyway) and Coleman v.
Ramada Hotel Operating Co., 933 F.2d 470 (7th Cir. 1991) (where an employee who participated
in an obstacle course game during an employer-sponsored picnic was said to have assumed the
risk of injury by volunteering to encounter a known and obvious risk in choosing to climb up a
slide backwards); But see Evans, supra, (declining to affirm summary judgment based upon the
doctrine of assumption of risk where the court was unable to say, as a matter of law, that
plaintiff was aware of and accepted the risk that emergency procedures were possibly
inadequate).
II.
INJURIES TO SPECTATORS
Generally speaking, the owner of a business premises has a duty to an invitee to exercise
ordinary care in the use and maintenance of his property and, more specifically, the owner has a
duty to discover dangerous conditions existing on the premises and to give sufficient warning to
the invitee to enable him to avoid harm. Duffy v. Midlothian Country Club, 92 Ill. App. 3d 193,
197, 415 N.E.2d 1099, 47 Ill. Dec. 786 (1st Dist. 1980). Along these lines, the court in Pickel noted
that the defendants, as possessors of the football facility, had a special relationship with the
plaintiff (their invitee) that obliged them to take reasonable action to protect against an
unreasonable risk of injury either from the conduct of their agents or the conduct of third
persons. Pickel v. Springfield Stallions, 2010 WL 1205959 at *11.
It must also be noted, however, that there are some special statutory exceptions which apply
depending upon the type of sporting event at which a spectator is injured, e.g. owners and
operators of hockey and baseball facilities are afforded special statutory protections which may
apply when spectators are injured while attending a hockey or baseball game:
A.
Hockey Facility Liability Act (745 ILCS 52/1 et seq.)
The owner or operator of a hockey facility shall not be liable for any injury to the
person or property of any person as a result of that person being hit by a hockey
stick or puck unless: (1) the person is situated behind a screen, protective glass,
or similar device at a hockey facility and the screen, protective glass, or similar
device is defective (in a manner other than in width or height) because of the
negligence of the owner or operator of the hockey facility; or (2) the injury is
caused by willful and wanton conduct, in connection with the game of hockey, of
the owner or operator or any hockey player or coach employed by the owner or
operator.
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B.
Baseball Facility Liability Act (745 ILCS 38/1 et seq.)
The owner or operator of a baseball facility shall not be liable for any injury to the
person or property of any person as a result of that person being hit by a ball or
bat unless: (1) the person is situated behind a screen, backstop, or similar device
at a baseball facility and the screen, backstop, or similar device is defective (in a
manner other than in width or height) because of the negligence of the owner or
operator of the baseball facility; or (2) the injury is caused by willful and wanton
conduct, in connection with the game of baseball, of the owner or operator or
any baseball player, coach or manager employed by the owner or operator.
The constitutionality of the latter statute was addressed in Jasper v. Chicago Nat. League Ball
Club, Inc., 309 Ill. App. 3d 124, 722 N.E.2d 731, 242 Ill. Dec. 947 (1st Dist. 1999), a case in which a
spectator at a professional baseball game sued the owner of the ballpark after he was struck by
a foul ball. Included in his complaint was a count seeking a declaration that the immunity
provided by the Baseball Facility Liability Act was unconstitutional. The Appellate Court held that
provisions of the Act do not violate the equal protection clauses of federal and state
Constitutions or the Illinois Constitution's proscription against special legislation. In so doing,
the court noted that Baseball Facility Liability Act encourages baseball team owners to build and
maintain parks for the sport of baseball by shifting the expense of injury caused by foul balls to
spectators unless the injury is caused by the owner's willful and wanton conduct.
In other words, if you are going to sustain an injury while attending a sporting event, you are
better off if it occurs while you are watching a lacrosse or soccer contest than if it happens at a
hockey or baseball game!
III.
PROTECTION FOR VOLUNTEERS
As discussed above, the Illinois Supreme Court extended the Contact Sports Exception to
protect certain sports organizations in Karas, but subsequent Appellate Court decisions have
declined to expand the Contact Sports Exception to those not actively participating in a contact
sport. In light of this debate, it is important to remember that in 1987, the Illinois legislature
passed what is known as the Sports Volunteer Immunity Act. This statute affords special
protections for volunteers including managers, coaches, umpires, and referees under certain
circumstances as described below:
A.
Sports Volunteer Immunity Act (745 ILCS 80/1)
1. Manager, coach, umpire or referee negligence standard. (a) General rule.
Except as provided otherwise in this Section, no person who, without
compensation and as a volunteer, renders services as a manager, coach,
instructor, umpire or referee or who, without compensation and as a volunteer,
assists a manager, coach, instructor, umpire or referee in a sports program of a
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nonprofit association, shall be liable to any person for any civil damages as a
result of any acts or omissions in rendering such services or in conducting or
sponsoring such sports program, unless the conduct of such person falls
substantially below the standards generally practiced and accepted in like
circumstances by similar persons rendering such services or conducting or
sponsoring such sports programs, and unless it is shown that such person did an
act or omitted the doing of an act which such person was under a recognized
duty to another to do, knowing or having reason to know that such act or
omission created a substantial risk of actual harm to the person or property of
another. It shall be insufficient to impose liability to establish only that the
conduct of such person fell below ordinary standards of care.
(b) Exceptions.
(1) Nothing in this Section shall be construed as affecting or modifying the
liability of such person or a nonprofit association for any of the following:
(i) acts or omissions relating to the transportation of participants in a sports
program or others to or from a game, event or practice.
(ii) acts or omissions relating to the care and maintenance of real estate unrelated
to the practice or playing areas which such persons or nonprofit associations
own, possess or control.
(2) Nothing in this Section shall be construed as affecting or modifying any
existing legal basis for determining the liability, or any defense thereto, of any
person not covered by the standard of negligence established by this Section.
(c) Assumption of risk or comparative fault. Nothing in this Section shall be
construed as affecting or modifying the doctrine of assumption of risk or
comparative fault on the part of the participant.
(d) Definitions. As used in this Act the following words and phrases shall have the
meanings given to them in this subsection:
“Compensation” means any payment for services performed but does not include
reimbursement for reasonable expenses actually incurred or to be incurred or,
solely in the case of umpires or referees, a modest honorarium.
“Nonprofit association” means an entity which is organized as a not-for-profit
corporation under the laws of this State or the United States or a nonprofit
unincorporated association or any entity which is authorized to do business in
this State as a not-for-profit corporation under the laws of this State, including,
but not limited to, youth or athletic associations, volunteer fire, ambulance,
C-11
religious, charitable, fraternal, veterans, civic, county fair or agricultural
associations, or any separately chartered auxiliary of the foregoing, if organized
and operated on a nonprofit basis.
“Sports program” means baseball (including softball), football, basketball, soccer
or any other competitive sport formally recognized as a sport by the United
States Olympic Committee as specified by and under the jurisdiction of the
Amateur Sports Act of 1978 (36 U.S.C. 371 et seq.), the Amateur Athletic Union or
the National Collegiate Athletic Association. The term shall be limited to a
program or that portion of a program that is organized for recreational purposes
and whose activities are substantially for such purposes and which is primarily for
participants who are 18 years of age or younger or whose 19th birthday occurs
during the year of participation or the competitive season, whichever is longer.
There shall, however, be no age limitation for programs operated for the
physically handicapped or mentally retarded.
(e) Nothing in this Section is intended to bar any cause of action against a
nonprofit association or change the liability of such an association which arises
out of an act or omission of any person exempt from liability under this Act.
The statutory language of the Sports Volunteer Immunity Act is fairly straight-forward, and that
may be the reason why there are no published opinions from the Illinois reviewing courts
interpreting the Act. In any event, the Sports Volunteer Immunity Act should be kept in mind
when defending a claim brought against a volunteer coach or official, since the protections
afforded by the Act could serve as a key tipping point in favor of the defense.
IV.
GOLF-RELATED APPLICATIONS
The very nature of golf lends itself to some interesting applications of some of the principles
discussed throughout this paper.
No presumption of negligence arises from the mere fact that a player on a golf course is hit by a
ball driven by another player. Hampson v. Simon, 345 Ill. App. 582, 104 N.E.2d 112 (1st Dist.
1952). For example, in the case of Dann v. Gumbiner, 29 Ill. App. 2d 374, 173 N.E.2d 525 (1st Dist.
1961), where the plaintiff sustained injuries when she was hit by a golf ball driven by the
defendant who was playing immediately behind her, the court noted that the risk of being hit by
a golf ball on a golf course has been termed to be a risk assumed by playing. In Illinois,
“[a]lthough the object of the game of golf is to drive the ball as cleanly and directly as possible
toward its ultimate intended goal . . . the possibility that the ball will fly off in another direction is
a risk inherent in the game.” Heiden v. Cummings, 337 Ill. App. 3d 584, 587, 786 N.E.2d 240, 243,
271 Ill. Dec. 982 (2d Dist. 2003) (quoting Rinaldo v. McGovern, 78 N.Y.2d 729, 733, 587 N.E.2d
264, 579 N.Y.S.2d 626 (1991)).
C-12
In Duffy v. Midlothian Country Club, 135 Ill. App. 3d 429, 481 N.E.2d 1037, 90 Ill. Dec. 237 (1st
Dist. 1985) a spectator who was struck in the eye by a golf ball during a golf tournament
brought a negligence action against the country club and golf association. The Appellate Court
opinion held that the doctrine of secondary implied assumption of risk was abolished by the rule
of comparative negligence and the trial court properly precluded defense counsel from using
the terms “assumption of risk” and “assumed risk,” and properly refused to instruct the jury
concerning assumption of risk.
In the course of reaching this decision, the Appellate Court also discussed primary implied
assumption of risk (discussed above on pages C-8 and 9). In that respect, the court noted that
under the implied form of assumption of risk, plaintiff’s willingness to assume a known risk is
determined from the conduct of the parties rather than from an explicit agreement. The primary
type of implied assumption of risk, which has been applied to situations where a plaintiff has
assumed known risks inherent in a particular activity or situation, have not been those created
by defendant’s negligence but rather by the nature of the activity itself. Accordingly, primary
implied assumption of risk is arguably not a true negligence defense, since no cause of action
for negligence is ever alleged. Thus, under the circumstances of this case, where the plaintiff was
a spectator at a professional golf tournament who was injured outside a concession tent and
there were questions of fact whether it was negligence to place the tent at that location, primary
implied assumption of risk was not applicable. Duffy, 135 Ill. App. 3d at 432-434.
In Zurla v. Hydel, 289 Ill. App. 3d 215, 681 N.E.2d 148, 224 Ill. Dec. 166 (1st Dist. 1997), a plaintiff
sued a golfer for personal injuries, alleging that the golfer negligently hit a golf ball which struck
him in the head as they played a round of golf. The Appellate Court held that game of golf was
not a “contact sport” and thus plaintiff did not need to plead and prove wilful and wanton
misconduct. The court noted:
The issue of the proper duty of care as between golfers is one of first impression
in Illinois. Defendant argues that Illinois law should require that a golfer hit by a
stray ball plead and prove wilful and wanton misconduct against the defendant.
He argues that an allegation of simple negligence should be insufficient to
support a cause of action in cases involving golf ball injuries because the public
policy of Illinois is to promote athletic endeavors such as golf. Plaintiff responds
that the proper standard of care should be the same here as in any ordinary
negligence case, i.e., to exercise reasonable and ordinary care for the safety of
other golfers.
Zurla, 289 Ill. App. 3d at 217-18. The Zurla opinion went on to state:
In our view, golf is simply not the type of game in which participants are
inherently, inevitably or customarily struck by the ball. . . . We specifically reject
the notion found in some of the recent opinions from other jurisdictions that
physical contact with another player's ball is simply “part of the sport” of golf.
Adopting such a view undermines the reasonable incentive golfers have to guard
C-13
against injuries to one another, ultimately becoming a self-fulfilling prophesy.
Instead, we adopt the traditional “zone of danger” analysis which has historically
governed golf course injury cases. (Internal citations omitted.)
Zurla, 289 Ill. App. 3d at 221-22.
In other words, golf is not characterized as a “contact sport” for purposes of the Contact Sports
Exception, so a golfer injured by a golf ball may allege negligence and is not required to plead
and prove wilful and wanton conduct.
In Sullivan-Coughlin v. Palos Country Club, Inc., 349 Ill. App. 3d 553, 812 N.E.2d 496, 285 Ill. Dec.
676 (1st Dist. 2004), a golfer brought an action against a golf course owner after she was struck
in the head by a golf ball while riding in golf cart near the pro shop. The Appellate Court held
that the evidence was sufficient to support a finding that the golf course owner should have
known that the area of the golf course outside the ninth green near the pro shop, barbecue pit
and cart return was unreasonably dangerous, namely there was evidence that golf balls
occasionally landed in that area and that the course owner had constructed a fence to provide
limited protection, employees and others testified as to golf balls striking the pro shop, and it
was reasonable to conclude that golfers would stop to socialize, not realizing the danger of
being struck by a golf ball.
The court also addressed the primary assumption of risk doctrine and found it to be inapplicable
referencing Zurla:
[G]olf is simply not the type of game in which participants are inherently,
inevitably or customarily struck by the ball . . . “A golf course is not usually
considered a dangerous place, nor the playing of golf a hazardous undertaking. It
is a matter of common knowledge that players are expected not to drive their
balls without giving warning when within hitting distance of persons in the field
of play, and that countless persons traverse golf courses the world over in
reliance on that very general expectation.” (Citations omitted.)
Sullivan-Coughlin, 349 Ill. App. 3d at 560.
V.
CONCLUSION
Given the level of sports participation in this country, there are inevitably going to be a
significant number of sports injuries. Fortunately, most of those injuries will not be what might
be termed as “serious” injuries and, of those injuries, only a small percentage are likely to result
in claims. As a claim professional, however, you need to have a working knowledge of sports
injuries and applicable Illinois law so that you will be prepared to adjust such a claim. Of course,
if you regularly attend sporting events as a spectator, coach or officiate youth sporting events,
or are yourself an active “weekend warrior,” you run the risk of being injured and could
C-14
conceivably be a claimant yourself. Regardless of how a sports injury claim arises, you need to
remember that every sports injury claim requires a fact-intensive analysis as well as a working
knowledge of pertinent Illinois case law and statutory immunities. Please do not hesitate to let
us know should you need assistance with such a claim.
C-15
- Partner
Born in Pennsylvania, Matt began his legal career with
Heyl Royster while he was still in law school by
clerking with the firm during the summer. Following
graduation, he joined the firm in the Peoria office in
1989 and became a partner in 1997. He is the co-chair
of the firm's Truck/Motor Carrier Litigation Practice
Group.

Matt is an aggressive advocate who has tried many
cases to verdict and enjoys the challenges of complex
litigation. He handles the defense of personal injury
cases primarily focusing upon the trucking and
construction industries. Matt is frequently contacted
immediately after a catastrophic loss to visit an
accident scene and help develop the facts and case
strategy with an eye toward a successful result once
litigation is filed. Beyond his expertise in trucking and
construction matters, he has also handles cases
touching upon a wide variety of areas including
construction delay claims, covenants not to compete,
breach of contract, aviation accidents, premises
liability, auto accidents and product liability.

