Six Year Statute of Limitations Applies to Workers’ Compensation Subrogation
Ohio Bur. of Workers’ Comp. v. McKinley (9/7/11), 130 Ohio St.3d 156, 2011-Ohio-4432.
Issue: What is the statute of limitations for the BWC to file for subrogation?
Background: McKinley was injured and had an allowed workers’ compensation claim. McKinley filed and settled a third-party lawsuit against Heritage.
Under R.C. §4123.93 and R.C. §4123.931, the BWC has a subrogation interest based on workers’ compensation payments when a workers’ compensation claim also leads to a lawsuit against a third party.
The BWC filed suit based on R.C. §4123.931(G) against McKinley and Heritage to recover its subrogation interest. R.C. §4123.931(G) provides that
if a settlement or compromise excludes any amount paid by the statutory subrogee, the third party and the claimant shall be jointly and severally liable to pay the statutory subrogee the full amount of the subrogation interest.
Heritage filed a motion to dismiss the BWC’s claim for subrogation, arguing that a two year statute of limitations applied. Heritage claimed that the BWC’s subrogation interest arose out of McKinley’s personal injury claim against it. Because a two year statute of limitations applied to that personal injury claim, Heritage argued that the BWC had to file its subrogation claim within two years.
The BWC argued that its right to subrogation arose from a statute, and therefore under R.C. §2305.07, the six year statute of limitations which applies to an action for a “liability created by statute” applies.
The trial court granted Heritage’s motion to dismiss, but the Court of Appeals reversed. Heritage appealed.
Decision: Supreme Court affirms.
To determine what statute of limitations applies, the Court must determine what type of subrogation interest the BWC has. If the BWC has a “typical” subrogation interest, derivative of the injured worker’s right to recover, then the two year statute of limitations applies. If the BWC has an independent right to recovery, then the six year statute of limitations for a liability created by statute applies.
The workers’ compensation subrogation statute indicates that the BWC has a subrogation right which is independent of the injured worker. The Supreme Court determines that this is not a typical subrogation. Workers’ compensation subrogation would not exist if not for the statutory provisions and therefore the six year statute of limitations applies.
Editor’s Comment: The concurring opinion by Justice Pfeifer points out that this case only involved a suit for subrogation under R.C. §4123.931(G). Subrogation under R.C. §4123.931(A) or R.C. §4123.931(H) is derivative of the injured worker’s rights and would have a two year statute of limitations. However, a suit under R.C. §4123.931(G) is not derivative of the injured worker’s rights but is a separate right of the subrogee (in this case the BWC). The concurring opinion points out that this is significant:
A claim brought under §4123.931(G) is not a subrogation claim. It is a unique claim created by statute that punishes claimants and third parties for failing to include statutory subrogees in settlement negotiations. As “an action * * * upon a liability created by statute,” an R.C. §4123.931(G) action has a six-year statute of limitations pursuant to R.C. §2305.07.