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As a practicing attorney I have always found it interesting that clients believe that there is a definitive answer to almost every question that arises in the law. In my experience there are very few situations which lend itself to a definitive yes or no answer. However, the decision of the Illinois Supreme Court in the case of IRMO DeRossett, 173 Ill. 2d 416, 671 N.E. 2d 654 (1996) allows for a Family Law attorney to give a dispositive answer as to one issue. That issue would be as to whether or not Workers Compensation claims and/or personal injury claims, (where the claim accrued during the marriage), is marital or non-marital property. The Illinois Supreme Court answered that question in the affirmative, stating that the plain language of Section 503(a) dictates that these claims are marital property. The Illinois Supreme Court also stated that if the claim accrued prior to the marriage it follows that the plain language of Section 503(a) dictates that it is not marital property. If the claim accrued during the marriage then the next question, follows as to what allocation should be made if a settlement, award or judgment is made. The non-injured spouse will always argue that there should be an equal division of all marital property including personal injury and Workers Compensation awards. Illinois Courts have looked at Section 503(d) of the Illinois Marriage and Dissolution of Marriage Act and the guidelines set forth therein in order to determine a just proportion of marital property. A proportional asset division does not require mathematical equally. IRMO Dody, 255 Ill.App. 3d 1087, 629 N.E. 2d 679 (1994). The trial court may award an unequal distribution of property if it properly applies the Section 503(d) guidelines. IRMO Dody, supra. The guidelines to be considered under Section 503(d), are as follows: 1. The contribution of a spouse to the marriage; 2. The duration of the marriage; 3. The amounts and sources of each spouse's income; 4. The age, occupation, vocation skills, employability and needs of each spouse; 5. The reasonable opportunity for each spouse's future acquisition of assets and income; 6. Whether the apportionment is in lieu of or in addition to maintenance; 7. The tax consequences of the property division; 8. The dissipation of marital or non-marital property; 9. Any nuptial agreement of the parties; and 10. The value of the property set aside for each spouse. It can be readily seen from reviewing two factors, i.e. 1) the age, occupation, vocational skills, employability and needs of each spouse and 2) the reasonable opportunity for each spouse's future acquisition of assets and income to justify why a court, in case of a catastrophic injury such as a case where one of the spouses has been rendered a quadriplegic as a result of either a work related incident or a third party liability case (and sometimes both) would receive a greater proportion of the award, even if the actual award itself is classified as marital property. An interesting case is IRMO Wolfe, 298 Ill.App. 3d 510, 699 N.E.2d 190 (2nd Dist., 1998). In that case, the husband was injured on the job which resulted in not only a Workers Compensation settlement but also a pending personal injury claim brought pursuant to the Structural Work Act. (For you younger practitioners, there was such a thing known as the Structural Work Act, which was available under 740 ILCS 150/0.01, et seq. This involved almost any construction related accident where there was a "structure" involved. The "structure transformed the case into almost strict liability against whomever was determined to be "in charge of the work". As the litigation would involve all of the general contractors, architects, subcontractors and owners of the job, it became known as "The Lawyers Full Employment Act". It was, for the most part, a plaintiff oriented statute primarily available to those who were injured on the job as a construction worker. If there was a determination of a "structure" and an entity that was "in charge of the work" that could satisfy the type of settlements necessary to compensate severely injured individuals who were injured working on the skyscrapers that dominate the Chicago skyline and some of the suburbs then there was usually a fairly substantial monetary award or settlement). In the Wolfe case, the claim accrued during the marriage so it was determined to be marital property. The husband filed a Petition for Allocation of the Proceeds from the settlement of the Structural Work Act claim where he stated that the net settlement to him was to be approximately $375,000. Of that figure, the husband stated that 80% of the settlement proceeds represented his future wage loss with 6-2/3% representing his future medical expenses and 6-2/3% representing his past medical expenses and 6-2/3% representing pain and suffering. The court then awarded ten (10%) percent of the personal injury settlement to the wife as her marital property and twenty (20%) percent of the settlement to establish a trust for the support and benefit of the two minor children of the parties. The court then awarded the remaining seventy (70%) percent to the husband as his marital property. Prior to that allocation there was a $50,000 bankruptcy deposit from the proceeds of the settlement. The Appellate Court affirmed the ten (10%) percent allocation to the wife of the husband's personal injury award and reversed on the issue of placing twenty (20%) percent of the total award into a 503(g) trust for the benefit of the minor children stating that the trial court had failed to make a threshold determination as to the parties' net income. It was interesting that, in dicta, the court noted that a personal injury settlement constitutes net income for purposes of Section 505(a)(1) of the Illinois Marriage and Dissolution of Marriage Act only to the extent that it reimburses the injured party for lost earnings. See 298 Ill.App. 3d at 514. In the case of IRMO Zweig, 343 Ill.App.3d 590, 798 N.E.2d 1223 (5th Dist. 2003), the 5th District Appellate Court was asked to review the trial court's determination of allocating 75% of the major assets of the parties, including a personal injury settlement to the husband. In this case, husband was a truck driver who was personally injured on August 2, 1991 when he was loading a piggyback trailer on a railroad car. Apparently, a stanchion fell on the husband causing him to fall which resulted in a fracture of his neck at the C5-6 level and rendered him a quadriplegic. Husband remained hospitalized for five months after the accident. Four years after the accident, the husband was finally paid for his personal injury claims in the amount of $1,744,843.15. Prior to receiving the settlement the husband received monthly income of $4,120.00 from Workers Compensation, Social Security Disability, his employment pension and a Veterans Administration Disability. The trial court determined that there had been some dissipation of marital property by the wife. (One of the interesting holdings in IRMO Zweig is that the spouse charged with dissipation of marital funds has the burden of showing, by clear and convincing evidence, how the marital funds were spent. This places the burden upon the dissipating party to prove that the alleged dissipated funds were used for legitimate marital expenses.) In any event, the trial court awarded 75% of the assets, including the marital home and the personal injury settlement to the husband and 25% to the wife. The Appellate Court found that the trial court had adequately considered all of the elements necessary for a proper determination of the allocation of the marital assets. The Appellate Court cited the case of IRMO Murphy, 259 Ill.App. 3d 336, 631 N.E. 2d 893 (1994) and stated the following: "The trial court may consider the pain, suffering, and disability of an injured spouse when making a division of property... All the risks of loss of income and increased cost of living and medical expenses that stem from the injury will now be borne by respondent alone. Petitioner leaves the marriage the same way she entered it: an employed, healthy, able- bodied person... As a spouse she did suffer, but respondent will live with the paralysis for the remainder of his life. He not only endured pain and suffering at the time of the initial injury but as the ongoing absence of normal bodily function below the chest level with all of the risks and hazards in both health and personal life attended upon said paralysis. This paralysis was the basis for the personal injury award and that which the trial court could rightfully consider when dividing the marital property." The Appellate Court closed its opinion with the following: "While property distribution is meant to be in "just proportions", that does not mean that the division must be equal. (citation omitted) An award of a greater percentage of assets does not necessarily mean that the trial court abused its discretion." 343 Ill.App. 3d 601. That determining the date that a claim accrues, leads to a determination as to whether a personal injury settlement (or judgment) or a Workers Compensation award is marital or non-marital. The allocation of the amount received or to be received must be allocated pursuant to the factors delineated in Section 503(d). |
Workers Compensation and Personal Injury Awards