construction delay claims arising from the
construction of identical federal prisons in
Pekin and Greenville, Illinois. The case was
successfully resolved at mediation for our
clients, the steel subcontractors at each site.
Jalel Hanafi v. Tri-Hi Transportation, Inc.,
McLean County, 03 L 200 - Jury trial of a
trucking accident with chronic pain claims
involving testimony from 14 physicians. Verdict
for plaintiff was in line with case evaluation and
less than the offer of settlement prior to trial.
Neziroski v. Von Maur, 99 L 121 - Jury trial
involving false arrest, false imprisonment and
malicious prosecution claims arising out of an
unusual transaction at the Bloomington Von
Maur Store. Plaintiff asked for more than
$250,000. Verdict for plaintiff in the amount of
$50,000.
 Martindale-Hubbell AV rated
five percent of lawyers in the state are named
as Leading Lawyers
 40 Leaders Under 40 - Peoria, 2000
 Abraham Lincoln American Inn of Court
(President 2005-2006)
Matt has taught a Masters level course in the
graduate business program at Bradley University and
is a frequent speaker at continuing legal education
seminars held across the state addressing a variety of
different legal topics.
 Abraham Lincoln American Inn of Court (Past
President)
 Peoria County Bar Association
Matt is a Martindale-Hubbell AV rated lawyer who has
remained extensively involved in the community
serving on a number of boards of community
organizations. He has also been instrumental in
founding two local charitable organizations dedicated
to, among other things, awarding college scholarships
to local high school seniors. Matt has also been
recognized as one of Peoria's "40 Leaders Under 40."
Court Admissions
 United States District Court, Central District of
Illinois
Significant Cases
 Riddle v. McLean County Unit District 5, Parkside
Junior High School, and Richard Peterson, 341
Ill. App. 3d 1129 (4th Dist. 2003) - Obtained
summary judgment for a school district arising
out of a near amputation of an 8th grader's
hand while in shop class, which was affirmed
on appeal, based upon a failure to supervise
theory under the Illinois Tort Immunity Act.
 United States of America for the use of Bowman
Metal Deck, a division of ARMCO, Inc., and
Bowman Met, 94 CV 1214 - A complex Miller
Act case involving millions of dollars in
Education
 Juris Doctor, Southern Illinois University School
of Law, 1989
 Master of Business Administration, Southern
Illinois University, 1989
 Bachelor of Science (Magna Cum Laude),
Bradley University, 1984
C-16
INSURANCE COVERAGE UPDATE Presented and Prepared by:
Patrick D. Cloud
[email protected]
Edwardsville, Illinois • 618.656.4646
15503811_7.DOCX
D-1
INSURANCE COVERAGE UPDATE
I.
WHO IS AN INSURED – ADDITIONAL INSURED PROVISIONS .................................................. D-4
A.
B.
II.
National Fire Ins. of Hartford v. Walsh Const. Co. ............................................................. D-4
Pekin Ins. Co. v. Hallmark Homes L.L.C. ................................................................................ D-4
SCOPE OF THE INSURING AGREEMENT ............................................................................................. D-6
A.
Property Damage Caused by an Occurrence .................................................................... D-6
1.
2.
B.
Coverage for Qui Tam Actions ................................................................................................ D-7
1.
2.
C.
Damage to "Other Property" in
Construction Setting: CMK Development
Corp. v. West Bend Mut. Ins. Co. ............................................................................... D-6
Misrepresentation During Sale of Real Estate:
Rock v. State Farm Fire and Cas. Co........................................................................ D-7
Health Care Industry Liability Ins. Program v.
Momence Meadows Nursing Center, Inc. .............................................................. D-7
ISMIE Mut. Ins. Co. v. Michaelis Jackson &
Associates, LLC ................................................................................................................ D-9
Scope of Professional Liability Coverage for Lawyers .................................................... D-9
1.
2.
Continental Cas. Co. v. Donald T. Bertucci, Ltd. .................................................. D-9
Illinois State Bar Ass’n Mut. Ins. Co. v. Mondo ...................................................D-10
III.
NOTICE PROVISIONS: AMERICAN STANDARD INS. CO. OF
WISCONSIN V. SLIFER ..............................................................................................................................D-11
IV.
EXCLUSIONS ...............................................................................................................................................D-11
A.
B.
C.
Criminal Acts Exclusion: Allstate Ins. Co. v. Greer ...........................................................D-11
Intentional Acts Exclusion with Self-Defense
Exception: Pekin Ins. Co. v. Wilson .......................................................................................D-12
Assumed Liability Exclusion: American
Family Mut. Ins. Co. v. Fisher Development, Inc. ..............................................................D-13
D-2
V.
COVERAGE LITIGATION ISSUES ...........................................................................................................D-14
A.
B.
C.
D.
Ripeness of Declaratory Judgment Actions:
Gregory v. Farmers Auto. Ins. Ass'n ......................................................................................D-14
Determination of Duty to Defend: Farmers Auto.
Ins. Ass'n v. Danner ....................................................................................................................D-14
Attorney/Client Privilege: Illinois Emcasco Ins. Co.
v. Nationwide Mut. Ins. Co. ......................................................................................................D-15
Conflicts of Interest ...................................................................................................................D-16
1.
2.
E.
VI.
Settlement by the Insured: Federal Ins. Co. v.
Binney & Smith, Inc....................................................................................................................D-17
INTERACTIONS BETWEEN MULTIPLE INSURERS ...........................................................................D-18
A.
Targeted Tender Rule ...............................................................................................................D-18
1.
2.
B.
VII.
Right to Independent Counsel: National
Cas. Co. v. Forge Indus. Staffing Inc. .....................................................................D-16
Defense of Multiple Insureds: Country
Mut. Ins. Co. v. Olsak ..................................................................................................D-16
Deselection: State Auto Property & Cas. Ins.
Co. v. Springfield Fire & Cas. Co. ............................................................................D-18
Excess Insurance: River Village I, LLC v. Central
Ins. Companies..............................................................................................................D-18
Doctrine of Equitable Contribution: American States
Ins. Co. v. CFM Const. Co..........................................................................................................D-19
VEXATIOUS AND UNREASONABLE DELAY: SECTION 155 OF
THE INSURANCE CODE ...........................................................................................................................D-20
A.
B.
Standing to Bring Section 155 Claim: Statewide Ins.
Co. v. Houston General Ins. Co. ..............................................................................................D-20
Defense to Section 155 Claim: American Service Ins.
Co. v. Franchini ............................................................................................................................D-20
D-3
INSURANCE COVERAGE UPDATE
I.
WHO IS AN INSURED – ADDITIONAL INSURED PROVISIONS
A.
National Fire Ins. of Hartford v. Walsh Const. Co.
In National Fire Ins. of Hartford v. Walsh Const. Co., 392 Ill. App. 3d 312, 909 N.E.2d 285, 330 Ill.
Dec. 572 (1st Dist. 2009)  a subcontractor added a premises owner and general contractor as
additional insureds under its CGL policy. The additional insured endorsement of the CGL policy
read as follows:
That person or organization is an additional insured solely for liability due to [the
subcontractor’s] negligence and specifically resulting from ‘your work’ for the
additional insured which is the subject of the written contract or written
agreement. No coverage applies to liability resulting from the sole negligence of
the additional insured.
After an employee of the subcontractor was injured at the construction site, the employee sued
the premises owner and general contractor. According to the employee’s complaint, the general
contractor’s negligence caused his injuries, and the premises owner was vicariously liable for the
general contractor’s negligence. The complaint contained no factual allegations that might
support a claim of negligence against the subcontractor. The insurer filed a complaint for
declaratory judgment asserting that it had no duty to defend the premises owner or general
contractor under the additional insured endorsement.
The Appellate Court concurred with the insurer’s position. According to the court, “this is a case
where the alleged negligence falls on no one other than the general contractor” and the
“complaint reveals no factual allegation on which the defendants might hang [the
subcontractor’s] potential liability.” As a consequence, without allegations that the subcontractor
was negligent, the premises owner and general contractor did not qualify as additional insureds
under the terms of the CGL policy. Furthermore, the Appellate Court rejected the general
contractor’s position “that the mere fact that an employee of a primary insured is injured on the
jobsite is, by itself, sufficient to give rise to an inference of negligence on the part of [the
primary insured] so as to trigger a duty to defend on the part of” the insurer. “More than some
unspecified breach of the subcontractor’s duty to provide a safe work place is required to
support a claim that the negligence complaint implicates negligence on the part of the
subcontractor, too.”
B.
Pekin Ins. Co. v. Hallmark Homes L.L.C.
In Pekin Ins. Co. v. Hallmark Homes, L.L.C., 392 Ill. App. 3d 589, 912 N.E.2d 250, 322 Ill. Dec. 64
(2d Dist. 2009)  a general contractor was named as an additional insured under a
D-4
subcontractor’s liability insurance policy. The additional insured endorsement naming the
general contractor stated:
1. Who is An Additional Insured (Section II) is amended to include as an insured
any person or organization for whom you are performing operations when you
and such person or organization have agreed in writing in a contract or
agreement that such person or organization be added as an additional insured
on your policy. Such person or organization is an additional insured only with
respect to liability incurred solely as a result of some act or omission of the named
insured and not for its own independent negligence or statutory violation.
(emphasis added).
A worker at the construction site suffered an injury and sued both the general contractor and
subcontractor. The complaint against the contractor alleged two theories of relief. The first
theory sought relief pursuant to Restatement (Second) of Torts § 414, which states:
One who entrusts work to an independent contractor, but who retains the control
of any part of the work, is subject to liability for physical harm to others for
whose safety the employer owes a duty to exercise reasonable care, which is
caused by his failure to exercise his control with reasonable care.
The second theory sought relief pursuant to Restatement (Second) of Torts § 343,
under which a person who owns, possesses, or otherwise has control over land
may be liable to someone who is injured on the land, if the first person knew or
reasonably should have known of the dangerous condition that caused the injury
and should have expected that others would be injured but failed to take
adequate safety measures.
The complaint also contained a theory against the subcontractor nearly identical to the theory
against the contractor pursuant to Restatement (Second) of Torts § 343.
After the general contractor sought a defense under the additional insured endorsement, the
subcontractor’s insurer filed a complaint for declaratory judgment asserting that it had no duty
to defend the contractor. The insurer reasoned that, “because the complaint against [the
contractor] alleged that [the contractor’s] own negligence made it liable [to the injured worker],
any possible liability could not be based solely on the negligence of [the subcontractor], as
required by the endorsement.” The Appellate Court disagreed and found that a duty to defend
existed. According to the Appellate Court, the theory of liability against the contractor brought
pursuant to Restatement (Second) of Torts § 414 could potentially impose vicarious liability onto
the contractor “solely on the basis of the acts or omissions” of the subcontractor. Consequently,
“[a]s at least one of the theories of negligence alleged against [the contractor] could rest solely
on the acts or omissions of the named insured, [the insurer] has a duty to defend [the
contractor] against all of the claims raised against it by [the injured worker.]”
D-5
In rendering this ruling, the Appellate Court rejected the insurer’s argument that “it need not
defend [the contractor] unless the allegations of the underlying complaint specifically identify a
scenario in which [the contractor’s] liability rests solely on [the subcontractor’s] negligence.” The
court reasoned that it must read the complaint against the contractor “liberally” to determine
whether it alleges facts “within or potentially within coverage.” (emphasis in original). According
to the court, viewed liberally, the complaint alleged facts potentially within the scope of
coverage. Moreover, the Appellate Court rebuffed the insurer’s citation to “a ‘whole host of
decisions’ . . . [holding that], where a complaint alleges that the additional insured was itself
negligent, the complaint is not within the scope of the insurance provided to additional
insureds.” First, the court found that these cases were distinguishable based on the terms of the
policies involved and facts alleged in the underlying complaints. Second, the Appellate Court
found that these decisions “rest on an unduly restrictive application of the principles laid out by”
the Illinois Supreme Court when determining the existence of a duty to defend. Specifically,
these decisions failed “to interpret the allegations of the underlying complaints and the
language of the insurance policies liberally when determining whether the insurers owe a duty
to defend.”
II.
SCOPE OF THE INSURING AGREEMENT
A.
Property Damage Caused by an Occurrence
1.
Damage to "Other Property" in Construction
Development Corp. v. West Bend Mut. Ins. Co.
Setting:
CMK
In CMK Development Corp. v. West Bend Mut. Ins. Co., 395 Ill. App. 3d 830, 917 N.E.2d 1155, 335
Ill. Dec. 91 (1st Dist. 2009)  a contractor was insured under a CGL policy that only applied to
property damage if the “‘property damage’ [was] caused by an ‘occurrence.’” "Occurrence" was
defined as "an accident" by the policy. After the contractor built a home for a buyer, the buyer
submitted a list of defects with the home. Eventually, the disagreement between the buyer and
contractor resulted in an arbitration. Prior to the arbitration, the contractor submitted the claim
to its insurer, who denied coverage. The contractor filed suit against the insurer, and the trial
court ruled in favor of the insurer.
The Appellate Court affirmed, reasoning that, in a construction setting, damage to “other
property” does constitute “property damage” caused by an “occurrence.” Coverage for damage
to “other property,” however, “is not intended to cover the insured’s contractual liability when its
completed project does not meet the bargained-for standard.” Likewise, “[i]f the homeowners
are pursuing a breach of contract claim in order to recover the loss due to the repair or
replacement of the defective work or the diminished value of their home, there is no coverage.”
Rather, to qualify for the damage to other property rule, “[t]here must be damage to something
other than the structure.” In this case, the facts did not warrant the application of the damage to
other property rule. The defects identified by the buyer were defects resulting from the
D-6
contractor’s faulty workmanship in constructing the buyer’s home; they were not damage to
“other property.” As such, no coverage existed.
2.
Misrepresentation During Sale of Real Estate: Rock v. State Farm Fire
and Cas. Co.
In Rock v. State Farm Fire and Cas. Co., 395 Ill. App. 3d 145, 917 N.E.2d 610, 334 Ill. Dec. 784 (3d
Dist. 2009)  sellers were insured under a homeowner’s policy that provided coverage “if a claim
is made or a suit is brought against an insured for damages because of . . . property damage . . .
caused by an occurrence.” The policy defined property damage as “physical damage to or
destruction of tangible property, including loss of use of this property.” After the sellers sold
their home to buyers, the buyers sued the sellers alleging that they had falsely represented “that
there were no moisture or water problems in any area of the home, there was no damage due to
flood, there were no hazardous conditions such as mold, and there were no foundation
problems.” The sellers’ insurer denied the claim, and the sellers filed a complaint for declaratory
judgment. The Appellate Court ruled that no coverage existed under the policy.
According to the court, even if the misrepresentations qualified as an “occurrence” under the
policy, they did not cause “property damage." For example, “the underlying complaint [did] not
allege that the purportedly false statements made by the [sellers] caused any physical damage
to or destruction to tangible property” and made “no reference to any physical damage to the
house incurred after these statements were made.” Instead, the complaint “alleged that the
misrepresentations by the [sellers] caused the [buyers] to suffer economic losses stemming from
their assertions that they relied upon the allegedly false statements made by the [sellers] when
purchasing the home and, thus, they did not receive the value for which they bargained.”
Furthermore, the court found that the inclusion of “loss of use” within the definition of "property
damage" did not alter the analysis. According to the court, under the plain language of the
definition of “property damage,” “the phrase ‘loss of use of this property’ refers back to the first
part of the definition of property damage as physical damage to tangible property.” As a result,
“[t]he loss of use of property must accompany the physical damage or destruction of that
property.” In this case, although the buyers claimed loss of use as part of their damages,
because the complaint did not allege physical damage caused by an occurrence, the loss of use
claim could not qualify as a separate claim for property damage to trigger coverage.
B.
Coverage for Qui Tam Actions
1.
Health Care Industry Liability Ins. Program v. Momence Meadows
Nursing Center, Inc.
In Health Care Industry Liability Ins. Program v. Momence Meadows Nursing Center, Inc., 566 F.3d
689 (7th Cir. 2009)  a nursing center was insured under a professional liability policy and CGL
policy. Within the professional liability policy, the insurer promised to “pay those sums that the
insured becomes legally obligated to pay as damage because of injury to which this insurance
D-7
applies.” For the professional liability policy to apply, “[t]he injury must be caused by a ‘medical
incident,’” and “[t]he ‘medical incident’ must arise out of the providing or withholding of the
following professional services: Medical, surgical, dental, or nursing treatment to a person.”
Furthermore, under the CGL, the insurer agreed to “pay those sums that the insured becomes
legally obligated to pay as damages because of ‘bodily injury’ . . . to which this insurance
applies.” The policy defined “bodily injury” as “bodily injury, sickness or disease sustained by a
person.”
Two employees brought a qui tam action against the nursing center alleging that the nursing
center was submitting false claims to Medicare and Medicaid. The false claims stemmed from
the center's false certification “on its annual cost reports that it was meeting the required
standard of care when, in fact, [the nursing center] knew that it was not.” The required standard
of care was not met because the nursing center “failed to maintain the minimum [required]
staffing . . ., failed to ensure its residents received their medications. . . , failed to ensure
residents received adequate nutrition and assistance with meals, and failed to provide the
residents with clean and dry beds, clothes, and regular baths.” As a result of these failures, the
nursing center patients suffered from various maladies, including “scabies, sepsis, seizures, and
death.”
After the nursing center submitted the qui tam lawsuit to its professional liability and CGL
carrier, the insurer denied coverage and filed a declaratory judgment action. The district court
found in favor of the insurer, and the Seventh Circuit Court of Appeals affirmed. The Seventh
Circuit determined that the qui tam action did not allege an injury caused by a “medical
incident” within the meaning of the professional liability policy or the possible obligation to pay
“damages because of bodily injury” within the meaning of the CGL policy. In doing so, the court
rejected the nursing center’s argument that the allegations of harm to nursing center residents
were sufficient to trigger coverage. According to the Seventh Circuit,
The injuries to the residents as alleged by the plaintiffs relate back to [the nursing
center’s] cost reports to the government where it certified that it provided quality
services and care. Plaintiffs claim [the nursing center] knew that was false. The
statutory damages they seek result from those allegedly false filings, and not
from any alleged bodily injury to the residents. Although the allegations in the
underlying complaint detailing the injuries suffered by [the nursing center’s]
residents put a human touch on the otherwise administrative act of false billing,
they need not be proven by the plaintiff to prevail. . . . . [A]ll the plaintiffs need to
show is that [the nursing center] billed the government for services and a level of
care that it knew it was not providing.
The Seventh Circuit also noted that its decision conformed with other court decisions that “have
recognized this distinction between the proof required for the [qui tam] claim and the conduct
underlying the false claims.” These other courts have “uniformly [held] that an insurer is not
obligated to defend a qui tam suit merely because the insurer would have to defend the insured
against a suit for damages resulting from the insured’s conduct underlying the qui tam action.”
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2.
ISMIE Mut. Ins. Co. v. Michaelis Jackson & Associates, LLC
In ISMIE Mut. Ins. Co. v. Michaelis Jackson & Associates, LLC, No. 5-08-0426, 2009 WL 5185380
(5th Dist. Dec. 30, 2009)  a physician was insured under a professional liability policy wherein
the insurer agreed to:
pay amounts any ‘insured’ is legally obligated to pay as ‘damages’ because of any
‘claim’ against that ‘insured’ . . . which involves ‘personal injury’ and is caused by
‘professional services' . . .
The policy defined “damages” as “monetary compensation which is owed as a result of ‘personal
injury’” and defined “personal injury” as “bodily injury to . . . any patient . . . which arises out of
the rendering or failure to render” care.
Two employees brought a qui tam action against the physician for performing unnecessary
surgeries and submitting them for compensation under Medicare. When the physician
submitted the qui tam action to his professional liability carrier, the insurer denied the claim and
filed a declaratory judgment action. Adopting the reasoning set forth in Health Care Industry
Liability Ins. Program v. Momence Meadows Nursing Center, Inc., the Appellate Court found that
no coverage existed under the professional liability policy. According to the court, “the plaintiffs
in the underlying case here . . . do not seek damages for personal injury caused by medical care
falling below the requisite standard of care, nor could they, because they do not have standing
to sue on behalf of these patients.” Moreover, the court concluded that “the proof required to
sustain a claim for personal injuries, like a medical malpractice claim, is clearly distinct from the
proof required for a claim for false filings of claims for medical reimbursement.”
C.
Scope of Professional Liability Coverage for Lawyers
1.
Continental Cas. Co. v. Donald T. Bertucci, Ltd.
In Continental Cas. Co. v. Donald T. Bertucci, Ltd., No. 1-09-502, 2010 WL 1033448 (1st Dist.
March 19, 2010)  a lawyer was an insured under a professional liability policy that provided
coverage under its insuring agreement for “all sums . . . that the Insured shall become legally
obligated to pay as damages . . . because of a claim . . . by reason of any act or omission in the
performance of legal services by the Insured.” "Legal services” were defined as “those services
performed by an Insured for others as a lawyer, arbitrator, mediator, title agent or as a notary
public." "Damages” were defined as “judgments, awards and settlements” and did not include
“legal fees, costs and expenses . . . charged by the Insured . . . and injuries that are a
consequence of any of the foregoing.”
A former client filed a lawsuit against the lawyer. The lawyer had represented the client during a
medical malpractice case that settled for $2.25 million, and the lawyer retained $750,000 of the
settlement as his fee. According to the lawsuit, the lawyer’s retention of $750,000 as a fee
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violated an Illinois statute governing fees in medical malpractice cases and the client's fee
agreement with the lawyer. The former client sued the lawyer for breach of contract, unjust
enrichment, conversion, breach of fiduciary duty, fraud, and violation of the medical malpractice
fee statute. The lawyer submitted the claim to his legal malpractice insurer, and the malpractice
insurer denied the claim.
In the subsequent declaratory judgment action, the Appellate Court found that no coverage
existed under the policy. First, the court found that the underlying complaint did not allege
“damages” as defined by the policy because it sought the recovery of excessive legal fees and
consequential damages caused by the excessive fees. The court also found that the suit did not
allege “an act or omission in the performance of legal services by the Insured." When making
this ruling, the court recognized a dichotomy between billing and professional services
performed by a lawyer. While quoting a Massachusetts court, the Appellate Court stated:
[Professional acts or services require] specialized knowledge and skill that is
acquired through rigorous intellectual training. [citation omitted] The setting for
the intellectual training is often an academic one, as in architectural school,
engineering school, law school, or medical school.
Against those criteria we decide that the billing function of a lawyer is not a
professional service. Billing for legal services does not draw on special learning
acquired through rigorous intellectual training. We are not aware that courses in
billing clients appear in law school curricula. The billing function is largely
ministerial. There are elements of experience and judgment in billing for legal
services, but the same goes for pricing shoes. As billing is not a professional
service, it does not come with the coverage of a professional liability insurance
policy.
2.
Illinois State Bar Ass’n Mut. Ins. Co. v. Mondo
In Illinois State Bar Ass’n Mut. Ins. Co. v. Mondo, 392 Ill. App. 3d 1032, 911 N.E.2d 1144, 331 Ill.
Dec. 914 (1st Dist. 2009)  a lawyer was insured by a legal malpractice policy that covered
“DAMAGES and CLAIM EXPENSES . . . which [the insured became] legally obligated to pay as a
result of a CLAIM . . . provided that: 1. The CLAIM arises out of a WRONGFUL ACT.” The Policy
defined “WRONGFUL ACT” as “any actual or alleged negligent act, error, or omission in the
rendering of or failure to render PROFESSIONAL SERVICES.” PROFESSIONAL SERVICES was
defined as “services rendered by [the insured] as a lawyer . . . .” The lawyer operated a consulting
business that provided advice concerning the design and operation of insurance plans. One of
the consulting business’s clients sued the lawyer and the consulting business for wrongfully
convincing the client to become self-insured and to hire an administrator to manage the selfinsurance program. The lawyer also failed to disclose that he had a business interest in the
recommended administrator. The complaint alleged various theories of relief, including counts
for fraud, breach of contract, malpractice as an insurance broker, and malpractice as a lawyer.
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The lawyer submitted the claim to his malpractice insurer, and the malpractice insurer denied
the claim.
In the ensuing declaratory judgment action, the Appellate Court agreed with the insurer that no
coverage under the policy existed. The court reasoned, in part, that, “[i]n reading the complaint
as a whole, . . . it is clear that the true nature of the complaint is related to [the insured’s]
performance of duties related to his capacity as an insurance expert and not in any capacity
related to his status as an attorney despite the inclusion of” the legal malpractice count.
III.
NOTICE PROVISIONS: AMERICAN STANDARD INS. CO. OF WISCONSIN V. SLIFER
In American Standard Ins. Co. of Wisconsin v. Slifer, 395 Ill. App. 3d 1056, 919 N.E.2d 372, 335 Ill.
Dec. 653 (4th Dist. 2009)  an insured was covered by an auto policy that stated on the first
page:
IF YOU HAVE AN AUTO ACCIDENT OR LOSS NOTIFY US.
Tell us promptly. Give time, place, and details. Include names and addresses of
injured persons and witnesses.
This notice provision appeared before the insuring agreement of the policy. In 2002, the insured
was involved in a hit-and-run accident where he killed a pedestrian. He did not report the
accident to his insurer. In 2007, he confessed to the police that he was the driver of the vehicle
involved in the accident. In 2007, after the insured was sued by the pedestrian’s estate, he
submitted the claim to his auto insurer. The auto insurer filed a declaratory judgment action
asserting that the insured forfeited coverage. The Appellate Court agreed, finding that the 5 year
delay in reporting the accident constituted a breach of the notice provision. Furthermore, the
Appellate Court rejected the insured’s contention that the language of the notice provision was
ambiguous because it was placed before the insuring agreement and that the notice language
was insufficiently imperative to be contractually binding on the insured.
IV.
EXCLUSIONS
A.
Criminal Acts Exclusion: Allstate Ins. Co. v. Greer
In Allstate Ins. Co. v. Greer, 396 Ill. App. 3d 1037, 921 N.E.2d 793, 336 Ill. Dec. 937 (3d Dist.
2009)  the insureds were covered by a homeowners policy that excluded coverage for “bodily
injury or property damage intended by, or which may reasonably be expected to result from the
intentional or criminal acts or omissions of, any insured person.” This exclusion further stated
that it “applie[d] regardless of whether or not such insured person is actually charged with, or
convicted of a crime.” A suit was filed against the insureds. According to the suit, the insureds
negligently and willfully supplied alcohol to a seventeen year old teenager, “causing him to
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become intoxicated and impaired.” The teenager’s intoxication led to his death in a motor
vehicle accident. In Illinois, supplying alcohol to a minor is a crime. After the insureds submitted
a claim, their homeowners insurer denied that it had a duty to defend. According to the insurer,
“(1) the statute creating liability in the lawsuit required a criminal act, (2) the insurance policy
excluded coverage for conduct constituting a criminal act, and (3) the exclusion applied
regardless of whether the insured was ever charged or convicted for the criminal act.”
During the declaratory judgment action, the Appellate Court concurred with the insurer and
found that “a comparison of the allegations in the underlying complaint to the provisions of the
insurance policy show[ed] that [the insurer] does not have a duty to defend.” According to the
court, “[i]n the underlying complaint, the decedent’s parents alleged that the [insureds] were
liable for damages because they supplied alcoholic beverages to the decedent, causing him to
become intoxicated and impaired, which caused him to die while driving a motor vehicle.” The
court found that “[t]hese allegations describe criminal conduct,” and, “[b]y its plain language, the
insurance policy excludes coverage for criminal acts.” Furthermore, it was irrelevant to the court
that the allegations of the complaint did not assert that the insureds intended to injure the
teenager because the policy contained “a criminal-act exclusion under which coverage would be
barred irrespective of its intentional-act exclusion.”
B.
Intentional Acts Exclusion with Self-Defense Exception: Pekin Ins. Co. v.
Wilson
In Pekin Ins. Co. v. Wilson, 391 Ill. App. 3d 505, 909 N.E.2d 379, 330 Ill. Dec. 666 (5th Dist. 2009) 
the insured was covered under two policies. The first policy contained an exclusion precluding
coverage for bodily injury “expected or intended from the standpoint of the insured.” The
intended acts exclusion of this policy, however, contained a self-defense exception allowing
coverage for "‘bodily injury’ resulting from the use of reasonable force to protect persons or
property.” The second policy contained an intended acts exclusion precluding coverage for
bodily injury that was “expected or intended by the insured.” The second policy had no selfdefense exception.
A complaint was filed against the insured alleging assault, battery, intentional infliction of
emotion distress, and negligence. The facts of the complaint asserted that the insured
“screamed expletives at” the plaintiff, “struck him with [a] pipe,” “lacerated his hand with a knife,”
“threatened to go home to get a gun to shoot” the plaintiff, and actually threatened the plaintiff
with a gun a year later. Within the negligence count, the complaint “realleged all the factual
assertions from the intentional torts counts” but also asserted that the insured “breached his
duty of ordinary care by failing to ‘adequately use tools of his employment in a safe manner[,]
causing physical harm.’” In response to the complaint, the insured filed a counter-claim where
he asserted that he acted in self-defense during his encounters with the plaintiff.
In the ensuing declaratory judgment action, the Appellate Court found that a duty to defend
existed under the first policy but not the second policy. It first reasoned that complaint clearly
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alleged facts falling within the intentional acts exclusions of both policies. According to the
court,
The amended complaint in the underlying lawsuit alleges that [the insured]
intentionally assaulted, battered, and inflicted emotional distress on [the plaintiff]
and that he negligently used and maintained the tools of his employment,
causing injury to [the plaintiff]. [The insurers] contend that the negligence count
should not be considered because it is a “transparent attempt to trigger
insurance coverage.” They argue that the negligence count, which was not added
until after they had filed their declaratory judgment action, alleges only
intentional conduct, regardless of the label [the plaintiff] applied to it. We agree.
“The factual allegations of the complaint, rather than the legal theory under
which the action is brought, determine whether there is a duty to defend.”
The court, however, found that the self-defense exception created a duty to defend for the first
insurer. In doing so, the court rejected the first insurer’s argument that court could not look at
the insured’s counter-claim to determine the applicability of self-defense exception. The court
stated that the insurer “drafted and sold an insurance policy that excludes coverage for
intentional conduct by the insured unless the insured used reasonable force to protect persons
or property.” As such, the court needed to “consider the facts alleged in the underlying lawsuit
as a whole, including the allegations in [the insured’s] counterclaim or any other defense he
might plead; otherwise, the self-defense exception is largely a nullity and without any meaning.”
C.
Assumed Liability Exclusion: American Family Mut. Ins. Co. v. Fisher
Development, Inc.
In American Family Mut. Ins. Co. v. Fisher Development, Inc., 391 Ill. App. 3d 521, 909 N.E.2d 274,
330 Ill. Dec. 561 (1st Dist. 2009), a general contractor entered into a construction contract with a
premises owner wherein the general contractor agreed
to indemnify and hold harmless [the premises owner] . . . from and against any
and all liability . . . resulting from (i) personal injury . . . arising in whole or in part
by reason of, or in any way resulting from, the performance of the [contracted
work], whether by [the general contractor] or by any subcontractor, or anyone
directly or indirectly employed by either of them.
The general contractor was also named as an additional insured on a subcontractor’s CGL policy.
The CGL policy contained an assumed liability exclusion “excluding coverage for liability for
bodily injury ‘for which the insured is obligated to pay damages by reason of the assumption of
liability in a contract or agreement.’” This exclusion contained an exception for “liability for
damages[ ] [t]hat the insured would have in the absence of the contract or agreement.”
During the construction work, employees of the premises owner were injured. The injured
employees brought a civil action against the general contractor and subcontractor and workers’
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compensation claims against the premises owner. During the litigation, the premises owner
brought suit against the general contractor pursuant to the above-referenced indemnity
agreement. In its action, the premises owner asserted that the general contractor needed to
indemnify the premises owner for the workers’ compensation awards. When the general
contractor submitted the premises owner’s claim to the CGL insurer, the CGL insurer filed a
complaint for declaratory judgment based on the policy's assumed liability exclusion.
The Appellate Court found that the assumed liability exclusion applied and that the CGL insurer
had no duty to defend the general contractor. According to the court, the general contractor
assumed liability through its indemnification agreement with the premises owner. Moreover, the
exception to the assumed liability exclusion did not apply because the indemnification
agreement imposed liability onto the general contractor that the general contractor would not
have had in the absence of the agreement.
V.
COVERAGE LITIGATION ISSUES
A.
Ripeness of Declaratory Judgment Actions: Gregory v. Farmers Auto. Ins.
Ass'n
In Gregory v. Farmers Auto. Ins. Ass'n, 392 Ill. App. 3d 159, 910 N.E.2d 763, 331 Ill. Dec. 354 (5th
Dist. 2009)  the insured was covered by a personal auto policy and business auto policy. After
the insured was sued in a personal injury action, the insurer provided a defense to the insured
under the personal auto policy. During the pendency of the personal injury action, the insured
filed a declaratory judgment action seeking a declaration that the insurer had to indemnify the
insured under the business auto policy. The insurer moved to dismiss the declaratory judgment
action as being premature. The Appellate Court agreed with the insurer. It ruled that, while a
court can determine an insurer’s duty to defend “upon the filing of a complaint against the
insured, a declaratory judgment action brought to determine an insurer’s duty to indemnify an
insured is not ripe for adjudication until an insured becomes legally obligated to pay the
damages in the underlying action.”
B.
Determination of Duty to Defend: Farmers Auto. Ins. Ass'n v. Danner
In Farmers Auto. Ins. Ass'n v. Danner, 394 Ill. App. 3d 403 (4th Dist. 2009)  the insured was
covered under a policy that only covered bodily injury “caused by an occurrence” and excluded
claims for bodily injury “which [was] expected or intended by an ‘insured.’” The policy also
provided that the insurer would “provide a defense at [its] expense by counsel of [its] choice,
even if the suit is groundless, false[,] or fraudulent.” After the insured was sued in a complaint
only alleging battery, the insurer filed a declaratory judgment action asserting that it had no
duty to defend. The trial court denied the insurer relief, finding:
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1. That the underlying complaint . . . set forth allegations that are intentional in
nature and, as such, are otherwise excluded from coverage under [the insurer’s]
policies of insurance.
2. That, notwithstanding the above finding by this court, the relevant provision of
the . . . policies of insurance . . . states that [the insurer] owes a duty to defend its
insureds, ‘even if the suit is groundless, false[,] or fraudulent.
The Appellate Court reversed. According to the court, “construing the policy as a whole, the
duty-to-defend provision clearly provides that [the insurer] will defend an otherwise covered
claim or suit even if the allegations are groundless, false, or fraudulent.” (emphasis added). On
the other hand, “[t]he language in the policies [did] not impose a duty to defend a claim or suit
against an insured for damages because of bodily injury that were not caused by an
‘occurrence.’” As a consequence, “the trial court erred by reading the duty-to-defend language
to impose a duty to defend any groundless, false, or fraudulent suit regardless of whether the
bodily injury was caused by an ‘occurrence.’”
C.
Attorney/Client Privilege: Illinois Emcasco Ins. Co. v. Nationwide Mut. Ins.
Co.
In Illinois Emcasco Ins. Co. v. Nationwide Mut. Ins. Co., 393 Ill. App. 3d 782, 913 N.E.2d 1102, 332
Ill. Dec. 812 (1st Dist. 2009)  two insurers became intertwined in an action for declaratory
judgment after the resolution of a lawsuit against a contractor who was an insured under each
insurer's policy. During the declaratory judgment action, one insurer served discovery seeking
disclosure of all documents “which [bore] in any way upon the underlying case or insurance
coverage touching upon or in any way related to tenders of defense and/or coverage afforded
to” the insured. After the other insurer refused to produce communications between it and its
coverage counsel, the insurer that served the discovery filed a motion to compel. The trial court
granted the motion, but the Appellate Court reversed.
According to the Appellate Court, the common interest doctrine applies in Illinois. Under the
common interest doctrine, “when an attorney acts for two different parties who each have a
common interest, communications by either party to the attorney are not necessarily privileged
in a subsequent controversy between the two parties.” The court found that this was especially
true “where an insured and his insurer initially have a common interest in defending an action
against the former, and there is a possibility that those communications might play a role in a
subsequent action between the insured and his insurer.” On the other hand, the attorney/client
and work product privileges “bar disclosure of any communications or materials generated in
preparation for [a subsequent] declaratory judgment action.”
Furthermore, the court found that the hiring of separate “coverage counsel” does not
automatically bar the disclosure of communications between coverage counsel and the insurer.
Instead, it ultimately depends on whether the communication was made in preparation for the
declaratory judgment action or for the benefit of both the insured and insurer. During discovery
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disputes, the trial court can make this determination during an in camera inspection of the
documents. After enunciating these principles, the Appellate Court vacated the trial court’s
discovery order and remanded the case back to the trial court to reconsider the discovery
dispute in light of the court’s opinion.
D.
Conflicts of Interest
1.
Right to Independent Counsel: National Cas. Co. v. Forge Indus.
Staffing Inc.
In National Cas. Co. v. Forge Indus. Staffing, Inc., 567 F.3d 871 (7th Cir. 2009)  the insured was
covered by an Employment Practices Liability policy that provided coverage “for intentional acts,
including intentional torts such as intentionally discriminating against one of its employees.” The
policy, however, excluded coverage if the insured “’willfully failed’ to adhere to antidiscrimination laws.” The policy also did not cover awards of punitive damages. Employees of
the insured filed charges with the EEOC, asserting that the insured fired them because of “their
race and/or gender” and “in retaliation for complaining about [the insured’s] staffing practices,
which allegedly included honoring its clients’ requests not to staff employees that were AfricanAmerican, Hispanic, and/or female.” The insured requested that the insurer provide independent
counsel during the EEOC proceedings. After the insurer refused, the insured filed a complaint for
declaratory judgment seeking the appointment of independent counsel.
On appeal, the Seventh Circuit Court of Appeals found that the circumstances did not demand
the appointment of independent counsel. First, the court concluded that the mere possibility
that a claim for punitive damages could arise during a civil lawsuit following the EEOC
proceedings was insufficient to create a conflict situation requiring the appointment of
independent counsel. Moreover, the exclusion for willful violation of discrimination laws, by
itself, did not justify the appointment of independent counsel. The EEOC complaint did not
present charges that the insured “willfully violated the law” and did not contain “mutually
exclusive theories of liability” or “factual allegations which when resolved would preclude
coverage.” In Illinois, however, “if no fact issues appear on the face of the underlying complaint
that can be conclusively resolved in such a way that insurance coverage is necessarily precluded
under the policy, then appointment of independent counsel is not warranted.”
2.
Defense of Multiple Insureds: Country Mut. Ins. Co. v. Olsak
In Country Mut. Ins. Co. v. Olsak, 391 Ill. App. 3d 295, 908 N.E.2d 1091, 330 Ill. Dec. 433 (1st Dist.
2009)  a hockey player attacked his hockey coach. The hockey player’s father served on the
board supervising the hockey team. The hockey player’s father was also insured under a
homeowners’ insurance policy. The hockey coach sued the hockey player for battery and sued
the board supervising the hockey team and the father, individually, for negligence.
During litigation against the father’s insurer, the Appellate Court found that the hockey coach's
lawsuit created a conflict of interest for the insurer. The court concluded that the insurer owed a
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defense to two insureds (the father and son) whose interests were opposed. For instance,
according to the court, it was in the board’s and the father’s best interest “to argue that [the
hockey player] acted with the intent to deliberately injure [the hockey coach] and that the
altercation was an isolated act of violence that fell outside a master-servant relationship”
between the hockey player and “the hockey club and [father], as an agent and board member.”
Conversely, it was within the hockey player’s best interest to show that he did not act
intentionally, that he acted in self-defense, and that he “did not receive adequate discipline or
management from [the father] and the other members of the board.” The divergence of the
insureds' interests presented the insurer “with an ethical conflict where it could not choose a
defense strategy in the underlying litigation without harming either” of the insureds. The court
also found that the insurer “failed to disclose this conflict to [the son] and obtain his consent” to
represent him despite the conflict.
E.
Settlement by the Insured: Federal Ins. Co. v. Binney & Smith, Inc.
In Federal Ins. Co. v. Binney & Smith, Inc., 393 Ill. App. 3d 277, 913 N.E.2d 43, 332 Ill. Dec. 448 (1st
Dist. 2009)  after reports that trace levels of asbestos were found within crayons made by the
insured, plaintiffs brought class action lawsuits against the insured based on consumer fraud
and breach of express and implied warranties. During various policy periods, the insured had
been covered by a CGL policy issued by the insurer. In September 19, 2000, the insurer filed a
declaratory judgment action asserting that it had no duty to defend or indemnify the insured
during these class actions. In December 2000, the insured settled the class action lawsuits, and
the settlement was subsequently approved by the trial court. After the settlement of the class
actions, the insured argued that the insurer should compensate it for the full cost of the
settlements. The trial court in the declaratory judgment action ruled in favor of the insureds.
Although the Appellate Court affirmed the trial court in part and reversed in part, it found that
the settlements were reasonable. In Illinois, “[if] an insured settles an underlying claim prior to
verdict, [to qualify for coverage,] it must show that it settled an otherwise covered loss in
‘reasonable anticipation of liability.’” When meeting this burden, the insured need not establish
actual liability to the party with whom it has settled ”so long as a potential liability on the facts
known to the [insured is] shown to exist, culminating in an amount reasonable in view of the size
of possible recovery and degree of probability of claimants success against the insured.”
The burden to satisfy this test falls on the insured, but the insurer “retains the right to rebut any
preliminary showing of reasonableness with its own affirmative evidence bearing on the
reasonableness of the settlement agreement.” With these principles in mind, although the
insured had defenses to the class action, the court found that the insured had settled the case in
reasonable anticipation of liability given the uncertainty involved in any litigation and the doubt
that the insured would have an absolute defense to liability.
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VI.
INTERACTIONS BETWEEN MULTIPLE INSURERS
A.
Targeted Tender Rule
1.
Deselection: State Auto Property & Cas. Ins. Co. v. Springfield Fire &
Cas. Co.
In State Auto Property & Cas. Co. v. Springfield Fire & Cas. Co., 394 Ill. App. 3d 414, 916 N.E.2d
157, 334 Ill. Dec. 124 (4th Dist. 2009)  a contractor was a named insured under its own CGL
policy and an additional insured under a subcontractor’s CGL policy. The contractor’s CGL policy
contained an “other insurance” clause. Operation of the “other insurance” clause necessitated
that “other valid or collectible insurance [was] available.” The contractor also paid the premiums
for its coverage under both policies. After the contractor was sued by the estate of a worker who
died at the construction site, it deselected coverage under the subcontractor’s policy and only
sought coverage under its own policy. The contractor’s insurer filed a declaratory judgment
action contesting the contractor’s right to deselect coverage under the subcontractor’s policy.
The Appellate Court found that deselection was appropriate. According to the court, a named
insured can deselect coverage where it has either paid the premiums for each policy or has
“negotiated for the contracted right to be named on another’s policy.” As such, in this case,
because the contractor was a named insured and had paid for the premiums for each policy, it
had the right to deselect coverage under one policy in favor of exclusive coverage under the
other policy. Furthermore, the presence of the “other insurance” clause did not affect the
analysis. Because the contractor did not trigger coverage under the subcontractor’s policy, it
“left itself with coverage through only its” own policy. Consequently, “no other insurance was
‘available,’ as that term [was] used in the” insurer’s policy.
2.
Excess Insurance: River Village I, LLC v. Central Ins. Companies
In River Village I, LLC v. Central Ins. Companies, 396 Ill. App. 3d 480, 919 N.E.2d 426, 335 Ill. Dec.
707 (1st Dist. 2009)  a general contractor was an insured under its own CGL policy and an
additional insured under a subcontractor’s CGL policy. The additional insured endorsement
under the subcontractor’s CGL policy contained the following excess insurance clause:
This insurance is excess over: Any other valid and collectible insurance available
to the additional insured whether primary, excess, contingent or on any other
basis unless a contract specifically requires that this insurance be either primary
or primary and noncontributing.
There was no contract that required the additional insured endorsement to provide primary
insurance. After the general contractor was sued for injuries suffered during a construction
accident, it attempted to target tender the subcontractor’s CGL policy. The subcontractor’s
insurer filed a declaratory judgment action resisting the contractor's target tender.
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The Appellate Court agreed with the subcontractor’s insurer. According to the Appellate Court,
“when an insured has maintained concurrent primary insurance among multiple insurers, the
presence of an ‘other insurance’ excess provision in one insurer’s policy does not, in and of itself,
overcome the insured’s right to targeted tender.” On the other hand,
when the insurers do not stand in the same position with respect to a potential
duty of coverage, . . . an insured cannot use his targeted tender right to choose to
impose a coverage duty on an insurer with an ‘other insurance’ excess provision
in its policy to the exclusion of other co-insurers with which he holds primary
policies.
In this case, because the subcontractor’s policy only provided excess coverage and the
contractor’s own policy provided primary coverage, the contractor could not use his right to
target tender to select the subcontractor’s policy.
B.
Doctrine of Equitable Contribution: American States Ins. Co. v. CFM Const.
Co.
In American States Ins. Co. v. CFM Const. Co., 923 N.E.2d 299, 337 Ill. Dec. 740 (2d Dist. 2010)  a
general contractor was named as an additional insured under a policy issued to a subcontractor
and a policy issued to an interior decorator. The general contractor hired the subcontractor to
supervise the site. After an employee of the interior decorator fell at the work site and was
injured, he sued the general contractor and the subcontractor. The suit alleged that each had “a
duty to operate, manage, supervise, and control the construction site” and that their negligent
breach of this duty led to the employee’s injuries. When the general contractor submitted the
claim to the interior decorator’s insurer, the interior decorator’s insurer requested that the
subcontractor’s insurer contribute to the defense. The subcontractor’s insurer refused.
Furthermore, when the case settled, the subcontractor’s insurer refused to contribute to the
settlement of the claims against the general contractor.
The interior decorator’s insurer brought an equitable contribution claim against the
subcontractor’s insurer. The Appellate Court ruled that the insurer was entitled to equitable
contribution. According to the Appellate Court, “[w]hen an insurer has paid the entire loss, the
doctrine of equitable contribution allows it to be reimbursed by other insurers that are also
liable for the loss.” The doctrine “applies to multiple, concurrent insurance situations and is only
available where the concurrent policies insure the same entities, the same interests, and the
same risks.” In this case, the court found that both insurers insured the same general contractor
and the same risk.
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VII.
VEXATIOUS AND UNREASONABLE DELAY: SECTION 155 OF THE INSURANCE CODE
A.
Standing to Bring Section 155 Claim: Statewide Ins. Co. v. Houston General
Ins. Co.
In Statewide Ins. Co. v. Houston General Ins. Co., 397 Ill. App. 3d 410, 920 N.E.2d 611, 336 Ill. Dec.
402 (1st Dist. 2009)  a general contractor was an insured under its own CGL policy and was an
additional insured under a subcontractor’s policy. The general contractor was sued after a
worker at the construction site suffered an injury. When the subcontractor’s insurer refused the
defense of the general contractor after it made a selective tender, the general contractor’s
insurer defended and indemnified the general contractor. When the general contractor’s insurer
settled the claim, it took an assignment of the general contractor’s rights pursuant to section
155 of the Insurance Code against the subcontractor’s insurer. The general contractor’s insurer
subsequently filed a declaratory judgment action against the subcontractor’s insurer and sought
statutory damages pursuant to section 155. The trial court permitted the section 155 action, and
the Appellate Court affirmed.
On appeal, the Appellate Court reasoned that “the remedy under section 155 is intended for the
protection of both the insured and the assignee who succeeds to the insured’s position.” In this
case, the terms of the settlement agreement assigned the general contractor’s insurer any rights
that the general contractor would have against the subcontractor’s insurer. These rights
included any right to recover statutory damages pursuant to section 155. Furthermore, the
Appellate Court also rejected the argument that an assignee can only pursue a section 155 claim
if it takes assignment from the insured as a judgment creditor. According to the court, the
language of the statute did not support this interpretation. It also dismissed an argument that it
is inappropriate for one of the insured’s insurers to take an assignment of a section 155 claim
against another insurer.
B.
Defense to Section 155 Claim: American Service Ins. Co. v. Franchini
In American Service Ins. Co. v. Franchini, 396 Ill. App. 3d 413, 920 N.E.2d 1142, 336 Ill. Dec. 552
(1st Dist. 2009)  the insured’s sister was involved in an accident while operating the insured’s
vehicle, and the insured and his sister were subsequently sued. The insured’s sister resided with
the insured and regularly operated his vehicle. This information, however, was withheld from the
auto insurer when the insured applied for his policy. As a result, the insurer rescinded the policy
and filed an action for declaratory judgment. The insurer nonetheless defended the insured and
his sister under a reservation of rights. During the pendency of the litigation, the insurer
received conflicting information about the sister’s residency on the date of the accident and the
frequency with which she used the insured’s car. During the declaratory judgment action, the
insured and his sister attempted to file a counter-claim seeking relief pursuant to 215 ILCS
5/155. The trial court denied their motion for leave, and the Appellate Court affirmed.
The Appellate Court reasoned that “[i]t is insufficient for a party to merely assert that the other
party’s actions were ‘vexatious and unreasonable’ without also alleging facts supporting such a
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claim.” The court found that the insured’s proposed counterclaim for section 155 damages
lacked the facts necessary to state a claim. Indeed, to the court, the facts of the case suggested
that the insurer had acted responsibly. According to the court,
[D]espite evidence of . . . misrepresentation by [the insured, the insurer] defended
the [insured and his sister] against the lawsuit filed by the [plaintiffs], while
reserving its right to cancel coverage should fraud or material misrepresentation
by [the insured] be established. [The insurer] also filed this declaratory judgment
action to have a court of law determine whether there had been such fraud or
material misrepresentation. These actions by [the insurer] are precisely those
endorsed by our supreme court . . . as those which a responsible insurance
company should take.
Finally, the fact that the insured and his sister had to defend themselves during the declaratory
judgment action was just part of the procedure for determining the insurer’s obligations under
the policy and was insufficient to state a claim pursuant to section 155 of the Insurance Code.
D-21
Patrick D. Cloud
- Associate
Patrick, a native of the Saint Louis area, has spent his
entire legal career with Heyl Royster. He started as a
law clerk in the Edwardsville office in 2002 and joined
the firm as an associate in 2004. While in law school,
Patrick also served as an Associate Editor for the
Washington University Global Studies Law Review. At
Heyl Royster, Patrick concentrates his practice on toxic
tort matters, insurance coverage litigation, and
complex civil litigation.
 Madison County Bar Association
Court Admissions
 State Courts of Illinois and Missouri
 United States District Court, Southern District
of Illinois
As part of his practice, Patrick routinely takes a lead
role in the preparation and argument in significant
pretrial motions and briefs, such as those involving
issues concerning the doctrine of forum non
conveniens, venue, the Illinois Frye doctrine, consumer
fraud, choice-of-law issues, and insurance coverage
matters. Patrick also regularly defends the firm's
clients in depositions in asbestos litigation pending in
Illinois and Missouri.
Education
 Juris Doctor (Order of the Coif), Washington
University School of Law, 2004
 Bachelor of Arts-Economics (Summa Cum
Laude), University of Notre Dame, 2001
D-22
WHAT CAN THE PLAINTIFF RECOVER? DAMAGES UPDATE Presented by:
Renee L. Monfort
[email protected]
Urbana, Illinois • 217.344.0060
Prepared by:
Cheri A. Stuart
[email protected]
15502139_5.DOCX
E-1
WHAT CAN THE PLAINTIFF RECOVER?
DAMAGES UPDATE
I.
NON-ECONOMIC DAMAGES CAPS ON MEDICAL MALPRACTICE
CASES ARE UNCONSTITUTIONAL ......................................................................................................... E-3
II.
AN AFFIRMATIVE PLEADING MAY BE REQUIRED TO PRESERVE
A SET-OFF OF SETTLEMENT CREDIT ..................................................................................................... E-4
A.
B.
Thornton v. Garcini ....................................................................................................................... E-4
Thornton v. Garcini – Update .................................................................................................... E-5
III.
$100,000 VERDICT IN A WRONGFUL DEATH CASE NOT
MANIFESTLY INADEQUATE ...................................................................................................................... E-6
IV.
DAMAGES FOR INCONVENIENCE AND DISCOMFORT TOO
NEBULOUS BASED ON FACTS OF CASE .............................................................................................. E-7
V.
PUNITIVE DAMAGES DO NOT SURVIVE DEATH .............................................................................. E-8
VI.
PLAINTIFF ENTITLED TO RECOVER VALUE OF SICK TIME LOST
DESPITE HIS EMPLOYER’S ALLOWANCE OF SICK TIME ................................................................ E-9
VII.
JURY VERDICT ATTRIBUTING 50 PERCENT OF LIABILITY FOR
INJURIES TO EACH OF TWO TORTFEASORS WAS NOT AGAINST
THE MANIFEST WEIGHT OF THE EVIDENCE ................................................................................... E-10
VIII.
JURY VERDICT WAS IRRECONCILABLY INCONSISTENT ............................................................. E-12
IX.
JURY VERDICT WAS NOT INCONSISTENT ....................................................................................... E-14
X.
UPDATE FROM MAY 2009 SEMINAR................................................................................................. E-15
E-2
WHAT CAN THE PLAINTIFF RECOVER?
DAMAGES UPDATE
I.
NON-ECONOMIC DAMAGES CAPS ON MEDICAL MALPRACTICE CASES ARE
UNCONSTITUTIONAL
Lebron v. Gottlieb Memorial Hosp., Nos. 105741, 105745, 2010 WL 375190 (Feb. 4, 2010) – In
Lebron, the Supreme Court of Illinois held that the caps on non-economic damages in medical
malpractice actions set forth in section 2-1706.5 of the Illinois Code of Civil Procedure violates
the separation of powers clause of the Illinois Constitution and are therefore, void. Under the
Act that created the section, Public Act 94-677 (effective August 25, 2005), ("Act") non-economic
damages were limited to $1,000,000 against a hospital (and its hospital personnel or hospital
affiliates) and $500,000 against a physician. The Act further provided that in awarding damages
in a medical malpractice case, the finder of fact shall render verdicts with a specific award of
damages for economic loss, if any, and a specific award for non-economic loss, if any. The court
in Lebron stated that the crux of its analysis was whether the statute unduly infringed upon the
inherent power of the judiciary to correct jury verdicts through remittur.
The court stated that its decision in Best v. Taylor Machine Works, 179 Ill. 2d 367, 689 N.E.2d
1057, 228 Ill. Dec. 636 (1997) guided its analysis. In Best, the Supreme Court of Illinois
considered constitutional challenges to several provisions of Public Act 89-7 (effective March 9,
1995), commonly referred to as the Tort Reform Act of 1995. Among the challenged provisions
in that Act was a $500,000 cap on non-economic damages. The statute defined “non-economic
damages” as damages that were intangible, including but not limited to damages for pain and
suffering, disability, disfigurement, loss of consortium, and loss of society.
Because Public Act 94-67 contained an inseverability clause, the court held the Act to be invalid
in its entirety. Other sections of the Act that were invalidated include section 310, which
subjected medical malpractice insurance carriers to greater oversight in reporting requirements;
section 315, which modified certain aspects of the disciplinary process for physicians and
created an internet-based system for providing public access to information regarding matters
such as physician criminal and disciplinary histories, whether a physician’s hospital privileges
have been revoked or involuntarily restricted and any medical malpractice judgments or
arbitration awards which may have been entered against a physician; section 330, which made
various changes to the requirement set forth in section 2-622 (requirement of report of a
reviewing healthcare professional in a medical malpractice action be attached to the complaint),
a provision rendering inadmissible any expression of grief, apology, or explanation made by a
healthcare provider to a patient or patient's representative within 72 hours of when the provider
knew or should have known of the potential cause of an adverse outcome, and revised expert
witness standards; section 340, which expressly included retired physicians within the Good
Samaritan Act; and a Sorry Works! Pilot Program Act, which was intended to assess whether
prompt apologies by hospitals and physicians for errors in patient care accompanied by prompt
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offers of fair settlement had an effect on the costs the hospitals and physicians ultimately
expended on healing art malpractice claims.
II.
AN AFFIRMATIVE PLEADING MAY BE REQUIRED TO PRESERVE A SET-OFF OF
SETTLEMENT CREDIT
A.
Thornton v. Garcini
In Thornton v. Garcini, No. 107028, 2009 WL 3471065 (Oct. 29, 2009), the Supreme Court of
Illinois found that the defendant had forfeited his claim for a set-off because he had failed to file
a pleading. The defendant physician raised his right to a set-off for the first time in his post-trial
motion.
In this case, the plaintiff’s son, Jason Anthony, was born prematurely in a breech position, at an
approximate age of 24 weeks gestation. During childbirth, Jason’s head became stuck. The infant
died when the nurses at the hospital were unable to complete the delivery. The defendant
physician, Dr. Garcini, arrived at the hospital an hour and ten minutes later. Plaintiff’s suit
contained wrongful death and survival claims, and also included an individual claim for
intentional infliction of emotion distress, claiming she suffered emotional distress from the
delivery.
At the first trial, the jury found in favor of Dr. Garcini and the nurses on the wrongful death and
survival claims and the intentional infliction of emotional distress claim. On the intentional
infliction of emotional distress claim against the hospital, the jury found for plaintiff and
awarded her $175,000. Plaintiff filed a post-trial motion against all the defendants. During the
pendency of the motion, the hospital and nurses entered into a release of claims and
satisfaction of judgment upon payment of $175,000. The trial court denied the post-trial motion
against Dr. Garcini. The plaintiff appealed only the judgment in favor of Dr. Garcini. The
Appellate Court reversed and granted plaintiff a new trial.
At the second trial, the plaintiff testified about her emotional state from laying in a hospital bed
for over an hour with the infant partially delivered. Plaintiff amended her complaint to conform
to the pleadings and submitted a negligent infliction of emotional distress claim to the jury. The
intentional infliction of emotional distress claim was not submitted to the jury. The jury found in
favor of Dr. Garcini on the wrongful death and survival claims and for plaintiff on the negligent
infliction of emotional distress claim. The jury awarded plaintiff $700,000 in damages. Dr. Garcini
filed a post-trial motion, which included a request for set-off of the settlement paid by the
hospital.
Section 2-608 of the Illinois Code of Civil Procedure addresses when a claim by a defendant
against a plaintiff must be raised. It provides, in relevant part: (a) any claim by one or more
defendants against one or more plaintiffs, or against one or more co-defendants, whether in the
nature of set-off, recoupment, cross-claim or otherwise, and whether in tort or contract for
E-4
liquidated or unliquidated damages, or for other relief, may be pleaded as a cross-claim in any
action, and when so pleaded shall be called a counterclaim; (b) the counterclaim shall be part of
the answer, and shall be designated as a counterclaim. According to the court in Thornton,
section 2-608 provides that a set-off claim may be raised as a cross-claim in the defendant’s
answer. The court cited to its recent decision in MidAmerica Bank, FSB v. Charter One Bank, FSB,
232 Ill. 2d 560, 905 N.E.2d 839, 329 Ill. Dec. 1 (2009), in which it recognized that although the
pleading requirements of section 2-608 are framed as permissive, a party cannot be afforded
relief without a corresponding pleading. In MidAmerica, the court explained that the defendant
is required to raise a claim for a set-off in the pleadings to give the plaintiff notice and an
opportunity to defend against the claim.
The Thornton court went on to hold that the trial court did not err in denying the defendant’s
request for a set-off when the defendant failed to raise the issue in the pleadings because the
plaintiff did not have notice or opportunity to defend against the set-off claim until after the
completion of the second trial.
B.
Thornton v. Garcini – Update
Opinion Modified Upon Denial of Rehearing April 22, 2010 – This Type of Set-Off May Be
Raised at Any Time
The Supreme Court held in its original opinion that the defendant forfeited his set-off claim by
raising it for the first time in his post-trial motion. Upon consideration of defendant’s petition for
rehearing, the court was persuaded that a modification of the court’s opinion was necessary.
According to the defendant, a defendant’s request for set-off to reflect amounts paid by settling
defendants is in the nature of an enforcement action and a set-off that is not a counterclaim to
be evaluated by the trier of fact may be brought at any time. In Star Charters v. Figueroa, 192 Ill.
2d 47, 48-49 (2000), the court held that a motion for set-off may be brought after trial, as it is in
the nature of an enforcement action and does not arise as a result of the trial.
The court explained that the term set-off is used in two distinct ways. A set-off can refer to a
situation when a defendant has a distinct cause of action against the same plaintiff who filed suit
against him. With this type of set-off, the claim must be raised in the pleadings. A set-off can
also refer to a defendant’s request for a reduction of the damage award because a third party
has already compensated the plaintiff for the same injury. This occurs, for example, when a codefendant who would be liable for contribution settles with the plaintiff. This type of set-off may
be raised at any time.
The court found that in this case, the defendant’s set-off request constituted an enforcement
action rather than a counterclaim. Therefore, the defendant’s claim for set-off was not forfeited
simply because it was not raised in the pleadings. The court went on to find, however, that the
trial court properly denied defendant’s request for set-off because the judgment against the
defendant in the second trial was only for Toni Thornton’s claim of negligent infliction of
emotional distress and the settlement with the hospital was not merely for damages sought by
E-5
Toni Thornton, individually, but also for damages sought by Toni Thornton, as special
administrator of the estate of Jason Ebner, deceased. In addition, it released a variety of claims
against the hospital as well as against the individual nurses who had not been found liable prior
to settlement. The court rejected the defendant’s argument that he need not establish the
proper allocation of the settlement proceeds. The court found that given the multiple parties,
injuries, and claims settled in plaintiff’s agreement with the hospital, the allocation of the full
settlement proceeds to set-off defendant’s liability for only the negligent infliction of emotional
distress could not be justified in the absence of any supporting proof.
III.
$100,000 VERDICT IN A WRONGFUL DEATH CASE NOT MANIFESTLY INADEQUATE
In Dobyns v. Chung, No. 5-07-0568, 2010 WL 1055196 (5th Dist. Mar. 19, 2010), the plaintiff
argued that the circuit court erred in denying his post-trial motion for an additur or, in the
alternative, a new trial, because the damages awarded by the jury were manifestly inadequate
and contrary to the evidence. The court stated in a variety of contexts, courts of review in this
state have held that damages for loss of society are difficult to estimate exactly, and no standard
of value applies; rather, the assessment is committed to the sound discretion of the jury as to
what is reasonable under the circumstances of any given case guided by its observations,
experience, and sense of fairness. The plaintiff argued that the damages awarded did not
comport with verdicts in similar cases within the State of Illinois.
In reaching its finding, the Appellate Court, Fifth District found there was no concrete evidence
in the record of any specific loss of money or other economic loss resulting from the death of
Angela Dobyns. Along with the evidence of the close familial ties between Ms. Dobyns (she was
approximately 35 years old at the time of her death), her widower, and her teenage sons, as well
as their feelings of grief and loss, the jury was presented with a host of evidence regarding Ms.
Dobyns’ physical and mental health.
Ms. Dobyns’ death was caused by respiratory arrest as a result of the combination of drugs in
her system. She had been treating with her physician, Dr. Chung, for back pain for several years.
The plaintiff alleged that defendant physician Dr. Chung was negligent in failing to properly
evaluate and treat Ms. Dobyns’ pain syndrome, prescribing inappropriate types and amounts of
pain and other medications, and in failing to provide adequate information and warnings
regarding the prescribed medications and the risk of potential harm from taking those
medications. The jury also entered a finding of contributory negligence on the part of the
deceased, so the amount of the $100,000 award was reduced by 50 percent. Based on the
number of pills in her prescription bottles, she had taken more pills than what Dr. Chung had
prescribed. An autopsy was performed and the number of missing pills was consistent with the
supertherapeutic levels found in her body.
The new recovery for grief, sorrow or bereavement suffered by the surviving spouse or next-of-kin
under the Wrongful Death Act that was effective May 31, 2007, did not apply in this case (Ms.
Dobyns died in 2004). The jury verdict may have been higher if it had applied.
E-6
IV.
DAMAGES FOR INCONVENIENCE AND DISCOMFORT TOO NEBULOUS BASED ON
FACTS OF CASE
In Mayer v. Chicago Mechanical Services, Inc., No. 2-09-0239, 2010 WL 989033 (2d Dist. Mar. 16,
2010), the issue was whether plaintiffs, who alleged that a defective heating and air conditioning
system furnished and installed by one of the defendants caused mold growth that rendered
their homes temporarily uninhabitable, were entitled to compensation for discomfort and
inconvenience associated with being displaced from their homes. The Appellate Court, Second
District stated that while it left open the possibility that damages for discomfort and
inconvenience might be available under appropriate circumstances, it held that those damages
were not available as they were too nebulous.
The defendant argued that damages for inconvenience and discomfort were not recoverable as
a matter of law and that theory of damages had not been properly pled or disclosed during
discovery. The plaintiffs argued that they were entitled to compensation for the discomfort and
inconvenience of being forced to leave their homes to escape the dangerous condition caused
by the defective heating and air conditioning system. The court found that the question of
whether damages may be awarded for the inconvenience and discomfort associated with
temporary housing arrangements appeared to be a question of first impression in Illinois.
The court looked to VanBrocklin v. Gudema, 50 Ill. App. 2d 20, 199 N.E.2d 457 (2d Dist. 1964). In
VanBrocklin, manure from the defendant’s barn contaminated the plaintiffs’ well. The plaintiffs
were required to get drinking water from a filling station and take sponge baths for eight
months. The issue considered by the court was whether the law permitted recovery for the
elements of inconvenience and discomfort entailed in the temporary loss of a water supply
caused by the negligence of another. The VanBrocklin court quoted Gempp v. Bassham, 60 Ill.
App. 84 (3d Dist. 1894), for the proposition that where the injuries to physical discomfort results
in deprivation of the comfortable enjoyments of a home, the measure of damages is not the
depreciation in the rental value of the premises occupied by the plaintiff, but compensation for
such physical discomfort and deprivation of the use and comforts of the home.
The Mayer court stated that a rule strictly limiting damages for inconvenience and discomfort to
cases where plaintiffs remain in their home or on their land might produce arbitrary results. The
court found that in this case, the plaintiffs largely ignored the practical effects of being displaced
from their homes, and instead focused principally on the abstract sense of satisfaction
associated with one’s home. In essence, the plaintiffs’ theory of damages was rooted more in the
sentimental attachment to their homes than in the tangible comforts and convenience of living
in those homes.
At oral argument, the plaintiffs’ attorney contended that one’s home is a unique environment
for which there can be no substitute and that damages for discomfort and inconvenience are
appropriate no matter how luxurious the alternative quarters might be. By virtue of this
reasoning, one could seek compensation for displacement without regard to his or her actual
living conditions. The court found that they could not subscribe to such a sweeping view, and
E-7
found that the type of harm for which plaintiffs sought recovery was simply too nebulous to
serve as a basis for an award of damages.
V.
PUNITIVE DAMAGES DO NOT SURVIVE DEATH
In Marston v. Walgreen Co., 389 Ill. App. 3d 337, 907 N.E.2d 851, 330 Ill. Dec. 38 (1st Dist. 2009),
the court addressed whether punitive damages for personal injuries can survive death of the
injured party. Defendant Walgreen admitted liability in providing the wrong prescription to the
77-year-old decedent. The plaintiff alleged that the decedent suffered injury and ultimately
death as a result of the prescription. The prescription was written for an anti-gout medicine
called Allopurinol. The pharmacist gave the decedent a bottle of pills labeled Allopurinol, but
containing Glipizide pills, a medication used to treat diabetes by lowering a person’s blood
sugar. The jury awarded $6,351,107 in compensatory damages and $25 million in punitive
damages.
The Appellate Court, First District stated that the Supreme Court of Illinois has consistently held
that, absent specific statutory authority or very strong equitable reasons, punitive damages are
not permitted in Illinois in an action under the Survival Act (735 ILCS 5/27-6) or as part of a
common law action for wrongful death. The court looked at Froud v. Celotex Corp., 98 Ill. 2d 324,
456 N.E.2d 131, 74 Ill. Dec. 629 (1983). The Froud court considered whether the holding of
Mattyasovszky v. West Towns Bus Co., 61 Ill. App. 2d 31, 330 N.E.2d 509 (1975) should be
overturned. The Froud court very clearly reaffirmed Mattyasovszky noting that the legislature
had taken up and rejected a bill which would have amended the Survival Act to permit punitive
damages to survive the death of the injured party. The Marston court found it to be clear that
the exception noted in Mattyasovszky for punitive damages contemplated cases where there
were strong equitable considerations in which a party would otherwise be left without a remedy.
The Marston court stated that in the case before it, it was also clear that the plaintiff was entitled
to recover compensatory damages, and thus did not find that an equitable resolution or remedy
was required. The narrow exception referenced in Mattyasovszky was inapplicable to the facts.
The Mattyasovszky case cited two cases from other jurisdictions which allowed punitive damages
where a party would otherwise be left without a remedy: Moragne v. States Marine Lines, Inc.,
398 U.S. 375, 90 S.Ct. 1772 (1970) (although Federal Maritime Law permitted punitive damages
for deaths resulting from unseaworthy vessels, when the death occurred within the territorial
waters of a state which did not allow such damages, the party would otherwise be left without a
remedy); Gaudette v. Webb, 362 Mass. 60, 284 N.E.2d 222 (1972) (common law cause of action
for wrongful death recognized where minor plaintiffs would have otherwise been barred from
recovery because of the statute of limitations for minors).
The Marston court stated that actions for punitive damages will not survive the death unless the
legislature specifically authorizes such an action or there are strong equitable reasons for
allowing the recovery of punitive damages. An ample compensatory damages award does not fit
the narrow exceptions to the principle.
E-8
The court next considered whether the award of compensatory damages in the amount of
$6,351,107 was excessive. The decedent was given the prescription on January 1, 2001. He was
found unresponsive on January 2, 2001, and hospitalized until January 22, 2001. While there, he
suffered acute kidney failure, persistent hypoglycemia, decreased mental functioning and
pneumonia. Because of his kidney problems, he was placed on dialysis, which was to last until
the end of his life. During the remaining 22 months of his life, the decedent required full-time
care. He underwent dialysis regularly, was hospitalized for 136 days, placed in a rehabilitation
facility, had multiple surgeries, and required a feeding tube. He suffered a stroke, had episodes
of aspiration pneumonia, and became severely depressed. On November 8, 2002, he directed
that his dialysis be discontinued, telling a friend he could no longer face life. He died on
November 11, 2002.
The court stated that unless a jury verdict is so large as to clearly establish it was the result of
passion or prejudice, it should not be disturbed. The court found that there was ample evidence
of the grievous and ultimately deadly condition into which the decedent was placed through the
negligence and misconduct of Walgreen and its pharmacist. The amount awarded by the jury
matched what the plaintiff requested. The court stated that when confronted with a man whose
entire life was put into a downward spiral, which likely resulted in his decision to cease dialysis
treatment, and ultimately led to his death, it borders on futility to compare the amounts
awarded to other victims or their representative in unrelated cases. The court noted, however,
that similar amounts of compensatory damages have been awarded in other cases.
VI.
PLAINTIFF ENTITLED TO RECOVER VALUE OF SICK TIME LOST DESPITE HIS
EMPLOYER’S ALLOWANCE OF SICK TIME
Cummings v. Jha, 394 Ill. App. 3d 439, 915 N.E.2d 908, 333 Ill. Dec. 837 (5th Dist. 2009) – In this
case, the defendant, Dr. Lakshmanan, performed a laparoscopic cholecystecomy on the plaintiff.
The plaintiff suffered a common postoperative complication, a bile leak, which went
undiagnosed by Dr. Lakshmanan and the defendant, Dr. Jha. The jury returned a verdict in favor
of the plaintiff and awarded damages in the amount of $210,000.
An issue on appeal was whether Dr. Jha was entitled to a new trial because the circuit court
abused its discretion by instructing the jury that the plaintiffs may recover damages for the value
of the sick time that Cummings used. Dr. Jha argued that the previously accumulated sick time
had no intrinsic value and that Cummins’ accumulation of as much sick time as his employer
allows squarely refutes the notion that his use of sick time represented any loss at all, let alone a
compensable one. The plaintiff countered that Illinois law clearly provided that the plaintiff, who
was required to use a benefit to replace earnings he would have earned, but for his absence
from work by reason of the tortious conduct of Dr. Jha, was entitled to recover the value of that
benefit.
E-9
In Illinois, a plaintiff is entitled to recover the full value of time lost from work, without regard to
benefits received from his employer. The justification for this rule is that the wrongdoer should
not benefit from the expenditures made by the injured party or take advantage of contracts or
other relations that may exist between the insured party and third persons.
In Hoobler v. Voelpel, 246 Ill. App. 69 (2d Dist. 1927), the plaintiff was away from work
approximately six weeks. The plaintiff received pay from his employer for the time he was unable
to work because he was allotted time for vacation and sick leave. The plaintiff exhausted six
weeks of his accumulated sick leave and vacation periods. The court concluded that the
employer’s payment for sick time to the plaintiff could not operate to reduce the damages
recoverable against the tortfeasor. In Boden v. Crawford, 196 Ill. App. 3d 71, 552 N.E.2d 1287, 142
Ill. Dec. 546 (4th Dist. 1990), the plaintiff suffered an injury to his back and lost time from work.
Pursuant to the terms of his employment, he was entitled to a disability leave and received a
payment of more than 50 percent of the previous year’s salary. The Appellate Court held that
the plaintiff was entitled to recover the full value of the time he lost from work, without regard
to the disability benefit received by the plaintiff from his employer.
The evidence at the trial demonstrated that Cummings’ hourly rate in 1999 was $25.49, and that
he used 280 hours of sick leave. The jury awarded him $7,000 as the reasonable value of benefits
lost (280.00 x $25.49 = $7,137.20). Pursuant to Illinois law, Cummings was entitled to recover the
value of the time lost from his employment, despite his employer’s allowance of sick time.
VII.
JURY VERDICT ATTRIBUTING 50 PERCENT OF LIABILITY FOR INJURIES TO EACH OF
TWO TORTFEASORS WAS NOT AGAINST THE MANIFEST WEIGHT OF THE
EVIDENCE
In Sakellariadis v. Campbell, 391 Ill. App. 3d 795, 909 N.E.2d 353, 330 Ill. Dec. 640 (1st Dist. 2009),
the plaintiff’s complaint alleged that she was injured in two separate car accidents that occurred
three months apart. The first accident involved defendant Campbell and the second accident
involved defendant Walters. The jury found both defendants responsible for an amount totaling
approximately $518,000 in damages. Before the jury returned a verdict, one of the defendants
settled for $150,000. The trial court entered a judgment of one-half the total verdict against the
remaining defendant.
Plaintiff argued on appeal that the trial court erred in awarding plaintiff only 50 percent of the
$518,000 verdict from the non-settling defendant. Rather, the non-settling defendant – based
on a theory of joint and several liability – should have been responsible for the entire verdict,
less only the $150,000 received from the settling defendant. The Sakellariadis court rejected
plaintiff’s theory of recovery and affirmed the ruling of the trial court.
The evidence at trial showed plaintiff was treated for injuries to her eyes, shoulder, spine, and
knee. Plaintiff testified that the airbag in her car deployed in the first accident, causing burns to
her eyes. She went to the hospital for her injuries, which included pain in her upper back.
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Plaintiff was treated and released. After the second accident, when her car’s airbag again
deployed, plaintiff first went home, but later went to the hospital after experiencing leg and
back pain. She later had surgery on her shoulder, knee, lower back, and eyes. She said, with all
sincerity, it was the second accident that really “killed her.”
In the jury instruction conference, the attorney for the defendant involved in the second
accident argued that the defendants were consecutive and not concurrent tortfeasors. He
maintained that there were two separate accidents and that the court should tender to the jury a
separate verdict form for each accident. Plaintiff’s counsel argued plaintiff’s injuries were
indivisible. The trial court called the action a novel case, noting plaintiff had pre-existing
conditions before the first accident. The trial court observed that after the first accident, plaintiff
still had the original pre-existing conditions plus injuries from the first accident that had become
pre-existing conditions. The alleged injuries in the second accident were added to these preexisting conditions.
The trial court tendered to the jury the verdict form proposed by plaintiff. The form required
jurors to assign monetary amounts and percentages of responsibility to each defendant in 14
categories of past or future injuries. For example, one category was the reasonable expense of
the medical care, treatment, and services received for back surgery. To the right of this category
was a blank for the jury to fill in a dollar amount. To the right of this, were two blanks for the
jury to fill in percentages of responsibility for Campbell and Walters. Walters’ counsel objected
to the verdict form, arguing it provided no option for finding Walters not guilty. The jury
returned an itemized verdict of approximately of $518,000, attributing 50 percent of the liability
to each defendant. The jury award included $200,000 for past and future pain and suffering,
$102,000 for the reasonable expense of future medical care, and $100,000 for future disability.
The jury awarded lesser amounts for past and future back surgery, future neck surgery, and
other past medical care. The trial court then entered its judgment against Walters for 50 percent
of the verdict. The court concluded that plaintiff had consolidated two separate, distinct torts
into a single complaint for purposes of judicial expediency. The court further concluded that the
jury had determined which accident caused which injuries and had apportioned the damages
accordingly.
Plaintiff argued she should have received the entire jury verdict from Walters, minus only
$150,000 for Campbell’s settlement, because each defendant was jointly and severally liable for
the entire verdict. She maintained that defendants were successive or joint tortfeasors who
caused her indivisible injuries.
The court considered whether the evidence supported plaintiff’s contention that defendants
were joint tortfeasors who were jointly and severally liable for the entire amount of the verdict.
The common law doctrine of joint and several liability holds joint tortfeasors responsible for the
plaintiff’s entire injury, allowing plaintiff to pursue all, some, or one of the tortfeasors
responsible for his injury for the full amount of the damages. Where two or more persons, under
circumstances creating primary accountability, directly produce a single, indivisible injury by
their concurrent negligence, they are jointly and severally liable even though there is no
E-11
common duty, common design, or concerted action. The existence of a single, indivisible injury
is necessary to establish that multiple defendants are jointly and severally liable.
The court stated that Burke v. 12 Rothschild’s Liquor Mart, Inc., 148 Ill. 2d 429, 593 N.E.2d 522,
170 Ill. Dec. 633 (1992), is a seminal case on indivisible injury and joint liability. Where
defendants, albeit sharing no common purpose or duty, and failing to act in concert,
nevertheless acted concurrently to produce an indivisible injury to the plaintiff, courts found
them to be joint tortfeasors. The court in Burke adopted the test of jointness in section 433(a) of
the Restatement which provides that damages are to be apportioned among two or more
causes under these limited circumstances: (a) when each injury is distinct from the other injuries;
or (b) when there is a reasonable way of deciding each tortfeasor’s contribution to a single
harm. An injury cannot be apportioned among two or more tortfeasors unless it fits into
category (a) or (b). The explanatory notes to this section of the Restatement recognize that
certain kinds of harm cannot be divided in a logical, reasonable, or practical way. On the other
hand, the Restatement acknowledges that one defendant should not be liable for the distinct
harm inflicted by another defendant merely because it would be difficult to apportion the
damages. If a plaintiff’s injuries can be apportioned among multiple tortfeasors, then the
tortfeasors are not jointly and severally liable. The plaintiff’s allegation that she was injured twice
on the same part of her body will not transform two injuries into one. Where a party negligently
aggravates a pre-existing injury caused by another’s negligence, he has committed a tort that is
separate and distinct from the tort committed by the first wrongdoer and the injuries inflicted by
each are separate and distinct injuries.
The plaintiff in this case alleged she suffered injuries in each accident. The testimony supported
the conclusion that the injuries in the first accident were aggravated by the second accident. The
court found that the jury’s verdict attributing 50 percent of the liability for plaintiff’s injuries to
each defendant was not against the manifest weight of the evidence.
VIII.
JURY VERDICT WAS IRRECONCILABLY INCONSISTENT
In Stamp v. Sylvan, 391 Ill. App. 3d 117, 906 N.E.2d 1222, 329 Ill. Dec. 611 (1st Dist. 2009),
following a motor vehicle accident, which occurred on May 24, 1996, the defendant admitted
liability and the case was tried on the issue of damages. The plaintiff testified at trial that after
the impact, she experienced extreme, lower back spasms, a headache and stiffness in her neck. A
neurologist testified as the defendant’s medical expert. He testified that based upon a
reasonable degree of medical certainty, the plaintiff’s soft tissue injury to her neck would have
healed by approximately six months.
The plaintiff testified at trial that she still experienced pain and continued to see a chiropractor
two times a week due to her continued pain. She testified that she could walk and participate in
low impact exercise, but that she could not dance, ride horseback, or play tennis. She also
testified that she could not lift heavy packages or stand for long periods of time. Plaintiff
testified that she also suffered from digestive problems and experienced pain in her low
E-12
abdominal area, which occasionally prevented her from walking. She testified that she was
restricted in what she could eat.
The jury returned a verdict for plaintiff for past medical expenses in the amount of $4,348. The
jury awarded $0 in damages for pain and suffering and $0 in damages for loss of a normal life.
Plaintiff filed a motion for a new trial on damages. The circuit court granted plaintiff’s motion for
a new trial, finding the objective evidence supported an award for pain and suffering and loss of
normal life for a period of six months after the automobile accident. The plaintiff appealed,
contending the court erred by restricting the amount of damages that could be presented at the
new trial.
The Supreme Court of Illinois has held that a jury’s award of damages is entitled to substantial
deference by the court and a trial court can upset a jury’s award of damages only if it finds that:
(1) the jury ignored a proven element of damages; (2) the verdict resulted from passion or
prejudice; or (3) the award bore no reasonable relationship to the loss sustained. Plaintiff argued
that she was properly awarded a new trial on damages because the jury’s verdict awarding
nothing for pain and suffering or for loss of a normal life ignored the objective proof of injury
presented at trial.
The Stamp court found that the uncontroverted evidence was that the plaintiff suffered a soft
tissue injury to her neck and back that would heal in approximately six months. An award of $0
damages for pain and suffering for a six-month period, along with an award of medical
expenses for the same six-month period, ignored a proven element of damages the jury was not
free to disregard. Therefore, the court found that the circuit court’s determination granting a
new damages trial was not an abuse of discretion where the jury’s verdict was irreconcilably
inconsistent.
The plaintiff introduced into evidence a summary of medical bills which was broken down into
the following three components: (1) medical bills for the six months after the accident  $4,348;
(2) medical bills after six months, if the jury felt the injury lasted longer than six
months  $22,936.50; and (3) if the jury found the Crohn’s disease was related to the accident,
then an additional $28,423.33 in medical bills.
The Stamp court stated that the jury obviously found plaintiff’s injuries and damages only lasted
for six months and awarded plaintiff medical expenses of $4,348. The only inconsistency in the
verdict, therefore, was the failure to award pain and suffering, and loss of a normal life damages
for a period of six months. The court went on to find that the circuit court’s remand was
appropriately limited to the period of six months from the date of plaintiff’s accident where
there was sufficient evidence presented at trial to support an award of damages pertaining to
pain and suffering and loss of a normal life for that time period.
E-13
IX.
JURY VERDICT WAS NOT INCONSISTENT
In Poliszczuk v. Winkler, 387 Ill. App. 3d 474, 899 N.E.2d 1115, 326 Ill. Dec. 464 (1st Dist. 2008),
the defendant struck a motor vehicle occupied by the plaintiffs (Marie, age 15, and Joseph, age
17). The plaintiffs brought the action in the Circuit Court of Cook County seeking to recover
damages for injuries sustained as a result of the accident. Defendant admitted negligence prior
to trial. The jury rendered verdicts in favor of the plaintiffs. The jury awarded Marie a total of
$30,100, allocated as follows: $24,100 for past and future medical expenses, $6,000 for past and
future pain and suffering, and $0 for disability experienced and reasonably certain to be
experienced in the future, and $0 for loss of a normal life experienced and reasonably certain to
be experienced in the future. The jury awarded Joseph a total of $9,000, allocated as follows:
$7,000 for past and future medical expenses, $2,000 for past and future pain and suffering, $0
for disability experienced and reasonably certain to be experienced in the future, and $0 for loss
of a normal life experienced and reasonably certain to be experienced in the future.
Plaintiffs filed a post-trial motion for a new trial, arguing that the jury’s verdicts were against the
manifest weight of the evidence. Plaintiffs argued that the jury verdicts were internally
inconsistent and inadequate. In the alternative, plaintiffs’ post-trial motion sought an additur.
The trial court denied plaintiffs’ post-trial motion and plaintiffs appealed.
Marie testified that she began to feel pain in her neck and back on the way to the hospital. She
testified that her neck pain eventually subsided, but that she continued to have low back pain in
the lumbar area. She testified that her lower back pain was still present at the time of trial, six
years after the accident. She testified she was eventually able to return to dancing, but that she
was unable to do backbends, or bend forward. Bending her back forward or backward would
result in a radiating pain down her right leg. She testified that it was hard to put on socks or
shoes or tie her shoes. She could not clean the bathtub. She could not take out the garbage. She
could not lift anything heavy. She testified that as a result of her injury, she could never have the
dance career that she always desired. Joseph was an avid go-cart racer before the accident. After
the accident, he could not get out of the go-cart under his own power. He had trouble getting
up in the morning and would “walk like an old man” for several minutes until his back warmed
up. The testimony at trial on behalf of Joseph at the time was primarily from his father, Charles,
because Joseph was away at college in Arizona. His father could not testify as to his son’s
limitations or current pain level at the time of trial.
Prior to the Supreme Court of Illinois’ decision in Snover v. McGraw, 172 Ill. 2d 438, 667 N.E.2d
1310, 217 Ill. Dec. 734 (1996), a line of Illinois cases held that an award for medical expenses
without an award for pain and suffering and/or disability required reversal per se. In Snover, the
Supreme Court of Illinois examined that line of cases and held that a jury may award pain
related medical expenses and, at the same time, may also determine that the evidence of pain
and suffering was insufficient to support a monetary award. After rejecting the reversal per se
rule, the court held that an award of medical expenses alone could still be inconsistent. In any
event, it was clear that the reversal per se rule with regard to charges of internally inconsistent
jury verdicts has been rejected in the state. The court stated that it could overturn a jury’s award
E-14
only if the jury ignored an element of damages, acted out of passion or prejudice, or made an
award not reasonably related to loss. When evaluating this reasonable relationship, the court
must keep in mind that disability and loss of normal life are separate and distinct from either
past and future medical expenses or pain and suffering. Unlike economic damages, such as loss
of earnings, a disability or loss of normal life award is not as readily calculable in money and
jurors must draw on their real life experience in making an award.
The Poliszczuk court stated that the evidence in the record permitted the jury to conclude that
Marie was not disabled and would not be in the future; likewise, the evidence in the record
permitted the jury to award Marie nothing for loss of a normal life. Where evidence is
contradicted, or where it is merely based on the subjective testimony of a plaintiff, a jury is free
to disbelieve it. Although both Marie and her father testified about the restrictions in Marie’s
normal life, the jury was free to make its own credibility determinations and reject or accept
their testimony. As part of its credibility determination, the jury could have considered the
inconsistency between Marie’s and Charles’ testimony at trial. For instance, with regard to time
taken off from dancing, Marie testified that she took two years off from dancing, where Charles
testified that Marie took one year off.
The jury was also free to draw reasonable inferences about Joseph’s past and future disability
and loss of a normal life. The court noted that Joseph’s testimony was not included in the
record.
X.
UPDATE FROM MAY 2009 SEMINAR
Clark v. Children’s Memorial Hosp., 391 Ill. App. 3d 321, 907 N.E.2d 49, 329 Ill. Dec. 730 (1st Dist.
2009) – The appellate decision allowing parents in a wrongful birth suit to now include recovery
for the reasonable value of caretaking services for a severely disabled child beyond the age of
majority has been appealed to the Supreme Court of Illinois. The Supreme Court of Illinois has
granted leave to appeal. The Supreme Court of Illinois’ decision is pending.
E-15
Renee L. Monfort
- Of Counsel
Renee joined the Urbana office in December 2009.
She brought with her an established professional
liability practice and will be an asset to our statewide
professional liability practice group. Prior to joining
Heyl Royster she was a partner with the law firm of
Dobbins, Fraker, Tennant, Joy & Perlstein for almost
20 years, where she trained under the tutelage of Don
and Todd Tennant before assuming responsibility for
overseeing that firm's professional liability practice
group.



