Subrogation Applies To Settlement Before Workers’ Compensation Claim Allowed

Subrogation Applies To Settlement Before Workers’ Compensation Claim Allowed

Posted: May, 2018

Bur. of Workers’ Comp. v. Verlinger, ___ Ohio St.3d ___, 2018-Ohio-1481 (4/19/18).

Issue: When does a claimant become eligible and retain eligibility for workers’ compensation benefits for the purposes of R.C. §4123.931(G), the subrogation statute?

Background: Verlinger was injured in an automobile accident. Her claim was initially denied by the BWC, but she appealed to the Industrial Commission. During the pendency of the appeal, she settled her claims with the insurance companies. The settlement was finalized December 15, 2011. Her claim was allowed by the Industrial Commission on December 23, 2011, and she began to receive workers’ compensation benefits.

In July, 2013, the BWC filed a complaint in common pleas for subrogation pursuant to R.C. §4123.931(G) seeking reimbursement for what it had paid, and would continue to pay, on Verlinger’s workers’ compensation claim.

The trial court granted summary judgment for Verlinger finding that at the time of settlement of the claim she was not a claimant because the BWC had rejected her claim. The BWC appealed and the Court of Appeals affirmed the trial court’s judgment.

Decision: Supreme Court vacates and remands.

The Court looks to the definition of claimant in R.C. §4123.93(A). The statute defines “claimant” as “a person who is eligible to receive compensation, medical benefits, or death benefits under this chapter.” Verlinger argued that she was not eligible for benefits at the time of settlement since the BWC had denied her claim.

The Supreme Court looks to the definition of eligible. “Eligible” means “qualified to be chosen.” Webster’s Third New International Dictionary (2002). The Supreme Court states it is clear Verlinger was eligible to be chosen as her claim was allowed eight days after the settlement. While the BWC initially disallowed her claim, that decision was based on a lack of evidence as to eligibility. Because Verlinger timely appealed that decision, it was not a final determination that she was ineligible for workers’ compensation. The Court states:

A claimant maintains eligibility for benefits until a final determination is made that the claimant is not entitled to benefits, either because neither party has timely appealed or because all appeals have been exhausted, or, if no claim is filed, until the statutory period for filing a claim has elapsed.

Verlinger also argued that even if she was a claimant, the subrogation statute would not apply because she had not received any workers’ compensation benefits at the time of the settlement. The Court finds that the BWC meets the definition of a “statutory subrogee” and that “nothing in the statute requires the statutory subrogee to have identified the claimant as being entitled to benefits or to have made any payments to the claimant.” The Court states that the statute does not require payments to have been made in order to have a subrogration right and, according to R.C.§4123.931(H), the “right of subrogation * * * is automatic.”

Since Verlinger was eligible to receive workers’ compensation benefits at the time of the insurance settlement, she was a claimant. Because she failed to provide the BWC and attorney general “a reasonable opportunity to assert their subrogation rights” the insurance companies and Verlinger “shall be jointly and severally liable to pay the statutory subrogee the full amount of the subrogation interest.” R.C. §4123.931(G).

Editor’s Comment: The Court notes the insurance company’s argument

“it is unfair to hold a third party jointly and severally liable without regard to its knowledge of any subrogation rights.”

The Court says this is a policy argument that should be addressed by the General Assembly.