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Docket No. 98464-Agenda 11-May 2005.

ANGEL ALVARADO, Appellee, v. THE INDUSTRIAL
COMMISSION et al., Appellants.

Opinion filed October 6, 2005.

CHIEF JUSTICE THOMAS delivered the opinion of the court:

At issue in this case is whether the Illinois Industrial Commission (the Commission) may award attorney fees to a claimant's former attorneys several months after the Commission approves a settlement between the claimant and his employer. The trial court confirmed the Commission's decision to award attorney fees to the former attorneys. The appellate court reversed. For the reasons that follow, we reverse the decision of the appellate court.

BACKGROUND

Angel Alvarado, the claimant, was injured on August 19, 1996, while working for his employer, Central Die Casting. On December 16, 1996, the law firm of Goldstein, Fishman, Bender & Romanoff (Goldstein) filed an application for adjustment of claim on Alvarado's behalf pursuant to the Workers' Compensation Act (the Act) (820 ILCS 305/1 et seq. (West 2002)). The matter was assigned to arbitrator Reichart and was designated case number 96 WC 066576. In March 1997, Alvarado also entered into an attorney-client agreement with the law firm of Ribbeck Maravi, P.C. (Ribbeck), although this attorney-client agreement was not filed with the Commission until August 11, 1997. Goldstein did not learn that Alvarado had retained Ribbeck until August 8, 1997. Alvarado filed a substitution of attorneys with the Industrial Commission on August 15, 1997, naming Ribbeck as his attorneys and stating that he no longer wanted Goldstein to represent him.

On October 31, 1997, Goldstein filed a petition for attorney fees with the Commission, seeking fees in the amount of $1,350. On January 5, 1998, arbitrator Reichart continued Goldstein's fee petition and entered an order directing Alvarado and his employer, Central Die Casting, to immediately notify Goldstein of the settlement or other resolution of the case, and ordering Central Die Casting not to issue any drafts in payment of a settlement or other resolution until Goldstein's petition for fees had been finally and fully resolved.

On August 11, 1999, Alvarado, through Ribbeck, filed a second application for adjustment of claim with the Commission. The injury alleged in the second claim was the same injury alleged in the original claim filed by Goldstein. The second claim was designated case number 99 WC 42929 and was assigned to arbitrator Kane. Despite the existence of the 1996 claim, the 1999 application for adjustment of claim stated that no prior application had been filed concerning the injury at issue.

Alvarado then filed a motion to consolidate the 1996 action and the 1999 action. Notice of this motion was not served on Goldstein. The motion to consolidate was allowed on August 31, 1999, and the consolidated cases were assigned to arbitrator Reichart. On December 8, 2000, Ribbeck moved to voluntarily dismiss the 1996 claim. Goldstein did not receive notice of the motion to dismiss. Arbitrator Reichart granted the motion to dismiss the 1996 claim on January 17, 2001.

The parties then reached a settlement of the 1999 claim. The settlement contract provided for attorney fees in the amount of $19,413.33. Arbitrator Reichart approved the settlement on March 14, 2001. Goldstein was not given notice of the settlement.

Upon learning of the settlement, Goldstein filed a motion for fees pursuant to sections 16 and 16a of the Act (820 ILCS 305/16, 16a (West 2002)). Goldstein's motion was filed on August 9, 2001, five months after the settlement was approved and seven months after the 1996 claim was dismissed. At the hearing on Goldstein's motion for fees, Alvarado objected to the Commission's jurisdiction to consider the motion, arguing that Goldstein should have challenged the dismissal of the 1996 action when the dismissal order was entered. The Commission rejected Alvarado's challenge, finding that it had jurisdiction to hear and decide the petition for fees under section 16a of the Act. The Commission noted that Goldstein had filed its petition for fees immediately after it was discharged by Alvarado and while the 1996 claim was still pending. Goldstein took the steps necessary to protect its claim by bringing it before arbitrator Reichart on December 2, 1997. The Commission also found that the 1999 claim was identical in all respects to the 1996 claim, and that the dismissal of the 1996 claim was a mere technicality that could not be used to defeat jurisdiction. The Commission further held that Alvarado was estopped by his own conduct from claiming that Goldstein's fee petition was barred. Accordingly, on January 8, 2002, the Commission ordered Ribbeck to pay Goldstein fees in the amount of $1,350 pursuant to section 16a of the Act. In addition, the Commission found that the matter should be referred to the Attorney Registration and Disciplinary Commission for investigation into whether Ribbeck's conduct in the matter was a violation of the Illinois Rules of Professional Conduct. See 134 Ill. 2d R. 1.1 et seq.

Alvarado sought judicial review of the Commission's decision.⁽¹⁾ The circuit court confirmed the Commission's fee apportionment. Alvarado then appealed the circuit court's judgment, again arguing that the Commission lacked jurisdiction to reopen its final decision to award Goldstein its attorney fees. The appellate court, Industrial Commission division, with two justices dissenting, reversed the circuit court's judgment and vacated the Commission's award of attorney fees to Goldstein. 347 Ill. App. 3d 352. In vacating the Commission's award of attorney fees to Goldstein, the appellate court held that the case before it was indistinguishable from the appellate court's decision in Hoshor v. Industrial Comm'n, 283 Ill. App. 3d 295 (1996). In Hoshor, the court held that because the Commission's approval of a settlement, including an attorney fee provision, has the same legal effect as an award, the approved settlement is final unless a petition for review is filed within 20 days. Hoshor, 283 Ill. App. 3d at 298. Once an award becomes final, the Commission lacks jurisdiction to reopen the award and apportion attorney fees in a manner inconsistent with the original decision. Hoshor, 283 Ill. App. 3d at 298.

Applying Hoshor, the appellate court in this case held that, because no petition for review had been filed following the Commission's approval of the settlement, there was no basis for the Commission to reopen the settlement to award Goldstein its attorney fees. 347 Ill. App. 3d at 357. The appellate court further held that fraud is not a sufficient basis for extending the subject matter jurisdiction of an administrative agency. 347 Ill. App. 3d at 357. Rather, the appropriate method for seeking relief under the circumstances was for Goldstein to file an equitable action to set aside the Commission's judgment based upon fraud. 347 Ill. App. 3d at 357.

The dissenting justices argued that the Commission was properly authorized to enter the order for compensation. 347 Ill. App. 3d at 358. The dissenting justices stated that support for the Commission's jurisdiction could be found in section 7080.10 of the Administrative Code (50 Ill. Adm. Code