Renee's civil litigation practice focuses on the defense
of healthcare providers and other professionals
(attorneys, accountants, real estate agents, etc.) in
professional liability litigation. In addition to
representing clients in healthcare related litigation,
she also provides general counsel to individual health
care professionals, multi-specialty clinics and hospitals
on a wide range of administrative, policy and risk
management matters. The scope of her practice also
includes representation of clients in administrative
proceedings before the Illinois Department of
Financial and Professional Regulation and the Illinois
Human Rights Commission.
Communication in Healthcare”
Risk Management Seminar 2003
“A Glimpse at Medical Malpractice”
Legal Issues in Medicine Seminar sponsored by
University of Illinois at Chicago, College of
Medicine 2003
“Winning the Malpractice War”
Risk Management Seminar 2002
“Taking and Defending Depositions”
Illinois Defense Counsel Rookie Seminar 2001
as Leading Lawyers.
 Defense Research Institute (Alternative Dispute
Resolution Committee, 2000-Present; Medical
Liability Committee, 2000-Present)
(Alternative Dispute Resolution Committee
(2000-Present)
 East Central Illinois Women Attorneys
Association
 Illinois Society of Healthcare Risk Management
 Illinois Association of Healthcare Attorneys
 American Health Lawyers Association
 Champaign County Bar Association
Renee is an Adjunct Professor at the University of
Illinois College of Law where she teaches Trial
Advocacy. She is AV Rated by Martindale-Hubbell and
has been designated as one of the "Leading Lawyers"
in Illinois by the Chicago Daily Law Bulletin.
She has made presentations and participated in
programs in a variety of settings. She has lectured for
healthcare organizations, insurance companies and
educational institutions.
Court Admissions
Illinois
 United States Courts of Appeals, Seventh
Circuit
Public Speaking
 “How to Avoid Litigation When Communicating
with Patients and Documenting”
Christie Clinic 2009
 “Litigation and Risk Management”
Hudson Healthcare Risk Management Seminar
2008
 “Medical and Legal Risk Mitigation Strategies
for Ureter and Bladder Injury and Prevention”
Panel Member for Risk Management
Presentation 2007
 “How to Keep Your Metatarsals from Touching
Your Tonsils – The Importance of
Education
 Juris Doctor, Stetson University, 1990
 Bachelor of Science - Accounting, Murray State
University, 1986
E-16
INFORMAL DISCOVERY: GOOGLE, FACEBOOK AND BEYOND
Presented and Prepared by:
Matthew R. Booker
[email protected]
Springfield, Illinois • 217.522.8822
15545181_6.DOCX
F-1
INFORMAL DISCOVERY:
GOOGLE, FACEBOOK AND BEYOND
I.
INTRODUCTION............................................................................................................................................ F-3
II.
WHAT IS SOCIAL NETWORKING? .......................................................................................................... F-4
A.
B.
How It Works .................................................................................................................................. F-4
Demographics ................................................................................................................................ F-5
III.
THE SIGNIFICANCE OF SOCIAL NETWORKING SITES .................................................................... F-6
IV.
LEGAL AND ETHICAL CONSIDERATIONS ............................................................................................ F-8
V.
CONCLUSION ..............................................................................................................................................F-10
VI.
ADDITIONAL RESOURCES.......................................................................................................................F-10
F-2
INFORMAL DISCOVERY:
GOOGLE, FACEBOOK AND BEYOND
I.
INTRODUCTION
Virtually everyone is familiar with the power of the internet. Through search engines, websites
and a multitude of other different resources, anyone can virtually learn and discover information
on any topic. This, of course, includes information pertaining to individuals. The purpose of this
brief article is to examine some of the issues involved in obtaining information through internet
sites, including specifically social networking sites. This is by no means an exhaustive treatise on
the subject, but merely to raise some issues related to the prevalence of this type of information,
defining what social networking and similar sites are. This article also highlights the significance
of such sites, including their use in discovery and investigation of potential and litigated claims,
legal and ethical considerations and the use of that information.
It should be noted that electronic informal discovery is very much in its infancy in terms of the
claims and litigation process. While there are some reported decisions on these topics, there is
certainly no unified movement in the courts to address these types of issues. Various bar groups
and other court panels are looking into adopting model rules, but as of yet, very few
jurisdictions have even addressed the subject. Therefore, there is no one set of rules that defines
the scope and use of this information.
The internet is ubiquitous. Google states that “several hundred million” individual searches are
performed each day through its site. Google lists the results of those searches based on the
language and other identifying information in the search request. Search results can list several
million different websites with corresponding information. Google also has a search feature that
searches only images. The obvious use in claims handling as well as litigation is obvious. Simply
“googling” a potential claimant or plaintiff’s name in a search engine will likely provide
information pertaining to that individual. Further investigation, however, is needed to ensure
that the individual in the search results is the same individual at issue in the claim or suit.
Google is understandably an invaluable tool in getting started with any sort of informal
investigation and discovery. Social networking sites, however, provide an even better and
perhaps sharper tool in which to obtain information regarding subject individuals. Section II of
this article will describe more background in terms of what exactly a social networking site
consists of.
As of 2010, the largest and most popular social networking sites include Facebook and Twitter.
Facebook is the largest and one of the oldest social networking sites. Facebook states it has over
400 million active users. Moreover, 50 percent of these active users log on to Facebook in any
given day. Thirty-five million users update their status each day with more than 60 million status
updates posted each day. Perhaps most importantly to the claims and litigation side, more than
three billion photos are uploaded to the site each month. Therefore, Facebook is a large tool
F-3
that can be used to obtain information, including the all important photograph, of claimants in
litigation.
Twitter is another newer social networking site. As we will see in the next section, Twitter limits
entries of “microblogs” to no more than 140 characters. From its inception in 2007, Twitter has
grown drastically. There were approximately 5,000 “tweets” a day in 2007. As of early 2010, there
are approximately 50 million tweets per day, an average of 600 tweets per second. The amount
of information available in these types of social networking sites is vast and unprecedented.
The purpose of this article is to briefly review the legal and ethical considerations of the use of
informal discovery including internet searches, and the use of social networking information in
the claims and litigation process. There will be a discussion of the background of these types of
sites, along with their significance and current claims and litigation practices. We will also
discuss their impact on litigation. Next, there will be an overview of the legal and ethical
considerations and the use of this material. Lastly, we will provide a list of resources for further
investigation on the internet. Clearly, with the amount of users and information being shared in
these social networking sites and on the internet in general, many claimants and plaintiffs will be
able to be “discovered.” This article will hopefully shed some light on the best ways to identify
the types of information that can be found, and how to use that information in a legal, ethical
and practical manner.
II.
WHAT IS SOCIAL NETWORKING?
A.
How It Works
Social networking simply refers to internet sites which provide a forum and opportunity for
registered and non-registered users to view information posted on those websites by various
individuals and entities. Facebook is currently the leading social networking site. It is operated
and privately owned by Facebook, Inc. Since its inception in September of 2006, individuals over
the age of 13 with a valid e-mail address can become a Facebook user. There is no charge to
become a Facebook user. Once an individual becomes a registered user, “friends” can be added.
Once these friends are added, messages can be sent to them, information and personal profiles
viewed, and various groups can be joined. Additionally, users can join other networks sponsored
and organized by different businesses, schools, and other entities. A January 2009 compete.com
study ranked Facebook as the most used social network by worldwide monthly active users
followed by MySpace.
As stated above, once a registered user enters the site, profiles can be created. These can
include personal photographs, lists of personal interests, contact information and a host of other
more detailed, personal information. Communication with other registered users that have
previously been accepted as “friends” can be done through either private or public messages or
a chat feature. Registered users can also create and join other interest groups and “like pages”
some of which are maintained by businesses as a means of advertising. The primary interactive
F-4
feature of Facebook is the “wall.” This is a space on every user’s profile page that allows friends
to post messages for the other user to see. Registered users can also “poke” other registered
users. This is simply a notification from one registered user to another. As also stated,
photographs can be uploaded and categorized into albums. Lastly, the “status” function allows
users to inform their friends of their whereabouts and actions. Depending on privacy settings,
anyone who can see a user’s profile can also view that user’s wall.
One of the most popular features on Facebook is the photos application. Registered users can
upload a multitude of photographs, even whole albums. Facebook allows users to upload an
unlimited number of photographs, compared with other image hosting services such as
Photobucket and Flickr, which apply limits to the number of photos that a user is allowed to
upload. Photographs, like other information, can be categorized in terms of privacy settings.
That is, registered users can allow for only certain access to various photographs and albums.
For example, the privacy of an album can be set so that only the user’s friends can see the
album, while the privacy of another album can be set so that all Facebook users can see it.
Another popular feature of the photos application is the ability to “tag” or label individuals in a
photograph. For example, if a photograph contains a registered user’s friend, then that user can
“tag” the friend in the photo. Once an individual is “tagged” Facebook then sends a notification
to the friend that they have been tagged and provides them a link to see the photo.
Twitter is another important, ever-growing social networking site. It is characterized as a
“microblogging” service that enables its users to send and read messages known as “tweets.”
Tweets are text based posts of up to 140 characters displayed on the author’s profile page and
delivered to the author’s subscribers who are known as followers. Senders can restrict delivery to
those in their inner circle of friends or, by default, allow open access. All users can send and
receive tweets via the Twitter website or other external applications including smart phones. The
service is free to use. Twitter boasts that there are more than 100 million users world wide as of
2010. Over the last several years, Twitter has increased by 1500 percent. As a means of
comparison, by the end of 2007, there were approximately 500,000 tweets per quarter posted.
By the end of 2008, 100 million tweets per quarter were posted. By the end of 2009, two billion
tweets per quarter were posted. In the first quarter of 2010, four billion tweets were posted.
B.
Demographics
One would think that most users of social networking sites and other similar internet
applications are teenagers. This is certainly not the case. On its Facebook data page, the site
indicates that individuals over 35 years of age now constitute over 30 percent of registered
users. Those individuals age 55 and above grew at a rate of 922.7 percent in 2009. Individuals
between the ages of 13 and 17 constituted 10.4 percent of registered users. Those between the
ages of 18 and 24 constituted 25.3 percent. Individuals age 25 to 34 constituted 24.8 percent.
The largest demographic is the age group of 35 to 54 which constituted nearly a third of all
Facebook users. Twitter is a bit more youth-oriented. The median age of a Twitter user is 31
years old, while the median age of a Facebook user is 26. As with Facebook, however, the rates
of use among individuals age 35 and older is increasing at a significant rate.
F-5
Social networking sites like Facebook and Twitter have been criticized for the opportunity for
individuals to post details of their lives that seem rather odd. For example, it is not at all
uncommon in such sites to see and read individuals who post what they had for breakfast, what
they are going to have for dinner, what television shows they are watching, etc. A San Antonio
based market research firm, Pear Analytics, analyzed tweets over a two week period in August,
2009. These tweets were separated into six categories including pointless babble, conversational,
pass along value, self-promotion, spam and news. The results are as follows:






