§5(b): Third Party Liability—Subrogation

(b) 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 his personal

representative and judgment is obtained and paid, or settlement is made

with such other person, either with or without suit, then from the amount

received by such employee or personal representative there shall be paid

to the employer the amount of compensation paid or to be paid by him to

such employee or personal representative including amounts paid or to be

paid pursuant to paragraph (a) of Section 8 of this Act. If the employee or

personal representative brings an action against another person and the

other person then brings an action for contribution against the employer,

the amount, if any, that shall be paid to the employer by the employee or

personal representative pursuant to this Section shall be reduced by an

amount equal to the amount found by the trier of fact to be the employer’s

pro rata share of the common liability in the action.

Out of any reimbursement received by the employer pursuant to this

Section the employer shall pay his pro rata share of all costs and

reasonably necessary expenses in connection with such third-party claim,

action or suit and where the services of an attorney at law of the

employee or dependents have resulted in or substantially contributed to

the procurement by suit, settlement or otherwise of the proceeds out of

which the employer is reimbursed, then, in the absence of other

agreement, the employer shall pay such attorney 25% of the gross amount

of such reimbursement. If the injured employee or his personal

representative agrees to receive compensation from the employer or

accept from the employer any payment on account of such compensation,

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or to institute proceedings to recover the same, the employer may have or

claim a lien upon any award, judgment or fund out of which such

employee might be compensated from such third party.

In such actions brought by the employee or his personal representative, he

shall forthwith notify his employer by personal service or registered mail,

of such fact and of the name of the court in which the suit is brought,

filing proof thereof in the action. The employer may, at any time

thereafter join in the action upon his motion so that all orders of court

after hearing and judgment shall be made for his protection. 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 the employers, such consent is not

required where the employer has been fully indemnified or protected by

Court order.

In the event the employee or his personal representative fails to institute a

proceeding against such third person at any time prior to 3 months before

such action would be barred, the employer may in his own name or in the

name of the employee, or his personal representative, commence a

proceeding against such other person for the recovery of damages on

account of such injury or death to the employee, and out of any amount

recovered the employer shall pay over to the injured employee or his

personal representatives all sums collected from such other person by

judgment or otherwise in excess of the amount of such compensation paid

or to be paid under this Act, including amounts paid or to be paid

pursuant to paragraph (a) of Section 8 of this Act, and costs, attorney’s

fees and reasonable expenses as may be incurred by such employer in

making such collection or in enforcing such liability.

This amendatory Act of 1995 applies to causes of action accruing on or

after its effective date.

(Source: P.A. 89-7, eff. 3-9-95.)