So, how long does a self-insured employer have to file an action against a third party to recover the workers compensation benefits it paid to an employee injured by the third party? A recent Ohio Supreme Court case says the employer can wait up to 6 years!
The Ohio Revised Code provides that if a settlement between a workers’ compensation claimant and a third party excludes any amount paid by a statutory subrogee, the third party and the claimant are both liable to pay the subrogee the full amount of the subrogation interest. In the case of Ohio Bur. Of Workers’ Comp. v. McKinley (2011), 130 Ohio St.3d 156, the Ohio Supreme Court addressed whether this type of claim for statutory subrogation is subject to a two year statute of limitations (the same time limitation applicable to the injured worker’s personal injury suit against the third party) or to a six year statute of limitations.
In McKinley, it was undisputed that the claimant filed a personal injury claim against the owner of the premises where his injury occurred. The parties settled for an undisclosed amount. The Bureau of Workers’ Compensation (“BWC”) then filed suit against the claimant and the third-party, asserting that they were liable for failing to honor its subrogation interest in the settlement. The BWC asserted that it had paid more than $460,000 in medical bills and compensation in the claimant’s workers’ compensation claim and that future payments were expected to be made. The third-party filed a motion to dismiss, arguing that the BWC’s subrogation claim was subject to the two year statute of limitations applicable to the claimant’s personal injury claim. The trial court granted the motion to dismiss. The BWC appealed and the Seventh District Court of Appeals reversed the trial court’s decision.
In affirming the appellate court and reinstating the BWC’s claim, the Ohio Supreme Court first notes that the type of subrogation invoked by the BWC “creates a right of recovery atypical of typical subrogation statutes.” A workers’ compensation statutory subrogee pursues an independent recovery in its own right under the Ohio Revised Code. As such, the Court concluded that a claim brought by a workers’ compensation statutory subrogee is subject to a six year statute of limitations.
The McKinley holding provides self-insured employers with guidance as to exactly how long they have to assert their right of statutory subrogation. Fortunately, this decision provides employers with a lot more breathing room when asserting this type of claim.