Modzelewski v. Yellow Freight Systems, Inc., 102 Ohio St. 3d 192, 2004-Ohio-2365 - Worker’s Compensation/Subrogation

A self-insured employer tried to assert a right of subrogation for worker’s compensation payments it made on behalf of its employee. The employer argued the Supreme Court’s decision in Holeton v. Crouse Cartage Company, 92 Ohio St. 3d 115, 2001-Ohio-109, only found unconstitutional the 1995 version of R.C. 4123.931, and that the supposed effect of Holeton was that the earlier version of the subrogation statute, R.C. 4123.931 (effective in 1993) still gave employers a right of subrogation. The Supreme Court rejected this argument and held all prior versions of Ohio’s worker’s compensation subrogation statute are unconstitutional. This decision does not affect the validity of the new statute which was enacted in 2003.

Heritage Insurance Company v. Ohio Department of Transportation, 104 Ohio St. 3d 513, 2004-Ohio-6766 - Contribution Claims Against State

Heritage Mutual’s insured was sued by the estate of a woman who was killed in a motor vehicle accident at one of their construction sites. The estate received a jury award in their favor against the insured and Heritage Insurance paid the amount of the verdict.

Heritage and their insured then filed suit in the Ohio Court of Claims, against the Ohio Department of Transportation, alleging ODOT was a joint tortfeasor, and alleging an entitlement to contribution. ODOT contended R.C. §2743.02(D) barred a joint tortfeasor from asserting a subrogation claim against a state agency. The Supreme Court disagreed and held the statute did not trigger immunity and bar a contribution claim.

Northern Buckeye Education Council Group Health Benefits Plan v. Lawson, 103 Ohio St. 3d 188, 2004-Ohio-4886 - Subrogation, Made Whole Rule

Plaintiff’s minor daughter was injured in an auto accident. Before her health plan would pay any of the daughter’s medical bills, the mother had to sign a subrogation reimbursement agreement, promising she was reimburse the health plan in whole regardless of whether her tort claim recovery fully compensated her and her daughter for her daughter’s injuries. The employee recovered a total of $250,000.00, but refused to reimburse the plan for the $85,945.37 it previously paid. The health plan then filed suit, seeking enforcement of the subrogation agreement.

The Supreme Court did not expressly reject the Made Whole Rule, but did hold this subrogation agreement was enforceable as the specific language in there was clear and unambiguous, and not contrary to public policy. The affect of this decision is insurers of all sorts now have an opportunity to draft stronger subrogation reimbursement language in their policies. This benefits not only health insurers, but also auto insurers who write medical payment coverage.

Roselawn Chiropractic Center, Inc. v. Allstate Insurance Company, 2005-Ohio-1327 - Claim Assignment

Following an automobile accident a claimant began treating at the Roselawn Chiropractic Center.  She signed an assignment agreement with the chiropractor assigning to the clinic any monies she would recover in her BI claim so as to satisfy the costs of treatment.  The chiropractic center sent a copy of this assignment to Allstate.  The claimant ultimately settled her injury claim with Allstate.  Neither the claimant nor Allstate paid any monies to the chiropractic center.  The chiropractic clinic then sued both the claimant and Allstate seeking to enforce the assignment agreement.  Allstate contended it was not bound by the assignment agreement since it was not a party to it.  The Court of Appeals disagreed based upon the fact the assignment itself was valid and it was undisputed Allstate was on notice of the assignment prior to the settlement.  This decision has very broad implications given the fact claim assignments are a very common practice among chiropractors.  An argument can be made based upon this decision that any time an insurer is involved in the claim the chiropractic center must be named on any settlement check, unless the insurer is given written direction from the chiropractic clinic itself, indicating it does not need to be named.

Cunningham v. Aultcare Corp., 2003 - Ohio - 2410—Subrogation/Reimbursement

Plaintiffs were injured in an automobile accident and incurred over $166,000 in medical and hospital bills. At the time of the accident, plaintiff was employed at the U.S. Department of Justice and was a covered participant under the Federal Employee Health Plan, which was administered by Aultcare. The Plan included a reimbursement provision. Plaintiffs filed a claim for declaratory relief seeking to prevent Aultcare from recovering until they had been fully compensated for their damages. The Fifth District Appellate Court held that whether Ohio or Federal law governed the claim, the Plan’s reimbursement clause was ambiguous and did not override the “make whole” rule since it did not disclose the insurer’s rights to priority of reimbursement if recovery was incomplete. The appellate court, however, did reverse and remand the trial court’s decision since there had been no prior determination that plaintiffs had not been made whole.

Knop Chiropractic, Inc. v. State Farm Ins. Co., 2003-Ohio-5021 - Assignments

Chiropractor could not enforce patient’s assignment of prospective claim proceeds against automobile insurer because assignment was created before patient had brought civil action against insurer. Insurer was not in privity with assignment between patient and chiropractor. Chiropractor had no right to file action against insurer at the time the assignment was made. An assignment must be found against a right in being. Under R.C. §3929.06(B), assignment not actionable against insurer based on assignment created prior to existence of a civil action.