40 ILCS 5/8-228.5
In those cases where the injury or death for which a disability or death benefit is payable under this Article was caused under circumstances creating a legal liability on the part of some person or entity (hereinafter "third party") to pay damages to the employee, legal proceedings may be taken against such third party to recover damages notwithstanding the Fund's payment of or liability to pay disability or death benefits under this Article. In such case, however, if the action against such third party is brought by the injured employee or his or her personal representative and judgment is obtained and paid, or settlement is made with such third party, either with or without suit, from the amount received by such employee or personal representative, then there shall be paid to the Fund the amount of money representing the death or disability benefits paid or to be paid to the disabled employee pursuant to the provisions of this Article. In all circumstances where the action against a third party is brought by the disabled employee or his or her personal representative, the Fund shall have a claim or lien upon any recovery, by judgment or settlement, out of which the disabled employee or his or her personal representative might be compensated from such third party. The Fund may satisfy or enforce any such claim or lien only from that portion of a recovery that has been, or can be, allocated or attributed to past and future lost salary, which recovery is by judgment or settlement. The Fund's claim or lien shall not be satisfied or enforced from that portion of a recovery that has been, or can be, allocated or attributed to medical care and treatment, pain and suffering, loss of consortium, and attorney's fees and costs.
Where action is brought by the disabled employee or his or her personal representative, he or she shall forthwith notify the Fund, by personal service or registered mail, of such fact and of the name of the court where such suit is brought, filing proof of such notice in such action. The Fund may, at any time thereafter, intervene in such action upon its own motion. Therefore, no release or settlement of claim for damages by reason of injury to the disabled employee, and no satisfaction of judgment in such proceedings, shall be valid without the written consent of the Board of Trustees authorized by this Code to administer the Fund created under this Article, except that such consent shall be provided expeditiously following a settlement or judgment.
In the event the disabled employee or his or her personal representative has not instituted an action against a third party at a time when only 3 months remain before such action would thereafter be barred by law, the Fund may, in its own name or in the name of the personal representative, commence a proceeding against such third party seeking the recovery of all damages on account of injuries caused to the employee. From any amount so recovered, the Fund shall pay to the personal representative of such disabled employee all sums collected from such third party by judgment or otherwise in excess of the amount of disability or death benefits paid or to be paid under this Article to the disabled employee or his or her personal representative, and such costs, attorney's fees, and reasonable expenses as may be incurred by the Fund in making the collection or in enforcing such liability. The Fund's recovery shall be satisfied only from that portion of a recovery that has been, or can be, allocated or attributed to past and future lost salary, which recovery is by judgment or settlement. The Fund's recovery shall not be satisfied from that portion of the recovery that has been, or can be, allocated or attributed to medical care and treatment, pain and suffering, loss of consortium, and attorney's fees and costs.
Additionally, with respect to any right of subrogation asserted by the Fund under this Section, the Fund, in the exercise of discretion, may determine what amount from past or future salary shall be appropriate under the circumstances to collect from the recovery obtained on behalf of the disabled employee.
This Section applies only to persons who first become members or participants under this Article on or after the effective date of this amendatory Act of the 100th General Assembly.
40 ILCS 5/8-228.5