Pointless babbles 41 percent
Conversational 38 percent
Pass along value nine percent
Self-promotion six percent
Spam four percent
News four percent
The obvious criticism is that the “pointless babble” outweighs the other, more substantive data
that is passed. In recent months, however, the use of Twitter has gained interesting footings. In
research reported in the New Scientist in May 2008, those authors found that instant messaging
systems like Twitter did a better job of getting information out during emergencies than either
the traditional news media or government emergency services. The study also found that those
using Twitter during the fires in California in October 2007 kept their followers informed of their
whereabouts and the location of various fires minute by minute. Organizations that support
relief efforts are also using Twitter, including the American Red Cross. In fact, the Illinois court
system also posts information via Twitter.
With all of the information that is flowing in social networking sites, there are bound to be
instances where a potential claimant or plaintiff is mentioned, posts messages, uploads photos,
etc. Only by understanding the nature of social networking sites like Facebook and Twitter, can
that information be accessed in order to assist with the handling and defense of claims. The
above mentioned social networking sites are not the only such sites. Other popular sites include
MySpace, YouTube, blogger.com and Xanga.
III.
THE SIGNIFICANCE OF SOCIAL NETWORKING SITES
The significance of recent developments in social networking sites to claims handling and
litigation has been shown in a number of recent cases. For example, in November of 2009,
MSNBC.com reported that a woman lost her insurance benefits over photographs that were
uploaded to Facebook. As the AP story related, a Canadian woman on sick leave for depression
initiated litigation against her insurance company’s decision to cut her benefits. This followed
the insurance company rescinding her coverage. The company acted after an agent found
photos of the woman vacationing, at a bar and at a party. These photographs apparently
included the woman “having a good time” at a Chippendales bar show, at a birthday party and
F-6
on vacation. The insurance company argued that the woman’s benefits that she was receiving
while on sick leave for depression were clearly unwarranted given the Facebook photographic
postings. The woman, after being confronted with the photographs, claimed that she took
several “four day trips” when she was feeling especially low, or on the advice of her psychiatrist.
Another case involved the significance of posting information on social networking sites in a
criminal context. A college student was recently sentenced to five years and four months in
prison for driving under the influence of alcohol and vehicular manslaughter of her passenger.
The sentence came partly as a result of pictures on her MySpace page. As part of the
prosecution’s case, the district attorney presented the pictures taken from the driver’s MySpace
page, posted after the date of the August accident, depicting the driver partying and drinking
with friends. The prosecutor said the pictures were used to show the supposed lack of remorse
by the driver.
One of the fastest growing ways in which social networking sites and information is being used
in courts comes in the way of divorce cases. A recent Time.com article relayed a custody case
where a mother testified under oath to the court that she had not been drinking. Her MySpace
page, however, which the ex-husband relayed to the court, had actual dated photos of her
drinking and smoking various substances. Another case described a mother listing herself on a
dating site as single with no children, which the opposing attorney used to cast doubt on her
truthfulness.
Another manner in which the use of the internet, social networking and other instant messaging
applications have impacted litigation and legal proceedings is the use of those types of tools by
jurors. In a case from South Dakota, Russo v. Takata Corp., plaintiffs sued a seatbelt
manufacturer for negligent design. A jury trial resulted in a defense verdict. However, the verdict
was eventually vacated and a new trial was ordered after it was revealed that, during jury
deliberations, several of the jurors had “googled” the defendant, Takata. The issue the jurors
were considering was whether the defendant had any notice or knowledge of problems. Based
on the “googling” of the defendant by one of the jurors, the defense verdict was vacated and a
new trial was ordered.
Cases of jurors doing outside research are becoming all the more familiar. In March 2009, a
federal judge received a note from a juror reporting that another juror had conducted research
on the internet. This juror had, in addition to “googling” the case as well as the parties involved,
searched Wikipedia for relevant legal and technical definitions. Yet another similar scenario, a
sitting juror researched the criminal defendant on-line, discovered the defendant’s prior sex
offender conviction and subsequently shared this information with fellow jurors. This, of course,
resulted in a mistrial with the curious juror eventually being held in contempt and ordered to
pay the cost of two days of jury deliberations. Perhaps one of the most shocking instances of a
juror using the internet and social networking sites inappropriately occurred in November 2008
in an English jury. This juror apparently was undecided on how to vote, so she posted details of
the case on her Facebook page with the request “I don’t know which way to go, so I am holding
a poll.” An anonymous tip then alerted the presiding judge to the posting and to the fact that an
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undisclosed number of people had responded, some with guilty verdicts. The juror was
dismissed from the case.
As can be seen, the internet, social networking sites and internet search engines are becoming
an increasingly important factor in all phases of investigation through trial. With the amount and
types of information that can be obtained, special care must be taken in how to handle,
preserve, and use that information. The next section will discuss the legal and ethical issues
surrounding this type of information.
IV.
LEGAL AND ETHICAL CONSIDERATIONS
As stated previously, this area of the law and the use of information in claims and litigation is
still relatively new. There are very few published decisions and there are even fewer guides from
authoritative sources in the best way to handle, preserve and use this information. Nevertheless,
some recommendations can be made. A word of caution. Any contact of plaintiffs via MySpace,
Twitter or other social networking sites, may be viewed as an inappropriate and illegal contact
with an opposing party. Therefore, the utmost care must be exercised and advice of counsel
should be sought before endeavoring to use these resources.
Rules of evidence still apply to this type of information. That is, attorneys or other individuals
seeking to use photographs, comments or connections discovered on an individual’s social
networking site, i.e. Facebook or Twitter, must satisfy the rules of evidence. The individual states
have specific rules as to the use of this type of evidence. The federal rules of evidence provide a
baseline for many states, though that is not at all certain. In fact, Illinois has not universally
adopted the federal rules of evidence.
Under the federal rules, the information must be “relevant” to the issue at hand. Relevance is
defined as “evidence having any tendency to make the existence of any fact that is of
consequence to the determination of the action more probable or less probable than it would
be without the evidence.” That clearly indicates that not all information and evidence posted or
visible on a social networking site will necessarily be admissible in litigation, as other rules limit
the admissibility of relevant evidence at a trial.
Therefore, the information that was found on a social networking site or internet must have
some ability to make the existence of any fact that is important to the case more or less
probable. For example, photographs showing a plaintiff who claims soft tissue injuries of the
neck ingesting alcohol at a party would not be “relevant” to any issue in the case. Conversely,
photos of a plaintiff claiming soft tissue injuries drinking alcohol from a “funnel and tube,” which
demonstrate the soft tissues of the neck being hyperextended, may be admissible to rebut
plaintiff’s testimony of her inability to do certain activities.
Other evidentiary considerations will also likely come into play with this type of information and
evidence. For example, the Federal Rule of Evidence 403 suggests that “evidence will not be
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admitted if the probative value of potential evidence is substantially outweighed by the danger
of unfair prejudice, confusion of the issues or misleading the jury.” Therefore, an item may be
relevant but so prejudicial or likely to lend prejudice to the case, that it will not be admitted. For
example, a photograph depicting an individual with asthma and claiming difficulty breathing
lighting a marijuana cigarette may or may not be admissible. A court could find that the
prejudicial effect of the ingestion of marijuana would outweigh the probative value of the
evidence. Therefore, any time this type of evidence is sought to be used, either in claims
handling or litigation, careful consideration must be given to the legal context in which it is
being used. Simply downloading and printing photographs of claimants and plaintiffs and using
them at trial is, number one, improper, and number two, likely to lead to very significant
evidentiary questions being asked.
The Philadelphia Bar Association is one of the only entities in the country that has issued any
sort of information and discussion regarding the use of social networking site information and
obtaining that information. The Philadelphia Bar Association issued an opinion in March 2009 in
which an attorney from the bar had inquired whether or not it would be proper to obtain
information contained in a social networking site of a potential adverse party. The article
discussed the ways to get that information. One of the issues raised in the analysis was whether
the information was posted as “public.“
As detailed above, individual users on sites such as Facebook can modify their privacy settings. If
no modifications are made, then that information is generally available to anyone with access to
the internet. Some users have edited their privacy settings so only their “friends” can access that
information. One of the issues raised was whether an attorney or someone acting on their behalf
can send a “friend request” to an individual on Facebook so as to become a friend and access
that information. The recommendation from the Philadelphia Bar Association was that that
would be an inappropriate manner in which to obtain information. By having another individual
deliberately concealing the purpose of the “friend request” would allow the suggestion that the
attorney was inducing an adverse party to provide information. The committee further went on
to indicate that even if the attorney did not know if the adverse party would permit access and
accept the friend request did not remove the “deception.”
Therefore, the following guidelines can be gleaned from a review of cases and bar position
papers. Information contained in social networking sites on the internet can be used in claims
and litigation. However, no “deceptive” practices should be incorporated or used in obtaining
that information. There are no discovery rules or ethical guidelines that prohibit the use of social
networking tools in formal and informal discovery. Based on all the above, attorneys or claims
professionals should not contact an adverse party through a “friend request” or “tweet” or other
similar private message. The reason for this is that lawyers and claims professionals are not
generally permitted to speak with an opposing party without an attorney present. The same
should and seemingly does apply to online communications. This prohibition cannot get
circumvented by asking a third party outside of the law firm or claims professionals to contact
the same opposing party through a “friend request” or similar device. The bottom line is
relatively straightforward: if that information can be accessed through public means without
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deceptively requesting the information from the individual or one of the individual’s friends, it is
“fair use.”
Using the information in claims and/or litigation can prove to be another issue. In terms of
litigation, information and photographs that are in the possession of defense counsel must be
shared with opposing counsel through normal discovery, assuming that normal discovery
requests have been sent. For example, if defense counsel obtains photographs of a plaintiff
engaged in activities which postdate the occurrence, and which the plaintiff claims she was
unable to perform, those photographs must be shared with plaintiff’s counsel. There is some
question as to the timing and production of those photographs, however. For example, they
should be tendered as part of normal discovery. Illinois Rules of Evidence and Discovery will not
allow parties to produce evidence at the time of trial which was not previously disclosed.
Therefore, as soon as the information is discovered and a formal discovery request has been
received, they should be produced without hesitation. Their use can also be valuable in terms of
mediation. Often, parties will not attend a mediation individually. Rather, they will have friends
or family members accompany them. Discussing, using and making the plaintiff aware of the
subject information in a mediation process can also prove very beneficial in motivating a
plaintiff toward settlement.
V.
CONCLUSION
The information that parties place on the internet may be valuable in evaluating and defending
claims. While social networking sites will not always (and likely not often) provide useful
information, it is worth the small time investment to check the major social networking sites for
claimant’s profiles and pictures. Additionally, social networking sites can be useful in tracking
down and contacting witnesses and other third parties. For example, Facebook allows you to
contact a user with a written message without requesting or being approved as a friend. The
public information and resources contained on social networking sites can be used to your
advantage. However, one must keep in mind the new ethical and legal pitfalls that social
networking presents.
VI.
ADDITIONAL RESOURCES
The following are additional resources that should be investigated with potential claimants or
plaintiffs:
www.facebook.com
www.myspace.com
www.twitter.com
www.spokeo.com (look up anyone by name, phone number, etc.)
https://www.dmdc.osd.mil/scra/owa/home (Find out if someone is in the military)
https://extapps.ama-assn.org/doctorfinder/home.isp (Find physicians)
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www.craigball.com/hotlinks.html
www.macattorney.com/tools.html
www.searchsystems.net
www.ceoexpress.com/default.asp
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Matthew R. Booker
- Partner
Matt has spent his entire legal career with Heyl
Royster, beginning in 2000 in the Springfield office.
His practice focuses on healthcare law, representing
physicians, hospitals, long-term care facilities, and
other similar healthcare organizations. His defense of
these entities involves a range of issues including
licensure, discipline, fraud and abuse, risk
management, staff concerns, and defense of
malpractice and other civil litigation.
 Sangamon County Bar Association
 Adjuster's Association of Central Illinois
(Secretary)
Court Admissions
 United States District Court, Central and
Southern Districts of Illinois
With his extensive litigation experience, Matt has
personally defended a variety of civil cases, taking
more than 25 to verdict. In recent years, he has
developed a special focus on long term care and
nursing home litigation. Many of his cases are against
top Chicago and national counsel with settlement
demands often in the millions of dollars.
Education
 Juris Doctor (Magna Cum Laude), Southern
Illinois University School of Law, 1999
 Bachelor of Science-Nursing, Illinois Wesleyan
University, 1995
Matt's experience in the healthcare arena is vast. He
began working in a hospital at the age of 15. After
graduating from college, he began work as a
registered nurse in a Central Illinois emergency room.
While there, his responsibilities included charge nurse
positions as well as house supervisor. Working as a
nurse, he obtained trauma nurse specialist
certification, was an advanced cardiac life support
instructor and achieved certification in pediatric
advanced life support. He also was directly involved in
the training of paramedics at various level one trauma
centers.
Matt has also presented and lectured to various
healthcare groups and other educational entities
involving medical record privacy, nursing practice, and
long term care litigation. He has also presented
courses on evidence and evidence presentation. He
has co-authored Smart Evidence, Medical Malpractice,
and an evidentiary guide for medical malpractice
cases.
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TORT LAW UPDATE
Presented and Prepared by:
Daniel R. Simmons
[email protected]
Springfield, Illinois • 217.522.8822
Natalie D. DeLong
[email protected]
15513149_6.DOCX
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TORT LAW UPDATE
I.
ACTING IN CONCERT ................................................................................................................................ G-3
II.
INTENDED USE ............................................................................................................................................. G-3
III.
SLIP/TRIP AND FALL ................................................................................................................................... G-4
IV.
DUTY TO DEFEND ....................................................................................................................................... G-5
V.
USE OF EXPERTS .......................................................................................................................................... G-7
VI.
UNCATEGORIZED CASES ......................................................................................................................... G-7
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TORT LAW UPDATE
I.
ACTING IN CONCERT
Norman v. Brandt, No. 4-09-0246, 2010 WL 447328 (4th Dist. Feb. 4, 2010) – The father of a
passenger filed a complaint against the driver of a car that the vehicle his son was a passenger
of was following. The defendant offered to lead the other vehicle to a lake house, and the
plaintiff alleged that the defendant acted in concert with the driver of the vehicle his son was in
by forcing the following vehicle to speed, causing it to flip. The court found that the defendant
only agreed to lead the way to the lake house, and that there was no agreement or
encouragement to speed. The court held that there was no horseplay and no common plan to
commit a tortious act, and, therefore affirmed the trial court’s decision to grant the defendant’s
motion for summary judgment.
Simmons v. Homatas, No. 108108, 2010 WL 966139 (Mar. 18, 2010) – Plaintiffs, administrators of
decedents’ estate, brought a negligence action against the owner of an adult entertainment club
for requiring an intoxicated patron to drive away from the premises, resulting in a fatal accident.
The circuit court denied the club owner’s motion to dismiss, and the Appellate Court found that
the club owed a duty to the decedents. The club was not allowed to serve alcohol due to the
county’s laws, but it allowed patrons to bring their own liquor to the club. The club also required
valet parking, and required the defendant to leave the club due to his intoxication and then
allowed him to drive his car away from the club. The circuit court determined that the club was
not subject to the Dramshop Act because it did not sell alcohol, but allowed the issue of
whether the club owed a duty to the decedents to remain. The circuit court agreed that no
special relationship existed between the defendant and the decedents, but said a duty may exist
when the defendant’s affirmative behavior creates a risk of harm. The Supreme Court held that
had the defendant left on his own, the club owner would not be subject to liability. However,
since the club employees assisted the defendant to his car and directed him to leave, they could
have been acting in concert with the defendant’s tortious conduct. As such, the Supreme Court
found the plaintiffs’ complaint sufficiently pleaded common law negligence, and remanded the
case.
II.
INTENDED USE
Pence v. Northeast Illinois Regional Commuter R.R. Corp., No. 1-08-3668, 2010 WL 395629 (1st
Dist. Feb. 3, 2010) – A pedestrian who tripped over a bolt protruding from a railroad tie brought
an action against the railroad to recover for injuries he sustained from his fall. Plaintiff alleged
that that defendant failed to maintain its premises in a reasonably safe condition. Defendant
argued that it was immune under the Local Governmental and Governmental Employees Tort
Immunity Act and that plaintiff was not an intended user of the street as he crossed the street
outside of a crosswalk. The trial court found the defendant owed no duty because the plaintiff
was not a railroad passenger and the defect was de minimis. While the plaintiff did have a
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monthly railroad pass, the court held that he was in the parking lot at the time of his injury and
not a passenger, and as such, the heightened level of care for common carriers did not apply.
The court stated that tort immunity would apply if (1) the injured party was not an intended and
permitted user of the property, and (2) the injury arose from a condition on the property. Here,
the plaintiff was found to not be an intended user of the property as he was crossing the street
outside of the crosswalk. The Appellate Court affirmed the trial court’s summary judgment ruling
in favor of the defendant.
Gaston v. City of Danville, 393 Ill. App. 3d 591, 912 N.E.2d 771, 332 Ill. Dec. 284 (4th Dist. 2009) –
Plaintiff was the father of the decedent, a 17-year-old who ditched school with two of his friends
and went to a parking deck to hang out. As the decedent was leaving the deck, a stairwell
collapsed under his weight, resulting in his death. The City obtained summary judgment from
the trial court on the basis that the decedent was not an intended user because he did not own
a car, had no driver’s license, and was not using the parking deck for a car in any way. The
Appellate Court reversed summary judgment. The decedent was using the stairwell for its
intended use, descending the stairs by foot. The court stated that the purpose of the stairwell
was to provide pedestrian access to the garage. The court held that while the parking ramp itself
might have a limited intended use, the same was not true of the stairwell.
III.
SLIP/TRIP AND FALL
Gallagher v. Union Square Condominium Homeowner’s Ass’n, 922 N.E.2d 1201, 337 Ill. Dec. 624
(2d Dist. 2010) – A condominium owner sued the condominium association and the snow
removal company for injuries arising when the owner slipped and fell on an icy driveway.
Plaintiff alleged that defendants failed to inspect the driveway and failed to salt and sand the
driveway. The defendants claimed they fell within the Snow and Ice Removal Act, which provides
that any person who attempts to remove snow or ice from sidewalks shall not be liable for any
personal injuries caused from the condition unless willful and wanton. Plaintiff contended that
the Act did not apply because he fell on a driveway, not a sidewalk, and the court agreed. As
such, the court reversed the dismissal of the plaintiff’s complaint.
Qureshi v. Ahmed, 394 Ill. App. 3d 883, 916 N.E.2d 1153, 334 Ill. Dec. 265 (1st Dist. 2009) – The
trial court granted a homeowner defendants’ motion for summary judgment in a case brought
by a plaintiff for the injuries to his 10-year-old daughter in a slip and fall on defendants’
treadmill in their home. This was a case of first impression for the Appellate Court, as Illinois had
not yet considered whether pieces of home exercise equipment were considered open and
obvious dangers to young children. The issue, according to the Appellate Court, was whether
there was a dangerous condition present in the defendants’ home. The court stated that even if
it found the treadmill to be an open and obvious condition, it did not eliminate the duty from
the defendants to the child. The court stated that other factors would need to be examined such
as the likelihood of injury, the foreseeability of injury, the magnitude of the defendant’s burden
of guarding against the injury and the reasonableness of this burden. The Appellate Court stated
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that it could not conclude that the defendants owed no duty based on the open and obvious
nature of the danger posed by the treadmill, and as such reversed and remanded the case.
Reed v. Galaxy Holdings, Inc., 394 Ill. App. 3d 39, 914 N.E.2d 632, 333 Ill. Dec. 213 (1st Dist.
2009) – Plaintiff brought a negligence action against a laundromat for injuries sustained after
she slipped and fell on water that accumulated at the store’s entryway. The trial court applied
the natural accumulation rule, and granted summary judgment in favor of the defendants. The
Appellate Court stated that the plaintiff correctly asserted that business owners have a duty to
provide a safe means of ingress and egress, but owners are not liable for injuries resulting from
a natural accumulation of water. Plaintiff asserted that the owner placed two mats in front of the
doorway, but the court held that allowing the saturated mats to sit in the doorway did not
create an unnatural accumulation. The court also held that the defendant had no duty to
remove the natural accumulation of water regardless of whether he had previously done so. The
Appellate Court held there was no error in finding that the defendant owed no duty to the
plaintiff.
Rogers v. Matanda, Inc., 393 Ill. App. 3d 521, 913 N.E.2d 15, 332 Ill. Dec. 420 (3d Dist. 2009) –
Plaintiff brought a negligence action against a bar for a breach of its duty to provide a
reasonably safe means of ingress and egress. Plaintiff had consumed at least 18 mixed drinks on
his 21st birthday. Upon trying to reenter the bar after his friends removed him from it, it
appeared he fell from a retaining wall, though the plaintiff does not recall doing so. The plaintiff
alleged that there was improper lighting in the area of the fall, making ingress and egress
unreasonably unsafe. The defendant stated that there was no evidence that ingress and egress
to its business were unsafe as the place where the plaintiff fell was not an area of ingress or
egress. The court agreed and granted summary judgment. The Appellate Court agreed with the
plaintiff that the bar had a duty to provide proper illumination in places of ingress and egress,
but stated that the proper places of ingress and egress were properly illuminated and plaintiff
had safely entered the bar once that night. The court went further to state that the fact that the
plaintiff took a frolic beyond the prescribed areas of ingress and egress did not expand the
defendant’s duty. The plaintiff then argued that there was an unreasonably safe condition on the
defendant’s property, regardless of whether it was an area of ingress or egress, but the court
found that the plaintiff did not show this to be the proximate cause of his injuries as he could
not even recall the cause of his fall. The court would not infer liability based on a conjecture of
the cause of the injury, and affirmed the trial court’s decision.
IV.
DUTY TO DEFEND
American Service Ins. Co. v. Franchini, 396 Ill. App. 3d 413, 920 N.E.2d 1142, 336 Ill. Dec. 552 (1st
Dist. 2009) – Defendant was a policyholder with American Service Insurance Co. (ASI) for a
motor vehicle accident caused by defendant’s sister. ASI brought a declaratory judgment action
seeking a declaration that the defendant had defrauded ASI by not stating that his sister lived
with him and frequently drove his vehicle, and as such, the policy was void ab initio. The
defendant sought to file a counterclaim that ASI had committed vexatious conduct by denying
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his claim. The circuit court denied the defendant’s request for leave to file the counterclaim. The
court found no evidence to support the defendant’s claim of vexatious conduct, and pointed to
the fact that the insurance company did provide a defense, but it reserved its right to cancel the
representation. The court held that the allegations fell short of establishing any claim on which
relief could be granted, and affirmed the circuit court’s ruling.
Pekin Ins. Co. v. Wilson, 391 Ill. App. 3d 505, 909 N.E.2d 379, 330 Ill. Dec. 666 (5th Dist. 2009) –
The injured plaintiff filed suit alleging battery, assault and intentional infliction of emotional
distress against the defendant. The tortfeasor’s insurer filed a declaratory action based on the
intentional acts exclusion of the policy, and the injured plaintiff filed an amended complaint
alleging additional counts in negligence, based on the same facts. The court stated that the
factual allegations of the complaint, rather than the legal theory under which the action is
brought, determine whether there is a duty to defend. Accordingly, the trial court held that there
was no coverage based on the intentional acts exclusion. The Appellate Court agreed and
affirmed the decision, stating that the insurer has no duty to defend the insured where the
complaint in the underlying lawsuit alleged intentional conduct, but labeled it as negligence. To
escape the intentional acts exclusion, one cannot merely file a complaint using the term
“negligence” but showing intentional acts, but must plead acts that show negligence. However,
the court did determine that it could look beyond the complaint to determine self defense,
which was an exception to the exclusion of intentional acts.
Hacker v. Shelter Ins. Co., 388 Ill. App. 3d 386, 902 N.E.2d 188, 327 Ill. Dec. 433 (5th Dist. 2009) –
The mother of a tenant sued a landlord after suffering an injury by falling in a stairwell. The
landlord filed a third-party action against the tenant for contribution. The daughter claimed that
the landlord’s insurance policy owed her a duty to defend and indemnify, and the court found in
favor of the tenant. The Appellate Court reversed, finding that the definition of “insured” in the
policy fit only the landlord and could not be construed to include the tenant also. The court
distinguished this case from a previous case involving a tenant contributing to fire insurance
through her rent by noting that it is common practice for tenants to obtain their own renter’s
insurance to cover liabilities.
American Family Mut. Ins. Co. v. Fisher Development, Inc., 391 Ill. App. 3d 521, 909 N.E.2d 274,
330 Ill. Dec. 561 (1st Dist. 2009) – The case involved a dispute between an insurance company
for a subcontractor and the general contractor, which claimed to be an additional insured and
claimed damages for the insurance company’s refusal to defend it. The trial court granted
summary judgment for the insurance company. The insurance policy contained a clause
excluding coverage for liability for bodily injury “for which the insured is obligated to pay
damages by reason of the assumption of liability in a contract or agreement.” The subcontractor
entered into an indemnification agreement with the general contractor. Because of this
language, the Appellate Court held the insurance company had no duty to defend the general
contractor.
National Fire Ins. of Hartford v. Walsh Const. Co., 392 Ill. App. 3d 312, 909 N.E.2d 285, 330 Ill. Dec.
572 (1st Dist. 2009) – Subcontractor’s general liability insurer brought a suit for declaratory
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judgment that it had no duty to defend the general contractor for a claim brought by the
subcontractor’s employee. The trial court ruled in favor of the insurer. The policy provided that
there would be no coverage where the sole negligence was that of an additional insured. The
Appellate Court found the injury was a result of the sole negligence of the general contractor
and the property owner, and was therefore outside the realm of coverage; as such, the insurer
was held to have no duty to defend.
V.
USE OF EXPERTS
Henry v. Panasonic Factory Automation Co., 396 Ill. App. 3d 321, 917 N.E.2d 1086, 335 Ill. Dec. 22
(4th Dist. 2009) – Plaintiff brought a suit against the manufacturer of a machine, alleging
negligence and product defects. The plaintiff’s expert admitted that the machine would not be
dangerous if adjustments were made and observed from the outside of the machine, which the
defendant contended that it could. The trial court granted the defendant’s motion for summary
judgment based on the fact that an expert’s opinion testimony was necessary to show that the
machine was inherently dangerous, and that the plaintiff’s expert’s testimony was based upon
an incorrect assumption. The Appellate Court stated that to recover from a manufacturer on a
products liability case, plaintiff must show that his injury resulted from an unreasonably
dangerous condition of the product that existed when it left the manufacturer’s control. Because
the court found the defendant’s product to be a specialized piece of equipment, it concluded
that a breach of the standard of care could not be established without expert testimony and
affirmed the decision of the trial court.
Ford v. Grizzle, No. 5-08-0185, 2010 WL 572527 (5th Dist. Feb. 17, 2010) – Plaintiff sued the
defendant for a motor vehicle accident in which the defendant rear-ended the plaintiff. The trial
court entered judgment in favor of the defendant, and plaintiff appealed on various procedural
issues. The Appellate Court affirmed the trial court’s admission of plaintiff’s two previous car
accidents, stating that the defendant showed these accidents to be relevant as a possible cause
for plaintiff’s injuries. The Appellate Court also affirmed the trial court’s decision to allow the
admission of photographs of plaintiff’s vehicle without expert testimony as the court determined
the pictures could speak for themselves.
VI.
UNCATEGORIZED CASES
Pickel v. Springfield Stallions, Inc., No. 4-09-0490, 2010 WL 1205959 (4th Dist. Mar. 29, 2010) –
The plaintiff was injured while watching an indoor football game when a player fell out of
bounds and over a wall and collided with her. She sued the five partners that operated and
possessed the arena, claiming that they were negligent in three ways: (1) encouraging spectators
to sit dangerously close to the playing field, (2) failing to warn spectators of the danger of this
designated area, and (3) failing to construct a high enough and sturdy enough wall between the
playing field and the spectators. The trial court ruled for the defendants, who cited Karas v.
Strevell, 227 Ill. 2d 440, 884 N.E.2d 122, 318 Ill. Dec. 567 (2008) to say that football is a contact
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sport and violent collisions are inherent in the game. Thus, plaintiff was required to plead
culpability greater than negligence. In Karas, the Supreme Court held that in full contact sports a
player is liable only for intentional harm to another player. The Appellate Court reversed the trial
court’s ruling and distinguished Karas. The rule in Karas applied only to participants of a contact
sport, not spectators. The fact that the plaintiff was behind a barrier, as opposed to simply
standing on the sidelines, was also important to the court because it negated the affirmative
defense that the plaintiff should have known the risk of injury.
Gibbs v. Top Gun Delivery and Moving Services, Inc., No. 1-08-2986, 2010 WL 1033052 (1st Dist.
Mar. 29, 2010) – Plaintiff filed a negligence action against a truck driver, the truck driver’s
employer, and Harlem Furniture, the company for which the truck driver was delivering material.
Safeco, as the insurer for the driver and his employer, entered into an agreement with the
plaintiff for $735,000 in exchange for a covenant not to enforce a judgment above that amount
against either Safeco or the insureds. Harlem Furniture filed a motion to dismiss on the basis
that any settlement between an agent and a plaintiff must also relieve the principal of any
vicarious liability. Illinois courts have recognized covenants not to enforce judgments as
“settlements,” and as such, the Appellate Court affirmed the trial court’s decision to grant
Harlem Furniture’s motion to dismiss.
Mayer v. Chicago Mechanical Services, Inc., No. 2-09-0239, 2010 WL 989033 (2d Dist. Mar. 16,
2010) – In this appeal, the court considered whether plaintiffs, who alleged that a defective
heating and air conditioning system furnished and installed by one of the defendants caused
mold growth that rendered their homes temporarily uninhabitable, were entitled to
compensation for discomfort and inconvenience associated with being displaced from their
homes. While the court left open the possibility that damages for discomfort and inconvenience
might be available in appropriate circumstances, they held that they were not available here
because the plaintiffs did not state a viable theory for damages. Plaintiffs’ theory was rooted in
sentimental attachment to their homes, not tangible comforts and conveniences of living in the
homes.
Reed v. White, 921 N.E.2d 1243, 337 Ill. Dec. 105 (5th Dist. 2010) – Plaintiff, an employee of the
defendant, was injured on defendant’s property while dropping off a tool per the request of her
husband, who also worked for the defendant. The plaintiff denied that she was working at the
time of the injury, and she was not scheduled to work that day. The defendant began voluntarily
paying the plaintiff workers’ compensation benefits. The plaintiff filed a negligence claim almost
two years after the injury. The defendant contested that the plaintiff had an exclusive remedy of
recovering under the Illinois Workers’ Compensation Act (Act), and the trial court agreed and
dismissed the complaint. On appeal, the Appellate Court held that injured employees are not
entitled to seek recovery both under the Act and under common law. Because the plaintiff did
not file a suit under the Act, but merely accepted unsolicited benefits offered by the defendant,
her common law claim was not barred.
Eckburg v. Presbytery of Blackhawk of Presbyterian Church (USA), 396 Ill. App. 3d 164, 918 N.E.2d
1184, 335 Ill. Dec. 371 (2d Dist. 2009) – Plaintiff was driving a motorcycle when a large portion of
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a tree located on the defendant’s property fell, injuring him and killing his wife. Plaintiff alleged
that there were numerous rotting trees on the defendant’s property, that the defendant had
notice of the rotting trees, and that many of the trees were located near a busy highway.
Defendant argued that because his land was not in an urban area and he had 360 acres to
maintain, he could not be held liable for the injuries. The trial court granted the defendant’s
motion to dismiss, holding that the plaintiff failed to show the defendant had actual or
constructive notice that the tree that fell was defective. Further, imposing a duty to inspect trees
surrounding a highway would undermine the protection from overly burdensome obligations
given to rural landowners under the Second Restatement of Torts. As a matter of first impression
in Illinois, the Appellate Court declined to follow the Second Restatement of Torts and held
there should be no distinction between the duty of an urban versus a rural property owner, and
that a traditional negligence analysis should apply, taking into account various factors such as
property size and the amount of traffic on the road near the trees. Accordingly, the court
reversed the decision of the trial court, finding that the dismissal of plaintiff’s complaint was
erroneous.
Gregory v. Farmers Auto. Ins. Ass’n, 392 Ill. App. 3d 159, 910 N.E.2d 763, 331 Ill. Dec. 354 (5th
Dist. 2009) – Plaintiff brought an action for the death of a decedent in an automobile accident.
The tortfeasor’s vehicle was covered by a personal automobile policy which provided indemnity
for the accident and provided a defense to the insured. A business policy also existed. While the
tort case was still pending, the plaintiff brought a declaratory action to determine whether the
business policy would provide excess indemnification. The business policy insurer moved to
dismiss on the basis that the issue was not ripe until there was a determination that the insured
was liable and that the excess policy might be implicated in paying the damages. The trial court
denied the motion to dismiss, finding that a duty to indemnify existed. The Appellate Court
reversed, agreeing that any declaration of coverage or of the amount of the policy limits would
be an advisory opinion where the fact of liability or total amount of damages was still
undetermined.
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Daniel R. Simmons
- Partner
Dan concentrates his practice in the areas of workers'
compensation and general insurance defense,
including auto liability, premises liability and thirdparty defense of employers. Since graduation from
law school in 1984, he has spent his entire legal career
at Heyl Royster in the Springfield office. He became a
partner in 1996.
 Lincoln-Douglas American Inn of Court (past
president and program director)
 Sangamon County Bar Association
 Central Illinois Claims Adjusters' Association
Dan has extensive litigation experience. He has taken
numerous cases to jury verdict both in state and
federal courts. Additionally, he has arbitrated
hundreds of workers' compensation claims before the
Illinois Workers' Compensation Commission. Dan
appreciates that his client’s goal is to conclude claims
in the most efficient, economical means possible and
strives to achieve that goal through motion practice,
settlement or trial.
Court Admissions
Illinois
 United States Court of Appeals, Seventh Circuit
Education
 Juris Doctor, University of Iowa, 1984
 Bachelor of Arts (Magna Cum Laude) - Political
Science, Speech and Humanities, Augustana
College, 1981
Dan is a frequent author and lecturer on civil liability
and workers' compensation issues. His speaking is
both to clients and to Illinois attorneys for continuing
legal education. Dan continues to provide writing and
speaking services to the Property Loss Research
Bureau/Liability Insurance Research Bureau's annual
conference that is routinely attended by over 2,500
senior claims professionals from around the United
States.
Dan is a past president and program director of the
Lincoln-Douglas American Inn of Court. The Inn is
designed to promote legal education, civility and
collegiality among members of the bar.
G-10
WHAT’S ON THE HORIZON? CASES PENDING IN THE ILLINOIS SUPREME COURT Presented and Prepared by:
Karen L. Kendall
[email protected]
15484854_5.DOCX
H-1
WHAT’S ON THE HORIZON?
CASES PENDING IN THE ILLINOIS SUPREME COURT
Petitions for Leave to Appeal Allowed
by the Illinois Supreme Court
at the March 2010 Term .......................................................................................................................................... H-3
at the January 2010 Term........................................................................................................................................ H-4
at the November 2009 Term ................................................................................................................................. H-5
at the September 2009 Term ................................................................................................................................. H-7
Rule 316 Appeal to the Illinois Supreme Court
August 24, 2009 ....................................................................................................................................................... H-10
at the May 2009 Term ........................................................................................................................................... H-10
at the November 2008 Term .............................................................................................................................. H-11
H-2
WHAT’S ON THE HORIZON?
CASES PENDING IN THE ILLINOIS SUPREME COURT
at the March 2010 Term
Ries v. City of Chicago
S. Ct. Docket No.:
109541
Appellate Citation:
396 Ill. App. 3d 418, 919 N.E.2d 465, 335 Ill. Dec. 746 (1st Dist. 2009)
Topic:
Immunity
Issue Presented:
Whether the trial court properly denied the defendant-city’s motion seeking judgment
notwithstanding the jury’s $4.2 million verdict in an action by the plaintiffs for personal injuries
incurred when a squad car that had been stolen by a third party collided with the plaintiffs’
vehicle during a car chase, under circumstances where the police had previously placed the
unrestrained third party in the back seat of the car with the keys still in the car while the police
were investigating the accident involving the third party.
Appellate Court Decision:
The Appellate Court reversed the judgment of the trial court, finding that the city was entitled to
immunity under section 2-109 of the Tort Immunity Act where the trial court had previously
found that the officer who placed the third party in the squad car was entitled to immunity
under section 4-107 of the Tort Immunity Act. The Appellate Court also found that the city was
immune under section 4-106(b) of the Tort Immunity Act for conduct of the officers who had
pursued the third party during the car chase and that the willful and wanton conduct exception
contained in section 2-202 of the Tort Immunity Act did not apply.
Kaufmann v. Jersey Community Hospital
S. Ct. Docket No.:
109738
Appellate Citation:
396 Ill. App. 3d 729, 919 N.E.2d 1077, 336 Ill. Dec. 152 (4th Dist. 2009)
Topic:
Statute of Limitations
Issue Presented:
Whether the trial court properly dismissed plaintiff’s claims of negligent hiring, negligent
supervision, and negligent infliction of emotional distress arising out of allegations that the
doctor employed by the defendant-municipal hospital committed unwanted sex on the plaintiff
where the dismissal was based on the expiration of the one-year statute of limitations period
found in section 8-101(a) of the Tort Immunity Act.
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The Appellate Court affirmed the dismissal, finding that section 8-101(a) of the Tort Immunity
Act applied since the doctor’s actions were unrelated to providing patient care and the patient’s
injuries otherwise did not result from her patient care. The plaintiff had argued that the
applicable limitations period should have been the two-year period found in section 8-101(b) of
the Tort Immunity Act. One justice dissented.
at the January 2010 Term
Cookson v. Price
S. Ct. Docket No.:
109321
Appellate Citation:
393 Ill. App. 3d 549, 914 N.E.2d 229, 333 Ill. Dec. 22 (3d Dist. 2009)
Topic:
Medical Malpractice
Issue Presented:
Whether the trial court properly dismissed plaintiff’s medical malpractice claim for failure to
provide a sufficient physician’s report as required under 735 ILCS 5/2-622 where the plaintiff
attempted to amend an insufficient report with a second report authored by a different medical
professional.
The Appellate Court reversed the trial court and found that the plaintiff could amend the initial
report, ruling that there was no statutory bar to substituting a report by a new author. The trial
court had ruled that the plaintiff was not seeking to amend a consultation report but was
seeking to substitute a wholly new report which was not timely since it had been tendered after
the 90-day extension of time which had previously been granted to the plaintiff under section 2622.
Carr v. Gateway, Inc.
S. Ct. Docket No.:
109485
Appellate Citation:
Topic:
Arbitration
Issue Presented:
Whether the trial court properly denied the defendant’s motion to compel arbitration of the
claims contained in the plaintiff’s class action based on language in computer purchase
agreements waiving the right to litigate disputes in court and agreeing to resolve disputes
through binding arbitration.
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The Appellate Court found that the enforcement of the arbitration clause was precluded where:
(1) the language of the agreement called for arbitration to be conducted in a specific arbitration
forum which was no longer in existence; and (2) the identification of the specific forum formed
an integral part of the agreement.
at the November 2009 Term
State Building Venture v. O’Donnell
S. Ct. Docket No.:
108673
Appellate Citation:
391 Ill. App. 3d 554, 909 N.E.2d 894, 330 Ill. Dec. 872 (1st Dist. 2009
Topic:
Sovereign immunity
Issue Presented:
Whether the trial court properly granted the plaintiff-leaseholder’s motion for judgment on the
pleadings seeking a declaration that the Director of Central Management Services (CMS) had no
discretion under 20 ILCS 405/405-315(a)(5) to terminate an existing leased space in the
Thompson Center where the plaintiff sought to invoke a five-year renewal of the lease.
The Appellate Court held that the officer suit exception to sovereign immunity applied. It also
found that the CMS Director lacked discretion to deny renewal. The defendant argued that the
doctrine of sovereign immunity required the plaintiff’s case to be dismissed since its claim
against the State was founded on terms of contract.
Ready v. United/Goedecke Services, Inc.
S. Ct. Docket No.:
108910
Appellate Citation:
Topic:
Evidence
Issue Presented:
Whether the trial court properly excluded evidence of the conduct of settling co-defendants,
thereby preventing the defendant from presenting evidence establishing that another entity was
the sole proximate cause of the decedent’s injury.
The Appellate Court reversed a $14 million verdict in favor of the plaintiff, finding that the trial
court should not have excluded evidence of the co-defendants’ conduct where the instant
defendant entered a general denial that the plaintiff’s injuries were caused by its conduct. The
H-5
plaintiff argued that the disputed evidence was either actually admitted or properly excluded for
other reasons and that the Appellate Court failed to comply with the Supreme Court’s mandate
to decide whether the trial court properly refused the defendant’s jury instruction on the issue of
sole proximate cause.
Krywin v. Chicago Transit Authority
S. Ct. Docket No.:
108888
Appellate Citation:
Topic:
Negligence
Issue Presented:
Whether the Transit Authority breached its duty to provide the plaintiff with a safe place to
alight when it stopped in front of a natural accumulation of snow and ice upon which the
plaintiff fell and sustained personal injuries.
The Appellate Court reversed the jury verdict in favor of the plaintiff and found that the natural
accumulation rule prevailed over the defendant’s duty of highest care to the plaintiff and the
defendant therefore owed no duty to the plaintiff.
Hurlbert v. Charles
S. Ct. Docket No.:
109041
Appellate Citation:
Topic:
Collateral Estoppel
Issue Presented:
Whether the plaintiff was collaterally estopped from bringing a malicious-prosecution action
where the trial court had previously found the existence of probable cause on plaintiff’s prior
arrests for driving under the influence of alcohol after a hearing on the plaintiff’s petition to
rescind his statutory suspension.
The Appellate Court found that collateral estoppel applied to the trial court’s finding and
decision in the summary suspension proceeding and rejected the plaintiff’s contention that the
limited nature of the statutory-suspension hearing was incompatible with the application of the
collateral estoppels doctrine.
K. Miller Construction Co., Inc. v. McGinnis
S. Ct. Docket No.:
109156
Appellate Citation:
H-6
Topic:
Illinois Home Repair and Remodeling Act
Issue Presented:
Whether the plaintiff-contractor can maintain a cause of action for unpaid home repairs under a
theory of quantum meruit even though the plaintiff had failed to obtain a written contract
detailing the charges for said repairs prior to performing the work.
The Appellate Court reversed the trial court’s dismissal of the case, finding that quantum meruit
remained an equitable remedy available under the Home Repair and Remodeling Act and that
the plaintiff could pursue the cause of action against the defendant. One justice dissented.
People v. Becker
S. Ct. Docket No.:
108986
Appellate Citation:
No. 3-07-0660 (3d Dist. 2009) Rule 23 Order
Topic:
Evidence
Issue Presented:
Whether the trial court properly excluded testimony of the defendant’s forensic psychologist in
a trial on predatory criminal sexual assault of a child where the expert had previously testified at
the section 115-10 hearing that there was a high probability that the minor-victim’s out-of-court
statements were unreliable.
The Appellate Court reversed the defendant’s conviction, finding that the expert’s proposed
testimony regarding proper protocols and techniques used to elicit victims’ statements were
proper subject matters for expert testimony at trial. In its petition for leave to appeal, the State
argued that the exclusion was proper since the expert’s proposed testimony would have invaded
the jury’s province of determining witness credibility. One justice dissented.
at the September 2009 Term
Clark v. Children’s Memorial Hospital
S. Ct. Docket No.:
108656
Appellate Citation:
Topic:
Damages
H-7
Issue Presented:
Whether in a negligence action the plaintiffs can recover damages for the extraordinary costs of
caring for a child beyond the age of maturity when the child is unemancipated and disabled
(born with Angelman Syndrome).
The Appellate Court found that the costs could be recovered throughout the son’s adult years
where the plaintiffs alleged that the son would be unable to take care of himself and where the
plaintiffs stated that they would continue to care for their son throughout his majority. The trial
court had ruled that the plaintiffs could only recover for extraordinary costs for caring for their
son during his minority.
Pekin Ins. Co. v. Wilson
S. Ct. Docket No.:
108799
Appellate Citation:
Topic:
Insurance
Issue Presented:
Whether the trial court properly found that the insurance company did not owe the insured a
duty to defend the insured in the underlying personal injury lawsuit alleging assault and battery,
as well as negligence, arising out of an incident in which the insured allegedly cursed and hit the
victim with a steel pipe, and where the relevant policy contained an exclusion for lawsuits
containing allegations of intentional conduct on the part of the insured.
The Appellate Court reversed the trial court and found that the policy’s self-defense exception
to the exclusion triggered a duty to defend where the insured raised self-defense as an issue in
the counterclaim. In its petition for leave to appeal, the insurance company argued that the
insurer’s duty to defend could only be determined on allegations contained in the underlying
complaint and not on allegations contained in the counterclaim filed by the insured.
Founders Ins. Co. v. Munoz
S. Ct. Docket Nos.:
108605, 108612 (cons.)
Appellate Citation:
Topic:
Insurance
Issue Presented:
Whether the trial court properly granted the insurance company’s motions for summary
judgment in actions seeking a declaration that the insurance company owed no duty to defend
the insureds where the drivers involved in various accidents did not have valid driver’s licenses
and thus fell within the exclusion in the policies denying coverage for bodily injury or property
H-8
damage arising out of the use of a vehicle by a person not having a reasonable belief that he or
she was entitled to operate the insured vehicle.
The Appellate Court reversed the trial court holding that the subject exclusion did not
necessarily encompass unlicensed drivers, while the insurance companies argued that the
reasonable belief exclusion encompassed unlicensed drivers.
In re Estate of Wilson
S. Ct. Docket No.:
108487
Appellate Citation:
Topic:
Substitution of Judge
Issue Presented:
Whether the trial court erred in denying the respondent’s motion for substitution of judge for
cause pursuant to section 2-1001(a)(3)(iii) of the Code of Civil Procedure, rather than transferring
the motion to a different judge for disposition.
The Appellate Court ruled that section 2-1001(a)(3)(iii) did not authorize the trial judge accused
of bias to control the disposition of the motion, that the instant trial judge should have
transferred the motion to a different judge, and that the respondent was not required to
establish a threshold showing of bias stemming from extra-judicial sources prior to the transfer
of the motion to another judge. One justice dissented.
Vancura v. Katris
S. Ct. Docket No.:
108652
Appellate Citation:
Topic:
Illinois Notary Act
Issue Presented:
Whether the trial court properly found that the defendant-employer was liable under the
common law for the employee-notary’s misconduct in notarizing a forged signature on a
mortgage assignment.
The Appellate Court affirmed the trial court as to common law judgments in view of the
evidence that the defendant negligently trained and supervised the employee. In its petition for
leave to appeal, the defendant argued that it could not be liable on a common law theory of
negligent failure to train where it otherwise complied with the Notary Act.
H-9
Rule 316 Appeal to the Illinois Supreme Court
August 24, 2009
In re Marriage of O’Brien
S. Ct. Docket No.:
109039
Appellate Citation:
Topic:
Substitution of Judge
Issue Presented:
What standard should an Illinois court apply when a motion for substitution of judge for cause
has been filed alleging ex parte communications and the appearance of impropriety in violation
of Rule 62 and 63 of the Code of the Judicial Conduct?
The Appellate Court ruled that Illinois generally requires the finding of actual prejudice but that
recent cases, including the Supreme Court’s decision in Caperton v. A.T. Massey Coal Co., Inc.,
556 U.S. ___, 129 S.Ct. 2252, 173 L.Ed.2d 1208 (2009), requires something less, such as proof that
an objective, reasonable person would question the trial judge’s ability to rule impartially. While
the Appellate Court concluded that nothing in the cases contravened the existing weight of
Illinois authority that actual prejudice is required, it determined that it need not resolve the issue
because it found the petitioner had failed to meet either standard. In light of the U.S. Supreme
Court’s decision in Caperton and the confused state of the law regarding the standard for
obtaining a substitution of judge, the Appellate Court granted a rare certificate of importance
pursuant to Supreme Court Rule 316.
at the May 2009 Term
West American Ins. Co. v. Yorkville National Bank
S. Ct. Docket No.:
108285
Appellate Citation:
Topic:
Insurance
Issue Presented:
Whether the trial court erred in determining that the plaintiff-insurance company owed a duty
to provide coverage to the defendant-bank in the underlying defamation action where the
plaintiff alleged that the defendant breached a provision in the policy requiring that the
defendant give “written notice” of the underlying action as soon as possible where the
H-10
defendant waited 2.5 years and less than two months before the trial court to give written notice
of the lawsuit.
The Appellate Court reversed the trial court, finding that the plaintiff owed no duty to provide
coverage where the defendant had breached the policy terms by failing to give prompt written
notice of the underlying action. The Appellate Court further found that it was unnecessary to
reach the question as to whether the defendant’s oral notices of the underlying lawsuit uttered
prior to giving the written notice of the lawsuit were sufficient to constitute actual notice of the
underlying lawsuit. One justice dissented.
Studt v. Sherman Health Systems
S. Ct. Docket No.:
108182
Appellate Citation:
Topic:
Medical Negligence
Issue Presented:
Whether the trial court properly gave IPI (Civil) 105.01, which advised the jury that, in
determining whether the defendant’s emergency room physicians violated the applicable
standard of care, the jury could properly consider, among other things, evidence of bylaws,
rules, regulations, policies and procedures, and other evidence presented in the case.
The Appellate Court ruled that IPI (Civil) 105.01 was an accurate statement of law, while the
defendant had argued that the instruction improperly eliminated the distinction between
professional and institutional negligence.
at the November 2008 Term
Slovinski v. Elliott
S. Ct. Docket No.:
107146
Appellate Citation:
No. 1-05-0423 (1st Dist. 2008) Rule 23 Order
Topic:
Damages
Issue Presented:
Whether the Appellate Court properly reduced the jury’s $2 million punitive damages award in a
defamation action to $81,680 which represented the same amount awarded by the jury as
compensatory damages. The basis of the defamation action was the plaintiff’s contention that
H-11
the defendant had defamed him by stating, among other things, that the plaintiff was not doing
his job, was coming in late and leaving early, and was spending his time chasing women all day.
The jury had originally awarded the plaintiff $2 million in punitive damages which the trial court
reduced to $1 million. The Appellate Court found that $1 million in punitive damages was
excessive. One justice dissented stating that he would affirm the original remittitur of the trial
court.
H-12
Karen L. Kendall
- Partner
Karen is the Chair of our statewide Appellate Practice
Group and began her legal career with Heyl Royster in
1984 after serving as law clerk to the Honorable Jay J.
Alloy, Presiding Justice, Illinois Appellate Court, Third
District. Previously, she served as law clerk to the
Honorable Howard C. Ryan, Chief Justice, Illinois
Supreme Court, from 1981 to 1982.



With extensive appellate experience, Karen has
handled over 600 appeals, 300 of which have resulted
in published opinions. Over 40 of the appeals have
been in the Illinois Supreme Court. Many have been
cases of first impression and have served to develop
and interpret the laws of Illinois for not only the firm's
clients, but for the entire legal profession. Karen's
diverse experience includes appeals of cases tried by
our firm in the trial courts, as well as cases tried by
others, where her involvement begins at the appellate
level. Karen represents clients ranging from Fortune
500 companies to small businesses and individuals
who refer cases to her regardless of whether they are
the appellant or the appellee, confident that she has
total familiarity with the complex appellate rules and
procedures. Karen is well skilled in the persuasive
analytical writing and speaking so necessary to prevail
in the appellate arena.

