                                                FIRST DIVISION
                                                JULY 30, 2007




No. 1-06-1746



CHUBB GROUP INSURANCE                )     Appeal from the Circuit
COMPANIES, as Subrogee of            )     Court of Cook County.
Caliber Auto Transport,              )
                                     )
            Plaintiff-Appellant,     )
                                     )     No. 05 M1 16931
    v.                               )
                                     )     The Honorable
JOSE CARRIZALEZ,                     )     Moira S. Johnson,
                                     )     Judge Presiding.
            Defendant-Appellee.      )


     JUSTICE GARCIA delivered the opinion of the court.

     On December 5, 2003, a vehicle driven by the defendant, Jose

Carrizalez, struck a van driven by Eric Matthews.    Matthews was

driving a van while in the scope of his employment that belonged

to his employer, Caliber Auto Transport.    At the time of the

accident, the plaintiff, Chubb Group Insurance Companies, had a

policy of workers' compensation insurance with Caliber Auto.

     Matthews allegedly suffered personal injuries in the

accident.    Pursuant to the Workers' Compensation Act (Act) (820

ILCS 305/1 et seq. (West 2004)), the plaintiff paid medical bills
No. 1-06-1746


of $2,406.28 and temporary total disability benefits of $666.66

to Matthews.

     Within 90 days of the accident and without filing suit,

Matthews entered into a settlement agreement and executed a

general release of liability with Carrizalez's insurer, State

Farm Mutual Automobile Insurance Company.        Under the terms of the

agreement, which was entered into on February 23, 2004, Matthews

was paid $3,600 in exchange for releasing and discharging the

defendant of further liability.

     On July 29, 2005, the plaintiff sued Carrizalez to recover

monies that it paid to Matthews.         The defendant moved to dismiss

the complaint pursuant to section 2-619 of the Code of Civil

Procedure (735 ILCS 5/2-619 (West 2002)), arguing that the

release signed by Matthews discharged the defendant from

liability because the defendant had no knowledge of any lien or

claim by the plaintiff at the time the release was signed and the

settlement amount paid.    The trial court granted the motion and

dismissed the plaintiff's complaint.

     The plaintiff filed a motion to vacate and reconsider the

dismissal.    The court denied the motion, holding that the

defendant had no actual or constructive notice of the plaintiff's

interest.    This appeal followed.

     On appeal, the plaintiff argues that the trial court erred

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when it dismissed the complaint because section 5(b) of the Act

protected the plaintiff's interest.       Further, the defendant had

constructive notice of the plaintiff's interest at the time the

settlement and release were executed.      We agree with the

plaintiff and reverse the judgment of the trial court.



                               ANALYSIS

                         I. Standard of Review

       A section 2-619 motion to dismiss admits the legal

sufficiency of a complaint, but raises defects or defenses that

defeat the claim.    Krueger v. Lewis, 359 Ill. App. 3d 515, 520,

834 N.E.2d 457 (2005).    Dismissal is appropriate where the record

establishes that no genuine issue of material fact exists.       MC

Baldwin Financial Co. v. DiMaggio, Rosario & Veraja, LLC, 364

Ill. App. 3d 6, 22, 845 N.E.2d 22 (2006).      We review the

dismissal of a complaint de novo.      Krueger, 359 Ill. App. 3d at

521.

                           II. Section 5(b)

       Section 5(b) of the Workers' Compensation Act provides

protections to employers that are compelled to pay compensation

to employees injured by third-party tortfeasors.       Villapiano v.

Better Brands of Illinois, Inc., 26 Ill. App. 3d 512, 514, 325

N.E.2d 722 (1975).    The Act provides in relevant part:

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                "Where the injury or death for which

          compensation is payable under this Act was

          caused under circumstances creating a legal

          liability for damages on the part of some

          person other than his employer to pay

          damages, then legal proceedings may be taken

          against such other person to recover damages

          notwithstanding such employer's payment of or

          liability to pay compensation under this Act.

          In such case, however, if the action against

          such other person is brought by the injured

          employee *** or settlement is made with such

          other person, either with or without suit,

          then from the amount received by such

          employee *** there shall be paid to the

          employer the amount of compensation paid or

          to be paid by him to such employee ***.

                ***

                If the injured employee *** agrees to

          receive compensation from the employer or

          accept from the employer any payment on

          account of such compensation, or to institute

          proceedings to recover the same, the employer

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          may have or claim a lien upon any award,

          judgment or fund out of which such employee

          might be compensated from such third party.

