Subrogation Statute Ruled Unconstitutional

Subrogation Statute Ruled Unconstitutional

Posted: May, 1999

Sanders v. Greater Regional Authority (2/18/99), Cuyahoga Common Pleas No. 318174.

Issue: Is the workers’ compensation subrogation statute constitutional?

Background: Sanders, a bus operator, was injured November 20, 1995. His industrial claim was allowed as a medical only claim. The employer paid $783.00 in medical bills. The employer put the third party and the third party’s insurance carrier on notice of its subrogation claim.

Shortly thereafter Sanders entered into a settlement with the third party and gave noticed of the settlement to the employer. The money was put in an escrow account.

The employer advised Sanders it would accept $783.00 as subrogation if Sanders would sign a release giving up all future rights to workers’ compensation.

Sanders filed a declaratory judgment suit challenging R.C. 4123.931, the subrogation statute, on constitutional grounds.

Decision: Common Pleas rules the subrogation statute unconstitutional, finding it violates equal protection (U.S. Constitution, XIV Amendment and Ohio Constitution Art. II, Sec. 2.)

The Court says the statute “is not rationally related to the accomplishment of the state’s stated objectives.” The statute treats people injured on the job by a third party differently than those otherwise injured by a third party.

The statute creates a presumption against the worker injured on the job by providing that the “entire amount of any award … is presumed to represent compensation and medical benefits and future estimated values of compensation and medical benefits…”

The Court rejects the employer’s argument that all similarly situated claimants must honor the subrogated interests of the similarly situated employer-subrogee.

The Court also finds R.C. Sec. 4123.931 overbroad, because it allows subrogation for items that workers’ compensation does not cover (such as pain and suffering). The Court points out that the BWC does not require a release waiving future benefits; here, a self-insured made such a requirement.

Information courtesy of the Ohio Workers’ Compensation Bulletin. Subscribe to the Ohio Workers’ Compensation Bulletin to keep informed about the Ohio workers’ compensation system.