achievement. Only five percent of the lawyers
in each state earn this designation.
Top 50 Female Illinois Super Lawyers (2005present)
Top 50 Women Business Lawyers in Illinois
(2007)
Top 10 Leading Business Lawyers in Downstate
Illinois (2007)
Named SIU Law School Alumnus of the Year
(1996)
 American Academy of Appellate Lawyers
(President)
 Illinois Appellate Lawyers Association (Past
President)
 American Bar Association (Past Chair, Tort and
Insurance Practice Section, Appellate Advocacy
Committee)
(Member and Past Chair, Amicus Committee)
 Illinois Supreme Court Committee on Civil Jury
Instructions (Past Associate Member)
 Abraham Lincoln American Inn of Court (Past
President)
 Peoria County Bar Association (Past President)
 Association of Defense Trial Attorneys
 DRI Appellate Advocacy Steering Committee
 American Bar Foundation
 Bar Association of the Seventh Federal Circuit
 Bar Association of the Central and Southern
Federal Districts of Illinois
 Scribes, the American Society of Writers on
Legal Subjects
Karen regularly speaks at national, statewide and local
bar seminars on effective appellate practice and tort
and insurance coverage issues and presents mock
appellate arguments on various issues.
Currently, Karen is President of the American
Academy of Appellate Lawyers, an organization that
was founded in 1990 to advance the highest
standards and practices of appellate advocacy and to
recognize outstanding appellate lawyers. She has
been designated one of the "Leading Lawyers" in
Illinois as a result of a survey of Illinois attorneys
conducted by the Chicago Daily Law Bulletin; another
survey, published recently in Chicago magazine listed
Karen among the top 100 attorneys and top 50
female attorneys in the State of Illinois.
Court Admissions
 United States District Court, Central, Northern,
and Southern Districts of Illinois
 United States Courts of Appeals, Seventh and
Eighth Circuits
 United States Court of Appeals, Federal Circuit
 The Best Lawyers in America (2008-2010)
as Leading Lawyers.
 Named to the Illinois Super Lawyers list (20052010). The Super Lawyers selection process is
based on peer recognition and professional
Education
 Juris Doctor (Cum Laude), Southern Illinois
University School of Law, 1981
 Master of Arts-American History, Southern
 Bachelor of Arts-Philosophy, Southern Illinois
University, 1967
H-13
UNINSURED AND UNDERINSURED MOTORIST UPDATE Presented and Prepared by:
Mark J. McClenathan
[email protected]
Dana J. Hughes
[email protected]
15503779_5.DOCX
I-1
UNINSURED AND UNDERINSURED MOTORIST UPDATE
I.
COVERAGE ISSUES........................................................................................................................................ I-3
A.
B.
C.
D.
Defining “Insured”.......................................................................................................................... I-3
Statutory Exclusions ...................................................................................................................... I-6
Available Limits ............................................................................................................................... I-7
Ripeness ............................................................................................................................................. I-8
II.
ARBITRATION CLAUSES .............................................................................................................................. I-9
III.
OFFERS ............................................................................................................................................................I-10
IV.
STACKING ......................................................................................................................................................I-11
I-2
UNINSURED AND UNDERINSURED MOTORIST UPDATE
I.
COVERAGE ISSUES
A.
Defining “Insured”
DeSaga v. West Bend Mut. Ins. Co., 391 Ill. App. 3d 1062, 910 N.E.2d 159, 331 Ill. Dec. 86 (3d Dist.
2009) – Plaintiff’s decedent was hit by a car and killed after he walked onto a roadway to remove
some pieces of scrap that had fallen from his truck. Plaintiff sought benefits from her decedent’s
employer’s insurance carrier, West Bend, pursuant to its underinsured motorist endorsement of
the insurance policy. West Bend denied coverage, claiming that the decedent was not occupying
the vehicle as required under the policy to trigger underinsured (“UIM”) motorist coverage.
Plaintiff filed a declaratory judgment action seeking a judgment that her decedent was entitled
to UIM coverage at the time of the accident. West Bend filed a counterclaim for declaratory
judgment to the contrary. Both sides moved for summary judgment, and the trial court ruled in
favor of West Bend, finding that plaintiff’s decedent was not occupying the insured vehicle at
the time of the accident as required under the policy to trigger UIM coverage. Plaintiff appealed.
On appeal, plaintiff argued that Illinois law prohibits West Bend from defining “insured” more
narrowly for UIM coverage purposes than it did for liability bodily injury coverage under the
policy. A policy provision (or definition) that conflicts with Illinois law will be considered void and
unenforceable. The court looked to the statutory scheme of the Illinois Insurance Code to
analyze the applicable policy term. However, the court was mindful of the parties’ freedom to
contract in analyzing the definitions of insured as articulated in the policy at issue, and noted
that its power to declare a provision void must be exercised sparingly.
West Bend admitted that Illinois law prohibited it from defining “insured” differently in an
uninsured (UM) provision than in a UIM provision in the same policy, but argued that Illinois law
did not preclude it from defining insured differently under its UIM provisions than its liability
provisions. In considering plaintiff’s position, the court noted that Illinois law requires minimum
liability coverages to protect the public by securing payment of their damages. The Illinois
legislature enacted requirements concerning UM and UIM coverages to put the insured in the
same position as it would have been had the at-fault driver had adequate coverage to pay the
insured’s damages. The court found that the laws regarding liability, uninsured and
underinsured coverages were all connected.
The court then looked to the Illinois Supreme Court and other appellate districts for further
interpretation and discussion of the issue of whether an insurer could define insured more
narrowly for purposes of UIM coverage than for liability coverage. The DeSaga court cited the
Illinois Supreme Court’s dicta in Phelan, a 1974 decision, wherein it stated the following:
[The Illinois Insurance Code] does not restrict the parties to an insurance contract
from determining initially who will be insured under the policy, but once that
I-3
determination has been made, [the Illinois Insurance Code] mandates that UM
coverage be extended to anyone who is an insured for purposes of liability
coverage [emphasis added].
DeSaga, 391 Ill. App. 3d at 1069.
After considering the previous decisions rendered in the appellate districts and the Illinois
Supreme Court, the DeSaga court held that because the plaintiff is deemed an insured for
purposes of liability coverage, it must be deemed an insured for purposes of UIM coverage. In
the instant case, the court found that a more narrow definition was an indirect attempt at
denying UIM (and UM) coverage to its “insured.” The court found that West Bend’s attempt to
define “insured” differently violates Illinois law and reversed the trial court’s judgment.
Also, the court addressed the defendant’s alternative argument that the plaintiff’s decedent was
not occupying the insured vehicle at the time of the accident. The court found that even if it had
held that the defendant could require the element of “occupying the vehicle” in its UIM
provision, the court would have found that the plaintiff’s decedent was occupying the vehicle as
required under the provision. Two elements must be satisfied in order to impose liability on the
insurer in an instance where occupancy is at issue: “(1) there must be some nexus or relationship
between the insured party and the covered vehicle, and (2) there must be actual or virtual
physical contact between the injured party and the covered vehicle.” DeSaga, 391 Ill. App. 3d at
1071. In the instant case, the defendant conceded a relationship between the decedent and the
covered vehicle.
Regarding the second element, the parties agreed that the decedent was not in actual physical
contact with the insured vehicle at the time of the accident; thus, the issue is whether the
decedent was in virtual physical contact with the covered vehicle. The undisputed factual
evidence established that the decedent had parked his vehicle on the side of the road in order
to retrieve scrap metal from the roadway. He had activated his flashing emergency lights when
he went to remove the scrap. The court, finding that plaintiff’s decedent’s conduct in removing
the material from the roadway was reasonable, noted that the decedent may have even had a
statutory obligation to remove the scrap metal as it had fallen from his vehicle. The court found
that the decedent was in virtual physical contact with the insured vehicle at the time of the
accident. Thus, the court held that the decedent met the requirements under the “occupying”
test, and would have been covered under the UIM provision in his employer’s policy, had it not
been rendered void and unenforceable.
Schultz v. Illinois Farmers Ins. Co. and Illinois Farmers Ins. Co. v. Weglarz, No. 108038, 2010 WL
966206 (March 18, 2010) – The Illinois Supreme Court consolidated the appeals from the
matters of Schultz v. Illinois Farmers Insurance Company and Illinois Farmers Insurance Company
v. Weglarz in order to address the single question presented to the court: whether an insurer can
define “insured” for purposes of underinsured (“UIM”) coverage in a more narrow, restrictive way
than it does for uninsured (“UM”) or liability coverage purposes. For the reasons that follow, the
Illinois Supreme Court held that it cannot.
I-4
In Schultz, the driver (“Smetana”) and her passenger (“O’Conner”) were involved in an accident
with an underinsured motorist. Neither Smetana nor O’Conner were related to the owner of the
vehicle that they occupied at the time of the accident. The occupied vehicle was insured by
Farmers. Smetana and O’Conner each made claims under the underinsured motorist (UIM)
provision of the Farmers’ policy. Farmers paid Smetana’s claim but denied O’Conner’s claim.
Farmers claimed to rely on the UIM provision in its policy that limited UIM coverage to the
policyholder and its family members. On cross motions for summary judgment, the trial court
ruled in Farmers’ favor, declaring no available UIM coverage to O’Conner based on the policy
language. O’Conner appealed.
The Weglarz litigation involved a similar set of facts and an identical Farmers policy. Again, the
UIM provision excluded nonrelative occupants from UIM coverage. Even though the Weglarz
plaintiff was related to the policyholder, she did not reside with the policyholder. Farmers denied
coverage arguing that the UIM provision excluded nonresident relatives from coverage as well.
The Weglarz trial court found that the UIM provision contained ambiguous language, and
construed the ambiguity against Farmers. On cross motions for summary judgment, the court
held that the plaintiff was entitled to coverage under the policy. Farmers appealed.
On appeal, Farmers argued that Illinois law permits it to define “insured” more narrowly for UIM
purposes than it does for liability and UM purposes. Generally, terms of an insurance policy that
contravene Illinois law or seek to circumvent the underlying purpose of a statute in effect at the
time of the policy’s issuance are void and unenforceable. Illinois law requires a policy to insure
not only those named in the policy but also any “permissive user” of the insured vehicle. The
parties disputed the meaning of the term “permissive user.”
Farmers argued that a passenger should be excluded from the definition of permissive user. The
court applied the ordinary meaning of the term, as required under the rules of statutory
interpretation and notes that “permissive user” is defined as any person using or responsible for
the use of the subject vehicle with the express or implied permission of the insured. The court
further found that the plain and ordinary meaning of permissive user includes passengers;
otherwise, the statute would have used the term “driver.” The court held that Illinois mandatory
liability coverage requirements clearly extend to all permissive users, including permissive
passengers, by the very language in the statute.
Farmers further argued that Illinois law permits it to treat UIM coverage differently than it treats
UM or liability coverage. The court pointed out that Illinois law requires that automobile liability
policies include uninsured motorist coverage, and that UM coverage must extend to all who are
insured under the policy’s liability provisions. Furthermore, under Illinois law, insurers are
required to provide UIM coverage where the UM coverage exceeds the statutory minimums
required for liability for bodily injury, which are currently $20,000/$40,000. The UIM coverage
must be equal in amount to the UM coverage under the policy. UIM coverage must then also
extend to those who were insured under the policy’s liability provisions. UM and UIM provisions
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are, therefore, inextricably linked. If a person qualifies as an insured for liability coverage, then
he qualifies as an insured for UM and UIM coverage as well.*
*This opinion has not been released for publication in the permanent law reports due to the recent
date of release by the Illinois Appellate Court. Until it is released for publication, it is subject to
revision or withdrawal by the court.
Practical Considerations: An auto policy cannot define “insured” more narrowly for uninsured
and underinsured coverage than it does for liability coverage. Generally speaking, courts will
allow the parties (insured and insurer) the freedom to contract and the freedom to define who
qualifies as an insured, but only to the extent that the insurer does not draft the policy in a way
that seeks to circumvent statutory protections under the Illinois law.
B.
Statutory Exclusions
Ryan v. State Farm Mut. Auto. Ins. Co., 397 Ill. App. 3d 48, 921 N.E.2d 458, 336 Ill. Dec. 844 (1st
Dist. 2009) – The plaintiff, a City of Chicago police officer, was driving a patrol car when he was
injured in an accident with an uninsured vehicle. Prior to the day of the accident, the plaintiff
had never before driven that particular patrol car. Following the accident, he sought uninsured
motorist benefits pursuant to a personal auto policy he had with the defendant, State Farm, on a
different vehicle which he owned. State Farm denied the claim, relying on a coverage exclusion
in the policy relating to vehicles “furnished or available for [the insured’s] regular use.” State
Farm sought a declaration of no coverage, and the trial court granted its motion for summary
judgment. The plaintiff appealed.
On appeal, the plaintiff contended that the trial court erred in finding that the patrol car he
drove at the time of the accident was furnished or available for his regular use. The exclusion
referencing uninsured and underinsured coverage stated: “There is no coverage under
coverages U and U1 for bodily injury to an insured while occupying a motor vehicle owned by,
leased to, or furnished or available for the regular use of you, your spouse or any relative if [the
vehicle] is not insured for this coverage under this policy.” Ryan, 921 N.E.2d at 460.
The court initially noted that when interpreting an insurance policy, it must follow the rules of
contract interpretation. Plain and ordinary meaning will be applied to its terms, unless an
ambiguity exists, at which time the ambiguity will be construed strictly against the insurer. The
court found the language of the exclusion plain and unambiguous.
The plaintiff argued that he only used the vehicle one time, and therefore, the vehicle cannot be
considered furnished or available for his regular use. However, the court found that the plain
language of the exclusion does not depend on actual use, and does not deny coverage based
on regular use, but instead excluded vehicles that were furnished or available to the insured. The
exclusion depends on “availability.”
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Plaintiff further argued that the court erroneously stretched the exclusion to include a pool of
vehicles, because the exclusion does not expressly reference a pool of vehicles. The court found
that the vehicle was one among a pool of vehicles made available to the plaintiff. The court,
referencing a 1958 decision rendered in the Court of Appeals for the Seventh Circuit, stated that
since the vehicle was part of a pool of vehicles furnished or available to the plaintiff for his
regular use as a police officer, it was excluded under the policy. The court found the plaintiff’s
actual use immaterial to the analysis, and affirmed the trial court’s judgment in favor of State
Farm.
Practical Considerations: It is important to note that the court focused on the fact that the
exclusion was drafted consistently with the statutory regular use exclusion enacted by the Illinois
Legislature. See, 215 ILCS 5/143a(1) for regular use language. The court further noted that it is
not against public policy to allow insurers to exclude risks for which they have not collected a
premium. In this case, the excluded vehicle was a patrol car furnished for a police officer’s use in
high risk situations. The court found it unreasonable to conclude that State Farm’s policy would
provide coverage for this high risk at no cost to the plaintiff.
C.
Available Limits
Erie Ins. Exchange v. Triana, Nos. 1-08-3319, 1-08-3628, 2010 WL 395647 (1st Dist. Feb. 3,
2010) – Triana was a passenger in Christine Wagner’s (“Wagner”) vehicle when the vehicle
collided with another driven by William Weinen (“Weinen”). Triana and Wagner each made
claims against Weinen for bodily injuries sustained in the accident. Weinen was insured by State
Farm, with $100,000/$300,000 limits. State Farm paid $100,000 to each person. Triana and
Wagner also made underinsured (UIM) claims under Wagner’s policy with Erie. The Erie policy
had $300,000/$300,000 limits. Erie tendered $100,000 in full satisfaction of both claims,
contending that $100,000 was the full amount available in UIM coverage under the policy. Triana
and Wagner rejected, and Erie sought a declaration of the remaining policy limits in circuit court.
The trial court found that $100,000 remained under Erie’s split-limits policy for the claims made
by Triana and Wagner. The trial court agreed with Erie’s position that the $200,000 paid by State
Farm must be set-off against Erie’s $300,000 per accident limit, leaving $100,000 to be
apportioned between the Triana and Wagner claims. Triana and Wagner appealed, arguing that
because the Erie policy was a split-limits policy, the set-off provisions in the policy required that
only the $100,000 received by Wagner should be set-off against her $300,000 per person limits,
leaving $200,000 in available UIM coverage.
On appeal, Triana and Wagner raised two primary issues: (1) whether the maximum amount of
UIM coverage available should have been $200,000 (applying a $100,000 set off against the
$300,000 per person limits); and (2) whether the setoff provisions of Erie’s policy were
ambiguous and, therefore, construed strictly against Erie and in favor of Triana and Wagner. The
court stated that when interpreting the terms of a policy, it will first determine whether the
terms are clear and unambiguous. In doing so, the court will read the terms together. A term is
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ambiguous if it is susceptible to more than one meaning. If the terms of the applicable policy
provision are unambiguous, the court will apply their ordinary meanings.
After reading the terms applicable to this case, the court found the terms unambiguous.
According to the court, the Erie policy clearly stated that the per-person limits would be applied
if one insured person was injured in an accident, while the per-accident limits would be the most
that would be applied if more than one insured person was injured in an accident. Under the
policy, an insured is anyone who occupies any auto insured by Erie under the policy. In this case,
Triana and Wagner were insureds protected under the policy, and thus, the court ruled that the
per-accident limits of $300,000 was the maximum amount Erie had to pay out under the policy.
To address the set-off issue, the court looked to the language that specifically provided that the
policy limits would be reduced by the amounts paid by the tortfeasor. Here, the tortfeasor’s
insurance carrier, State Farm, paid $100,000 to each Triana and Wagner. Thus, the total amount
Erie was obligated to pay for this accident under the policy was $100,000. Therefore, the
Appellate Court upheld the judgment in Erie’s favor.
Practical Considerations: Policy language matters! We are reminded again that the court will
look to the terms of the insurance policy and give unambiguous terms their plain and ordinary
meanings.
D.
Ripeness
In Gregory v. Farmers Auto. Ins. Ass’n, 392 Ill. App. 3d 159, 910 N.E.2d 763, 331 Ill. Dec. 354 (5th
Dist. 2009), plaintiff’s decedent died in an automobile accident while he was a passenger in a
vehicle co-owned by defendant’s insured. The vehicle, co-owned by Jeffrey Wolf and Ralph Wolf,
was insured under a personal auto policy, as well as a business auto policy. Defendant conceded
coverage under the personal auto policy, and was defending the Wolfs under that policy in the
underlying litigation. Plaintiff filed a declaratory judgment action against defendant seeking
coverage under the business auto policy. The trial court granted the plaintiff’s motion for
summary judgment on the issue, and the defendant appealed.
On appeal, the defendant argued that the issue was not ripe for adjudication. The Appellate
Court stated that an action seeking a declaration that an insurer has a duty to defend is ripe
upon filing a complaint; however, an action seeking a declaration that an insurer has a duty to
indemnify is not ripe for adjudication until an insured becomes legally obligated to pay
damages in the underlying action. In this case, the underlying tort action was still pending at the
time the plaintiff sought a declaration of indemnity. Therefore, the issue of indemnity coverage,
the Appellate Court held, was not ripe for adjudication.
The plaintiff offered the distinction that she was not seeking a determination of limits, but
merely of coverage. The Appellate Court noted that an action that seeks a declaration of limits
and an action that seeks declaration of indemnification coverage both seek a declaration of the
duty to indemnify. The court found that the plaintiff’s argument was without merit. The court
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emphasized that the purpose of the rule regarding ripeness is to avoid advisory opinions, which
in essence, is the equivalent of giving legal advice to the parties.
II.
ARBITRATION CLAUSES
American Family Mut. Ins. Co. v. Stagg, 393 Ill. App. 3d 619, 912 N.E.2d 1283, 332 Ill. Dec. 397
(5th Dist. 2009) – American Family entered into an automobile insurance contract with Diane
Stagg (“Stagg”), which included an arbitration provision that provided in pertinent part: “[a]ny
arbitration award not exceeding the minimum limit of the Illinois Safety Responsibility
Law: 1. will be binding; and 2. May be entered as a judgement [sic] in any court having
jurisdiction.” Subsequent to entering into the policy, Stagg sustained injuries in an automobile
accident. She collected the at-fault driver’s liability insurance limits of $25,000 and sought
underinsured (“UIM”) motorist coverage under her policy with American Family. Her UIM claim
proceeded to arbitration, where the arbitration panel awarded Stagg $36,340.75. The arbitration
panel found that American Family was entitled to a set-off for the $25,000 collected from the atfault driver and $5,000 in medical payments that American Family had paid on Stagg’s behalf
prior to the arbitration. American Family was left to pay $6,340.75 if the court entered judgment
on the arbitration award.
American Family filed suit to enforce the arbitration award entered in Stagg’s favor. The
complaint also stated that Stagg had not objected to the award within the time frame set forth
in the Uniform Arbitration Act (“UAA”). American Family argued, in the alternative, that Stagg
was barred from rejecting the award, and consequently, judgment should be entered consistent
with the arbitration award.
Stagg filed a motion to dismiss American Family’s suit, claiming that the arbitration award was
not binding under the terms of the arbitration provision in UIM endorsement because the award
exceeded the minimum statutory limits ($20,000). In response to American Family’s claim of
untimely rejection, Stagg argued that the terms of the arbitration provision in the contract
governed her rejection, and she was not required to reject the award in accordance with the
timeframe set forth in the UAA. The trial court found in favor of Stagg on both issues, granting
her motion to dismiss American Family’s complaint, and her motion for trial de novo. American
Family appealed.
On appeal, American Family argued that the meaning of the term “arbitration award” meant the
actual amount it was ordered to pay as a result of the arbitration award. The court articulated
the general rule of contract interpretation, which provides that it is the court’s obligation to
ascertain and give effect to the intention of the parties as expressed in the language. If the
terms are susceptible to more than one meaning, then they will be considered ambiguous and
will be construed strictly against the insurer. The arbitration award was actually $36,340.75.
However, after the set-off, American Family would have been required to pay $6,340.75. Stagg
argued that arbitration award should be interpreted to mean the actual award, which in this case
was $36,340.75.
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The court found that “arbitration award” was susceptible to more than one meaning. The court
construed the ambiguity against American Family, and held that “arbitration award” would be
defined according to Stagg’s interpretation of the term. Thus, the court held that the arbitration
award exceeded the statutory minimum limits, that it was not binding against the parties and
that Stagg had the right to a trial on the merits pursuant to the policy.
American Family also argued that even if the award did exceed the statutory minimum limits,
Stagg was barred from rejecting the award due to the untimely nature of her rejection. The court
disagreed, again looking to the language of the policy. The court agreed with Stagg’s argument
that she was not required to confirm her rejection to the UAA, as the arbitration provision in the
policy clearly governed the terms of the arbitration. Further, Stagg was not required to state any
additional grounds to vacate the award. The policy provided her a basis to reject the award –
that it exceeded the minimum limits – and request a trial on the merits. The court stated that
American Family had the opportunity, as the drafter of the insurance policy, to address the
definition of “arbitration award” and to provide a timeframe for rejection, but it failed to do so.
The Appellate Court upheld the trial court’s rulings in favor of Stagg.
Practical Considerations: Ambiguities in an insurance policy will always be construed against
the insurer. The court stressed that the insurer has the right to define all the terms in the
insurance policy.
III.
OFFERS
Nicholson v. State Farm Mut. Auto. Ins. Co., No. 2-08-0639, 2010 WL 1208887 (2d Dist. Mar. 23,
2010) – Plaintiff’s decedents (“Janotas”) took out an automobile liability policy with State Farm in
1988. The policy insured a 1988 Olds and provided $100,000 in liability limits and $50,000 per
person in uninsured motorist (UM) limits. The Janotas signed a coverage selection form at that
time acknowledging their opportunity to elect UM coverage in the amount equal to liability
coverage. In 1997, the Janotas changed the insured vehicle to a 1997 Olds. In September of
1999, the Janotas requested an increase in coverage to $250,000 per person liability limits, and
$100,000 in UM limits. Their premium increased as a result. The Janotas did not execute the
coverage selection form until November of 1999. In 2003, the Janotas changed the insured
vehicle to a 2003 Buick, but made no other changes to the policy.
In November 2003, the Janotas were fatally injured in an accident with an uninsured motorist.
Their estate sought $250,000 each in UM benefits. State Farm paid $100,000 on behalf of
Mr. Janota and $100,000 on behalf of Mrs. Janota. The administrator of the Janotas’ estate
sought a reformation of the policy, arguing that State Farm failed to offer UM coverage in
accordance with the Illinois Insurance Code. The trial court agreed, and reformed the policy to
afford the Janotas $250,000 each in UM benefits. State Farm appealed.
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In this case, the parties disputed whether the September 1999 transaction constituted a new
application requiring an express denial of UM coverage, or whether the policy was simply a
renewal of the previous policy which would not require an express denial. In 1999, the law
provided that no policy shall be renewed or delivered or issued for delivery unless uninsured
motorist coverage was included in the amount of liability coverage, unless the UM coverage was
specifically rejected by the insured. In this case, the 1999 transaction changed the level of
coverage the Janotas enjoyed, and triggered an increase in premiums. The court held that the
1999 transaction resulted in a new policy which required a new offer (and refusal if appropriate)
of UM coverage.*
*This opinion has not been released for publication in the permanent law reports due to the recent
date of release by the Illinois Appellate Court. Until it is released for publication, it is subject to
revision or withdrawal by the court.
IV.
STACKING
Abram v. United Services Auto. Ass’n, 395 Ill. App. 3d 700, 916 N.E.2d 1175, 334 Ill. Dec. 287 (1st
Dist. 2009) – Plaintiff’s decedents (“the Abrams”) were killed in Louisiana when they were in an
automobile accident caused by an uninsured driver. The vehicle the Abrams occupied at the
time of the accident, a 2003 GMC Envoy, was insured by United Services Automobile Association
(“USAA”). The Abrams also owned a BMW, which USAA insured as well. The two vehicles were
insured under the same policy; however, the policy provided different coverages for each
vehicle. Particularly, the declarations page of the policy specifically excluded uninsured or
underinsured coverage for the BMW, while the policy provided $300,000/$500,000 in UM limits
for the GMC. The Abrams also had a personal umbrella policy (“PUP”) which provided excess
coverage up to $2 million per occurrence. Following the accident, USAA paid the plaintiffs
$500,000 as a result of the Abrams’ deaths.
The plaintiffs filed a declaratory judgment action seeking an order granting additional UM
payments. Plaintiffs presented three arguments:
(1) that the court should imply UM coverage on the BMW;
(2) that the anti-stacking provisions in the policy are ambiguous and should be
construed liberally in favor of coverage; and
(3) that the PUP provided UM coverage of $2 million in excess of the $500,000 UM
coverage in the underlying automobile policy.
The plaintiffs filed a motion for summary judgment and USAA moved to dismiss the complaint.
The trial court dismissed the complaint and denied plaintiff’s motion for summary judgment
finding that the policy expressly prohibited stacking and that the PUP did not provide UM
coverage. The trial court never addressed the issue of whether UM coverage on the BMW was
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implied. The trial court agreed with USAA that the plaintiffs were limited to recovering $500,000
in UM benefits under their policy. Plaintiffs appealed.
On appeal, the plaintiffs made the same three arguments. Initially, plaintiffs argued that the trial
court should have implied UM coverage on the BMW. Further, they argued that they should be
able to stack the UM coverages and recover $1 million, i.e., $500,000 on each insured vehicle.
However, like the trial court, the Appellate Court found the stacking issue dispositive. The court
found that plaintiffs were precluded from stacking UM coverages, regardless of whether UM
coverage on the BMW was implied.
The plaintiffs acknowledged the five anti-stacking provisions in their policy, but argued that the
provisions did not preclude them from stacking UM coverages. Plaintiffs first argued that Illinois
law provides that if premiums are paid on both vehicles, then recovery is permitted on both
vehicles. However, the Appellate Court found that where the limits are listed once on the
declaration page, then regardless of the number of premiums paid or vehicles listed, recovery is
limited to the amount of coverage listed. In the policy at issue, the Abrams did not pay for UM
coverage on both vehicles; therefore, the court found the plaintiffs’ argument meritless.
Plaintiffs also argued that the anti-stacking provisions in the policy did not preclude them from
stacking UM coverages because two insured persons were killed in the same accident. The
plaintiffs focused their arguments on the three, UM-specific, anti-stacking provisions. Plaintiffs
argued that the UM-specific anti-stacking provisions did not specifically address their unique
situation, that is, two insured persons killed in one accident. Plaintiffs relied on the following
language in the policy in support of their argument: “by any person in any one accident.”
Plaintiffs argued that the anti-stacking provisions therefore applied only in situations where one
insured person was injured or killed in an accident.
The court articulated the rule that when construing anti-stacking provisions in an insurance
policy, all provisions will be read together and given their plain and ordinary meanings, unless
the terms are ambiguous. If the terms are ambiguous, then the court will liberally construe them
in favor of allowing insureds to stack coverages.
The court addressed the first line of the UM anti-stacking provision, which is as follows: “You are
not able to stack UM or UIM coverage on any vehicle on this policy.” The court found that when
read together with the rest of the anti-stacking provisions in the policy, the provision is
unambiguous. Thus, the court held that the language plainly precludes the plaintiffs from
stacking any UM coverage afforded under the policy.
The plaintiffs also argued that the Appellate Court should construe the Abrams’ PUP in favor of
coverage because the PUP was ambiguous as to whether the policy provided $2 million in
excess UM coverage. The Appellate Court again looked to plain language of the policy
provisions. It found that several provisions plainly stated that the PUP did not provide UM
coverage. Plaintiffs argued that the language relied on by USAA was ambiguous: “This policy
provides no first party insurance coverage (including but not limited to, any uninsured motorist
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coverage, underinsured motorist coverage, personal injury protection or any medical payments
coverage).” The Appellate Court disagreed, finding that first-party coverage was explicitly
defined in the provision. Thus, the Appellate Court found that the provision expressly and
unambiguously excluded UM coverage from the Abrams PUP.
The Appellate Court held that the Abrams’ policy unambiguously precluded stacking UM
coverages, and further held that the PUP did not provide $2 million in excess UM coverage.
Therefore, the court affirmed the trial court’s rulings.
Economy Premier Assur. Co. v. Jackson, 393 Ill. App. 3d 929, 913 N.E.2d 90, 332 Ill. Dec. 495 (2d
Dist. 2009) – Ellen Hall and Tommy Jackson were the divorced parents of Thomas Jackson
(“Thomas”) who was killed while a passenger in a car owned by Christian DeFilippo. Two others
were injured in the accident, which was DeFilippo’s fault. DeFilippo’s vehicle was insured under a
policy with Allstate which provided $50,000/$100,000 liability limits. Allstate paid $15,000 each
to Ellen, Tommy, and Thomas’ sister Sarah Jackson (collectively referred to as “the claimants”). At
the time of the accident, Thomas was an insured under Ellen’s policy with Safeco which provided
$100,000/$300,000 in UM and UIM coverage; Thomas was also an insured under Tommy’s policy
with Economy Premier which likewise had $100,000/$300,000 UM and UIM limits. Ellen and
Tommy each made UIM claims under their respective policies. Both carriers took the position
that they were entitled to share liability under their policies’ respective anti-stacking provisions,
meaning they would each pay a share of their single $100,000 per-person limits because only
one loss had occurred.
Three lawsuits ensued over the coverage dispute:
(1) Economy Premier sought a declaratory judgment that the maximum available UIM
coverage under its policy was $25,000 ($100,000 limits - $50,000 Allstate limits, divided by two
to account for “other insurance” available under the Safeco policy);
(2) The claimants filed suit against Economy Premier seeking a declaratory judgment
that the Safeco policy was not “other insurance” which could be used to reduce the amount of
coverage in the Economy UIM provision. They also argued that they were Tommy’s next of kin
within the meaning of the Wrongful Death Act and were entitled to recover UIM benefits under
both of the policies.
(3) The claimants filed a similar suit against Safeco seeking the same relief as they
sought against Economy Premier.
The trial court found that Safeco and Economy were entitled to a combined $45,000 set-off
($22,500 each) from the amount Allstate paid to the claimants for Thomas’ death. The court
further ordered each carrier to pay $77,500 on the UIM claims presented. The carriers appealed.
On appeal, the issue was whether the trial court improperly stacked the UIM coverages in
rendering its judgment in favor of the claimants. The parties generally agreed that the policies
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prohibit stacking UIM coverages, but they disagree about whether the court in fact stacked the
policies at all in rendering its decision. The court acknowledged that the anti-stacking provisions
would preclude an insured from stacking when the insured has more than one policy of
coverage available. In this case, the key was determining who the insured was for purposes of
the anti-stacking provisions-Thomas or the claimants.
On appeal, the carriers argued that Thomas was the “insured” for purposes of the anti-stacking
provisions. The claimants, on the other hand, argued that they were the “insureds” for purposes
of addressing the stacking issue. To determine whether stacking had occurred in violation of the
policies’ anti-stacking provisions, the court examined the nature of the claims presented. The
Appellate Court found that the claimants sought relief under the Wrongful Death Act, which
allows personal claims for the decedent's survivors. Whereas, the carriers argued that the
claimants sought UM benefits on Thomas’ behalf. Hence, Thomas was not the insured seeking
to stack coverages.
Once the Appellate Court found that claimants were the “insureds” for purposes of the antistacking provision, the court needed to then determine whether the provision was otherwise
applicable. In order to find the anti-stacking provision applicable, the claimants would have to
have additional coverage available to them. The court found that Ellen was not an insured under
Tommy's policy, and vice versa. Neither Ellen nor Tommy had other insurance coverage
available. Therefore, the anti-stacking provision was not triggered in this litigation because no
other insurance coverage was available to either Ellen or Tommy. Thus, the Appellate Court held
that the anti-stacking provision did not preclude the relief awarded to the claimants by the trial
court.
Every argument advanced by the carriers was based on the assertion that Thomas was the
“insured” for purposes of evaluating the anti-stacking provisions in the applicable policies. The
court distinguished Tommy and Ellen's claims from any claim that could have been brought on
behalf of Thomas' estate, which would have presented a different scenario to the court. The
Appellate Court affirmed the trial court's rulings, holding that no impermissible stacking had
occurred.
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Mark J. McClenathan
- Partner
Mark joined Heyl Royster in 1989, and became a
partner with the firm in 1998.


Mark concentrates his practice in commercial and civil
litigation. He has extensively defended product
liability, professional liability, construction liability, and
agriculture liability cases.

