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To Sue Or Not To Sue: Illinois Employers May Sue To Recover Workers Compensation Payments From Wrongdoers Pursuant to 720 ILCS 5(b) Where Employee Fails to Institute Suit.

By Daniel E. Murphy, Managing Partner-Murphy & Murphy, 39 South LaSalle Street, Suite 720,        Chicago, IL 60603, 312.267.6900, d.murphy@murphymurphylaw.com.

Rarely utilized and often overlooked, Illinois employers have always not availed themselves of a tool which potentially could reduce overall costs of a comprehensive workers compensation program.  Section 5(b) of the Illinois Workers Compensation Act (820 ILCS 5(b)(“Act”) provides that where an injured employee, or his representative in the case of death, fails to institute a proceeding against a third party responsible for his or her injuries or death 3 months before such action would be barred, then the employer who has paid workers compensation benefits for the accident may commence an action in its own name or in the name of the employee to recover workers compensation payments made to the employee.  This section of the Act also provides that any excess recovery over the amount of workers compensation benefits paid taking into account attorneys fees and costs incurred in prosecution of the suit is payable to the employee.

A comprehensive risk management plan or self-insured workers compensation plan should include evaluation of this important right by an in-house adjuster or third party administrator assigned to handle liability for the underlying workers compensation case or by an individual to whom this task is delegated within the claim handling network, including counsel.  In cases where substantial workers compensation benefits have been paid or are anticipated, and where there are sufficient assets or insurance coverage available to satisfy a judgment against a negligent third party who has caused the employee’s injuries, an employer can file suit directly against the negligent third party and recover the workers compensation benefits paid to its employee, where the employee has not filed suit. Even a single recovery through use of this statutory provision may substantially reduce the overall cost of an employer’s self-insured workers compensation program.

Daniel E. Murphy is Managing Partner, Murphy & Murphy, 39 South LaSalle Street, Suite 720, Chicago, IL 60603, telephone: 312.267.6900, d.murphy@murphymurphylaw.com.

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