Argument Report: How Should a Workers' Compensation Settlement Be Handled in Calculating Child Support?

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Last week, the Illinois Supreme Court heard oral argument in Mayfield v. Mayfield, which presents several issues regarding the proper handling of lump sum workers' compensation payments for purposes of calculating a party's child support obligation. Given that most of the Justices seemed skeptical of the appellant's position, it seems likely that the Court will not significantly alter current law on these issues. Our detailed preview of the facts and lower court opinions in Mayfield is here. The video and audio of the argument is available here.

The parties in Mayfield were divorced in 2003, and the husband was ordered to pay child support. In the years that followed, as the children’s living arrangements changed, the child support obligation was adjusted multiple times. Finally in 2011, the wife petitioned to modify child support. At the hearing on the wife’s petition, the husband disclosed that he had received a $300,000 lump-sum workers’ compensation settlement the year before. Following In re Marriage of Dodds, which held that workers’ compensation payments are income for purposes of child support, the Circuit Court ordered the husband to pay 20% of the settlement to his ex-wife, and to continue paying child support. The Appellate Court affirmed, holding that such a settlement payment was certainly "income" within the meaning of the Illinois Marriage and Dissolution of Marriage Act, and that the 20% base multiplier should be applied to the entire amount of the workers compensation award.

Counsel for the husband began by arguing that husband didn't contest that the settlement was income, but rather believed that the lower courts had erred in their application of the 20% base multiplier. Counsel argued that it was important to make it clear to lower courts that they had discretion in this area, which should be applied with attention to the factors relevant to making a fair division. Among these factors, counsel argued, were the nature and extent of the parent's injury, and its impact on the injured worker, as well as the relevant economic positions of the parties. Justice Thomas pointed out that far from living on the settlement, the husband had in fact made various other expenditures, including remodeling his house and buying a motorcycle. Counsel responded that while such issues were perhaps relevant, the husband was facing returning to work because he had been unable to establish disability. Justice Garman asked whether the husband had had his child support obligation lowered because of his injury, and counsel agreed he had. Should that be taken into account in the allocation, the Justice asked? Counsel responded that the entirety of the circumstances were relevant. Justice Freeman asked whether the husband's settlement would have been bigger if paid in monthly installments, and if so, should the 20% base multiplier be applied to that figure, rather than the lump sum. Counsel responded that he had suggested that the 20% multiplier should be applied to that monthly amount at trial. Justice Theis clarified that counsel was now agreeing that the settlement amount was income, and merely challenging the allocation, and then asked whether the allocation had been challenged at the trial court. Counsel responded that he had, and that 20% of the monthly sum would be significantly less. Justice Theis asked counsel what he wanted the Court to do: provide a checklist of factors for the exercise of discretion? Counsel suggested again that the nature and extent of the injury, whether the party was likely to work again and the age of the child were all relevant issues. Justice Theis asked counsel what the error in the Appellate Court decision was. Counsel responded that the lower courts had believed they had no discretion to vary from the 20% base multiplier.

Counsel for the former wife began by arguing that neither the statute nor Dodds made the 20% multiplier mandatory. Rather, the court must merely explain why if it chooses to deviate. Counsel argued that the husband had never argued for a deviation below, and that nothing in the trial court's opinion suggested that the judge believed he had no discretion to deviate from the multiplier. Justice Garman asked whether it factored into the issue that the settlement was for the rest of the husband's life. Counsel responded that in fact, it was for the rest of the husband's working life; it had been set up that way to allow him to seek Social Security disability. Justice Garman asked counsel whether the issue of deviating from the multiplier had been raised in the trial court. Counsel responded that the husband had merely admitted that he received the award, and disclosed how much was left, never mentioning deviation.

On rebuttal, counsel for the husband argued that he had sought deviations from the multiplier at least twice. Justice Theis asked whether the matter had been raised at the Appellate Court, and counsel responded yes. Justice Theis asked where in the trial court's order the court had said he lacked discretion, and counsel responded that the court had felt compelled to follow Dodds. Justice Theis pointed out that neither the trial court order nor the Appellate Court opinion had actually said that. Justice Thomas asked counsel whether he wanted a ruling that there must be an exercise of discretion, reviewing all the factors, even when the Appellate Court apparently believed that the trial court had acted properly. Counsel argued that the Court should remand to the trial court with instructions that the trial court should exercise its discretion to find a proper allocation.

The Court will likely decide Mayfield in the next three to six months.