In addition, Mark has represented clients in the areas
of business and corporate law, construction law, and
real estate. Also, Mark has represented municipalities
and clients before various governmental bodies, and
has extensive experience in annexations, subdivisions
and developments, zoning, and intergovernmental
agreements.
negotiating and drafting border agreements
and annexation agreements.
Represented municipalities in court on border
disputes.
Represented municipalities before
administrative boards on disciplinary
proceedings (including police issues).
Represented Ken Rock Community Center on
sale of commercial/school property.
Public Speaking
 “Evidentiary Issues for the Claims Professional”
Heyl Royster 2008
 “Premises Liability Update”
Heyl Royster 2007
 “Mediation and Arbitration: When, Why &
How?”
Heyl Royster 2001
 Various presentations to local realtor company
meetings on professional liability issues
 “Evidentiary Issues for the Fire Investigator”
Northern Illinois Arson Investigator Association
annual certification meeting
Prior to joining Heyl Royster, Mark worked for the
legal department of the Defense Logistics Agency
(Defense Contract Services) of the Department of
Defense in Chicago; the legal departments of two
Fortune 500 companies headquartered in the Twin
Cities, Minnesota including Land O'Lakes, Inc. in St.
Paul and 3M Corporation in Minneapolis; and then
was in private practice with a firm in Rockford, where
he practiced in the areas of business and corporate
law, commercial and civil defense litigation, and
bankruptcy (creditors' rights).
as Leading Lawyers
 Winnebago County Pro Bono Volunteer of the
Year (1990)
 Court certified mediator, Winnebago County
Significant Cases
 Fox Controls, Inc. v. Honeywell, Inc., 2004 WL
906114 (N.D. Ill. 2004) Dismissal of case
alleging misappropriation of trade secrets.
 Zimmerman v. Fasco Mills Co., 302 Ill. App. 3d
308 (2d Dist. 1998) Dismissal of case involving
"fireman's rule."
 Donovan v. Beloit Corp., 275 Ill. App. 3d 25 (2d
Dist. 1995) Structural Work Act versus preemption of OSHA issue.
 Jansen v. Aaron Equipment, (N.D. Ill. 1995)
Product liability case involving joint and several
rule.
 Baker v. Boomgarden, 263 Ill. App. 3d 251 (2d
Dist. 1994) Dismissal of roofers' personal injury
claim against homeowners.
 Winnebago State Bar Association
 Court Admissions
 United States District Court, Northern District
of Illinois
Education
 Juris Doctor, Hamline University School of Law,
1987
 Bachelor of Arts (Magna Cum Laude),
University of Wisconsin - Eau Claire, 1984
 Porter Scholar, Beloit College, 1979-1980
Transactions
 Assisted various municipalities on
incorporations; drafting new or amending
existing zoning, subdivision, and general
ordinances; drafting comprehensive plans;
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THIRD‐PARTY LIABILITY: CONTRIBUTION, INDEMNITY, AND SET‐OFFS Presented and Prepared by:
Joseph G. Feehan
[email protected]
[email protected]
Jesse A. Placher
[email protected]
15568104_2.DOCX
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THIRD-PARTY LIABILITY:
CONTRIBUTION, INDEMNITY, AND SET-OFFS
I.
JOINT AND SEVERAL LIABILITY ................................................................................................................J-4
A.
Unzicker v. Kraft Food Ingredients Corp. ................................................................................J-5
II.
SECTION 2-1117 IN ITS CURRENT FORM ............................................................................................J-6
III.
SETTLING PARTIES ........................................................................................................................................J-8
A.
A Historical Perspective ...............................................................................................................J-8
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
B.
C.
D.
Third District Implies That the Fault of a Settling Party
(Plaintiff’s Employer) Should Be Considered ........................................................J-8
Supreme Court follows Alvarez .................................................................................J-9
Fifth District Finds That the Fault of a Settling Party Should
Be Considered, Following Lannom ...........................................................................J-9
Fifth District Finds That the Fault of a Settling Party
Should Not Be Considered ..........................................................................................J-9
Seventh Circuit Follows Blake and Holds the Fault of a
Settling Party Should Not Be Considered ........................................................... J-10
District Court Says Frieslinger Was Wrongly Decided and
Follows Lannom ............................................................................................................ J-10
First District Suggests, Somewhat Awkwardly,
That Settling Parties Should Be Considered ...................................................... J-10
District Court Finds That the Settling Party’s Fault Should
Be Considered, Following Lannom ........................................................................ J-11
Fourth District Interprets Current Section 2-1117 and
Finds Settling Party’s Fault Should Be Considered .......................................... J-12
First District Holds that Settling, Non-Parties Are “Defendants
Sued by the Plaintiff” Pursuant to 2-1117 .......................................................... J-12
The Next Day, the First District Decides Differently ........................................ J-13
Ready or Not, Here It Comes! ................................................................................................. J-15
Ready in Practice  What Does It Mean? ........................................................................... J-16
Recent Case Law Applying Ready ......................................................................................... J-17
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IV.
SET-OFF.......................................................................................................................................................... J-18
A.
B.
V.
STRATEGIC CONSIDERATIONS ............................................................................................................. J-22
A.
B.
C.
D.
E.
F.
G.
VI.
What About Set-Offs and Section 2-1117? ....................................................................... J-18
Illinois Supreme Court Holds That a Non-Settling Defendant Is Entitled
to a Set-Off If It Is Properly Preserved ................................................................................ J-19
Is Sole Proximate Cause a Defense in Illinois? ................................................................. J-22
Should a Contribution Claim Be Filed Against Plaintiff’s Employer? ....................... J-24
Should Plaintiff’s Co-Workers Be Added As Third-Party Defendants? ................... J-25
Does 2-1117 Apply to Defendants Acting in Concert? ................................................. J-25
What About the Fault of Non-Parties Who Have Not Settled? ................................. J-26
What About the Statute of Limitations? ............................................................................. J-27
Is Any Version of Section 2-1117 Constitutional? .......................................................... J-27
INDEMNITY................................................................................................................................................... J-28
A.
Contractual Indemnity............................................................................................................... J-28
1.
2.
B.
Construction Accidents .............................................................................................. J-29
Non-Construction Setting......................................................................................... J-29
Implied Indemnity ....................................................................................................................... J-31
J-3
THIRD-PARTY LIABILITY:
CONTRIBUTION, INDEMNITY, AND SET-OFFS
I.
JOINT AND SEVERAL LIABILITY
The apportionment of fault in multi-party litigation can be difficult to determine and raises many
unanswered questions. Effective June 3, 2003, the General Assembly amended the 1986 version
of 735 ILCS 5/2-1117 (“Joint Liability”). The text of the provision states:
[I]n actions on account of bodily injury or death or physical damage to property,
based on negligence, or product liability based on strict tort liability, all
defendants found liable are jointly and severally liable for plaintiff’s past and
future medical and medically related expenses. Any defendant whose fault, as
determined by the trier of fact, is less than 25% of the total fault attributable to
the plaintiff, the defendants sued by the plaintiff, and any third party defendant
who could have been sued by the plaintiff, except the plaintiff’s employer, shall
be severally liable for all other damages. Any defendant whose fault, as
determined by the trier of fact, is 25% or greater of the total fault attributable to
the plaintiff, the defendants sued by the plaintiff, and any third party defendants
who could have been sued by the plaintiff, except the plaintiff’s employer, shall
be jointly and severally liable for all other damages.
735 ILCS 5/2-1117.
In this latest version of the Code, the fault of plaintiff’s employer is not considered. Without that
fault considered, the statute clearly operates to benefit plaintiffs who are injured at work.
Furthermore, pursuant to the recent Supreme Court decision in Ready v. United/Goedecke
Services, Inc., No. 103474, 2008 WL 5046833 (Nov. 25, 2008), plaintiffs are now given the
opportunity to receive an even bigger windfall when bringing suits against multiple defendants
as settling defendants will no longer be considered in the allocation of fault for apportionment
under 2-1117.
However, defendants, at least those in the asbestos realm, are now able to strike back with the
overturn of Lipke v. Celotex Corp., 153 Ill. App. 3d 498, 505 N.E.2d 1213, 106 Ill. Dec. 422 (1st Dist.
1987), via the recent Supreme Court decision in Nolan v. Weil-McLain, 233 Ill. 2d 416, 910 N.E.2d
549, 331 Ill. Dec. 140 (2009). In sum, a defendant will not be barred from introducing evidence of
other potential causes of injury where it pursues a sole proximate cause defense.
Before we discuss these issues and more, a brief review of the history of how 2-1117 has evolved
over the years will assist us in our discussion.
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A.
Unzicker v. Kraft Food Ingredients Corp.
Four months prior to the enactment of the current version of 2-1117, the Illinois Supreme Court
held the 1986 version of that statute (which closely mirrored today’s version) was constitutional.
Essentially, the court determined the plaintiff’s employer could be included in the fault
apportionment calculations. Unzicker v. Kraft Food Ingredients Corp., 203 Ill. 2d 64, 783 N.E.2d
1024, 270 Ill. Dec. 724 (2002).
In Unzicker, plaintiff obtained a verdict in the amount of $879,400, $91,400 of which was medical
and $788,000 of which was non-medical. The jury found plaintiff’s employer 99 percent at fault
and defendant, Kraft Foods, 1 percent at fault. The trial court entered judgment on the jury’s
verdict finding Kraft and plaintiff’s employer were jointly and severally liable for plaintiff’s past
and future medical expenses of $91,400. Kraft was severally liable for 1 percent of the nonmedical damages ($7,880). Plaintiff’s employer was then liable to Kraft on Kraft’s third-party
complaint for $90,486 in contribution, which represented 99 percent of the medical damages.
On appeal, plaintiffs argued that the fault of plaintiff’s employer should not be considered for
apportionment purposes, since plaintiff’s employer was not a “third party defendant who could
have been sued by the plaintiff” given that plaintiff’s employer was immune from suit under the
Workers’ Compensation Act (820 ILCS 305/1 et seq.). Unzicker, 203 Ill. 2d at 69. In determining
that the fault of plaintiff’s employer should be considered for apportionment purposes, the
Illinois Supreme Court stated as follows:
The clear legislative intent behind section 2-1117 is that minimally responsible
defendants should not have to pay entire damage awards. The legislature set the
line of minimal responsibility at less than 25%. In order to apportion
responsibility, the legislature looked to those people in the suit: the plaintiff, the
defendants sued by the plaintiff, and any third-party defendants who could have
been sued by the plaintiff. In our opinion, the broad wording in the statute
merely shows that the legislature intended the division of responsibility to
include those people in the suit who might have been responsible for the
plaintiff’s injuries. Here, ignoring the party found to be 99% responsible for the
plaintiff’s injuries and requiring the party found 1% responsible to pay all of the
nonmedical damages would not be in accord with the clear legislative intent that
minimally responsible defendants should not be liable for entire judgments.
Id. at 78-79.
The General Assembly quickly responded to this decision by enacting the current version of 21117, which clearly states the fault of a plaintiff’s employer (which many times exceeds that of
any defendant) will not be utilized in determining whether a defendant is jointly or severally
liable. The minimally culpable defendant at present is now faced with possibility of being jointly
and severally liable.
J-5
II.
SECTION 2-1117 IN ITS CURRENT FORM
Currently, the fault of plaintiff’s employer, no matter how egregious, is removed from the
calculations for determining joint and several liability. After the jury apportions fault to the
various parties, the court must then engage in reallocation to determine joint and several
liability. The following example shows, in theory, how minimally culpable defendants may now
be asked to pay a grossly disproportionate share, if not all, of the judgment.
Verdict - $1,000,000
Medical bills: $100,000
Non-medical damages: $900,000
Defendant 1 - 1%
Defendant 2 - 1%
Defendant 3 - 1%
Plaintiff’s employer - 97%
Prior 2-1117
Current 2-1117
Defendants 1, 2 and 3 are each jointly and
severally liable for the medical bills.
Plaintiff’s employer’s fault is removed.
Defendants 1, 2 and 3 are each 33 1/3% at
fault.
Defendants 1, 2 and 3 are severally liable for
the non-medical damages (or $9,000 each).
Defendants 1, 2 and 3 are jointly and
severally liable for the medical bills and the
non-medical damages.
Under the above example, plaintiff’s employer bears almost all of the fault, but the court will
ignore the fault of plaintiff’s employer in determining joint and several liability. After the
employer’s fault is removed, each defendant will share 1/3 of the total fault. Each defendant
could be asked to satisfy the entire judgment, in theory. Any defendant doing so would then
have rights of contribution against the remaining defendants. Regardless, each defendant could
be responsible for paying a substantially larger portion of the judgment than would otherwise
have existed under the prior version of section 2-1117.
J-6
The result reached in Unzicker would also be entirely different under the current version of
section 2-1117. Using the facts in Unzicker, the following result would now occur:
Verdict - $879,400
Medical: $91,400
Non-medical: $788,000
Kraft fault - 1%
Plaintiff’s employer’s fault - 99%
Plaintiff’s recovery from Kraft - $879,400
The 99 percent fault of plaintiff’s employer is removed for determining joint and several liability.
Despite being only 1 percent at fault, Kraft’s fault is 100 percent of the fault once the court
reallocates to determine joint and several liability. Kraft would still have a right of contribution
against plaintiff’s employer, but the employer’s exposure would be substantially mitigated by
the limitation of liability provided for in Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155, 585
N.E.2d 1023, 166 Ill. Dec. 1 (1991) (which limits the liability of plaintiff’s employer in contribution
to the amount of the workers’ compensation benefits that the employer is obligated to pay the
injured employee). Accordingly, Kraft, under the current section 2-1117, would pay, incredibly,
the entire judgment even though the jury found it only 1 percent at fault.
Expanding upon the Unzicker example, the current application of section 2-1117 can potentially
operate to substantially reward plaintiff even where plaintiff bears more fault than the
defendant. For example, consider the following:
Total verdict - $879,400
Medical: $91,400
Percentages of fault
Plaintiff’s employer: 96%
Kraft: 1%
Plaintiff: 3%
Kraft pays plaintiff: $853,018 (or $879,400 x .97)
Given the application of section 2-1117, the fault of plaintiff’s employer will be dropped out of
the equation by the court for purposes of determining joint and several liability. After the fault
of plaintiff’s employer is removed, the fault of the plaintiff versus Kraft is compared, which
represents a ratio of 3:1. In essence, Kraft would bear 25 percent and plaintiff 75 percent of the
total responsibility upon reallocation. Kraft would end up paying virtually all of the verdict even
though it was found to be only 1 percent at fault by the jury. Plaintiff’s fault of 3 percent simply
reduces Kraft’s responsibility by a very small amount.
J-7
There are obvious questions associated with this hypothetical. Plaintiff will still be allowed to
recover despite the fact that the apportionment of fault calculations reveal that plaintiff bears 75
percent of the total fault. The example again highlights the unfair application of section 2-1117
in requiring Kraft, only 1 percent at fault, to pay virtually all of the verdict. When the court
considers apportionment, Kraft suffers greatly, while plaintiff, whose fault is 75 percent of the
total fault for apportionment purposes, benefits greatly. The result seems absurd, and the court
may be faced with the decision of trying to determine how plaintiff’s fault should be evaluated
in this context.
This is an area undecided at this time, and the answer probably lies within the construction and
application of sections 2-1116 and 2-1117. Section 2-1116 provides that a plaintiff will not
recover if “the trier of fact” determines that the plaintiff is more than 50 percent at fault. The
court may take the position that section 2-1116 only operates to deny plaintiff a recovery when
the trier of fact (not the court during reallocation) finds plaintiff’s fault is more than 50 percent.
Therefore, the court only evaluates plaintiff’s fault in the context of reallocation for joint and
several liability, not to determine whether plaintiff should recover.
III.
SETTLING PARTIES
The question of whether the fault of a settling defendant who has been dismissed should be
considered for apportionment went unresolved for a great deal of time. There were opinions on
both sides of the issue. However, the recent Supreme Court decision in Ready seems to have put
this issue to rest. In Illinois, settling defendants will NOT be considered for apportionment.
A.
A Historical Perspective
For a historical perspective regarding the issue of whether to consider settling tortfeasors for
apportionment, the following cases should be addressed:
1.
Third District Implies That the Fault of a Settling Party (Plaintiff’s
Employer) Should Be Considered
Alvarez v. Fred Hintze Const., 247 Ill. App. 3d 811, 617 N.E.2d 821, 187 Ill. Dec. 364 (3d Dist.
1993) – Plaintiff was injured at a construction site and filed suit against the general contractor
and owner. Both defendants filed third-party complaints for contribution against plaintiff’s
employer. Plaintiff’s employer then reached a settlement with plaintiff and obtained a goodfaith finding. Plaintiff’s employer was then dismissed. The general contractor argued that the
dismissal of the plaintiff’s employer would deny its right to obtain apportionment under section
2-1117 (the 1986 version). The Third District concluded that, even where one tortfeasor has
settled, the jury should still be able to assess the defendant’s relative culpability.
J-8
2.
Supreme Court follows Alvarez
Lannom v. Kosco, 158 Ill. 2d 535, 634 N.E.2d 1097, 199 Ill. Dec. 743 (1994) – Plaintiff filed suit for
injuries he sustained while working alongside a highway. The defendant driver then filed a thirdparty complaint for contribution against his employer. Plaintiff’s employer then moved to
dismiss the third-party complaint on the basis that it was waiving the workers’ compensation
lien. Defendant argued that dismissing plaintiff’s employer would obstruct the purpose of
section 2-1117 (the 1986 version). The Illinois Supreme Court disagreed, stating in relevant part:
We note, however, that this dilemma arises whenever a defendant or third party
settles with the plaintiff or is dismissed from an action for any reason. Section 21117 was not intended to prohibit the dismissal of a defendant or a third party
from an action, where such dismissal is otherwise warranted. Moreover, the
defendant’s rights under section 2-1117 are not abolished simply because a
defendant or third party settles or is dismissed from an action. The jury may still
assess the remaining defendants’ relative culpability, and if the degree of fault
attributable to one or more defendants is less than 25%, those defendants’
liability is several only.
Lannom, 158 Ill. 2d at 542-43 (emphasis added).
3.
Fifth District Finds That the Fault of a Settling Party Should Be
Considered, Following Lannom
Banovz v. Rantanen, 271 Ill. App. 3d 910, 649 N.E.2d 977, 208 Ill. Dec. 617 (5th Dist. 1995).
Plaintiffs were passengers involved in a multi-vehicle accident in Madison County. They filed suit
against a driver of the vehicle in which they were passengers and against the driver of a tractor
trailer and his employer. The defendants filed counterclaims against each other seeking
contribution. The truck driver’s employer settled with one of the plaintiffs and obtained a goodfaith finding. However, the trial court did not dismiss pending contribution claims between the
truck driver’s employer (who had settled) and the driver of the vehicle in which plaintiffs were
passengers.
The Fifth District found that the failure to dismiss was improper. It noted further that upon retrial the fault of the settling party will be presented to the jury for apportionment purposes
under section 2-1117 (the 1986 version). It relied upon the reasoning employed in the Illinois
Supreme Court’s decision of Lannom v. Kosco.
4.
Fifth District Finds That the Fault of a Settling Party Should Not Be
Considered
Blake v. Hy Ho Restaurant, Inc., 273 Ill. App. 3d 372, 652 N.E.2d 807, 210 Ill. Dec. 5 (5th Dist.
1995) – A wrongful death action was filed when a City of Belleville employee was killed by
methane gas fumes while removing grease deposits that clogged a city sewer line near two
J-9
restaurants (both of which were named defendants). The City of Belleville settled and moved to
dismiss the third-party claims for contribution filed against it. The trial court found the
settlement was in good faith and dismissed all claims against the City of Belleville.
Defendants argued on appeal that the fault of the City of Belleville should still be considered by
the trier of fact to apportion fault among all tortfeasors. The Fifth District concluded that the
plain language of section 2-1117 (the 1986 version) established that once the City of Belleville
settled it was no longer a defendant for purposes of section 2-1117 apportionment. It noted
that 2-1117 does not address “former defendants” or “dismissed defendants.”
5.
Seventh Circuit Follows Blake and Holds the Fault of a Settling Party
Should Not Be Considered
Freislinger v. Emro Propane Co., 99 F.3d 1412 (7th Cir. 1996) – The Seventh Circuit followed the
analysis employed by the Illinois Fifth District Appellate Court in Blake v. Hy Ho Restaurant, Inc.
in determining that “defendants sued by the plaintiff” under section 2-1117 (the 1986 version)
only applies to defendants who remain in the case when it is submitted to the jury. It does not
apply to settled parties. Furthermore, it held that plaintiff’s employer was not to be included in
the section 2-1117 calculation since plaintiff’s employer was not a third-party defendant “who
could have been sued by the plaintiff.” Obviously, the latter part of the court’s analysis was
subsequently overruled in the Unzicker decision. It is also noteworthy that the Seventh Circuit in
this opinion appears to improperly analyze the Illinois Supreme Court’s decision in Lannom v.
Kosco. The Seventh Circuit interpreted the decision in Lannom to suggest that the fault of
settling parties is not to be included for apportionment purposes.
6.
District Court Says Frieslinger Was Wrongly Decided and Follows
Lannom
Costello v. U.S., No. 96-C-187, 1998 WL 341615 (N.D. Ill. June 23, 1998) – The lawsuit arose from
a midair collision between two airplanes. The only issue which the district court addressed was
whether the United States, as the only remaining defendant, was jointly and severally liable or
simply severally liable based upon the settlements entered into by the other defendants in the
case. The district court determined that the Illinois Supreme Court in the Lannom decision
intended to apportion fault between all defendants, including those who had settled.
Accordingly, the district court found that the trier of fact will apportion fault among all parties,
including parties who had settled. The district court specifically noted that the Seventh Circuit in
Frieslinger had misinterpreted the Illinois Supreme Court’s decision in Lannom.
7.
First District Suggests, Somewhat Awkwardly, That Settling Parties
Should Be Considered
Lombardo v. Reliance Elevator Co., 315 Ill. App. 3d 111, 733 N.E.2d 874, 248 Ill. Dec. 199 (1st Dist.
2000) – Plaintiff was employed in the maintenance department at a bank. He was injured when a
lift he was riding upon suddenly fell. He filed suit against the owner of the building, two
J-10
companies that maintained the lift and the beneficiary of the trust which held title to the
building. Plaintiff’s employer (the bank) was then made a third-party defendant. One of the
maintenance companies settled, and plaintiff’s employer also settled.
On appeal, plaintiff argued that the maintenance company and plaintiff’s employer (who had
both settled) should not have been included on the verdict form for purposes of apportioning
fault. It is noteworthy that 90 percent of the fault was attributed to plaintiff’s employer at trial.
The First District disagreed with plaintiff’s argument. It held that including both non-parties and
settling defendants helps protect defendants’ interests in preserving their right to contribution.
In addition, upon re-trial, the First District noted that the trial court should include plaintiff’s
employer and any other settling defendants on the verdict form. It went on to add that the trial
court should only consider the fault of those parties specified within section 2-1117. This last
statement by the First District leaves the interpretation of who was to be included for
apportionment subject to debate.
8.
District Court Finds That the Settling Party’s Fault Should Be
Considered, Following Lannom
Dowe v. Nat’l R.R. Passenger Corp., No. 01-C-5808, 2004 WL 887410 (N.D. Ill. April 26, 2004) –
The lawsuit arose from a collision of an Amtrak passenger train with a truck at a railroad crossing
in Bourbonnais, resulting in the loss of many passengers’ lives and injuries to many others. The
district court held that settling defendants would not be kept off the verdict form. In dicta, the
court found there was reason to believe that the Illinois Supreme Court would find that the fault
of a settling party should be considered by the jury for apportionment purposes. The court
stated as follows:
Settling defendants and third party defendants are among the ‘defendants sued
by the plaintiff’ and, in this case at least, are among the ‘third party defendant[s]
who could have been sued by the plaintiff.’ The real question is the time at which
whether a party is or was a ‘defendant’ is to be determined. Freislinger and Blake
says that the determination depends on who remains in the case when it is
submitted to the fact finder; Lannom and Alvarez indicate that the answer
depends only on whether a party was a defendant or third party defendant at
some point during the case. Though both approaches give meaning to the
statute’s language, the latter approach is more faithful to the Illinois Supreme
Court’s statement that ‘[t]he clear legislative intent behind section 2-1117 is that
minimally responsible defendants should not have to pay entire damage awards.’
Dowe, 2004 WL 887410 at *9, quoting Unzicker, 203 Ill. 2d at 77-78.
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9.
Fourth District Interprets Current Section 2-1117 and Finds Settling
Party’s Fault Should Be Considered
Skaggs v. Senior Services of Cent. Illinois, Inc., 355 Ill. App. 3d 1120, 823 N.E.2d 1021, 291 Ill. Dec.
435 (4th Dist. 2005) – The Fourth District reviewed section 2-1117 in its current form after
determining that a settlement was in good faith, discharging a tortfeasor from any further
liability. It followed the Illinois Supreme Court’s analysis in Unzicker, finding that a minimally
responsible defendant should not have to pay entire damage awards. In determining that the
fault of a settling tortfeasor should be considered for apportionment purposes, the Fourth
District stated in relevant part:
The revision to section 2-1117 excepts a plaintiff’s employer from being
considered in the apportioning of fault, but the legislative intent remains the
same with respect to minimally responsible defendants. Forcing a minimally
responsible defendant to shoulder the nonmedical expenses only because the
more culpable defendant settled would allow plaintiffs to circumvent the purpose
of the statute. In 1993, an Illinois appellate court suggested as follows:
“[T]he rights of a nonsettling defendant under Section 2-1117 ‘cannot be negated
simply because another tortfeasor has settled with the plaintiff.’ [Citation.] . . .
[E]ven where one tortfeasor has settled with the plaintiff, ‘[t]he jury should still be
able to assess the defendant’s relative culpability, and if the defendant’s level of
fault falls below the 25[%] threshold, its liability is several only and is not affected
by the plaintiff’s settlement with the other tortfeasor.”’ [Citation omitted].
***
The plain language of the statute includes “defendants sued by the plaintiff.” 735
ILCS 5/2-1117 (West Supp. 2003). Even though a defendant settles with a plaintiff
and is dismissed from the case, that defendant does not lose its status as a
defendant sued by the plaintiff. Therefore, we hold section 2-1117 requires the
trier of fact to consider the percentage of fault of settling defendants.
Skaggs, 823 N.E.2d at 1028-29.
The Illinois Supreme Court granted a petition for leave to appeal the Skaggs decision during its
September 2005 term, but before the court was able to render a decision, the case settled.
10.
First District Holds that Settling, Non-Parties Are “Defendants Sued
by the Plaintiff” Pursuant to 2-1117
Heupel v. Jenkins, 379 Ill. App. 3d 893, 884 N.E.2d 1263, 319 Ill. Dec. 18 (1st Dist. 2008)  Here,
two vehicles, one driven by defendant and the other by Nivethitha Murugeson, collided at an
intersection in Chicago. The facts indicate that the defendant had the right of way at the time of
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the collision. As a result of the collision, defendant’s vehicle spun into the adjacent sidewalk,
striking plaintiff. Prior to filing suit, plaintiff entered into a settlement agreement with
Murugeson, the more culpable of the two defendants, for $100,000, the amount of Murugeson’s
insurance coverage. Plaintiff subsequently filed suit sounding in negligence against defendant.
Defendant prevailed at trial, and plaintiff appealed alleging the trial court erred by including
Murugeson, a settling non-party, on the jury verdict form. The facts in this case are therefore
unique as Murugeson was never a named defendant.
The First District, Third Division, held that the legislative intent of 2-1117 was to apportion fault
among all tortfeasors. Consequently, “a third party need not be a named defendant in order for
her relative fault to be considered by the jury.” Heupel, 379 Ill. App. 3d at 902. The court further
noted its support for the holding in Skaggs that the name of a prior settling defendant must
appear on the jury verdict form. Essentially, settling defendants do not lose their status as
“defendants sued by the plaintiff” pursuant to 2-1117.
Heupel represented the first case in Illinois to find that settling non-parties should be considered
“defendants sued by the plaintiff” pursuant to 2-1117.
11.
The Next Day, the First District Decides Differently
Yoder v. Ferguson, 381 Ill. App. 3d 353, 885 N.E.2d 1060, 319 Ill. Dec. 380 (1st Dist. 2008)  Just
one day after the First District, Third Division holding in Heupel, the First District, Fourth Division
came to a contrary conclusion in Yoder. Here, the court held that the trial court did not err in
refusing to consider settling defendants in the allocation of fault for apportionment.
In Yoder, a multi-vehicle accident occurred on I-90 near Rockford involving plaintiff and her
family. At the time of the accident, Scott Yoder was driving. Jerelyn Yoder was in the passenger
seat, and their two children, Zachary and Teagan, were in the back seat. Jerelyn and Scott Yoder
suffered severe injuries, Zachary was profoundly disabled, and Teagan was killed as a result of
the accident. Jerelyn Yoder brought suit individually, as next friend of Zachary, and as
administrator of Teagan’s estate against the following defendants: (1) James Ferguson and his
employer, Romar Transportation Systems (“Ferguson”); (2) Thomas Alexander and his employer,
Single Source Transportation (“Alexander”); (3) David Knoll and his employers, Kee Transport and
Roundy’s (“Knoll”); (4) Mary Beth Marshall (“Marshall”); (5) Joseph Rezetko (“Rezetko”); and
(6) her husband, Scott Yoder. Scott Yoder named the same defendants in his suit, and the cases
were consolidated for trial.
The evidence in the case revealed the following about the accident:
Marshall: The semi in front of her began to fishtail, causing her to slow down on a bridge which
was described as “like an ice skating rink.” However, she never lost control of her vehicle. While
slowing down, Rezetko rear-ended Marshall. This caused the semi behind Rezetko, driven by
Ferguson, to come to a sudden stop. In doing so, his trailer ended up perpendicular to the road,
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thus blocking the Interstate. It is noteworthy that Mary Beth Marshall’s passenger testified
similarly as well.
Rezetko: He was driving behind Marshall, who did not have her lights on. At the bridge, the
weather worsened and Rezetko lost sight of Marshall. Just after crossing the bridge, Rezetko saw
Marshall’s brake lights and realized she was stopped. He pumped his brakes but was unable to
stop his vehicle, rear-ending Marshall. The two cars remained in the right lane, and two cars
passed in the left lane. Shortly thereafter, Ferguson’s trailer blocked both lanes of the Interstate
after rear-ending Rezetko.
Ferguson: He had driven semis for 15 years. On the day of the accident, two cars passed
(Marshall and Rezetko) him before the bridge. When he got closer to the bridge, he noticed the
same two cars in front of him with their passenger sides facing him. He realized they were
blocking part of the road. To avoid hitting them, he pumped the brakes, but his truck failed to
slow down. He then directed it to the right guardrail to help stop the truck. He lost control of
the truck, and it jackknifed short of the cars, blocking the entire Interstate. Ferguson did not turn
his hazard lights on.
Alexander: Alexander had been driving semis for 14 years at the time. He admitted that at one
point, his visibility was reduced to 15-30 feet, yet he continued to drive despite having the
option to pull over. He saw Ferguson’s truck ahead but could not slow down without losing
control of his semi-trailer. He tried to veer right, but determined he could not pass on the
shoulder. He locked up his brakes and veered left to avoid a major collision. Alexander slid into
Ferguson’s truck, coming to rest diagonally. Once stopped, he turned on his hazards and looked
in his rearview mirror. He saw the Yoder vehicle careen off a vehicle in the right-hand lane, come
back across the Interstate and come to rest crashing under a semi trailer (driven by Knoll).
Alexander testified that the Yoder vehicle was traveling approximately 65 mph. He based this on
the erratic way the vehicle came through traffic and the damage to the vehicle.
Knoll: He was driving a semi at the time. He had been driving this same route three times a
week for several months. At the bridge, his visibility was reduced to about 100 feet, at which
point he reduced his speed to less than 45 mph. Shortly thereafter, he saw Alexander’s and
Ferguson’s trucks obstructing the roadway. He did not turn his hazard lights on but maintained
brake pressure for the final 17 seconds his truck was traveling. He finally came to a complete
stop partially in the median, with his trailer remaining partly in the left lane. Shortly thereafter,
Scott Yoder collided with the rear of his trailer.
Prior to trial, Jerelyn Yoder entered into good faith settlements with two defendants, Scott Yoder
and Joseph Rezetko. Scott Yoder paid approximately $500,000, and Joseph Rezetko paid
$300,000. After an eight-week trial, the jury found Scott Yoder was 51 percent at fault, and
judgment was thereby entered against him in his case. However, in Jerelyn’s cases, the jury did
not determine that Scott Yoder was the sole cause of the accident. Furthermore, as a result of
their prior settlements, Scott Yoder and Joseph Rezetko were not included on the verdict forms.
The jury entered a verdict for $38.3 million. Specifically, $7.3 million was awarded for Jerelyn’s
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personal injury claims, $3.5 million as administrator of Teagan’s estate, and $27.5 million as next
friend of Zachary. Fault was allocated as follows among the remaining four defendants:
(1) Ferguson:
(2) Alexander:
(3) Knoll:
(4) Marshall:
30% ($11,490,000)
10% ($3,830,000)
27% ($10,341,000)
33% ($12,639,000)
After trial, Marshall settled for $10.8 million, which was found to be in good faith. Knoll also
settled for $10,341,000, the full amount of his apportionment of the verdict. However, Ferguson
and Alexander both appealed a number of issues, including the issue of whether the trial court
erred by excluding the settling defendants from the jury fault allocation forms.
The First District, Fourth Division in a result-oriented decision adopted the rationale in Blake,
thus holding that settling defendants are no longer “defendants sued by the plaintiff.” The court
noted that the legislature’s subsequent amendments to 2-1117 did not modify the language in
response to established case law, and thus the legislature must agree with the Blake
interpretation.
Yoder now serves to highlight how unfairly the Supreme Court’s decision in Ready, as will be
discussed, can operate. Minimally culpable defendants, such as Marshall, whom arguably did
very little wrong, can now be found disproportionately responsible due to our Supreme Court’s
recent decision.
B.
Ready or Not, Here It Comes!
Ready v. United/Goedecke Services, Inc., 367 Ill. App. 3d 272, 854 N.E.2d 758, 305 Ill. Dec. 166 (1st
Dist. 2006) – The lawsuit arose when plaintiff’s decedent was killed during a pipe re-fitting
project at his employer’s factory. Both decedent’s employer and the general contractor for the
project settled with plaintiff, leaving the scaffolding subcontractor (United) in the case at trial.
After trial, the jury returned a verdict of $14,230,000. They assessed 35 percent of the fault with
decedent, reducing the judgment to $9,250,000, and United was then allowed a set-off of
$1,112,502.58, which was the amount paid by the settling defendants.
On appeal, United raised numerous issues relating to the admissibility of evidence and that the
trial court erred in excluding the settling defendants from the jury verdict form.
Notably, the First District held the pre-amendment version of 2-1117 applied as the amendment
was a substantive change and could not be applied retroactively (the accident occurred in 1999
and the amendment was passed in 2003).
United relied on most of the cases cited above (including Alvarez, Dowe, and Skaggs) to support
its position that settling defendants should be included on the jury form. The First District
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agreed with United and earlier interpretations of 2-1117, in that “a remaining defendant’s
culpability should be assessed relative to the culpability of all defendants, including settling
defendants.” It further noted that a defendant that settles with a plaintiff is still “[a] defendant
sued by the plaintiff” as stated in 2-1117. In the court’s opinion, because Lannom held a settling
defendant and its dismissal does not affect a nonsettling defendant’s rights under 2-1117, “it
follows that settling defendants must appear on the verdict form so as not to affect the rights of
the nonsettling defendants.” Since the prior 2-1117 applied in this matter, the employer was to
be included on the verdict form, and a new trial on liability was required.
The Illinois Supreme Court granted a petition for leave to appeal the Ready decision during its
November 2006 term, and finally issued its decision on November 25, 2008.
Ready v. United/Goedecke Services, Inc., No. 103474, 2008 WL 5046833 (Nov. 25, 2008)  After
embarking on a lengthy exercise of statutory construction, the Supreme Court in a plurality
decision (5-4) held that settling tortfeasors are NOT “defendants sued by the plaintiff” pursuant
to 2-1117. Therefore, settling defendants are not considered for fault apportionment purposes.
Throughout its analysis, the Supreme Court focused on the phrase “defendants sued by the
plaintiff” included in the language of 2-1117. Ultimately, the court determined that the meaning
of the phrase is ambiguous. The court held that where the legislature chooses not to amend a
statute after judicial construction, it is presumed the legislature has acquiesced in the court’s
assessment of legislative intent. The court noted that the 1995 amendments were passed by the
legislature after the holding in Blake. Consequently, the court determined that the amendments
are a compelling indication that the legislature never intended settling defendants to be
included in the apportionment of fault under 2-1117. The court’s analysis is particularly
interesting as it looks back to the Fifth District’s holding in Blake in 1995, but chooses to ignore
a number of other relevant cases.
On March 23, 2009, the Supreme Court denied rehearing on this matter.
C.
Ready in Practice  What Does It Mean?
The outcome in Ready increases the potential exposure of minimally culpable defendants, as the
following example illustrates:
Verdict - $1,000,000
Medical: $100,000
Defendant 1 - 10%
Defendant 2 - 20%
Defendant 3 - 30%
Employer - 40%
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Plaintiff settles with defendants 2 and 3 for a total of $200,000.
Employer’s workers’ compensation lien of $300,000 is waived.
Settling Parties Not Considered Per Ready
Settling Parties Considered
for Apportionment
Defendant 1 is only 10% at fault
Defendant 1 represents 16% of the total
fault for apportionment
But, Defendant 1 still represents 100% of
the total fault for apportionment
Defendant 1's responsibility:
Medical:
$100,000
Non-Medical: $144,000
$244,000
Defendant 1 is jointly and severally liable for
the entire $1,000,000 verdict
Defendant 1 gets a set-off of $500,000
Defendant 1 gets a set-off of $500,000
Defendant 1 has no exposure after set-off
Defendant 1's responsibility is $500,000
D.
Recent Case Law Applying Ready
Since the decision in Ready, the following pertinent Illinois cases have interpreted and applied
the decision:
Heupel v. Jenkins, 395 Ill. App. 3d 689, 919 N.E.2d 378, 335 Ill. Dec. 659 (1st Dist. 2009). On
remand, the First District held that the trial court’s inclusion on the verdict form of a joint
tortfeasor who settled with plaintiff warranted a new trial. The court noted the decision in Ready,
whereby the Illinois Supreme Court held that good faith settling tortfeasors are not “defendants
sued by the plaintiff” within the meaning of section 2-1117. The First District therefore reversed
and remanded for a new trial. The court specifically held that a new trial was warranted because
at the trial court level where the jury returned a verdict for the defendant, the settling tortfeasors
should not have been listed on the verdict form or considered in the apportionment of fault.
Petition for re-hearing was denied on January 19, 2010.
Jablonski v. Ford Motor Co., No. 5-05-0723, 2010 WL 378527 (5th Dist. Feb. 1, 2010). At the jury
instructions conference, the defendant, Ford Motor Company, submitted proposed verdict forms
that would have required the jury to allocate fault between the defendants, Ford and Natalie
Ingram. Defendant Ingram settled with plaintiffs prior to trial. The trial court rejected Ford’s
proposed verdict forms. The Fifth District noted that when this case was briefed and argued
there was a conflict between the Fourth and Fifth Districts as to whether a defendant who settles
before trial should be included in the jury’s apportionment of fault under section 2-1117.
Specifically, the court was referring to the Fifth District decision in Blake where the court held
that a settling tortfeasor should not be included in the jury’s apportionment of fault and the
Fourth District decision in Skaggs concluding that the jury should be informed about a settling
tortfeasor. The Fifth District recognized that this conflict has been resolved by the Illinois
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Supreme Court’s decision in Ready where it was held that settling torfeasors should not be
included in apportionment of the fault pursuant to 2-1117. Accordingly, the trial court did not
abuse its discretion in refusing defendant Ford Motor Company’s proposed verdict forms. A
petition for re-hearing was denied on February 25, 2010.
IV.
SET-OFF
A.
What About Set-Offs and Section 2-1117?
Illinois provides a right of contribution where two or more persons are subject to liability in tort
arising out of the same injury. 740 ILCS 100/2. If a tortfeasor settles and obtains a good-faith
finding, the non-settling tortfeasor is entitled to a set-off against the judgment by the amount
paid by the settling tortfeasor. 740 ILCS 100/2(c). The non-settling tortfeasor is entitled to the
set-off even if the resulting judgment in favor of plaintiff is reduced to zero. Pasquale v. Speed
Products Engineering, 166 Ill. 2d 337, 654 N.E.2d 1365, 211 Ill. Dec. 314 (1995). Nothing within
section 2-1117 suggests that a non-settling tortfeasor should be deprived of a set-off.
A non-settling tortfeasor’s right to a set-off arises under the Contribution Act (740 ILCS
100/0.01, et seq.) as a result of settlements reached between plaintiff and other joint tortfeasors.
A defendant’s right to apportion liability for joint and several liability purposes arises under
section 2-1117. The defendant’s rights to a set-off and apportionment are wholly independent.
Therefore, the non-settling tortfeasor should be entitled to apportionment under section 2-1117
and to a set-off under the Contribution Act for any amounts paid by settling tortfeasors.
Expanding upon an earlier example, please consider the following:
Verdict - $1 million
Medical: $100,000
Percentages of fault
Defendant 1 - 1%
Defendant 2 - 1%
Defendant 3 - 1%
Plaintiff’s employer - 97%
Before trial, plaintiff settles with Defendants 2 and 3 as well as his employer.
Plaintiff’s employer’s workers’ compensation lien of $400,000 is waived.
Defendant 2 pays $100,000 in settlement and Defendant 3 pays $150,000 in settlement.
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What happens?
Defendant 1 is jointly and severally liable under section 2-1117 (because Defendant 1’s
fault was one third of the total fault excluding the fault of the employer)
Defendant 1 is entitled to a set-off of $400,000, the amount of the waived workers’
compensation lien.
Defendant 1 is entitled to a set-off of $250,000, the total amounts paid in settlement by
Defendants 2 and 3.
Defendant 1's total set-off is $650,000.
Defendant 1 pays plaintiff $350,000 ($1 million minus $650,000).
A recent Seventh Circuit decision, Baltzell v. R & R Trucking Co., 554 F.3d 1124 (7th Cir. 2009),
sheds further light on this subject. In Baltzell, plaintiff-employee was critically injured when he
was crushed by a tractor-trailer while working. Plaintiff received workers’ compensation benefits
from his employer. Additionally, plaintiff and his wife brought suit against the owner of the
tractor-trailer, the tractor manufacturer, and the trailer manufacturer. All three defendants filed
third-party claims for contribution against the employer. Plaintiffs prevailed before a jury against
all three defendants and were awarded $13,980,120. The employer waived its workers’
compensation lien after trial and moved to dismiss the contribution claims, which the district
court denied. It is noteworthy that the workers’ compensation case was not closed and future
payments were undetermined at the time of trial.
On appeal, the Seventh Circuit vacated and remanded. The court held that the employer could
waive the workers’ compensation lien after trial and was thus not liable in contribution.
However, the court concluded that the defendants were entitled to a set-off for any workers’
compensation benefits the employee and his wife received from the employer. Furthermore,
once future workers’ compensation benefits were determined, the defendants would be entitled
to a set-off for those amounts as well.
B.
Illinois Supreme Court Holds That a Non-Settling Defendant Is Entitled to a
Set-Off If It Is Properly Preserved
In Thornton v. Garcini, No. 107028, 2009 WL 3471065 (Opinion filed Oct. 29, 2009; modified on
April 22, 2010), plaintiff Toni Thornton brought an action for medical negligence and negligent
infliction of emotional distress against defendants Dr. Francisco Garcini, Silver Cross Hospital,
and individual nurses. Plaintiff’s lawsuit arose out of the death of her son, Jason, who was born
prematurely in a breech position at the gestational age of 24 weeks. During childbirth, Jason’s
head became stuck in his mother’s vagina, with the rest of his body outside the vagina. The
infant died when the nurses at the hospital were unable to complete the delivery. Dr. Garcini, an
obstetrician, arrived at the hospital an hour and 10 minutes later.
Plaintiff, as administrator of Jason’s estate, brought wrongful death and survival claims against
the defendants which alleged medical malpractice. Significantly, she also brought a claim on her
own behalf for infliction of emotional distress.
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At trial, Dr. Garcini testified that he initially learned that Ms. Thornton was at the hospital having
contractions when he received a call from a nurse at his home at 6:35 a.m. Dr. Garcini gave the
nurse certain instructions. Thirty-five minutes later, at 7:10 a.m., the infant partially delivered in a
breech position. There were nurses present for the delivery, but no physician was present. Jason
became entrapped at the neck during the delivery so the nurses called Dr. Garcini again. He
instructed the nurses not to deliver the infant unless it could be done easily, because of a risk of
decapitation. After being informed of the partial delivery, Dr. Garcini took a shower and then
drove to the hospital. The nurses were unable to deliver Jason, and he died before Dr. Garcini
left his house. Upon arriving at the hospital, Dr. Garcini delivered the dead infant. The testimony
established that Ms. Thornton waited for over an hour, with the deceased infant partially
delivered, before Dr. Garcini arrived to complete the delivery.
Ms. Thornton testified about her emotional status as a result of lying in a hospital bed for over
an hour with her deceased son partially delivered. Plaintiff testified that there was nothing she
could do but “sit there like that with my baby.” She further testified that she has these thoughts
“all the time” and she has had thoughts of suicide because “it was so horrible and I’m always
reminded of that hour and ten minutes that I sat there with him.” Plaintiff stated that she
became depressed, and could not eat or sleep. The infant’s father and Ms. Thornton’s mother
testified about the adverse effects that Jason’s death and the circumstances of the delivery had
on plaintiff.
At the first trial, the jury found in favor of Dr. Garcini and the nurses on all claims. However, the
jury found against Silver Cross Hospital on the emotional distress claim and awarded
Ms. Thornton $175,000. Plaintiff filed post-trial motions against all of the defendants. She then
settled all of her claims against Silver Cross Hospital and the nurses for $175,000 in return for a
release of claims and satisfaction of judgment. The trial court later denied plaintiff’s post-trial
motion with respect to Dr. Garcini.
Plaintiff appealed the jury’s verdict relating to Dr. Garcini on various grounds, including juror
bias and jury instructions issues. The Third District Appellate Court reversed and granted plaintiff
a new trial. Thornton v. Garcini, 364 Ill. App. 3d 612, 846 N.E.2d 989, 301 Ill. Dec. 386 (3d Dist.
2006).
Plaintiff then proceeded to trial solely against Dr. Garcini. After the second trial, the jury found in
favor of Dr. Garcini on the medical malpractice claims but found him guilty of negligent infliction
of emotional distress and awarded damages of $700,000. Dr. Garcini appealed, arguing that
Ms. Thornton failed to prove negligent infliction of emotional distress because she did not
introduce any expert testimony to support her claim that she suffered emotional distress due to
Dr. Garcini’s acts or omissions. Specifically, Dr. Garcini argued that plaintiff failed to introduce
expert testimony to establish that her emotional distress was caused by the delay in delivering
the deceased infant. Dr. Garcini also contended that he should receive a setoff of $175,000 due
to the settlement previously paid by Silver Cross Hospital.
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The Third District Appellate Court rejected Dr. Garcini’s arguments and affirmed the jury’s verdict
of $700,000. Thornton v. Garcini, 382 Ill. App. 3d 813, 888 N.E.2d 1217, 321 Ill. Dec. 284 (3d Dist.
2008). Subsequently, the Illinois Supreme Court also rejected Dr. Garcini’s claim that he was
entitled to a set-off of $175,000 due to the settlement reached with the hospital and nurses. The
Supreme Court found that Dr. Garcini had forfeited his ability to assert a set-off because he did
not raise the issue until he filed a post-trial motion. The Thornton court examined section 2-608
of the Code of Civil Procedure and found that it requires a defendant to assert a claim for set-off
“in the pleadings.” (735 ILCS 5/2-608) The Thornton court suggested that section 2-608 provides
that a set-off may be raised as a cross-claim in the defendant’s answer to the complaint.
Accordingly, the Thornton court rejected Dr. Garcini’s request for a set-off because he did not
request a set-off until after the conclusion of the trial.
On April 22, 2010, the Illinois Supreme Court issued a modified opinion in Thornton which holds
that a claim for set-off does not have to be raised in the pleadings or even before trial. Upon
consideration of Dr. Garcini’s petition for rehearing, the court was persuaded that a modification
of its previous opinion was necessary. The defendant argued that its request for set-off (for the
amounts paid by settling defendants) was in the nature of an enforcement action. Dr. Garcini
contended that a set-off is not a counterclaim to be evaluated by the trier of fact and therefore,
a claim for set-off may be brought at any time.
The Thornton court agreed with Dr. Garcini and explained that the term set-off is used in two
distinct ways. A set-off can refer to a situation when a defendant has a distinct cause of action
against the same plaintiff who filed suit against him. With this type of set-off, the claim must be
raised in the pleadings. A set-off can also refer to a defendant’s request for a reduction of the
damage award because a third party has already compensated the plaintiff for the same injury.
This occurs, for example, when a co-defendant who would be liable for contribution settles with
the plaintiff. The Thornton court ruled that this type of set-off may be raised at any time.
The Thornton court found that the defendant’s set-off request constituted an enforcement
action rather than a counterclaim. Therefore, the defendant’s claim for set-off was not forfeited
simply because it was not raised in the pleadings. The court went on to find, however, that the
trial court properly denied defendant’s request for set-off because the judgment against the
defendant in the second trial was only for Toni Thornton’s claim of negligent infliction of
emotional distress and the settlement with the hospital was not merely for damages sought by
Toni Thornton, individually, but also for damages sought by her as special administrator of the
estate of Jason Ebner. In addition, the settlement agreement released a variety of claims against
the hospital and the individual nurses who had not been found liable prior to settlement. The
court rejected Dr. Garcini’s argument that he was not required to establish the proper allocation
of the settlement proceeds. The Thornton court stated:
Generally, a nonsettling party seeking a setoff bears the burden of proving what
portion of a prior settlement was allocated or attributable to its share of the
liability. (Citation omitted.)
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Here, plaintiff’s $175,000 settlement with the hospital specifically provided that
plaintiff was not settling her claims against defendant. The settlement was not
merely for damages sought by Toni Thornton, individually, but also for damages
sought by Toni Thornton, as special administrator of the estate of Jason Ebner,
deceased. In addition, it released a variety of claims against the hospital as well as
against the individual nurses who had not been found liable prior to settlement.
The judgment against defendant in the second trial, however, was only for Toni’s
individual claim of negligent infliction of emotional distress.
***
Defendant also contends he is entitled to a set-off of the full settlement amount
but admits he has failed to offer any proof of the proper allocation based on his
share of the liability. Given the multiple parties, injuries, and claims settled in
plaintiff’s agreement with the hospital, the allocation of the full settlement
proceeds to set off defendant’s liability for only the negligent infliction of
emotional distress cannot be justified in the absence of any supporting proof. No
independent judicial determination of the proper allocation is possible.
Accordingly, we hold that the trial court properly denied defendant’s request for
a setoff. (Emphasis added.)
Thorton v. Garcini, No. 107028, slip op. at 12 (Apr. 22, 2010).
The Thornton case highlights the importance of filing a timely pleading which asserts that a nonsettling defendant is or may be entitled to a set-off. A more specific claim for setoff (which
references the amount(s) of any settlement(s)) can be filed after a plaintiff reaches a settlement
with one or more parties. Based on the Thornton court’s reasoning in its modified opinion, a
crafty plaintiff’s attorney could attempt to avoid the application of a set-off or credit by arguing
that the settlement related to only one element of damages (i.e., wage loss or medical bills). By
filing a timely request for a set-off or credit, a non-settling party should be able to preserve the
issue or force plaintiff’s counsel to simply agree to full a set-off or credit. If plaintiff’s counsel
does not agree to a full set-off or credit, then the non-settling party should ask the court to
either award the set-off or credit, or to allocate the settlement proceeds in a fair manner.
V.
STRATEGIC CONSIDERATIONS
A.
Is Sole Proximate Cause a Defense in Illinois?
In Lipke v. Celotex Corp., 153 Ill. App. 3d 498, 505 N.E.2d 1213, 106 Ill. Dec. 422 (1st Dist. 1987),
the First District distinguished the rights of a defendant involved in asbestos litigation. In Lipke,
an asbestos worker filed suit against 27 asbestos manufacturers to recover for damages
sustained as a result of continued exposure to asbestos products. By the time of trial, all of the
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defendants, except one, had obtained settlement with plaintiff. A verdict of $629,000 in
compensatory damages was awarded, along with $175,000 in punitive damages.
The remaining defendant appealed this decision, and argued, among other things, that a series
of errors made by the trial court resulted in the denial of a fair trial. One such error was the
exclusion of evidence of plaintiff’s exposure to other asbestos-containing products. The First
District did not find this to constitute error. Evidence of other exposures was deemed irrelevant.
The Lipke court noted that where there is more than one proximate cause of an injury, a party
guilty of negligence cannot avoid responsibility just because another is also guilty of negligence
contributing to the same injury. See, Lipke, 153 Ill. App. 3d at 509, citing, Sears v. Kois Bros. Equip.,
Inc., 110 Ill. App. 3d 884, 889, 443 N.E.2d 214, 66 Ill. Dec. 531 (1st Dist. 1982). The First District
concluded that where such guilt is present, it is no defense that another contributed to bring
about the result for which damages are claimed; either or both are liable and, therefore, the fact
that plaintiff used a variety of asbestos products does not relieve a defendant of liability.
However, there are circumstances where a defendant would argue its actions were not the
proximate cause to an injury suffered by a plaintiff. In those circumstances, nothing should
prevent that defendant from presenting evidence of a settled party’s negligence under the
auspices that the settling defendant was the “sole proximate cause” of the injury.
Since this decision, defendants in asbestos-related cases face the potential of being the only
party left on the hook for damages in the event all other defendants settle and it stands alone
when a verdict is announced. The only arguments remaining for such a defendant are set-off
and sole proximate cause.
Asbestos defendants continued in their efforts to have Lipke overturned. In 2006, the Fourth
District ruled in Nolan v. Weil-McLain, 365 Ill. App. 3d 963, 851 N.E.2d 281, 303 Ill. Dec. 383 (4th
Dist. 2006), that a boiler manufacturer was barred from introducing evidence of a decedent’s
exposures to other asbestos-containing products. The defendant in that matter petitioned for
leave to appeal this decision (essentially, asking for the Illinois Supreme Court to overrule Lipke).
The Supreme Court accepted defendant’s petition, and oral arguments were made May 16,
2007.
On April 16, 2009, the Supreme Court reversed the circuit court and Fourth District and
remanded to the circuit court. Nolan v. Weil-McLain, 233 Ill. 2d 416, 910 N.E.2d 549, 331 Ill. Dec.
140 (2009). In a decision that overturns Lipke, the Supreme Court held the following:
The single paragraph in Lipke from which the exclusionary rule of other-exposure
evidence is derived neither suggested nor held that a defendant should be
barred from introducing evidence of other potential causes of injury where it
pursues a sole proximate cause defense, nor that juries should be deprived of
evidence critical to a causation determination. As observed by the dissenting
justice below, the appellate court’s erroneous interpretation of Lipke, Thacker and
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Leonardi in its rulings in Kochan and Spain left Illinois standing alone in excluding
evidence of other asbestos exposures, and conflicted with our well-settled rules
of tort law that the plaintiff exclusively bears the burden of proof to establish the
element of causation through competent evidence, and that a defendant has the
right to rebut such evidence and to also establish that the conduct of another
causative factor is the sole proximate cause of the injury. We hold that the circuit
court erred by relying on the appellate court’s erroneous - and now overruled decisions to prevent defendant from presenting evidence of decedent’s other
asbestos exposures in support of its sole proximate cause defense.
Nolan, 233 Ill. 2d at 444-45.
The Nolan decision is a significant victory for defendants. Nolan makes it quite clear that
defendants should be allowed to argue that its actions were not the proximate cause of an
injury suffered by a plaintiff. Accordingly, nothing should prevent defendants from presenting
evidence of the negligence of either a settling tortfeasor or a non-party tortfeasor under the
auspice that the actions of other tortfeasors were the “sole proximate cause” of the injury.
Despite Ready, sole proximate cause remains an available strategy to utilize at trial. Section 21117 deals strictly with apportionment of fault. If fault can only be apportioned to one
defendant (100 percent vs. 0 percent), then the party that is 0 percent liable should not be
forced to pay.
B.
Should a Contribution Claim Be Filed Against Plaintiff’s Employer?
Given the operation of section 2-1117, the fault of plaintiff’s employer will not be considered by
the court in reallocating fault for purposes of 2-1117. However, the contribution claim is still a
valuable tool. The Contribution Act (740 ILCS 100/0.01 et seq.) is designed to make sure that a
joint tortfeasor does not pay more than its pro rata share. A contribution claim will reduce the
amount of the exposure even in situations where the minimally culpable defendant ends up
paying substantially more than it ever should.
Plaintiff’s employer’s contribution liability will still be limited by its Kotecki cap. The operation of
section 2-1117 will not ensure the result intended by the Contribution Act (i.e., joint tortfeasors
should pay their pro rata share of liability), but it will still help limit the exposure of the
defendant found jointly and severally liable. Furthermore, the third-party contribution claim
against plaintiff’s employer may help get the workers’ compensation lien waived, which will
operate as a set-off, should a good-faith finding be obtained, at the time of trial. See, Wilson v.
Hoffman Group, Inc., 131 Ill. 2d 308, 546 N.E.2d 524, 137 Ill. Dec. 579 (1989).
It is important to note, however, that getting a complete lien waiver may become more difficult
since the minimally culpable defendant may now be compelled to pay the entire judgment
ensuring plaintiff’s employer payback of the lien. Lastly, contract documents should be carefully
reviewed to determine whether plaintiff’s employer may have waived its Kotecki lien protection.
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If so, the contribution claim could help even more to offset the injustice foisted upon a
minimally culpable defendant by section 2-1117.
C.
Should Plaintiff’s Co-Workers Be Added As Third-Party Defendants?
Under the current joint liability statute, the only tortfeasor whose fault is excluded from the
apportionment process is the “plaintiff’s employer.” The statute is silent with respect to any
other culpable parties, such as plaintiff’s co-workers. Section 5(a) of the Workers’ Compensation
Act, 820 ILCS 305/5(a), immunizes employers and co-workers from liability to the plaintiff,
Fregeau v. Gillespie, 96 Ill. 2d 479, 484, 451 N.E.2d 870, 71 Ill. Dec. 716 (1983); Rylander v.
Chicago Short Line Ry. Co., 17 Ill. 2d 618, 628, 161 N.E.2d 812 (1959). The immunity provided by
the Workers’ Compensation Act is an affirmative defense which must be asserted. Doyle v.
Rhodes, 101 Ill. 2d 1, 461 N.E.2d 382, 77 Ill. Dec. 759 (1984).
The Illinois Supreme Court has also recognized that, for Contribution Act purposes, any liability
for the fault of a co-worker must be paid by the employer, not by the co-worker. Ramsey v.
Morrison, 175 Ill. 2d 218, 231, 676 N.E.2d 1304, 222 Ill. Dec. 100 (1997). The Ramsey court
determined that the co-worker immunity that exists within the Workers’ Compensation Act bars
a direct suit against the co-worker and also bars a third-party contribution action against the coemployee. Id. at 229-30. However, the Illinois Supreme Court also held that this immunity must
be asserted in order to be effective, citing section 5(a) of the Workers’ Compensation Act. Id. at
231. This is an area that has not been addressed by the courts. If a co-worker is added as a
third-party defendant, a motion to dismiss will likely be filed, contending that the co-worker is
immune from a third-party claim for contribution. The motion to dismiss will likely be granted.
The question which remains unanswered is whether the co-worker, who was named as a thirdparty defendant but subsequently dismissed, is considered a “third-party defendant” for
apportionment purposes under section 2-1117. This appears to be a difficult argument to make
given the rationale employed in the Ramsey decision, but it is an area that is unsettled. Section
2-1117 by its very terms excludes the plaintiff’s employer from the fault calculations, not
plaintiff’s co-workers.
D.
Does 2-1117 Apply to Defendants Acting in Concert?
Under the common law, a tortfeasor who acts in concert with other individuals in causing
plaintiff’s injury is jointly and severally liable for the injury because the tortfeasor is legally
responsible for the actions of the other individuals. The Supreme Court has held that section 21117 does not apply to cases where tortfeasors act in concert, stating that it is “legally
impossible to apportion liability among tortfeasors who act in concert.” Woods v. Cole, 181 Ill. 2d
512, 520, 693 N.E.2d 333, 230 Ill. Dec. 204 (1998).
In Rice v. White, 374 Ill. App. 3d 870, 874 N.E.2d 132, 314 Ill. Dec. 222 (4th Dist. 2007), three
individuals hosted a party at the home of the mother of one of the individuals. Prior to the party,
a flyer was distributed advertising the party and stating, “We will check for weapons.” One of the
J-25
guests at the party was shot and killed by the third-party defendant. A Sangamon County jury
awarded plaintiff’s estate $700,000 and found that the three individuals who hosted the party, as
well as the mother at whose home the party was held, acted in concert with one another in
bringing about the victim’s death. Interestingly, the jury was allowed to apportion fault and
attributed 19 percent to the mother, 2 percent to each of the three individuals who hosted the
party, and 75 percent to the shooter. Because the mother and three individuals who hosted the
party had liability which totaled 25 percent, the trial court held them jointly and severally liable
under section 2-1117 for the entire $700,000 award.
One of the issues on appeal was whether the “in concert” defendants were jointly and severally
liable for the damages. The Fourth District declined to address the issue regarding joint and
several liability. Instead, it found that there was not sufficient evidence to allow a claim to
proceed upon a theory of voluntary assumption of duty and, accordingly, defendants were
entitled to a directed verdict.
E.
What About the Fault of Non-Parties Who Have Not Settled?
There is no language within section 2-1117 which addresses whether the fault of non-party
tortfeasors should be considered for purposes of determining joint and several liability under
section 2-1117. Under Ready, non-party tortfeasors who have settled with plaintiff prior to suit
will not be considered. However, there may be circumstances where a non-party has not settled
and is not a named party. Obviously, the inclusion of non-parties could operate to reduce the
potential exposure to a defendant. The inclusion of a non-party is certainly consistent with the
language within the Unzicker decision which suggests that minimally responsible defendants
should not have to pay entire damage awards. On the other hand, plaintiffs will argue that
Ready makes it clear that only those parties at the time of trial should be considered for
apportionment purposes.
Illinois courts will generally consider the fault of non-parties for contribution purposes. See,
Truszewski v. Outboard Motor Marine Corp., 292 Ill. App. 3d 558, 685 N.E.2d 992, 226 Ill. Dec. 537
(1st Dist. 1997) (excluding a non-party tortfeasor’s fault on the verdict form causes an unfair
determination of a party’s pro rata share under the Contribution Act); Bofman v. Material Service
Corp., 125 Ill. App. 3d 1053, 1063-64, 466 N.E.2d 1064, 81 Ill. Dec. 262 (1st Dist. 1984) (the fault
of non-party tortfeasors was allowed to be considered in determining the extent of plaintiff’s
responsibility in a purely comparative fault setting). The Illinois Pattern Jury Instructions suggest
that the jury apportion fault between the plaintiff, all defendants, third-party defendants and
non-parties. The First District’s decision in Lombardo suggests that the inclusion of non-parties
and settling defendants should be on the verdict form, since it helps protect the rights of a
plaintiff to an appropriate attribution of plaintiff’s own fault, as well as protecting defendant’s
contribution rights. However, it is unclear whether a non-party (a party never sued) should be
considered for apportionment of fault under section 2-1117.
J-26
F.
What About the Statute of Limitations?
The Contribution Act states that claims for contribution must be filed within two years of being
served with process in the underlying action. 735 ILCS 5/13-204. In addition, section 13-204(b)
allows the two-year period to be extended where a party, or its privy, did not know or did not
have reason to know of any act or omission giving rise to the action for contribution.
In addition, a contribution claim can be filed despite the passing of the two-year statutory
period under section 5/13-204 of the Contribution Act. The Supreme Court has held that section
5/13-207 of the Code of Civil Procedure is a saving provision for counterclaims which can be
utilized to file a responsive contribution claim despite the passing of the two-year limitations
period. Barragan v. Casco Design Corp., 216 Ill. 2d 435, 837 N.E.2d 16, 297 Ill. Dec. 236 (2005).
Here, the court reasoned that 13-207 was not a statute of limitations because it serves to
preserve cases, not bar them. Id. at 448-49. Furthermore, the court noted that nothing from
section 13-204 indicates that it was meant to circumvent the saving clause of 13-207. Id. at 449.
The two-year statute of limitations period for contribution claims, rather than the one-year
statute of limitations under the Tort Immunity Act, will apply to a contribution action against a
local public entity. Brooks v. Illinois Cent. R. Co., 364 Ill. App. 3d 120, 846 N.E.2d 931, 301 Ill. Dec.
328 (1st Dist. 2005). In Brooks, the First District noted that the plain language of the Contribution
Act states that, “in actions for contribution, its applicable limitations preempts all other statutes
of limitation or repose.” Additionally, the court recognized that contribution claims might not
arise until well after the event giving rise to the underlying action, thus the two-year statute
applies. Id. at 123. As such, in actions for contribution, the two-year statute of limitations should
trump all other potentially applicable statutes.
Finally, keep in mind that a contractually shortened statute of limitations is enforceable, so long
as the limitations period is otherwise reasonable. Village of Lake In the Hills v. Illinois Emcasco
Ins. Co., 153 Ill. App. 3d 815, 506 N.E.2d 681, 106 Ill. Dec. 881 (2d Dist. 1987). Accordingly, it is
imperative to review all contracts pertaining to an underlying claim as the contract’s language
may shorten your client’s time to file a valid contribution claim.
G.
Is Any Version of Section 2-1117 Constitutional?
In 1986, the Illinois Legislature enacted the version of section 2-1117 which provided that
defendants found less than 25 percent at fault would be severally liable only, except as to
medical expenses. This particular provision, along with several others, was amended by the
Illinois Legislature in 1995 when it adopted pure several liability. The amended version was
subsequently declared unconstitutional in Best v. Taylor Mach. Works, 179 Ill. 2d 367, 689 N.E.2d
1057, 228 Ill. Dec. 636 (1997), resulting in the 1986 version being reinstated. The Supreme Court
in Best found that section 2-1117 was unconstitutional because it was special legislation
exempting medical malpractice claims from its scope. Best, 179 Ill. 2d at 432-33. In essence, the
Illinois Supreme Court in Best found that special benefits were conferred upon medical
malpractice plaintiffs.
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The rationale utilized in the Best decision can apply with equal force to the current version of
section 2-1117. The Unzicker decision made it clear that minimally responsible defendants
should not have to pay entire damage awards. The current version of section 2-1117 unfairly
benefits a certain class of plaintiffs (i.e., those injured at work). If a plaintiff is injured at work, he
or she stands to benefit greatly from the operation of the statute, something clearly forbidden
based upon the rationale employed by the Supreme Court in its Best decision.
The constitutionality of the statute has not been addressed and, as a practical matter, will have
little relevance to handling most cases. In an appropriate setting, consideration should be given
to challenging the provision. It is noteworthy that even though the Supreme Court in Ready
looked at the prior version of 2-1117, the constitutionality of the current version was never
addressed.
Evaluating fault in multi-party cases can be a confusing task. However, due to the recent
Supreme Court holdings in Ready and Nolan, a great deal of light has been shed on this subject.
Although defendants will be able to introduce the fault of other tortfeasors to argue sole
proximate cause, plaintiffs benefit greatly with the recent decision in Ready, since settling
defendants are not considered “defendants sued by the plaintiff” pursuant to 2-1117, and thus
will not be considered in the allocation of fault. Consequently, defendants, particularly deeppocket defendants, may be forced to pay a disproportionate share in settlement even where
they are only minimally culpable.
VI.
INDEMNITY
Indemnity is based in common law and contract doctrine. In general terms, it is an obligation on
one party to make good a loss or damage incurred by another. Indemnity thus shifts the entire
responsibility for payment from a party who has been compelled to pay to the one that is
actually at fault. Indemnity may be either expressed in a contractual provision or implied in the
relationship between the tortfeasors.
A.
Contractual Indemnity
Contractual indemnity, or express indemnity, can be expressed by either word of mouth or via a
written contract. Written indemnity agreements are common in construction contracts, and
typically take one of the following three basic forms:
(1)
Agreements that obligate a contractor to indemnify another contractor but only
for the first contractor’s negligence;
(2)
Agreements that obligate a contractor to indemnify another contractor for all
liability except for the second contractor’s sole negligence; and
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(3)
Agreements that obligate a contractor to indemnify another contractor for all
liabilities, including the second contractor’s negligence.
1.
Construction Accidents
The Illinois Anti-Indemnity Act states that, with respect to construction contracts, agreements to
indemnify or hold harmless another person from that person’s own negligence are void as
against public policy and wholly unenforceable. 740 ILCS 35/1.
2.
Non-Construction Setting
Prior to the Illinois Supreme Court’s recent decision in Buenz v. Frontline Transp. Co., 227 Ill. 2d
302, 882 N.E.2d 525, 317 Ill. Dec. 645 (2008), barring clear and explicit language, Illinois courts
were often reluctant to provide indemnification for one’s own negligence in non-construction
related agreements. See, Karsner v. Lechters Illinois, Inc., 331 Ill. App. 3d 474, 771 N.E.2d 606, 264
Ill. Dec. 902 (3d Dist. 2002). After the Supreme Court’s holding in Buenz, Illinois courts may be
more likely to liberally construe indemnification agreements in favor of the party seeking
indemnification in a non-construction setting.
In Buenz, supra, Olga Buenz was involved in a multiple vehicle traffic accident that resulted in her
death. Her husband, John Buenz, filed a wrongful death action alleging negligence on the part
of defendants COSCO, Frontline, and Frontline’s employee, Vicente Zepeda. Plaintiff alleged that
Zepeda was Frontline’s employee and the driver of the tractor trailer that struck Olga Buenz.
COSCO filed a counterclaim against Frontline seeking a declaration that Frontline be obligated,
pursuant to express contractual terms set forth in an equipment interchange agreement, to
indemnify COSCO for costs and expenses associated with the litigation. The circuit court granted
summary judgment in favor of COSCO and the Appellate Court affirmed.
At issue before the Supreme Court was whether the Appellate Court properly affirmed the circuit
court’s grant of COSCO’s motion for summary judgment and subsequent denial of Frontline’s
motion to reconsider. Frontline argued that the holding in Karsner stands for the proposition
that the interchange agreement between COSCO and Frontline does not provide COSCO
indemnity for its own negligence. Frontline acknowledged that the Appellate Court declined to
follow Karsner, but Frontline contended that the language of the indemnification provision in
Karsner was similar to the language in the indemnification provision
in this case.
The Supreme Court reviewed the equipment interchange agreement. Pursuant to this
agreement, Frontline agreed to indemnify COSCO for “any and all claims . . . arising out of . . .
the possession, use, operation or returning of the equipment during all periods when the
equipment shall be out of the possession of [owner].” The court concluded that the agreement
clearly provided indemnification to COSCO for COSCO’s own negligence. The court held that,
“[i]t is not simply the use of the phrase ‘any and all’ that determines whether a particular
contract provides indemnification for an indemnitee’s own negligence.” Rather, the phrase “any
J-29
and all” must be considered in the context of the entire contract. If warranted by the contract,
the phrase “any and all” may indicate that the parties intended the indemnitee to be
indemnified for the indemnitee’s own negligence. The Supreme Court thus overruled the
holding in Karsner and held that, barring a statutory provision to the contrary, contracts that
clearly and explicitly provide indemnity for one’s own negligence are valid and enforceable.
In Nicor Gas Co. v. Village of Wilmette, 379 Ill App. 3d 925, 884 N.E.2d 816, 318 Ill. Dec. 848 (1st
Dist. 2008) the plaintiff gas utility brought suit sounding in, among other things, both
negligence and breach of contract, alleging that a broken water main owned by the village
damaged the utility’s property and caused a natural gas outage. The village filed a motion to
dismiss, contending the utility could not recover because the contract between the parties
included a provision indemnifying the village for any damages resulting from the utility’s
occupation of an easement. Significantly, the indemnification agreement used the phrase “any
and all,” as discussed in Buenz. The circuit court granted the motion to dismiss, based in part on
the indemnification agreement. On appeal, the utility contended that the indemnification clause
between the parties was not so clear, specific and unequivocal as to require indemnification of
the village for its own alleged negligence. The First District, in applying Buenz, held that the
phrase “any and all” may indeed indicate the parties’ intent to indemnify the indemnitee for its
own negligence. It was further noted that in Buenz, there was no limiting language, thus the
indemnification clause was construed as very broad and sufficient to encompass even claims
arising out of the indemnitee’s own negligence. Accordingly, the First District found the
indemnification clause to be very broad due to the phrase “any and all” without any additional
limiting language present. As a result, it was concluded that the parties’ agreement clearly and
explicitly provided indemnification for the village’s own negligence.
In Downs v. Rosenthal Collins Group, LLC, 385 Ill. App. 3d 47, 895 N.E.2d 1057, 324 Ill. Dec. 342
(1st Dist. 2008), a member of a limited liability company brought an action against the company
for breach of contract and a declaratory judgment alleging that the company breached its
operating agreement by failing to indemnify him for his attorney’s fees incurred in successfully
defending an earlier action brought by the company. The circuit court granted the company’s
motion to dismiss with prejudice and the plaintiff appealed. On appeal, the First District affirmed
and held that the indemnification clause did not expressly include attorney’s fees and thus did
not entitle the plaintiff to indemnification for such fees. The plaintiff argued that the decision in
Buenz mandated that the Appellate Court allow for an indemnification obligation based on the
general language in the indemnity contract. The First District agreed with plaintiff’s contention
that Buenz supports the assertion that indemnity contracts are to be analyzed like any contract
and that broad language may allow indemnification. However, the court disagreed that Buenz
required reversal of the trial court. Specifically, the Downs court noted that Buenz did not
address the issue of attorney’s fees. Therefore, the court did not find that Buenz supported an
overcoming of the “American Rule” that requires specific statutory or contractual authority to
receive an award for attorney’s fees. The court found that the American Rule extends to
indemnification agreements just as any other contract.
J-30
In American Management Consultant, LLC. v. Carter, 392 Ill. App. 3d 39, 915 N.E.2d 411, 333 Ill.
Dec. 605 (3d Dist. 2009), the plaintiff landlord brought a forcible entry and detainer action
against the defendant tenant. The circuit court entered judgment for the landlord and the
tenant appealed. One issue addressed on appeal by the Third District was the plaintiff’s attempt
to obtain indemnity for its own negligence. The Third District recognized that, pursuant to
Buenz, contracts that clearly and explicitly provide indemnity against one’s own negligence are
valid and enforceable. However, the Third District placed significant emphasis on the holding in
Blackshare v. Banfield, 367 Ill. App. 3d 1077, 857 N.E.2d 743, 306 Ill. Dec. 344 (5th Dist. 2006),
whereby the Fifth District ruled against the indemnitee’s action seeking indemnification for its
own negligence. The Third District noted that an agreement to indemnify a party for its own
negligence is so unusual and extraordinary that the intent to indemnify to that extent must be
beyond doubt by express stipulation. Furthermore, any ambiguity in the indemnity contract is to
be construed most strongly against the indemnitee. In the end, the Third District held that the
agreement did not contain an “express stipulation” that plaintiff was to be indemnified for its
own negligence.
B.
Implied Indemnity
Implied indemnity arises where one of the tortfeasors was not personally negligent, but there
existed a special relationship or other facts which would permit a trier of fact to infer a right to
indemnity. Examples of pre-tort relationships that give rise to a duty to indemnify include lessorlessee and employer-employee.
The Illinois Supreme Court has held that implied indemnity is no longer a viable theory for
shifting the whole cost of tortious conduct among jointly liable tortfeasors following the
adoption of the Contribution Act. Skinner v. Reed-Prentice Division Package Machinery Co., 70 Ill.
2d 1, 374 N.E.2d 437, 15 Ill. Dec. 829 (1977). The Illinois Supreme Court has also stated that
implied indemnity no longer existed after the adoption of contribution. Allison v. Shell Oil Co.,
113 Ill. 2d 26, 495 N.E.2d 496, 99 Ill. Dec. 115 (1986). In a contribution action, a defendant whose
liability to the plaintiff is based upon his own negligence cannot obtain implied indemnity.
However, the Contribution Act did not abolish common law implied indemnity if the party’s
liability to the plaintiff is based solely upon vicarious liability or the aforementioned pre-tort
relationships. American Nat. Bank & Trust Co. v. Columbus-Cuneo-Cabrini Medical Center, 154 Ill.
2d 347, 609 N.E.2d 285, 181 Ill. Dec. 917 (1992). Implied indemnity may also be recovered from a
lessee’s employee/driver who caused an accident with a leased vehicle. Richardson v. Chapman,
175 Ill. 2d 98, 676 N.E.2d 621, 221 Ill. Dec. 818 (1997). Finally, where there is a pre-tort
relationship between attorneys, accountants, or professional individuals, an implied indemnity
claim will be allowed. Kerschner v. Weiss & Co., 282 Ill. App. 3d 497, 667 N.E.2d 1351, 217 Ill. Dec.
775 (1st Dist. 1996.)
J-31
Joseph G. Feehan
- Partner
Joe has spent his entire legal career with Heyl Royster,
beginning in 1988 in the Peoria office. He is the cochair of the firm's Truck/Motor Carrier Litigation
Practice Group. Joe concentrates his expertise in all
areas of civil litigation including products liability,
sexual torts, trucking/transportation, premises liability,
auto, and commercial litigation.