                *** No release or settlement of claim

          for damages by reason of such injury or

          death, and no satisfaction of judgment in

          such proceedings shall be valid without the

          written consent of both employer and employee

          or his personal representative, except in the

          case of employers, such consent is not

          required where the employer has been fully

          indemnified or protected by Court order."

          820 ILCS 305/5(b) (West 2004).

     Thus, as to the remedies provided to employers to recoup

compensation paid to employees for injuries caused by third-party

tortfeasors, section 5(b) specifically provides: (1) a lien

against any compensation the employee receives from a third party

with or without suit for any workers' compensation benefits paid

by the employer; (2) the right to intervene in any suit filed by

the employee against the tortfeasor at any stage prior to

satisfaction of judgment, so that all orders are made for the

employer's protection; (3) the invalidity of a release or

settlement of claim for damages entered between the employee and

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the tortfeasor, without written consent of the employer unless

the employer has been fully indemnified or is protected by court

order; and (4) the right to bring a suit during the three months

prior to the expiration of the statute of limitations if the

employee has not filed suit.    Insurance Co. of North America v.

Andrew, 206 Ill. App. 3d 515, 518-19, 564 N.E.2d 939 (1990).       "It

is clear that the statute provides numerous protections for the

interests of an employer who has made workers' compensation

payments."    Andrew, 206 Ill. App. 3d at 519.

     The protections afforded an employer by section 5(b) are

"crucial to the workers' compensation scheme" because often the

employer is required to pay compensation even though it was not

at fault.    Gallagher v. Lenart, 367 Ill. App. 3d 293, 299, 854

N.E.2d 800 (2006).   Section 5(b) provides a means for the

employer to reach the true tortfeasor.    Gallagher, 367 Ill. App.

3d at 299.   Further, section 5(b) ensures that the employee does

not benefit from a double recovery.    Gallagher, 367 Ill. App. 3d

at 299.   "'"This is fair to everyone concerned: the employer,

who, in a fault sense, is neutral, comes out even; the third

person pays exactly the damages he or she would normally pay ***;

and the employee gets a fuller reimbursement for actual damages

sustained than is possible under the compensation system alone."'

[Citations.]"    Gallagher, 367 Ill. App. 3d at 300.

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                        III.   Employer's Lien

       The defendant's principal argument is that because it was

unaware of "the Plaintiff's lien for medical payments and/or TDD

benefits it paid under [the] Worker[s'] Compensation Act, the

Plaintiff's lien never came into effect; therefore, the Plaintiff

is not entitled to reimbursement for the same."    For support, the

defendant points to Trimon, where the court explained that an

employer's lien comes into effect when the employer gives notice

to the third-party tortfeasor.     Employers Mutual Casualty Co. v.

Trimon Elevator Co., 71 Ill. App. 2d 124, 134, 217 N.E.2d 391

(1966).    In its rejoinder, the plaintiff notes that the court in

Villapiano found the statement regarding the effectiveness of the

employer's lien to be dictum.     Villapiano, 26 Ill. App. 3d at

517.

       We are persuaded that the statement in Trimon regarding when

an employer's lien comes into effect is dictum.     More

importantly, the defendant here, as the defendants did in

Villapiano, mistakenly fastens his argument on the word "'lien,'

treating it as akin to an equitable lien and as an exclusive

remedy."    Villapiano, 26 Ill. App. 3d at 517.   But as the

Villapiano court made clear, a "lien" is merely one of four

remedies afforded an employer for its protection in section 5(b).

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In fact, the language cited by the defendant in Trimon was deemed

dictum by the Villapiano court because the Trimon court allowed a

remedy other than the enforcement of the lien.       "[T]he amount of

the settlement in Trimon had been paid to the employee more than

a year prior to the employer's action, [and] as a practical

matter there remained no res or particular fund upon which to

impress a lien ***."        Villapiano, 26 Ill. App. 3d at 517.

Instead, the Trimon court, in accordance with a separate remedy

provided in section 5(b), reversed based on "the employer's right

to sue for indemnity and to name the third-party tort-feasor as a

defendant."     Villapiano, 26 Ill. App. 3d at 517.    As the Trimon

court made clear, the enforcement of a lien presupposes the

intervention of the employer in a suit by the employee against

the tortfeasor.    But the Act "does not provide an exclusive

remedy.   To hold this as an exclusive remedy on the part of the

employer would to a great extent cut down to the very minimum the

protection which the act intended to give him."       Trimon, 71 Ill.

