Does the Workers’ Compensation Commission have exclusive jurisdiction over a plaintiff’s claim for breach of an agreement to pay referral fees in connection with two workers’ compensation cases? That’s the question the Illinois Supreme Court debated during its November term, hearing oral argument in Ferris, Thompson and Zweig, Ltd. v. Esposito. Our detailed summary of the underlying facts and lower court opinions in Ferris, Thompson is here.

The plaintiff law firm allegedly entered into a joint representation agreement with the defendant. The plaintiff agreed to undertake certain steps in preparing the litigation, and the defendant agreed to represent the clients before the Workers’ Compensation Commission. When the defendant failed to pay the plaintiff following settlement of the two claims, the plaintiff filed suit.

The defendant moved to dismiss, arguing that the Commission had exclusive jurisdiction over all disputes regarding attorneys’ fees; the plaintiff responded that the Commission’s authority was limited to fees for representing clients before the Commission. The circuit court denied the motion to dismiss, and ultimately found for the plaintiff following trial. The Appellate Court affirmed, holding that the Commission’s authority was limited to fees for representing clients before the Commission.

Counsel for the defendant began. He explained that the two issues at bar were (1) whether the Appellate Court’s determination of the subject matter jurisdiction issue was consistent with the legislature’s intent re fees disputes in workers comp; and (2) whether holding that the Commission had continuing jurisdiction to determine fees collateral to the main award frustrated the intent of the Workers Comp Act to protect workers’ right to prompt compensation. The Second District Appellate Court said requiring this issue to be determined at the Commission would frustrate that intent. Although normally subject matter jurisdiction is presumed, counsel argued that that presumption did not apply under the Workers Comp Act, where the Circuit Court’s jurisdiction was appellate only. The consequence of bringing an action in Circuit Court that belongs at the Workers Comp Commission is that the Court must dismiss in deference to the Commission’s exclusive jurisdiction. Counsel argued that the Workers Comp Act explicitly divests the Circuit Court of its ordinary jurisdiction by providing that any and all disputes regarding attorneys’ fees, including the division of fees, “shall be heard” by the Commission. Counsel argued that the complaint made it clear that this is a fee dispute arising from a workers comp claim, and also attached the workers’ comp complaints, making it clear that this was a co-representation matter before the Board. Justice Theis asked whether the plaintiff attorney filed an appearance before the Commission, and counsel said no. Justice Theis asked whether the fact that most fees disputes involving the Commission were between lawyers who had both filed appearances should change the analysis. Counsel responded that the language of the Act doesn’t require both attorneys to appear for jurisdiction to kick in. Various provisions of the Comp Act demonstrate that the Act is concerned with regulating the behavior not just of lawyers appearing before the Commission, but also of attorneys representing the workers outside. Counsel argued that Section 16(b) of the Act expressly regulates referring attorneys – the Act is a comprehensive statutory scheme using broad language reaching all attorneys involved in these cases. Chief Justice Garman pointed out that in a pure referral situation, the Commission would be determining whether the referring attorney did enough under the Rules of Professional Conduct to justify a fee. Counsel answered that under the Rule, there’s a proportional services approach. If the primary service provided is a referral, the agreement must reflect that the referring attorney is assuming joint financial responsibility. Counsel continued, noting that because there is an express divestment of the legislature’s ordinary jurisdiction, there can be no concurrent jurisdiction in the Circuit Court. Justice Karmeier asked whether it was clear that the dispute between the attorneys would have no bearing on the ultimate net award. Counsel said yes. Justice Karmeier asked whether that bore on the analysis in any way. Counsel responded that it did only in the sense that the courts have found that the Commission has continuing jurisdiction where the matter is merely collateral to the award. Counsel cited Section 305/16 of the Act, which says that the Commission has the power to fix a fee for services rendered in securing a right under the Act. Rule 1.5 of the Rules of Professional Conduct refers to referral as a service. Counsel concluded by briefly noting the plaintiff’s argument that it was being deprived of its constitutional right to a jury trial. That principle didn’t apply here because the right at issue is created solely by statute.

Counsel for the plaintiff began with the constitutional point. Counsel argued that the case was a run-of-the-mill breach of contract claim. Since that claim existed at common law at the time of the Sixth Amendment, the plaintiff had a constitutional right to a trial of the claim by jury. Counsel pointed out that there is no mention of the Act in plaintiffs’ complaint. Justice Thomas asked whether counsel was departing somewhat from the rationale of the Appellate Court regarding exclusive jurisdiction. Counsel denied that plaintiffs were sandbagging defendants by raising the constitutional issue for the first time at the Supreme Court. When the Court granted the petition for leave to appeal, counsel explained that he realized that a mandatory trial before the Commission would violate the right to trial by jury. Justice Burke asked whether that was why no fee petition had been filed before the Commission. Counsel responded that plaintiffs’ firm does criminal, bankruptcy and personal injury actions; since the plaintiffs’ firm doesn’t practice before the Workers’ Comp Commission, it referred the case. Justice Theis asked counsel how he read Section 16b of the Act, which appears to say that issues about referral agreements are resolved by the Commission. Counsel argued that Section 16b was actually a gift ban, criminalizing any gift given for referring workers comp cases. Counsel argued that in fact, Section 16b demonstrates that the Commission does not have exclusive jurisdiction over such disputes – when the legislature drafted the section, it was cognizant of referral fee arrangements, and nevertheless it didn’t mention the issue in the statute. Counsel argued that the defendant was asking for the statute to be amended to include language that isn’t there – the Act refers to claims brought under the Act, but this case wasn’t such a claim. Counsel concluded by arguing that the Court should defer to the trial court’s finding that this was a pure referral agreement.

Counsel for the defendant began his rebuttal by addressing the plaintiff’s claim that the complaint doesn’t refer to the Act. He pointed out that the complaint attaches two co-representation agreements which expressly mention recovery under the Act. As for the constitutional argument, counsel argued that since it was clear at the time the parties entered into their agreement that the Commission has exclusive jurisdiction over fee disputes, so that result could hardly be a surprise now. Counsel argued that defendant doesn’t concede that the agreement was a pure referral fee. Each party had duties delineated in the agreement – this was part and parcel of a traditional joint representation. Nevertheless, the dispute belonged at the Commission whether or not it was a pure referral. Counsel argued that the notion that the Commission’s authority was limited to persons appearing before the Commission was a red herring – for example, the Commission had authority to set a physician’s fees, and they don’t appear. Counsel concluded by noting the argument made by plaintiff’s counsel for deference to the factual findings. Any factual findings were made without subject matter jurisdiction, counsel argued, so they were all void and deserving of no deference by the Supreme Court.

We expect Ferris, Thompson to be decided in four to six months.

Image courtesy of Flickr by Till Krech (no changes).