In recent years, Joe has developed a special focus on
defending sexual tort claims, particularly those
brought against corporations and religious entities.
Many of his cases are against leading Chicago and
national counsel where damages sought against these
target defendants typically reach several million
dollars.
Contract Law Handbook; Chapter on UCC
Warranties, Disclaimers and Limitations, Illinois
Institute of Continuing Legal Education (2008
and 2005 editions)
Illinois Appellate Court First District Vacates
$25 Million Jury Verdict Because Trial Court
Improperly Barred Expert Testimony Regarding
Plaintiff's Blood-Alcohol Level, Illinois Defense
Counsel Quarterly
 Named to the Illinois Super Lawyers list (20082010). The Super Lawyers selection process is
based on peer recognition and professional
achievement. Only five percent of the lawyers
in each state earn this designation.
as Leading Lawyers
Distinguished Service Award, 2007
Although always prepared to try cases when
necessary, Joe is a skilled negotiator and has had
great success resolving cases through mediation. Over
the last five years, Joe has resolved over 20 lawsuits
through mediation.
Joe is a frequent speaker at programs and seminars
on civil litigation, including such topics as effective
trial techniques, expert witnesses, and evidentiary
issues. Joe has published many articles on various trial
practice and evidence issues. He served as Editor-inChief of the Illinois Defense Counsel Quarterly, the
official journal of the Illinois Association of Defense
Trial Counsel, and as a contributor to the IDC
Quarterly's Evidence and Practice Tips column for
several years. Joe co-authored the chapter on UCC
Warranties in the Contract Law Handbook published
in 2008 and 2005 by the Illinois Institute of Continuing
Legal Education. Currently, Joe serves as Chair of the
Peoria County Bar Association's Continuing Legal
Education Committee and is President of the Abraham
Lincoln Chapter of the Inns of Court.
 National Diocesan Attorneys Association
 Trucking Industry Defense Association
(IDC Quarterly regular columnist and past
Editor-in-Chief)
 Abraham Lincoln Inn American Inn of Court
(presently President)
 Peoria County Bar Association (Chair of
Continuing Legal Education Committee)
Court Admissions
 United States District Court, Central and
Northern Districts of Illinois
Joe enjoys an "AV" rating by Martindale-Hubbell. He
has been designated an Illinois "Super Lawyer" (top
5%) as a result of a survey of Illinois attorneys and
judges conducted by Chicago magazine, as were 13 of
his partners.
Education
 Juris Doctor (Cum Laude), Northern Illinois
University College of Law, 1988
 Bachelor of Arts-Business Administration,
Illinois State University (1983)
Publications
 Life After "Same Part of the Body:" An Update
on Admissibility of Prior Injuries, Illinois Bar
Journal
J-32
WHEN DO YOU NEED AN EXPERT WITNESS? Presented and Prepared by:
Douglas R. Heise
[email protected]
Gary C. Pinter
[email protected]
15564346_1.DOCX
K-1
WHEN DO YOU NEED AN EXPERT WITNESS?
I.
INTRODUCTION............................................................................................................................................K-3
A.
B.
Why Do We Need Experts? .......................................................................................................K-3
When Should We Consider If an Expert Is Needed? .......................................................K-4
II.
WHEN TO USE EXPERTS ............................................................................................................................K-5
III.
ILLINOIS CASE LAW UPDATE: RECENT DECISIONS
CONCERNING EXPERT WITNESSES .......................................................................................................K-6
A.
B.
C.
D.
Thornton v. Garcini .......................................................................................................................K-6
Loman v. Freeman .........................................................................................................................K-8
Ford v. Grizzle .................................................................................................................................K-8
Petryshyn v. Slotky...................................................................................................................... K-10
IV.
THE USE OF DAUBERT AND THE GATEKEEPING
FUNCTION IN FEDERAL COURT .......................................................................................................... K-11
V.
THE USE OF FRYE IN ILLINOIS STATE COURTS .............................................................................. K-13
K-2
WHEN DO YOU NEED AN EXPERT WITNESS?
I.
INTRODUCTION
Expert witnesses are an important and frequently necessary component of civil litigation. Experts
may not only be critical to the introduction of evidence (i.e. testimonial experts), but may also
play a key role in the development, evaluation and preparation of the defense or prosecution of
a case (i.e. consulting experts). In addition to attempting to provide you with assistance in
determining when an expert may be needed, the article contains a summary of some recent
Illinois decisions discussing the use of expert witnesses.
A.
Why Do We Need Experts?
Generally, expert testimony is required to introduce evidence regarding matters requiring
“scientific, technical or specialized knowledge.” Lay witness testimony cannot be used to present
evidence on matters beyond the ordinary layman’s knowledge or experience. Consequently, if a
fact or evidence at issue involves scientific, technical or specialized knowledge that is outside the
scope of the ordinary layman’s experience or involves complex issues that challenge the
layman’s comprehension, expert witness testimony is necessary to aid the trier of fact in
understanding the evidence or evaluating the issues. On the other hand, expert testimony is not
necessary if the evidence or issues are matters within the trier of fact’s own perceptions,
common sense, common experience or simple logic. Expert testimony cannot be used for
statutory interpretation, legal conclusions, or judging the credibility of witnesses.
In federal court, the admissibility of expert testimony is governed by Federal Rule of Evidence
702, which provides:
If scientific, technical, or other specialized knowledge will assist the trier of fact to
understand the evidence or to determine a fact in issue, a witness qualified as an
expert by knowledge, skill, experience, training, or education, may testify thereto
in the form of an opinion or otherwise, if (1) the testimony is based upon
sufficient facts or data, (2) the testimony is the product of reliable principles and
methods, and (3) the witness has applied the principles and methods reliably to
the facts of the case.
In Illinois state courts, “[e]xpert testimony is proper when the subject matter of the inquiry is of
such a character that only persons of special skill or experience in that area are capable of
forming a correct judgment with respect to the applicable facts.” Harvey v. Norfolk and W. Ry.
Co., 73 Ill. App. 3d 74, 83, 390 N.E.2d 1384, 28 Ill. Dec. 794 (4th Dist. 1979). “Expert testimony is
admissible when the subject matter is beyond the ken of the average juror, . . . the witness has
skill sufficient to aid the jury's understanding of the facts,” Lundy v. Whiting Corp., 93 Ill. App. 3d
244, 256, 417 N.E.2d 154, 48 Ill. Dec. 752 (1st Dist. 1981), and “the proffered expert is qualified as
an expert by knowledge, skill, experience, training, or education, and the testimony will assist the
K-3
trier of fact in understanding the evidence.” Friedman v. Safe Sec. Services, Inc., 328 Ill. App. 3d
37, 44, 765 N.E.2d 104, 262 Ill. Dec. 278 (1st Dist. 2002). Typically, experts are used “’in matters
which are complicated and outside the knowledge or understanding of the average person, and
even as to matters of common knowledge and understanding where difficult of comprehension
and explanation.’ As stated by the court in Abrahamson v. Levinson, 112 Ill.App.2d 42, 50, 250
N.E.2d 796, ‘There must be a need apparent from the record in the case for scientific knowledge,
expertise and experience, which will aid the jury to a correct and a just result.’” Ray v. Cock
Robin, Inc., 10 Ill. App. 3d 276, 281, 298 N.E.2d 483 (2d Dist. 1973).
The use of experts is not limited to the introduction of evidence. Particular circumstances may
require the retention of a consulting expert to aid in the defense or prosecution of a case. For
instance, an expert can assist in the understanding of factual complexities; in determining
strengths and weaknesses of a case (your side and that of the opposition); in preparing written
discovery; in preparing for depositions; in attacking opposing expert opinions; and assisting in
trial strategy.
B.
When Should We Consider If an Expert Is Needed?
A claims professional should consider whether an expert may be needed or not as soon as the
claim is made. The initial review of the claim may reveal circumstances where an expert is
needed, e.g. questions may be raised about medical treatment, about a particular product
involved in the accident, or the mechanics of the accident itself. If the claims professional has
access to in-house resources (e.g. access to nurses and doctors who can provide immediate
insight into the nature of a claimed injury, whether proper care or excessive treatment was
rendered, and opinions as to the necessity of future treatment and disability), those in-house
resources can greatly assist in the early evaluation of whether an outside expert may be needed
or not.
Defense counsel must also consider potential expert needs when the file is initially received.
Both attorneys and claims professionals sometimes wait until the approach of discovery
deadlines to consult with or retain an expert. While not all cases require or can economically
justify the time and expense of retaining an expert, the question whether a factual issue involves
matters outside the ken of the average juror is one which the defense team should constantly be
considering. If, for example, the claims professional and defense counsel have difficulty in
understanding or explaining a factual issue, why should a juror be any different?
Early use of an expert can also provide the defense with invaluable insight into the complexities
or disciplines involved in a particular case whether it involves medicine, product manufacturing,
specific business practices or complicated injury claims. The expert’s perspective on complex
issues can assist with the drafting of written discovery, the review of documents and preparation
for depositions, not only of opposing experts, but also the plaintiff, co-workers, witnesses and
medical care providers.
K-4
II.
WHEN TO USE EXPERTS
In general, both consulting and testifying experts may be necessary if matters involve scientific,
technical or specialized knowledge that is outside the realm of the common experience and
knowledge of lay persons. However, whether experts are needed or not will depend upon the
particular circumstances of a case, the facts and concepts at issue, and the defense budget.
Additionally, what is currently lay person “common knowledge and experience” will change over
time and thus makes it difficult to predict with certainty what matters will be outside the ken of
the average juror in the future. Thus, it is impossible to list every category and instance where
experts will be necessary.
Particular types of litigation where experts are commonly used, and will continue to be used in
the future, include: (1) product liability; (2) medical malpractice; (3) other professional
malpractice; (4) automobile accidents; (5) construction accidents; (6) business and insurance
litigation; and (7) claims for damages. The non-exhaustive list below can aid in the identification
of circumstances or categories where experts may be needed in a particular case.

Product Liability

Design

Warnings
- Product Manufacturing
- State of the Art
- Safety Devices
- Alterations

Medical Malpractice
- Standard of Care
- Proximate Cause
- Informed Consent
- Medical Devices
- Drug Interactions
- Specific Diseases and Conditions
- Loss of Chance

Other Professional Malpractice
- The Skill and Knowledge Normally Possessed by Members of the Profession
- Specialized Knowledge Claimed by the Professional
- Engineering Design or Implementation
- Accounting Practices

Automobile Accidents
- Accident Reconstruction
- Impact/Crash Analysis
K-5

Crashworthiness
Independent Medical Examinations
Construction Accidents
- Use and Control of Cranes, Material Handlers and Other Machinery
- Safety Programs and Implementation
- Use of Scaffolds, Picks, Walkways and Safety Devices for Each
- Construction Sequencing and Management

Business and Insurance Litigation
- Accounting Practices
- Economics
- Banking Customs
- Corporate Management
- Farm Production
- Motion Picture Distribution
- Insurance Claims Processing
- Labor Relations
- Securities Investments

