McDonnell on Illinois Supreme Court Ruling on Employer Waiver of Lien in Third Party Recovery: Gallagher v. Lenart

McDonnell on Illinois Supreme Court Ruling on Employer Waiver of Lien in Third Party Recovery: Gallagher v. Lenart

The Illinois Supreme Court resorted to elementary principles of contract law in determining whether an employer, who had obtained from its employee a release “in full and final settlement of all claims under the Workers’ Compensation Act,” had waived its statutory lien by failing to specifically reserve its lien rights in the settlement contract. In doing so, the Court confirmed that a waiver must be clear and unmistakable from the language used and may not be inferred or implied.

In Gallagher v. Lenart, 226 Ill. 2d 208 (Ill. 2007), the Court considered the language of the settlement contract and a resignation agreement signed by the employee at the same time in determining whether waiver of the employer’s right of reimbursement un-der Section 5(b) of the Workers’ Compensation Act, 820 ILCS 305/5(b), had occurred.

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