App. 2d at 136.

                      IV.    Invalidity of Release

     Thus, the defendant's argument as to when the lien came into

effect misses the point.       The plaintiff here does not seek to

enforce a "lien," but relies instead on its statutory right to

hold the release between the employee, Matthews, and the

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defendant tortfeasor, invalid as against the plaintiff because

the employer did not give its written consent and was not fully

indemnified or fully protected by court order.     Andrew, 206 Ill.

App. 3d at 518-19.

     This liberal interpretation of alternative remedies

available to employers in section 5(b) given by the Trimon court

and recognized by the court in Villapiano is reinforced by the

decision in Andrew, 206 Ill. App. 3d 515, a case procedurally

similar to the case here.   In Andrew, an employee of Lewis Truck

Lines, Inc., that was acting within the scope of his employment

was injured when he was struck by a vehicle driven by the

defendant, an employee of Rely Maintenance Seal Coating &

Stripping Company (Rely).     The plaintiff filed a negligence

action against the defendant and Rely, seeking, in part,

reimbursement of workers' compensation benefits that it paid the

employee on behalf of Lewis.     Andrew, 206 Ill. App. 3d at 517.

The accident giving rise to the workers' compensation payments

occurred on October 6, 1987; the release signed by the employee

was dated September 26, 1989; he did not file suit.    The workers'

compensation insurance carrier filed a subrogation claim against

Rely on September 29, 1989.

     The defendant moved to dismiss the complaint, arguing that a

release and settlement agreement, signed by the employee, barred

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No. 1-06-1746


the action, and that the defendants had no notice of the

plaintiff's interest.     Andrew, 206 Ill. App. 3d at 517.   The

plaintiff argued that the release was invalid because neither

Lewis nor the plaintiff agreed to the settlement as required by

the Act.   The trial court granted the defendant's motion to

dismiss.   Andrew, 206 Ill. App. 3d at 517-18.

     The Andrew court addressed the plaintiff's contention that

"the Workers' Compensation Act imposes a duty upon the trial

court to protect the employer's right to reimbursement for

workers' compensation benefits paid, and a release, signed by the

injured employee who has accepted workers' compensation benefits,

does not bar the employer's right to reimbursement."     (Emphasis

added.)    Andrew, 206 Ill. App. 3d at 518.   The Andrew court

agreed with Villapiano that an employee's release and settlement

do not vanquish an employer's cause of action.     The Andrew court

noted, because the employee did not sue the tortfeasor, the

plaintiff did not have the opportunity to intervene prior to the

settlement.     Andrew, 206 Ill. App. 3d at 520.

     Much as in the instant case, the parties in Andrew disputed

whether there was any basis in the record to support a finding of

constructive notice of the employer's interest prior to the

execution of the release; the record was unclear when the

employer discovered the settlement between the employee and the

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No. 1-06-1746


defendant; and the record was unclear as to any actual notice of

the employer's interest to the defendant prior to the settlement.

Despite the gaps in the record, the court found "[t]he plain,

unambiguous statutory language provides that a release or

settlement entered into without the employer's consent or without

an order of the court protecting the employer is not valid."

Andrew, 206 Ill. App. 3d at 521.      Because the release contained

only the employee's signature and did not indicate that the

plaintiff or the employer consented to the agreement, the release

did not bar the plaintiff's action.      Andrew, 206 Ill. App. 3d at

521.

       We adopt and follow the analysis in Andrew.    In this case,

there is no evidence in the record that the plaintiff or Caliber

Auto consented to the release or settlement.     Nor is there

evidence that the plaintiff was indemnified or protected by a

court order.    Because the plain language of section 5(b) provides

that a release or settlement entered into without an employer's

(or its subrogee's) consent is not valid, the settlement and

release do not bar the plaintiff's timely cause of action against

the defendant.   See Andrew, 206 Ill. App. 3d at 521.     "[T]he

right granted employers by that section [5(b)] is paramount to

the alternative remedies available for enforcement. *** [T]he

right to an adjudication on issues of liability and damages

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passed to [Matthew's] employer and its insurance carrier, ***

much as if [Matthews] had allowed the statute of limitations to

run within 90 days of expiration."     Villapiano, 26 Ill. App. 3d

at 517-18.   Accordingly, the plaintiff's cause of action based on

the invalidity of the release survives.

