Set-off Changes after the Illinois Supreme Court Decision in Thornton v. Garcini
The recent Illinois Supreme Court decision in Thornton v. Garcini significantly impacts the steps a defendant claiming a set-off must take to obtain the set-off. This decision will change the manner in which defense cases are evaluated and litigated.
Pre-Thornton Set-Off in Illinois
Prior to the court’s decision in Thornton, the Illinois Joint Tortfeasor Contribution Act (“the Act”) provided liable parties with the right of contribution against all joint tortfeasors, even where judgment was not entered against any or all of them. The Act allowed any tortfeasor paying more than its share of liability to seek contribution (akin to reimbursement) against other responsible parties up to the amount paid in excess of its share.
The way it worked was quite simple. Assume a plaintiff’s injury was caused by two defendants. Prior to filing suit, Plaintiff settled his claim against one of the defendants, Defendant A, for $25,000. Plaintiff then filed suit against defendant B, proceeded to trial, and was awarded $100,000 in damages. Defendant B would have been awarded a set-off of $25,000, reducing his cost of satisfying the judgment to $75,000.
The Thornton Decisions
In Thornton, the mother of a stillborn child filed claims based on wrongful death, the Survival Act and negligent infliction of emotional distress against her obstetrician, the hospital and the nursing staff. After a trial, that awarded plaintiff $175,000 in damages against the hospital and nursing staff, while post-trial motions were pending, the hospital and nurses settled claims against them for $175,000. The appellate court ordered a new trial. That trial proceeded against the only remaining defendant, the doctor. At the doctor’s trial, the jury acquitted the doctor on all claims except for the negligent infliction of emotional distress claim, for which it awarded $700,000 in damages. The trial court subsequently denied the doctor’s request for set-off of the $175,000 settlement paid on behalf of the hospital and nurses. The doctor appealed, alleging that the trial court erred in refusing to set-off settlement proceeds from the damage award, resulting in the plaintiff collecting greater than 100% recovery for her injury in violation of the single recovery rule.
The Illinois Appellate Court held that a defendant cannot wait until a post-trial motion to raise a set-off, as this precludes an opportunity for plaintiff to defend against the claim. The Court held that, since the doctor waited until the second trial to file a post-trial motion alleging violation of the single recovery rule, the claim was waived. Further, the Court determined that the party seeking a set-off bears the burden of proving that a prior settlement is applicable to the claim for which the defendant is liable. Thus, because the doctor did not establish which portion of the settlement was applicable to the negligent infliction of emotional distress claim, the set-off request was properly denied by the trial court.
The doctor appealed to the Illinois Supreme Court. It affirmed the Appellate Court, holding that while a plaintiff may indeed only recover once, single recovery claims must be raised (prior to post-trial motions) in pleadings. A defendant must raise set-off claims as cross-claims in his answer, in order to permit the plaintiff an opportunity to defend against the claim. The Court determined that because the doctor raised his single recovery and set-off claims in a post-trial motion, he forfeited these claims all together.
Case Management Implications After Thornton
It is clear, after the decision in Thornton, that set-off claims must appear as a counter or cross-claim in a defendant’s answer, less the claim be waived. There is no doubt that this requirement increases many case management burdens and expenses, including investigation to determine additional tortfeasors, increased attorney fees to file all potential set-off claims prior to the close of discovery, increased discovery burden and the increased burden of determining the portion of any settlement applicable to the defendant’s liability. These considerations necessitate revisions to the defense case management process:
- Protect your ability to set-off by claiming it in a counter or cross-claim;
- Revise internal procedures and forms to include exhaustive investigation of the identification and coverage limits of other potential tortfeasors (this information will also enable you to properly posture the case for apportionment); and
- Attorney briefing and instruction sheets should include a reminder to add set-off claims.
This article was prepared with the assistance of Amy M. Paulsen, paralegal.
Originally published in the Spring 2010 edition of Quinn Quarterly.