Subjects Related to Damages
- Lost Past Income
- Future Income
- Present Cash Value
- Effects of Inflation on Damage Awards
- Lost Profits
- Value of Particular Assets
- Value of Services
- Disability and Disfigurement
- Permanency of Injuries
- Likelihood of Future Pain and Suffering
- Matters Relevant to Punitive Damages Awards
III.
ILLINOIS CASE
WITNESSES
A.
LAW
UPDATE:
RECENT
DECISIONS
CONCERNING
EXPERT
Thornton v. Garcini, No. 107028, 2009 WL 3471065 (Oct. 29, 2009)
The Illinois Supreme Court recently held that expert testimony is not needed in a claim for
negligent infliction of emotional distress.
In this case, the plaintiff’s son, Jason, was born prematurely in a breech position. During
childbirth, Jason’s head became stuck inside of his mother with the rest of his body outside of
K-6
his mother. Jason died when the nurses were unable to complete the delivery. The defendant
obstetrician arrived at the hospital 1 hour and 10 minutes later. Jason’s mother was left in the
position of having a partially delivered child for that period of time. Jason’s mother filed suit for
wrongful death, survival claims and for intentional infliction of emotional distress from the
delivery. The jury found in favor of the defendants on all counts except the intentional infliction
of emotional distress claim and awarded $175,000. The plaintiff appealed, and the Appellate
Court reversed and ordered a new trial.
At the second trial, the defendant obstetrician testified that he was called at 6:35 a.m. on the day
of delivery, at his home, and advised that plaintiff was having contractions. He gave certain
orders. The infant partially delivered in the breech position 35 minutes later. Nurses were
present but no doctors. When the infant became entrapped at the neck during delivery, he
ordered the nurses not to deliver the infant unless it could be done easily because of the risk of
decapitation. The nurses could not complete the delivery and the infant died before the
obstetrician left his home. When he was told of the partial delivery, he first took a shower and
then drove to the hospital and delivered the dead infant.
Plaintiff testified as to her emotional state from lying in the bed for the 1 hour and 10 minutes
with the infant partially delivered. She stated she was depressed, and could not eat or sleep. She
could only think about the 1 hour and 10 minutes. She ruminated over the incident and had
suicidal thoughts. The infant’s father and plaintiff’s mother testified to the effect of the infant’s
death and circumstances of the delivery had on the plaintiff. No expert witness testimony was
presented on plaintiff’s claim for emotional distress. This jury awarded plaintiff $700,000 in
damages for negligent infliction of emotional distress.
On the second appeal, the defendant argued that, based on prior holdings, claims for negligent
infliction of emotional distress must be supported by expert testimony to ensure that any verdict
is supported by competent evidence. Defendant also argued that causation was at issue because
plaintiff simultaneously lost her infant and suffered the traumatic event of the partial birth prior
to defendant’s arrival.
The Appellate Court affirmed the verdict, as did the Supreme Court. As to the first point, the
Supreme Court determined that expert testimony is not required to establish a claim for
emotional distress. “The absence of medical testimony does not preclude recovery for emotional
distress. Rather, the existence or nonexistence of medical testimony goes to the weight of the
evidence but does not prevent the issue from being submitted to the jury.” As to the second
point, the court noted that plaintiff had testified to periods of depression, of not being able to
eat or sleep, of ruminating on the 1 hour and 10 minutes she waited for the physician to appear,
and of her thoughts of suicide. Taken in the light most favorable to the plaintiff, the court held
that this testimony established causation. From a defense perspective, this case seems to
exemplify the old adage that “bad facts make bad law.”
K-7
B.
Loman v. Freeman, 229 Ill. 2d 104, 890 N.E.2d 446, 321 Ill. Dec. 724 (2008)
This case, in which a veterinarian was sued for malpractice, is one of first impression wherein the
court determined that section 299A of the Restatement (Second) of Torts is an accurate
statement of the common law of Illinois with respect to the duty of care owed by members of
professions or trades.
Plaintiffs brought their race horse, Master David Lee, to the Large Animal Clinic at the University
of Illinois College of Veterinary Medicine for evaluation and treatment. Plaintiffs alleged that
they gave Dr. Freeman, a member of the faculty of the College of Veterinary Medicine,
permission for two procedures: to perform surgery on the left carpal bone, and to drain fluid
from the right stifle. The stifle joint in the horse’s hind leg is the functional equivalent of the
human knee. Plaintiffs alleged that they specifically instructed Dr. Freeman not to perform any
other procedure on the right stifle. However, Dr. Freeman performed surgery on the right stifle
and, according to plaintiffs, ruined Master David Lee for future racing.
Section 299A of the Restatement (Second) of Torts entitled “Undertaking in Profession or Trade”
provides:
Unless he represents that he has greater or less skill or knowledge, one who
undertakes to render services in the practice of a profession or trade is required
to exercise the skill and knowledge normally possessed by members of that
profession or trade in good standing in similar communities.
Comment (a) to section 299A notes that the word “skill” as used refers to a “special form of
competence which is not part of the ordinary equipment of the reasonable man, but which is
the result of acquired learning, and aptitude developed by special training and experience.“
Further, “[a]ll professions, and most trades, are necessarily skilled, and the word is used to refer
to the special competence which they require.” The court determined that it could not be
disputed that a doctor of veterinary medicine is skilled and that the practice of veterinary
medicine and surgery is a “profession or trade.”
The court cited to several medical malpractice decisions in which it was the plaintiff’s burden of
proof to establish the “standard of care against which the defendant physician’s alleged
negligence is judged.” In other words, any claim of negligence in the practice of a profession or
trade requires expert testimony to establish the standard of care in that profession or trade, and
a breach of that standard of care.
C.
Ford v. Grizzle, No. 5-09-0185, 2010 WL 572527 (5th Dist. March 2, 2010)
This case from the Fifth District holds that the issues of whether to admit photographic evidence
of damages to a vehicle, whether to allow evidence of prior injuries or preexisting conditions,
and whether a sufficient foundation has been laid for expert testimony are all issues within the
sound discretion of the trial court, and will not be disturbed absent an abuse of discretion.
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Plaintiff, who was driving a truck with a hitch on the back, was rear-ended while stopped in
traffic. He testified that he saw defendant’s vehicle coming up behind him, let up on the brakes
and ducked down in anticipation of the impact. He estimated that defendant was going 20-25
mph at the time of the collision. The plaintiff testified that his vehicle moved “about a foot” as a
result of the collision. After the accident the parties looked over the vehicles for damage.
Plaintiff’s truck had none while defendant’s had damage to the front grill, bumper, headlights,
radiator and fan blade.
Plaintiff did not go to the ER but did visit his chiropractor. In fact, plaintiff had been at the
chiropractor earlier on the day of the accident to obtain treatment for two prior auto accidents
in which he had been involved. The accident in question occurred in July 2002; plaintiff’s prior
accidents occurred in 2000 and June 2002. He had been treating with chiropractors since 2000, a
fact that he failed to disclose to subsequent medical care providers. Plaintiff’s conservative
treatment failed and he had surgery in October 2003.
The defendant had plaintiff examined by Dr. Karen Pentella, a neurologist and pain medicine
specialist. She reviewed plaintiff’s medical records, conducted an IME and reviewed the postaccident photographs. She testified that the photographs were relevant because the
photograph of the plaintiff’s vehicle showed no damage and that the general rule in automobile
collisions is that the severity of the impact corresponds to the impact on the vehicle occupants.
Based on her review of the records and diagnostics performed, she further opined that plaintiff
was not a surgical candidate at the time of the surgery.
Plaintiff hired his own expert, Dr. Robert Margolis, also a neurologist. He reviewed the medical
records and diagnostics and opined that the July 2002 accident was the direct cause of the
exacerbation of the plaintiff’s injury and that the need for the surgery was due to that accident.
The case was tried in Madison County and the jury returned a verdict for the defendant. Plaintiff
appealed, arguing that the defendant failed to introduce evidence showing a causal connection
between the prior accidents and injuries and the present case. He also argued that the
introduction of prior accidents was highly prejudicial, that the introduction of photographs of
plaintiff’s vehicle was not only prejudicial but also lacked proper foundation without expert
testimony, and that the testimony of Dr. Pentella regarding minimal impact should have been
excluded because of lack of proper foundation (in that the doctor did not analyze the impact on
the defendant’s vehicle as a result of the collision) and should have been stricken. The Fifth
District rejected each of these arguments.
With respect to prior injuries, the court referred to the Illinois Supreme Court’s decision on
Voykin v. Estate of DeBoer, 192 Ill. 2d 49, 733 N.E.2d 1275, 248 Ill. Dec. 277 (2000) for the
proposition that if a defendant wishes to introduce evidence of a prior injury, the defendant
must introduce expert evidence demonstrating why the prior injury is relevant to causation,
damages, or some other issue of consequence, unless the trial court determines that a layperson
can readily appraise the relationship between those injuries. However, prior injuries can be
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relevant to impeachment in that a plaintiff may be examined in respect to his failure to disclose
to a physician that he had previously suffered an injury to the same body part. The Fifth District
noted that both parties’ expert witnesses along with several of his treating chiropractors testified
to some degree that the prior injuries were relevant to the current injuries and that plaintiff had
suffered from a preexisting chronic, pain-causing condition in his neck prior to the July 2002
accident. In addition, plaintiff had treated on the day of this accident for his prior injuries and
had scheduled appointments for additional treatment. Also, at trial plaintiff tried to claim
medical bills that were not solely related to the July accident and failed to inform some of his
doctors of earlier accidents when he sought treatment for the July 2002 accident. Based on
these factors, the Appellate Court held that the trial court had not abused its discretion in
admitting the evidence of the plaintiff’s prior accidents and injuries.
With respect to the photographs of the vehicles, the court declined to adopt a bright-line rule
which would either provide that the photographs in themselves are always admissible or that
expert testimony is always necessary to lay a foundation for the admissibility of photographs.
The critical question is whether the jury could properly relate the vehicular damage depicted in
the photos to the injury without the aid and assistance of an expert. The court ruled that, based
upon a review of the photographs and the record of the proceedings in this case, a jury could
properly assess the relationship between the damage to the vehicles and the plaintiff’s injuries
without the aid of an expert. Thus, the trial court did not abuse its discretion in admitting the
photographs of the vehicles.
With respect to the testimony of Dr. Pentella, the Appellate Court noted that Dr. Pentella had
testified concerning her qualifications, and had based her opinions concerning the plaintiff’s
injuries on her physical examination of the plaintiff, her review of medical records, and the lack
of damage to the plaintiff’s vehicle as depicted in the photographs. Since the expert was
qualified and a proper foundation was laid, and the decision whether to admit expert testimony
is within the sound discretion of the trial court, the Appellate Court found that there was no
abuse of discretion.
D.
Petryshyn v. Slotky, 387 Ill. App. 3d 1112, 902 N.E.2d 709, 327 Ill. Dec.
588 (4th Dist. 2008)
Generally, in order for an expert witness to testify with respect to the standard of care owed by a
healthcare practitioner, the expert must be licensed in the same school of medicine as the
practitioner. See, Dolan v. Galluzzo, 77 Ill. 2d 279, 396 N.E.2d 13, 32 Ill. Dec. 900 (1979) (physician
expert cannot testify about the standard of care owed by a podiatrist unless that physician
expert is a licensed podiatrist); see also, Sullivan v. Edward Hosp., 209 Ill. 2d 100, 806 N.E.2d 645,
282 Ill. Dec. 348 (2004) (a physician expert was not qualified to testify about the standard of care
owed by a nurse). This is known as the “licensing requirement” rule. The rule is designed to
prevent the imposition of a different standard of care on a practitioner by another medical
professional who may not be familiar with or trained in that particular discipline, i.e. to ensure
that the proposed expert has similar experience and training in dealing with the medical
problem and treatment at issue.
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The case of Petryshyn v. Slotky, 387 Ill. App. 3d 1112, 902 N.E.2d 709, 327 Ill. Dec. 588 (4th Dist.
2008) discusses an exception to the licensing requirement rule. In that case the plaintiff sued a
defendant obstetrician after a portion of an intrauterine pressure catheter (IUPC) was left in the
plaintiff’s uterine cavity after a cesarean-section. The defendant obstetrician was trying to point
the finger toward the nurses on his surgical team by using a physician expert to establish that
“(1) in preparing a patient for the C-section, the IUPC is normally removed by nurses, (2) the
IUPC had not been removed when [plaintiff’s] C-section began, (3) the nurses' postoperative
responsibilities include (a) performing a ’sponge and instrument count’ and (b) inspecting the
instruments used during the C-section to ensure they remained intact, and (4) if the nurses had
seen that the IUPC was not intact, it would have been within their standard of care to
communicate their inspection results to [the defendant obstetrician].” The expert witness was a
board-certified physician in obstetrics and gynecology with 33 years of experience. The plaintiff
argued that the physician expert’s testimony regarding the nurses’ standard of care was
inadmissible because the expert was not licensed in the same school of medicine as were the
nurses. Plaintiff’s arguments were overruled, the testimony was admitted, the jury found in favor
of the defendant obstetrician, and the plaintiff appealed.
The Appellate Court affirmed the jury verdict, ruling that the defendant obstetrician’s proffered
expert testimony did not directly involve the “specialized nature of the medical care” being
provided by the nurses, but rather involved the “intrinsically intertwined interaction between a
physician and nurse when they are members of the same surgical team.” Consequently, the
concerns underlying the licensing requirement rule were not implicated under these
circumstances. In other words, if a physician expert is not testifying with regard to a particular
nursing procedure per se, but is instead testifying about communications or actions undertaken
during a surgical team effort that the physician ordinarily relies upon to render care, the
licensing requirement will not apply and a physician expert will be able to testify to the standard
of care notwithstanding the fact that he or she is not licensed as a nurse.
IV.
THE USE OF DAUBERT AND THE GATEKEEPING FUNCTION IN FEDERAL COURT
In Gayton v McCoy, 593 F.3d 610, (7th Cir. 2010), the Seventh Circuit Court of Appeals provided a
discussion of the district court’s gatekeeping function as required by Daubert v. Merrell Dow
Pharm., Inc, 509 U.S. 579, 113 S.Ct. 2786 (1993)
India Taylor was a 34-year-old woman who entered the Peoria County Jail complaining of chest
pain. Despite the jail’s knowledge that she had a serious heart condition and elevated blood
pressure, she was never provided with any medication and, contrary to the jail’s written
protocols, a doctor was never contacted to examine her. Less than three days after she entered
the jail, she died. Her autopsy result attributed her death to non-specific heart failure and an
elevated pulse.
Taylor's estate sued the correctional facility officials and nurses, alleging that they violated
Taylor’s due process rights by failing to provide adequate medical care. The district court
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excluded the plaintiff’s expert, Dr. Corey Weinstein, finding that he was unqualified and that his
opinions were unreliable. Summary judgment was entered for the defendants and plaintiff
appealed. The issue on appeal was the exclusion of Dr. Weinstein’s opinions that: 1) if Taylor had
been given her cardiac medications while in jail, she might still be alive; 2) that her vomiting and
diuretic medications may have caused an electrolyte imbalance resulting in the elevated heart
rate and heart failure; and 3) that jail officials departed from accepted standards of care for jails
in their treatment, or lack thereof, of Taylor. After a defense expert refuted the opinions of
Dr. Weinstein, the court excluded Dr. Weinstein's opinions and summary judgment was entered
for the defendants.
The Court of Appeals noted preliminarily that Federal Rule of Evidence 702 allows an expert
witness to testify about a relevant scientific issue in contention if his testimony is based on
sufficient data and is the product of a reliable methodology correctly applied to the facts of the
case. Under the Daubert framework, the district court is tasked with determining whether a
given expert is qualified to testify in the case in question and whether his testimony is
scientifically reliable. Daubert at 509 U.S. 592-93. Whether the witness is qualified as an expert
can only be determined by comparing the area in which the witness has superior knowledge,
skill, experience, or education with the subject matter of the witness's testimony. In determining
reliability, Daubert sets forth the following non-exhaustive list of guideposts:
1)
Whether the scientific theory can be or has been tested;
2)
Whether the theory has been subjected to peer review and
publication; and
3)
Whether the theory has been generally accepted in the scientific
community.
Daubert, 509 U.S. 593-94.
Applying that test, the Seventh Circuit concluded that: as to Dr. Weinstein’s first opinion (that
Taylor would not have died if she had been given her heart medication), that opinion was
properly barred because Dr. Weinstein had a lack of specific knowledge of cardiology and
pharmacology nor did he give any basis for this opinion; as to the second opinion, the Seventh
Circuit disagreed with the district court, holding that specialized knowledge was not required to
express an opinion as to the effects of vomiting on electrolytes in that, " . . . it [was] knowledge
that any competent physician would typically possess;" and that as to the final opinion (that the
jail did not meet the acceptable standards of medicine that applied to jails and that the standard
level of care may have prevented her death), the district court erred in barring that opinion since
it was undisputed that Dr. Weinstein was an expert in the area of prison healthcare and his
opinions regarding the jails, or that an individual defendant’s failure to provide adequate care
resulted in Taylor’s injuries and death, could "assist the trier of fact to understand the evidence
or to determine a fact in issue." Accordingly, the case was remanded to district court with
instructions allowing Dr. Weinstein to testify on the issues in which he was found to be qualified.
K-12
V.
THE USE OF FRYE IN ILLINOIS STATE COURTS
A recent Illinois Supreme Court decision, People v. McKown, No. 102372, 2010 WL 572082 (Feb.
19, 2010), considered whether the horizontal gaze nystagmus (HGN) test used by law
enforcement to indicate if a person is impaired by the consumption of alcohol meets the
reliability requirements of Frye v. United States, 293 F. 1013 (D.C. Cir. 1923). The so-called “Frye
test” governs the admissibility and reliability of expert testimony in Illinois state courts, and thus
the analysis in this case provides an excellent comparison to the use of Daubert in the federal
courts (discussed in section IV above).
Following a bench trial in the circuit court of Peoria County, McKown was convicted of two
counts of aggravated driving under the influence of alcohol (DUI). The conviction was obtained
on the basis of police officer testimony that McKown had failed field-sobriety testing. A part of
the field-sobriety testing involved what is called an HGN test in which the officer looks for
evidence of nystagmus, which is “an involuntary, rapid, rhythmic movement of the eyeball, which
may be horizontal, vertical, rotatory, or mixed, i.e., of two varieties.” Dorland's Illustrated Medical
Dictionary 1296 (30th ed. 2003). With the HGN test, the officer looks for three “clues,” assessing
each eye separately. The three clues are lack of smooth pursuit, distinct nystagmus at maximum
deviation, and the onset of nystagmus at an angle less than 45 degrees. One point is assigned
for each clue that is present in either eye. Thus, the maximum score is six, which would indicate
all three clues present in both eyes. A score of four or more is considered “failing” and indicative
of alcohol impairment. McKown I, 226 Ill. 2d at 249-50. McKown allegedly failed the HGN test.
Under the Frye test, scientific evidence is admissible at trial only “if the methodology or scientific
principle upon which the opinion is based is ‘sufficiently established to have gained general
acceptance in the particular field in which it belongs.’“ In re Commitment of Simons, 213 Ill. 2d
523, 529-30 (2004), quoting Frye, 293 F. at 1014. The Frye test is necessary only if the scientific
principle, technique or test offered by the expert to support his or her conclusion is “new” or
“novel.” See, People v. Basler, 193 Ill. 2d 545, 550-51 (2000).
In People v. McKown, No. 3-04-0433 (2006) (unpublished order under Supreme Court Rule 23),
the Appellate Court affirmed and the Supreme Court then granted the defendant’s petition for
leave to appeal on the issue of whether the defendant was entitled to a Frye hearing or not. The
Illinois Supreme Court held (in McKown I) that “[b]ecause the results of an HGN test require
expert interpretation” by a trained police officer, “the results of HGN testing are scientific
evidence.” The court further held that, despite its use by police officers for many years, “the
methodology of HGN testing is novel for purposes of Frye.” Thus, a Frye hearing was necessary
“to determine if the HGN test has achieved general acceptance as a reliable indicator of alcohol
impairment.” Finally, although the court noted that it was appropriate in some circumstances for
a trial court to resolve the question of general acceptance via judicial notice, this particular issue
could not be resolved “on judicial notice alone.” Thus, the Supreme Court concluded that the
trial court and the Appellate Court erred in taking judicial notice that the HGN test is generally
accepted as an indicator of alcohol impairment and remanded the case to the trial court with
instructions to conduct a Frye hearing to determine whether HGN testing is generally accepted
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in the particular scientific field to which it belongs as an indicator of alcohol impairment and to
make findings of fact and conclusions of law as to this question. The Supreme Court also held
that it retained jurisdiction to review the Frye analysis which was to be conducted in the trial
court.
Subsequently, the Frye hearing in the trial court was held over the course of four dates between
March 2007 and April 2008. A number of expert witnesses testified on each side. In addition,
each party submitted numerous journal articles and other writings in support of its position.
Finally, each party submitted a trial brief arguing for certain findings of fact and conclusions of
law. Due to the length of the summary of the evidence, it will not be reviewed in detail here, but
the bottom-line conclusion of the trial court was that “ophthalmology and optometry generally
accept the principle that the HGN test may be an indicator of alcohol consumption.” In addition,
the trial court concluded that the use of HGN test results at trial “should be limited to the
conclusion that a ‘failed’ test suggests that the subject may have consumed alcohol and may
[have] be[en] under the influence. There should be no attempt to correlate the test results with
any particular blood-alcohol level or range or level of intoxication.” The Supreme Court agreed,
adopting the trial court’s finding that HGN testing is generally accepted in the relevant scientific
fields and that evidence of HGN test results is admissible for the purpose of proving that a
defendant may have consumed alcohol and may, as a result, be impaired.
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Douglas R. Heise
- Partner
Doug joined the Edwardsville office of Heyl Royster in
2004 and became a partner in 2008. With more than
25 years of litigation experience, Doug has defended a
broad range of clients from individuals involved in
auto accidents to major corporations in product
liability claims.
Public Speaking
 “Casualty and Property Seminar - Premises
Liability Update”
Heyl Royster 2008
 “Current Issue in Illinois Law”
United States Arbitration and Mediation,
Midwest, Inc. 2007
 “Claims Against Governmental Agencies / Tort
Immunity”
Illinois State Bar Association 2006
At Heyl Royster, Doug has an active practice
defending health care professionals who provide
medical services to the prison population in Illinois.
These professionals are often sued by prisoners for
alleged civil rights violations in state and federal
courts. His representation of professionals also
includes veterinarians who have been sued for
malpractice.
 St. Clair County Bar Association
 Bar Association for the Central and Southern
Federal Districts of Illinois
 East St. Louis Bar Association
In addition to defending professionals, he also
defends municipalities in civil rights claims and
employers defending their employment decisions in
federal court. His employment practice includes
charges brought before the Illinois Human Rights
Commission and the Equal Employment Opportunity
Commission. This variety of experience assists Doug in
understanding our clients' needs and helping them to
understand the litigation process.
Court Admissions
 United States District Court, Southern and
Central Districts of Illinois (Trial Bar)
Education
 Juris Doctor, John Marshall Law School, 1983
 Bachelor of Science-Political Science, Eastern
Significant Cases
 City of Belleville v. Doe by Doe, 523 U.S. 1001
(1998) Whether same sex harassment is
actionable under Title 7.
 Longstreet v. Cottrell, 374 Ill. App. 3d 549 (5th
Dist. 2007) The estate of a deceased party
cannot introduce the discovery deposition of
the deceased party at trial as an exception to
the hearsay rule.
 Steelman v. City of Collinsville, 319 Ill. App. 3d
1131 (5th Dist. 2001) The IRS's seizure of funds
being held by a municipal police department
did not constitute a conversion of those funds
by the department.
 T.H.E. Insurance v. City of Alton, 277 F.3d 802
(7th Cir. 2000) Whether a certificate of
insurance can modify the language contained
in the policy of insurance.
 City of East St. Louis v. Circuit Court, for the
20th Judicial Circuit, St. Clair County, IL 986 F.
2d 1142 (7th Cir. 1998) The Federal District
Court properly entered Rule 11 sanctions
against Plaintiff's counsel for bringing suit
against a judicial circuit.
K-15
MEDICARE AND FUTURE MEDICAL EXPENSES: DOES THE “SUPER LIEN” APPLY? Presented and Prepared by:
Bradford J. Peterson
[email protected]
15500689_7.DOCX
L-1
MEDICARE AND FUTURE MEDICAL EXPENSES:
DOES THE “SUPER LIEN” APPLY?
I.
INTRODUCTION............................................................................................................................................ L-3
II.
THE MEDICARE SECONDARY PAYER ACT........................................................................................... L-3
A.
B.
C.
D.
E.
F.
G.
III.
History of the Secondary Payer Act ....................................................................................... L-5
Future Medical Expenses ............................................................................................................ L-6
Application to Liability Claims Uncertain ............................................................................. L-8
The Impact of SCHIP ..................................................................................................................L-10
Options to Address Ambiguities ...........................................................................................L-10
What About Cases Tried to a Jury? ......................................................................................L-11
Thoughts for the Future ...........................................................................................................L-11
RECENT MEDICARE CASES .....................................................................................................................L-13
A.
B.
Must Medicare Reduce Its Lien in Recognition
of Comparative Fault Principles? ...........................................................................................L-13
Can Medicare Recover for Conditional Payment of
Medical Bills Incurred After Settlement Date? .................................................................L-13
L-2
MEDICARE AND FUTURE MEDICAL EXPENSES:
DOES THE “SUPER LIEN” APPLY?
I.
INTRODUCTION
A little known federal statute may soon become a significant factor with regard to settlements
and judgments in liability cases. The Medicare Secondary Payer Act sets forth the statutory
framework for what is commonly known as the Medicare “super lien.” 42 U.S.C.
§ 1395(y)(b)(2)(B)(iv). Indeed, Medicare has a statutory first right of recovery against all proceeds
over all entities; the liens are statutory and notice thereof is not required. Simply stated, the
statute provides that Medicare shall not pay for medical expenses incurred where coverage
exists under workers’ compensation, automobile liability, or liability insurance policies, as well as
no-fault insurance policies. 42 U.S.C. § 1395(y)(b)(2). Liability plans are identified as “primary”
plans, 42 U.S.C. § 1395(y)(b)(2)(A)(ii), which are deemed foremost responsible for payment.
Medicare is intended to be secondary to all other available healthcare payment sources and
available only when the other sources are exhausted. 42 U.S.C. § 1395y(b)(2) and
§ 1862(b)(2)(A)(ii).
While addressing and ultimately satisfying Medicare liens in personal injury liability claims is
common practice, a greater issue is arising, however, with regard to whether litigants have an
obligation to protect Medicare as to future medical expenses that may be incurred by the
plaintiff after settlement or judgment. As can be seen from the discussion below, the issue can
be complex, and a lack of direction from the United States Department of Health and Human
Services further complicates the issue.
II.
THE MEDICARE SECONDARY PAYER ACT
Medicare’s status as a secondary payer arises under the Medicare Secondary Payer Act (the
“Act”). Significant provisions of the Act are found at 42 U.S.C. § 1395y(b)(2) which states, in
relevant part:
(2) Medicare secondary payer
(A) In general
Payment under this subchapter may not be made, except as provided in
subparagraph (B), with respect to any item or service to the extent that –
(i) payment has been made, or can reasonably be expected to be made,
with respect to the item or service as required under paragraph (1), or
L-3
(ii) payment has been made or can reasonably be expected to be made
under a workmen’s compensation law or plan of the United States or a
State or under an automobile or liability insurance policy or plan
(including a self-insured plan) or under no fault insurance.
In this subsection, the term “primary plan” means a group health
plan or large group health plan, to the extent that clause (i)
applies, and a workmen’s compensation law or plan, an
automobile or liability insurance policy or plan (including a selfinsured plan) or no fault insurance, to the extent that clause (ii)
applies. An entity that engages in a business, trade, or profession
shall be deemed to have a self-insured plan if it carries its own risk
(whether by a failure to obtain insurance, or otherwise) in whole or
in part.
42 U.S.C. § 1395y(b)(2).
Furthermore, subsection (B) provides:
(B) Repayment required
(i) Authority to make conditional payment
The Secretary may make payment under this subchapter with
respect to an item or service if a primary plan described in
subparagraph (A)(ii) has not made or cannot reasonably be
expected to make payment with respect to such item or service
promptly (as determined in accordance with regulations). Any such
payment by the Secretary shall be conditioned on reimbursement
to the appropriate Trust Fund in accordance with the succeeding
provisions of this subsection.
(ii) Primary plans
A primary plan, and an entity that receives payment from a
primary plan, shall reimburse the appropriate Trust Fund for any
payment made by the Secretary under this subchapter with
respect to an item or service if it is demonstrated that such
primary plan has or had a responsibility to make payment with
respect to such item or service. A primary plan’s responsibility for
such payment may be demonstrated by a judgment, a payment
conditioned upon the recipient’s compromise, waiver, or release
(whether or not there is a determination or admission of liability)
of payment for items or services included in a claim against the
primary plan or the primary plan’s insured, or by other means. If
reimbursement is not made to the appropriate Trust Fund before
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the expiration of the 60-day period that begins on the date notice
of, or information related to, a primary plan’s responsibility for
such payment or other information is received, the Secretary may
charge interest (beginning with the date on which the notice or
other information is received) on the amount of the
reimbursement until reimbursement is made (at a rate determined
by the Secretary in accordance with regulations of the Secretary of
the Treasury applicable to charges for late payments).
42 U.S.C. § 1395y(b)(2)(B).
In addition, the statute further vests Medicare with subrogation of rights as well as enforcement
provisions for violations of the Act. 42 U.S.C. § 1395(y)(b)(2)(B)(iii), (iv).
A.
History of the Secondary Payer Act
The Act was enacted in 1980 to ensure that Medicare was not making payments for medical
expenses where other insurance was available. 42 C.F.R. § 411.40 (2000). Later that same year,
the Omnibus Reconciliation Act expanded Medicare’s secondary payer status and right to
reimbursement for conditional payments to include liability, auto liability, and no-fault
insurance. P.L. 96-499, § 900, et seq. Early litigation as to application of the Act to tort claims
focused on Medicare’s ability to recover their liens (conditional payments). “Conditional
payments” are those payments made by Medicare for services for which another payer is
responsible, 42 C.F.R. §§ 411(C)-(H), 411.21, in tort settlements. Federal courts were divided as to
the propriety of the federal government’s attempts to recover Medicare expenditures under the
Act in tort claims. Early attempts by Medicare to enforce the Act were rejected in several cases,
including Thompson v. Goetzmann, 337 F.3d 489 (5th Cir. 2003); In re Orthopedic Bone Screw
Products Liability Litigation, 202 F.R.D. 154, 163-169 (E.D. PA. 2001); and Fanning v. United States.
346 F.3d 386 (3d Cir. 2003). In many instances, the government’s efforts were defeated when
courts found that the tort defendants were not under an obligation to “pay promptly” under the
Act. See United States v. Baxter Intern., Inc., 345 F.3d 866 (11th Cir. 2003); In re Zyprexa Products
Liability Litigation, 451 F.Supp.2d 458 (E.D. NY 2006).
Due to conflicting court decisions, amendments to the Act were enacted in 2003. Congress
approved the Medicare Modernization Act, P.L. 108-173, 117 Stat. 2066 (2003), and therein
amended the Act with regard to the definition of self-insurance and deleted “prompt payment”
language from Section (A)(ii) of the Act. Such efforts were a clear attempt to cure problematic
language in the statute that had led to the government’s failed attempts to enforce the Act via
the courts. Government litigation, however, has remained focused on claims involving Medicare
liens for conditional payments made by Medicare as opposed to addressing the issue of future
medical expenses. To date, there are no federal cases specifically addressing Medicare’s interest
under the Act with regard to future medical expenses in civil liability claims.
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B.
Future Medical Expenses
The Act specifically identifies and addresses previous “conditional payments” by Medicare, yet
does not set forth specific rights or obligations with regard to future medical expenses in liability
and auto liability claims. Obligations for future medical expenses in workers’ compensation
claims are, however, specifically addressed in the Code of Federal Regulations. 42 C.F.R.
§§ 411.40 – 411.47. Enacted in 1989, Section 411.46 addresses the topic of lump sum settlements
in workers’ compensation claims and provides, in pertinent part:
(a) Lump-sum commutation of future benefits. If a lump-sum compensation
award stipulates that the amount paid is intended to compensate the individual
for all future medical expenses required because of the work-related injury or
disease, Medicare payments for such services are excluded until medical
expenses related to the injury or disease equal the amount of the lump-sum
payment.
(b) Lump-sum compromised settlement.
(1) A lump-sum compromise settlement is deemed to be a workers’
compensation payment for Medicare purposes, even if the settlement agreement
stipulates that there is no liability under the workers’ compensation law or plan.
(2) If a settlement appears to represent an attempt to shift to Medicare the
responsibility for payment of medical expenses for the treatment of a workrelated condition, the settlement will not be recognized. For example, if the
parties to a settlement attempt to maximize the amount of disability benefits
paid under workers’ compensation by releasing the workers’ compensation
carrier from liability for medical expenses for a particular condition even though
the facts show that the condition is work-related, Medicare will not pay for
treatment of that condition.
42 C.F.R. § 411.46.
Where there is an allocation for future medical expenses as a part of the workers’ compensation
settlement, the Code provides:
(2) Exception. If the settlement agreement allocates certain amounts for specific
future medical services, Medicare does not pay for those services until medical
expenses related to the injury or disease equal the amount of the lump-sum
settlement allocated to future medical expenses.
42 C.F.R. § 411.46(d)(2).
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The Code of Federal Regulations contains no similar provisions with regard to liability
settlements under the Act. Although the Code of Federal Regulations addresses recovery of
conditional payments where there is a civil judgment or settlement, 42 C.F.R. § 411.37, the Code
remains silent with regard to future medical expenses. This lack of regulatory direction from the
Department of Health and Human Services significantly contributes to the ambiguity and
confusion over parties’ obligations to Medicare with regard to future medical expenses.
While the Act does not specifically address future medical expenses, language of the statute
appears to create a basis for the proposition that parties should protect Medicare’s interests
with regard to future medical expenses in civil liability settlements and judgments. Of particular
interest, the statute contains language framed in the past tense, suggesting that when liability
for future medical expenses is extinguished through settlement or judgment, Medicare must still
be protected. The Act requires repayment of conditional payments where it is demonstrated that
the primary plan “has or had a responsibility to make payment with respect to such item or
service.” 42 U.S.C. § 1395(y)(b)(2)(B)(ii); John J. Campbell, Medicare Set Aside Arrangements for
Future Medical Expenses and Third Party Liability Settlements, the Medicare Set Aside Bulletin,
February 14, 2005, at http://jjcelderlaw.com/CMSTPLNews.htm. Such language suggests that an
obligation to protect Medicare exists even where liability for future medical expenses has been
extinguished through settlement or satisfaction of judgment.
In July of 2001, the Center for Medicare and Medicaid Services (CMS) published the “Patel
Memo” setting forth the first written policy with regard to the need to protect Medicare’s
interests as to future medical expenses in workers’ compensation settlements. The CMS, as well
as its Coordination of Benefits Office, oversees administration of the Medicare Set-Aside (MSA)
Trusts in workers’ compensation matters. Since 2001, no less than a dozen memoranda have
been issued by Medicare clarifying – and at times changing – policies and procedures with
regard to handling future medical expenses in workers’ compensation claims. The vehicle used
to satisfy obligations for future medical expenses is commonly referred to as a MSA Trust. In
accordance with CMS policy, funds are set-aside in an MSA Trust and are only to be used by the
workers’ compensation claimant for future medical expenses related to the industrial injury.
These accounts may be established as bank accounts or investment accounts and are funded at
the time of settlement of the case or through periodic payments to the MSA fund. The MSA may
be managed professionally or by the claimant. Once exhausted, Medicare will agree to cover
additional future medical expenses under Medicare. Settlement thresholds have also been
established by Medicare as to when a proposed Medicare Set-Aside arrangement should be
submitted to CMS for their approval. Memo, July 23, 2001, Parashar B. Patel, Deputy Director
Purchasing Policy Group, Center for Medicare Management to all associate regional
administrators, available at
http://www.cms.hhs.gov/WorkersCompAgencyServices/Downloads/72301MEMO.pdf. A workers’
compensation MSA may be submitted to CMS for review and approval where (1) the claimant is
currently a Medicare beneficiary and the total settlement exceeds $25,000, or (2) the claimant
has a “reasonable expectation” of entering Medicare within 30 months of the settlement date
and the anticipated total settlement amount for future medical expenses and lost wages
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exceeds $250,000. An MSA is not necessary when the settlement leaves future medical expenses
open.
C.
Application to Liability Claims Uncertain
Unlike its position respecting workers’ compensation cases, CMS has failed to set forth any
policy memoranda or state a clear policy with regard to requirements for Medicare Set-Asides in
liability settlements. Unofficially, CMS has become more forthcoming. Representatives of the
CMS Chicago Regional Office will advise that CMS’ position is that the Act requires liability
insurers and auto liability insurers to protect Medicare’s interests with regard to future medical
expenses where there is an allocation for future medical as a part of the settlement. CMS
regional offices have reportedly made the following statements regarding litigants’ obligations
to Medicare.
CMS’ position is that we expect any funds that are allocated for future medicals to be spent
before any claims are submitted to Medicare for payment and the beneficiary will probably be
asked about it on the initial enrollment questionnaire that is systems generated, but, we are not
asking that MSAs be established in those cases, nor are we reviewing/approving/denying them.
John J. Campbell, Medicare Set-Aside Arrangements for Future Medical Expenses and Third Party
Liability Settlements, The Medicare Set-Aside Bulletin, February 14, 2005, located at
http://jjcelderlaw.com/CMSTPLNews.htm. The Center for Lien Resolution further advised in June
2004 that during a Medicare Set-Aside conference a representative of the Office of General
Counsel for the United States confirmed the intention of Medicare to begin enforcement of the
Act in liability cases. See http://www.thecenterforlienresolution.com/medicare_medicaid.shtml.
In addition, the San Francisco Regional Office has promulgated a written statement which states:
The Centers for Medicare & Medicaid Services (CMS) has no current plans for a
formal process for reviewing and approving Liability Medicare set-aside
arrangements. However, even though no formal process exists, there is an
obligation to inform CMS when future medicals were a consideration in reaching
the Liability settlement, judgment, or award as well as any instances where a
Liability settlement, judgment, or award specifically provides for medicals in
general or future medicals. Letter from Department of Health & Human Services,
Centers for Medicare & Medicaid Services, San Francisco Regional Office (on file
with author).
Accordingly, it is clear, at least informally, that the Center for Medicare Services interprets the
Act as requiring litigants to protect Medicare’s interests with regard to settlement or satisfaction
of judgment in liability claims.
The Medicare Secondary Payer manual is also contributing to the ambiguity as to the CMS
position. The manual was amended in 2009 to define set-aside arrangements in such a manner
that included liability and no fault cases. Medicare Secondary Payer (MSP) manual – chapter 1 –
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Background and Overview, Section 20-definitions (2009). The Medicare manual, however, further
states that “[t]here should be no recovery of benefits paid for services rendered after the date of
a liability insurance settlement.” Medicare Secondary Payer (MSP) manual – chapter 7 –
Contractor MSP Recovery Rules, Section 50.5 (2009). Therefore the Medicare manual is
expanding the definition of Medicare Set-Aside arrangements to include liability and no-fault
liability cases while at the same time suggesting Medicare benefits should not be paid for injury
related services following a liability settlement.
Currently the Center for Medicare and Medicaid Services lacks a regulatory framework upon
which it may base enforcement. Until regulations are promulgated similar to those in workers’
compensation, 42 C.F.R. § 411.46, litigants will continue to be left with only informal policy
statements. Furthermore, it is foreseeable that any effort by Medicare to undertake legal action
to enforce the statute with regard to future medical expenses in liability claims will be met with
statutory challenges. If clear direction is not forthcoming from the Center for Medicare and
Medicaid Services, such direction will likely be left to the judiciary.
Assuming, arguendo, that CMS has statutory authority to require litigants to protect its interests
in future medical expenses, then one must attempt to determine CMS policy. As set forth above,
CMS’ unwritten policy has been to communicate that Medicare must be protected where there
is an allocation for future medical expenses in the settlement of a tort claim. It is, in fact,
extremely rare that litigants would specifically allocate settlement funds to a plaintiff’s particular
element of damages. The overwhelming majority of settled cases are resolved with a lump-sum
payment for all forms of damages in exchange for a comprehensive release. Currently there
does not appear to be an obligation to protect Medicare’s interests in the absence of a specific
allocation for future medical expenses as a part of a settlement. The King Kong Contingent:
Should the Medicare Secondary Payer Statute Reach to Future Medical Expenses in Personal
Injury Settlements? Norma S. Schmidt, 68 U. Pitt. L. Rev. 469, 489 (Winter, 2006). It has been
further noted that Medicare lacks regulatory authority to reapportion a settlement in a personal
injury case where it has simply been resolved by lump-sum without a specific allocation for
future medical expenses. It is anticipated that when Medicare learns of an allocation for future
medical expense in a civil case, Medicare will then deny Medicare coverage for related expenses
until a sum equal to the allocation has been expended on related medical expenses by the
Medicare beneficiary.
Currently, litigants are left without direction by CMS as to what constitutes an “allocation” of
future medical expenses pursuant to a settlement. Common examples of when specific
allocations may arise in tort settlements include settlements involving mentally disabled adults
or minors where court approval of specific settlement terms is required. Left unanswered is the
question of whether litigants have an affirmative duty to allocate settlement funds for future
medical expenses where future medical expenses are reasonably anticipated and the plaintiff is
Medicare eligible or soon to become Medicare eligible. In workers’ compensation claims,
Medicare requires that its interests be protected with a Medicare Set-Aside arrangement where
petitioners are Medicare beneficiaries or where petitioners are deemed future beneficiaries
under standards set forth in CMS policy memoranda.
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D.
The Impact of SCHIP
The Medicare Set-Aside issue has received renewed attention in the litigation community with
the enactment of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA). P.L. 110173, 121 Stat. 2492. The new statute created mandatory reporting requirements for claims
involving Medicare eligible individuals. Specific obligations were placed on liability insurers, as
well as workers’ compensation insurers, to report such claims. While these reporting
requirements constitute a further effort by Medicare to enforce the Act, 42 U.S.C. § 1395(y)(b)(2),
the MMSEA does not explicitly address or change any standards with regard to Medicare SetAside requirements. In fact, the user guide to the MMSEA emphasizes that Section 111 of the
Act did not change or remove any existing Medicare Secondary Payer rules or requirements.
Act II: Reporting Obligations for Settling Insurers Where Medicare is a Secondary Payer: The
Medicare, Medicaid and SCHIP Extension Act of 2007, Matthew Garretson and Sylvius Von
Saucken (May 21, 2009), available at
http://www.garretsonfirm.com/garretson/news/?newsID=13. While the MMSEA will enable
Medicare to identify claims where conditional payments may need to be reimbursed, there is no
indication it was intended to change or expand obligations with regard to future medical
expenses in liability claims.
E.
Options to Address Ambiguities
As it now stands, litigants are left with several options as to how to address and comply with the
Act. The most conservative approach would be to specifically allocate settlement funds towards
future medical expenses where the claim involves a current Medicare beneficiary or a future
beneficiary under the current workers’ compensation standard. The current workers’
compensation standard requires that Medicare’s interests be protected through a Medicare SetAside under which workers’ compensation claimants meet one of the following criteria: (1) the
claimant has applied for social security disability; (2) the claimant has applied for and been
denied social security disability; (3) the individual is in the process of appealing and/or refiling
for social security disability benefits; (4) the claimant is 62 ½ years of age or older; or (5) the
claimant has end stage renal disease. Memo, July 23, 2001, Parashar B. Patel, Deputy Director
Purchasing Policy Group, Center for Medicare Management to all associate regional
administrators, available at
http://www.cms.hhs.gov/WorkersCompAgencyServices/Downloads/72301MEMO.pdf.
A workers’ compensation MSA may be submitted to CMA for review and approval where (1) the
claimant is currently a Medicare beneficiary and the total settlement exceeds $25,000, or (2) the
claimant has a “reasonable expectation” of entering Medicare within 30 months of the
settlement date and the anticipated total settlement amount for future medical expenses and
lost wages exceeds $250,000. An MSA is not necessary when the settlement leaves future
medical expenses open. Settlement terms would be subject to negotiation and require the
plaintiff to place settlement funds allocated for future medical expenses into a self-directed
Medicare Set-Aside account similar to those used in workers’ compensation settlements. Where
such an allocation involves a substantial sum, litigants may further consider submitting the
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proposed Medicare Set-Aside to CMS for approval, although CMS currently does not have a
formal review procedure in place for liability claims.
A less conservative approach is to only use Medicare Set-Aside arrangements in cases involving
catastrophic injury with substantial future medical expenses as an element of damages.
Medicare eligibility would be a prerequisite to use of this strategy. Where a substantial element
of damages is the plaintiff’s future medical expenses, the use of a Medicare Set-Aside account
may be advisable. Furthermore, parties can consider the use of annuities as a means of funding
future medical expenses to help ensure the preservation of funds over time and to further
protect Medicare’s interests.
The least conservative approach would be to only employ the use of a Medicare Set-Aside
where the settlement or judgment specifically requires an allocation of future medical expenses.
As stated, examples of such settlements would be those involving mentally disabled adults and
minors. In either instance, a set-aside should only be required where the plaintiff is either
Medicare eligible or otherwise meets the current Medicare standard for future beneficiaries
under workers’ compensation. 42 U.S.C. § 1395y(b)(2).
F.
What About Cases Tried to a Jury?
Cases that are tried to verdict raise an additional issue concerning compliance with the Act.
Where future medical expenses are sought as an element of damages, such damages are
awarded on itemized verdict forms. In such instances, it is arguable that an allocation of future
medical expenses has been rendered as a result of the verdict. Defendants attempting to satisfy
the judgment are left with no procedural or legal means to protect Medicare’s interests by
requiring the use of a Medicare Set-Aside by the judgment plaintiff. The SCHIP Extension Act,
however, will provide a means through which Medicare is advised of the satisfaction of the
judgment. The provisions of SCHIP will require notification to Medicare that a judgment
involving a Medicare-eligible individual has been satisfied and that the judgment included an
itemized verdict for future medical expenses. At that juncture, Medicare will certainly be on
notice of the plaintiff’s receipt of funds for future medical expenses; however, this would not
necessarily per se satisfy one’s obligation to protect Medicare’s interests. It is likely that
Medicare will require that the plaintiff expend the award in full for future medical expenses
before Medicare will pay related treatment.
G.
Thoughts for the Future
Regardless of how liberally or conservatively one approaches the Act compliance issue, litigants
are left with the unresolved issue of how to protect Medicare’s interests regarding future
medical expenses where settlements involve a substantial compromise. Issues of liability as well
as issues of comparative fault often result in settlements of substantially less than full value.
Existing CMS methodologies for evaluating the amount of Medicare Set-Aside proposals are
geared toward the full value or no-fault nature of workers’ compensation statutes. Making Sense
of Medicare Set-Asides, Matthew L. Garretson, Trial (May 2006). Accessed on 8/31/09 at:
L-11
http://garretsonfirm.com/garretson/pdf/MakingSenseofMedicareSetAsides.pdf. Litigants will
potentially violate the Act if the settlement is construed as an improper attempt to shift liability
to Medicare for the plaintiff’s future medical expenses. 42 C.F.R. § 411.46(b)(2)(2005). As such,
litigants must employ a standard of reasonableness in determining what, if any, amount may
need to be placed into a Medicare Set-Aside in those instances where there is a compromise
settlement.
One approach is to calculate the amount of the compromised settlement as a percentage of the
full value of the claim. A Medicare Set-Aside can be funded using the same percentage for
funding in relation to the full amount of anticipated future medical expenses. For example, if the
claim is being settled at approximately 75 percent of full value, it would be reasonable to fund
future medical expenses in a set-aside at 75 percent of the full future medical expense
reasonably expected to arise in the future. One would expect that such an approach would be
deemed a reasonable attempt to protect Medicare’s interests and further avoid the appearance
that parties are attempting to improperly shift liability for future medical expenses on to
Medicare.
Clearly many questions remain unanswered regarding the scope of the Act and the position of
CMS respecting statutory compliance. What is clear, however, is that the Department of Health
and Human Services and the Center for Medicare Services have failed to promulgate any
regulations specifically addressing the issue of future medical expenses in liability and auto
liability claims. In the absence of regulatory direction from Medicare, questions will continue as
to whether the Act is even enforceable with regard to liability settlements. While not all statutes
require regulations, for practical purposes it can generally be considered that a statute for which
an implementing regulation has never been created has no administrative or judicially
cognizable consequence for failing to follow the statute. Code of Federal Regulations available
at: http://www.originalintent.org/edu/federalreg.php. In addition, while CMS has made informal
statements with regard to Medicare Set-Asides in liability and auto liability cases, they have
failed to promulgate any written policies or directives. As such, litigants will continue to face
considerable ambiguity with regard to the parties’ obligations to Medicare under the Act.
Currently, litigants may take several views of what may constitute compliance with the Act.
Those views will range from not employing Medicare Set-Asides in any case, to using Medicare
Set-Asides in all personal injury settlements involving Medicare-eligible individuals with future
accident-related medical expenses. Although further clarification and direction from CMS is
anticipated, it remains speculation as to when, or even if, such action may be undertaken. In any
event, the best advice is to anticipate that there may well be Medicare implications for your case
and to continue to monitor developments in this field.
L-12
III.
RECENT MEDICARE CASES
A.
Must Medicare Reduce Its Lien in Recognition of Comparative Fault
Principles?
In Hadden v. U.S., No. 1:08-CV-10, 2009 WL 2423114 (W.D. Ky., Aug. 6, 2009), the United States
District Court for the Western District of Kentucky was recently faced with an argument by
plaintiff’s counsel that Medicare’s conditional payments (lien) must be reduced based on
Kentucky state law principles of comparative fault. Vernon Hadden, plaintiff, was a pedestrian
struck by a utility truck belonging to Pennyrile Rural Electric Cooperative on August 24, 2005.
The Pennyrile vehicle had swerved to avoid a car that had run through a stop sign. The identity
of the operator of the vehicle which had run the stop sign was never identified. Hadden sued
Pennyrile for negligence and ultimately the case settled for $125,000. Medicare asserted a lien
after accounting for recovery costs totaling $62,338.07. Upon settlement, the plaintiff sent a
letter to CMS requesting that conditional payments be waived under principles of comparative
fault. Plaintiff’s counsel argued that a reasonable allocation of fault would be ten percent to the
Public Utility (Pennyrile) and 90 percent as to the unknown vehicle which had run the stop sign.
Plaintiff, therefore reasoned, that CMS should recover no more than ten percent of its
conditional payment amount. The request for a waiver or compromise was denied and the
plaintiff appealed the decision. Upon exhausting administrative appeals he filed suit in the
United States District Court for the Western District of Kentucky.
The federal district court denied the request for waiver or compromise of the conditional
payments amount and held that the plaintiff was responsible for the full $62,338.07 claimed by
CMS. The court found against the plaintiff ruling that there was not a basis in the law to apply
comparative fault principles to the CMS lien. The court further found that the settlement did not
meet the “equity and good conscience” test for reduction under the Medicare Recovery Statute.
The case drew significant interest in the insurance industry. The Medicare Advocacy Recovery
Coalition has undertaken to fund the appeal of the district court decision to the United States
Court of Appeals for the Sixth Circuit. The Appellate Court will be asked to address the legal
question of whether CMS must consider state comparative fault principles in its Medicare lien
recovery process. A decision is expected from the Appellate Court late in the summer or early
fall of 2010.
B.
Can Medicare Recover for Conditional Payment of Medical Bills Incurred
After Settlement Date?
In U.S. v. Stricker, 1:09-CV-02423, filed December 1, 2009, the United States of America brought
suit in the Northern District of Alabama against defendants who had previously been involved in
the settlement of a class action lawsuit that had been brought against Monsanto Company,
Solutia, Inc., and Pharmacia Corporation. The United States additionally is seeking recovery of its
conditional payments against plaintiff’s counsel involved in the class action as well as the
Travelers Insurance and AIG. The government claims that Medicare paid $67,156,770.01 for
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medical treatment on behalf of Medicare beneficiaries who are plaintiffs or class members in the
underlying lawsuit. The class action litigation was settled in 2003, for an approximate sum of
$300,000,000.
What is particularly significant about the Stricker case is that CMS is essentially seeking, not only
prior conditional payments made previous to the 2003 settlement but, additional conditional
payments made between the time of settlement and suit. Under the class action settlement the
Stricker plaintiffs will be receiving annual installments through 2013. CMS is seeking a
declaratory judgment that future payments due under the settlement agreement must not be
made until Medicare is first repaid its lien (conditional payments). The Stricker case presents a
case of first impression with regard to the declaratory relief being sought by the United States
(CMS). Concerns have arisen in the insurance industry that the complaint in this case signals an
intent by CMS to expand the Act to future medical expenses that may arise from a tort related
injury. The United States has filed a Motion for Summary Judgment arguing that it is entitled to
judgment as a matter of law. Currently the parties are briefing various motions to dismiss which
raise issues other than the future payment issue. By this fall it is anticipated that the summary
judgment motion will be fully briefed and argued in the event defendants are not entirely
successful on their motions to dismiss.
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Bradford J. Peterson
- Partner
Public Speaking
 “Medicare Set-Asides and the SCHIP Extension
Act”
Illinois State Bar Association Advanced
Workers' Compensation Seminar 2008
 “Medicare Set Aside Issues and Update”
22nd Annual HRVA Claims Handling Seminar
2007
 “Workers’ Compensation and Medicare Set Aside
Proposals”
Illinois State Bar Association Hot Topics and
Workers’ Compensation 2005
 “Aggressive and Successful Workers’
Compensation Defense Strategies for Today’s
Industrial Commission”
19th Annual HRVA Claims Handling Seminar
2004
Brad has spent his entire career with Heyl Royster
beginning in 1987, in the Urbana office. He became a
partner with the firm in 1997. Brad concentrates his
practice in the defense of workers' compensation,
construction litigation, auto liability, premises liability
and insurance coverage issues. In recent years, Brad
has become a leader in the field on issues of Medicare
Set-Aside trusts and workers' compensation claims.
He has written and spoken frequently on the issue. He
was one of the first attorneys in the State of Illinois to
publish an article regarding the application of the
Medicare Secondary Payer Act to workers'
compensation claims "Medicare, Workers'
Compensation and Set Aside Trusts," Southern Illinois
Law Journal (2002).
Brad is a member of the Champaign County, Illinois
State, and American Bar Associations. He currently
serves on the Illinois State Bar Association Assembly
and has also served several previous terms. He has
also been a member of the ISBA Bench and Bar
Section Council and served as its chairman 2000-2001.
Currently, he serves as a member of the ISBA Workers'
Compensation Council and is past editor of the
Workers' Compensation Section Newsletter.
 Champaign County Bar Association
Court Admissions
Illinois
Significant Cases
 West v. Kirkham, 207 Ill. App. 3d 954 (4th Dist.
1991), Recognized that trial court may find
plaintiff contributorily negligent as a matter of
law.
 Propst v. Weir, 937 F. 2d 338 (7th Cir. 1991),
Application of qualified immunity for university
officials in First Amendment Retaliatory
Transfer claim.
Education
 Juris Doctor, Southern Illinois University, 1987
 Bachelor of Science (with honors), Illinois State
University, 1984
Publications
 "Medicare, Workers' Compensation and Set
Aside Trusts," Southern Illinois University Law
Journal (2002)
 "Survey of Illinois Law-Workers'
Compensation," Southern Illinois University Law
Journal (1991)
L-15
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Employee theft
Business fraud
Embezzlement
Hacking
Trade and business secrets theft
Computer Forensic & Electronic
Data Discovery Services
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Forensic hard drive imaging
Observation and documentation of imaging process
H til site
Hostile
it acquisition
i iti
Password recovery/removal
Data decryption
Data compression & imaging
Media type conversion
Duplicate file elimination
Forensic examination of log files and computer registry
Swap / META file examination
Website visit logs and internet cache examination
Email searches
Expert report writing
Expert testimony
M-4
Digital Forensics
• What is Digital
g
Forensics?
– Digital forensics is the identification,
preservation, extraction, interpretation and
presentation of computer-related evidence.
Digital Forensics
• Can be performed on:
–
–
–
–
–
–
–
–
–
–
Computers
Networks
Flash Drives
CD’s, DVD’s, etc.
Cellular Telephones
PDA’s
Vid S
Video
Surveillance
ill
S
Systems
t
GPS Devices
xBox 360
iPod
M-5
Why Technology?
CD Media Comparison
M-6
Data vs Printed Pages
• One megabyte = 1,400
1 400 pages
• One gigabyte = 140,000 pages
• One terabyte = 140
140,000,000
000 000 pages
Digital Data
• 80% of all corporate and business data is stored
electronically.
• 95% of all information generated today is in
digital form.
• 80% of this information stays in electronic format
like email
email, pdf,
pdf word documents and digital
images.
• Very few business documents created today
ever leave their digital form and get printed out.
M-7
Digital Data Discovery
• This means that in almost every legal
matter,
tt critical
iti l and
d relevant
l
t evidence
id
is
i
electronically stored on personal, business
and corporate computer systems.
• Are you confident that you have viewed
every document in discovery?
Wh Digital
Why
Di it l Forensics?
F
i ?
M-8
“The Smoking Gun”
• We all are looking for the “smoking gun.”
• Every case has it’s smoking gun. Searching for
the smoking gun once meant searching through
reams of paper stored in folders, boxes and
cabinets.
• Today
Today, fewer and fewer business
communications and records find their way into
paper form, so your smoking gun is likely stored
on someone’s digital storage media.
“The Smoking Gun”
• Not only is the smoking gun more likely to
b stored
be
t d digitally,
di it ll th
the iinformal
f
l and
d
immediate nature of electronic
communications makes them more likely
to be smoking guns.
M-9
Evidence Is Left
• At home, through the use of a computer.
• At work, through the use of a computer.
• On the road, through the use of a
computer.
Additionally:
• People aren’t as guarded in what they say
via
i e-mailil as when
h writing
iti a lletter.
tt
• Electronic communication is so frictionless
that a damning e-mail and or text
messages are just a click away from
dozens or hundreds or thousands of in
boxes.
M-10
Types of data often considered as critical
evidence in litigation include:
•
•
•
•
•
•
•
•
•
•
•
•
e-mail
plain text and documents
p
graphics
calendar files
databases
spreadsheets
digital faxes
audio files
videos
websites
computer applications
viruses and spyware
Why a Computer Forensic Examiner?
• Far more information is stored by a
computer
t than
th mostt people
l are aware.
• Proper techniques and procedures must
be followed in acquiring and examining
data.
• Inadmissibility?
• Sanction for spoliation of evidence?
M-11
Computer Based Evidence
• Courts have recognized the importance of
computer forensic investigations to
authenticate computer evidence.
• Gates Rubber Co. v. Bando Chemical
Indus., Ltd.,13 is a particularly important
decision where the court defines a
mandatory legal duty on the part of
litigants to perform proper computer
forensic investigations.
Gates Rubber Co. v. Bando
Chemical Indus., Ltd.,13
• The court ruled and issued harsh
evidentiary
id ti
sanctions.
ti
F
Further,
th th
the courtt
criticized the errant examiner for failing to
make an image copy of the target drive.
The court stated that when processing
evidence for judicial purposes a party has
"a duty to utilize the method which would
yield the most complete and accurate
results.”
M-12
Famous Computer Forensic Cases
•
Michael Jackson
– Forensics recovered Internet history and
Email.
•
Scott Peterson
– Forensics recovered Internet history which
showed web searches for dump sites.
•
BTK Killer
– Forensics used to trace letter back a computer
at his church.
Dennis Rader, BTK Killer
M-13
The BTK Killer
• Dennis Radar was responsible for 10 murders
around Wichita
Wichita, Kansas between 1974 and
1991. Dennis taunted investigators with letters
he had written boasting about the murders.
• BTK Killer again resurfaced in 2004 when he
sent a local television station a floppy disk which
contained a file titled “Test A.rtf”, and a 3 x 5
index card which read “"Any
Any Communications
will have a # assigned from now on, in case one
is lost or not found."
The BTK Killer
• The floppy disk file instructed investigators
t read
to
d the
th index
i d card.
d
• A computer forensic exam of the floppy
disk revealed other data on the disk,
including the previous disk user, “Dennis”.
• That same data also revealed that the disk
had previously been used at Wichita's
Christ Lutheran Church.
M-14
The BTK Killer
• Investigators checked the church’s
website and discovered the church
church’ss list of
officers, including a man named Dennis
Rader. Investigators were then able to link
Radar to the crime scenes with the use of
DNA.
• After more than 31 years and 100
100,000
000
man-hours, the case was cracked by a 15
minute computer forensic exam.
Why a Computer Forensic Examiner?
Why Not A Computer Repair Technician?
M-15
Digital Evidence
• Digital evidence is unlike any other
physical
h i l evidence
id
b
because it can b
be
altered or changed easily. The integrity of
the evidence is fungible.
• Therefore
Therefore, digital evidence must only be
handled by properly trained individuals.
CRIME SCENE
CRIME SCENE
M-16
CRIME SCENE
Digital Forensic Principles
1. No action should be taken that would change
data held on a computer or storage media
which may subsequently be relied upon in
court.
2. In exceptional circumstances, where a person
finds it necessary to access original data held
on a computer or on storage media
media, that
person must be competent to do so and be
able to give evidence explaining the relevance
and the implications of their actions.
3. An audit trail or other record of all
processes applied
li d tto computer
t b
based
d
electronic evidence should be created
and preserved. An independent third
party should be able to examine those
processes and achieve the same result.
M-17
Special hardware and software are utilized
t preserve the
to
th integrity
i t it off the
th evidence
id
for use in court proceedings.
Computer Forensic Examination
• Active Data: Files that are not deleted
and are available to the user through the
operating system.
• Ambient Data: Deleted files, RAM dumps,
swap files, printer spool files.
• Archival Data: Data that has been
“backed up” on tape, DVD, CD, etc.
M-18
How Computer Forensics Can Help You
• Find the “Smoking Gun” in your case
• Help you determine which devices need to be examined
• Determine if evidence has been modified or tampered
with
• Discover or prove if the opposition is “guilty” of
wrongdoing
• Offer strategies regarding the report findings
• Provide facts that are backed up by the forensic
community
• Testify in Court as an expert witness
Divorce Cases
• Infidelity
– Chat room logs
logs, incriminating e
e-mails,
mails digital
photographs
• Hidden Assets
– Quicken balances, brokerage account records
• Online access of financial accounts
– Overseas account passwords, business
correspondence
• Doctored records
M-19
Corporate Cases
•
•
•
•
•
•
•
Sexual harassment
Doctored records
“Smoking Gun” document
“Too Candid” memo
Product liability cases
Wrongful discharge claims
Anti-trust actions
Sensitive Business Information
• Did a former employee leave and take
sensitive
iti b
business
i
iinformation
f
ti or ttrade
d
secrets to a competitor or new company?
– What information did they take?
– Where did they send that information?
– How did they
y cover it up?
p
M-20
Employee Litigation
• Discovery of Theft of Company’s Digital
A
Assets
t
• Misuse of Corporate Property
• Denial of Unemployment Claims
• Criminal Prosecution for Fraud or Other
Statutory Violations
Employee Litigation
• Employees who sue their current or former employer
often allege
g discrimination, harassment, wrongful
g
termination, or compensation irregularities.
• Sometimes, plaintiffs fabricate evidence in support of
their case before leaving and filing litigation.
• Establishing the facts by conducting a forensic
examination of the computer used by the plaintiff can be
crucial to managing an effective legal defense and can
be pivotal to obtaining a prompt resolution and avoiding
protracted litigation.
M-21
Why Digital Forensics?
“Not only is computer forensics necessary in
the guilt phase to establish a defendants
culpability, it is just as important in exposing
the lies of his defense.”
Thomas Keith, Supervisory Assistant United
States Attorney, Central District of Illinois
Forensic Example
• United States v. Lance Pisman
• Lance Pisman met Wilkerson via chat rooms. Pisman lived in Iowa City, Iowa. • Evidence against Pisman was weak, therefore, on March 1, 2004, investigators made contact with Pisman to ask him to cooperate with the prosecution against
cooperate with the prosecution against Wilkerson.
M-22
Pisman Forensic Exam
Lance Pisman hard drive file structure
Contents deleted
AIM chats with Wilkerson that had been deleted from hard drive.
M-23
ID21.lnk stored in Pisman’s recent folder
• 040301_1523·E:\My Documents\ID21.psf····E·:·\·M·y·
·D·o·c·u·m·e·n·t·s·····
– Source: hard drive physical sector 6423706
Forensic Example
• United States v. Lance Pisman
• Pisman was confronted with this information. He confessed that he made the disc and hid it under his kitchen sink. The disc was recovered and the chats were located on the disc. M-24
DVD data that had been recovered CD001
CD001··
040301_1523
040301 1523
········3······3············································Ò······ÒÙ··········Ý···
·"·················h···)·è·········
EASY CD CREATOR 5.1 (053) COPYRIGHT (C) 19992001 ROXIO, INC.
Source: Data located at Physical sector 16 on DVD
Side by Side File Structure
Hard drive file structure
DVD file structure
M-25
Forensic Example
• United States v. Michael Leahy
• Michael Leahy was convicted locally of weapons offenses in 2001 and was placed on probation. • Local probation officers received a tip that Leahy was possessing child pornography. • Officers seized a computer. A subsequent exam revealed images of cp.
investigators interviewed Leahy who confessed to the cp. Leahy also attempted to abduct a minor child locally. Leahy Library Forensic Exam
M-26
Leahy Library Forensic Exam
M-27
Forensic Example
• Leahy fled to the United Kingdom
• He was apprehended and extradited back to CDIL and convicted for possession of child pornography. M-28
Questions?
Presented by:
((866)) 938-4041
M-29
James C. Feehan, Jr.
EnCE Digital Forensic Specialist
James Feehan is a Computer Forensic Specialist and
owner of Peoria Computer Forensic Associates, LLC,
located in Peoria, Illinois. He is an EnCE certified
digital forensic examiner who has conducted
thousands of digital media forensic examinations and
has been qualified in state and federal court
numerous times as an expert in this field of digital
forensics. Additionally, James is an associate Professor
at Bradley University, where he developed and
instructs the computer forensics curriculum.

“What Every Lawyer Needs To Know About
Computer Forensics,” Peoria County Bar
Association, Peoria, IL, February 2010
Representative Expert Testimony
 United States v Christopher J. Wixom, January
26, 2007 in the Central District of Illinois. Expert
testimony rendered regarding computer
forensic examination techniques, data residue
recovered from the Microsoft Windows
operating system, Digital Versatile Discs (DVD),
file-sharing programs such as Limewire, Ares,
and encryption programs such as Truecrypt.
 People v John D. Stufflebeam, October 15, 2008
in Tazewell County, Illinois. Expert testimony
rendered regarding computer forensic
examination techniques, and ICQ data
recovered from a database file for instant
messaging.
 United States v Jeffrey Ellington, January 23,
2009 in the Central District of Illinois. Expert
testimony rendered regarding Digital Media
Forensic Analyses, and Digital Data
Reconstruction and Recovery.
 United States v Kenneth Clark, January 6, 2010
in the Central District of Illinois. Expert
testimony rendered regarding Digital Media
Forensic Analyses of Garmin Street Pilot GPS
Navigator.
 People v William Malone, February 24, 2010 in
Peoria County, Illinois. Expert testimony
rendered regarding computer forensic
examination techniques of a Cellular Telephone
and associated Micro SD card.
Major Investigative Assignments
 Detective, Computer Crime Unit, Peoria Police
Department (March 2000 to present)
 Special Federal Officer, Federal Bureau of
Investigation, Cyber-Crime Taskforce (June
2003 through August 2009)
 Special Federal Officer, United States Secret
Service, Cyber-Crime Taskforce (September
2009 through present)
Representative Academic Positions
 Instructor (March 2001 to 2007); Computer
Forensics, Computer Crime; Mobile Police
Training Center, Peoria, IL
 Instructor (January 2006 to 2007); Computer
Forensics, Computer Crime and Investigations;
Traffic Institute; Northwestern University,
Evanston, IL
 Instructor (August 2007 to present); Child
Exploitation Investigations, State of Illinois,
Illinois State Police Academy, Springfield, IL
Representative Presentations
 “Solving Crimes with Digital Forensic Evidence,”
Training Resource Services, Las Vegas, Nevada,
May 2004
 “Solving Crimes with Digital Forensic Evidence,”
International Association of Identification
Forensic Science Conference, East Peoria, IL,
April 2007
 “Social Networking,” Illinois Juvenile Officers
Association 51st Annual State Conference,
Peoria, IL, June 2007
 “A Forensic Success Story: The Digital Evidence
Working Group of the Central District of
Illinois,” 2008 Project Safe Childhood State
Conference, United States Department of
Justice, Forsyth, Georgia, August 2008
Training
 Department of Justice. Online Undercover
Investigations - National Advocacy Center
 Image Scan, Computer Forensic Utility - Federal
Bureau of Investigation
 Mobile Digital Evidence Previewing - 2007
National Project Safe Childhood Conference
 Windows Law Enforcement Tools and Windows
Vista for Investigators - Microsoft Corporation 2008 National Project Safe Childhood
Conference
 RAM Analysis - 2008 National Project Safe
Childhood Conference
M-30

Entire Book - Heyl Royster

Transcription

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