                V.   Notice of Employer's Interest

     The defendant's related argument that "[b]ecause Defendant

did not have constructive notice of the Plaintiff's lien, the

Plaintiff is not entitled to reimbursement" falls with his "lien"

argument.    We are aware of no authority that requires an employer

to provide notice of its interest to a third-party tortfeasor

before the employer may invoke its protection under section 5(b)

that a release entered into without its knowledge and written

consent is invalid.    This, the Villapiano court made clear:

"[E]ven if we did agree that the defendants could not be charged

with notice of the employer's interest when they obtained the

release, the outcome would not be different.    Neither [the

employer] nor [the insurance carrier] by act or omission waived

its statutory right to indemnity."     Villapiano, 26 Ill. App. 3d

at 516.

     Even if a defense of lack of notice were available to the

defendant, we would reject its application here.

     Constructive notice need not be founded exclusively on

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notice, constructive or actual, arising from the circumstances

that created a legal liability for damages on the part of the

tortfeasor.   Constructive notice of an employer's interest may

also arise "from a presumption of awareness of the statute's

protective provisions."   Villapiano, 26 Ill. App. 3d at 516,

citing Woodward v. E.W. Conklin & Son, Inc., 171 App. Div. 736,

739, 157 N.Y.S. 948, 950 (1916) (third party takes release with

full knowledge that without written approval of such release, it

may not be asserted against the person whose approval is

statutorily required); see also Braye v. Archer-Daniels-Midland

Co., 175 Ill. 2d 201, 217, 676 N.E.2d 1295 (1997) (parties are

presumed to contract with knowledge of existing law).    Based on

the protections afforded the employer in the statutory provision

of section 5(b), the Villapiano court noted that the defendants

had, at a minimum, constructive notice of the employer's

interest.

     The Villapiano court found more, as we do here.    In

Villapiano, the defendants, in their answer, admitted that they

knew the vehicle operated by Villapiano was the property of

Reefer.   It was that knowledge that put the defendants on inquiry

as to the employer's interest: "If it appears a party having

knowledge or information of facts sufficient to put a prudent man

upon inquiry wholly neglects to make any inquiry, the inference

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of actual notice is necessary and absolute."     Villapiano, 26 Ill.

App. 3d at 516.   "The fact that Villapiano was driving the truck

of his employer when the accident occurred should have alerted

[the defendants and their agent] to the potential interest of

Reefer."   Villapiano, 26 Ill. App. 3d at 516.

     In this case, the record contains a copy of the accident

report, clearly identifying Caliber Auto Transport as the owner

of the van Matthews was driving at the time of the accident.     As

such, the defendant had sufficient information to put him on

inquiry as to Matthews' status as an employee.     Villapiano, 26

Ill. App. 3d at 516.   The court in Andrew followed this

reasoning.   "[W]hile we express no opinion as to whether notice

of the employer's reimbursement interest is necessary under these

circumstances, plaintiff did allege *** that [the defendant]

struck a vehicle owned by [the employer].   Under the reasoning of

Villapiano, this would be enough to establish constructive notice

of the employer's interest."   Andrew, 206 Ill. App. 3d at 521.

     Finally, as to the defendant's claim of laches, we find no

merit in the unsupported argument that the plaintiff's "long

delay" in filing suit constituted laches.   While there may be

many reasons to explain the speedy settlement in this case in

relation to when the instant suit was filed, there is no reason

that a speedy settlement should inure to the benefit of the

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tortfeasor in light of the clear and unambiguous language in

section 5(b) of the Act affording protections to employers.     As

the Villapiano court noted:     "To hold otherwise, would convert

post-accident negotiations into an unseemly race, the only result

of which, if not the goal, would be inequity."     Villiapano, 26

Ill. App. 3d at 517.

                              CONCLUSION

     The trial court erred in granting the defendant's motion to

dismiss.   As provided by section 5(b), without the employer's

consent or without an order of court protecting the employer, the

release signed by Matthew is not valid against the employer.       If

the employer was required to provide notice of its interest to

the tortfeasor, at a minimum, the defendant had such constructive

notice prior to the execution of the release.     We reverse the

judgment of the trial court and remand for further proceedings

consistent with this opinion.

     Reversed and remanded.

     McBRIDE, P.J., and R.GORDON, J., concur.




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