Revision to Subrogation Statute Carves out Exceptions for Motor Vehicle Accidents in State Fund Claims

January 5, 2016Articles

In early December, the Ohio House of Representatives voted unanimously to pass House Bill 207, which contains a significant change to Ohio’s Workers’ Compensation subrogation statute. If approved by the Senate, the revision will create an exception where a state funded employer will not be impacted by claims that arise from a motor vehicle accident caused by a third party.

Under current law, where an employee is injured in a work-related motor vehicle accident, the claim counts against the employer’s experience even when the accident was the fault of a third party. If the Bureau of Workers’ Compensation (BWC) eventually recovers subrogation dollars in the employee’s personal injury lawsuit, the employer’s risk is credited, sometimes years after the accident. Full reimbursement almost never occurs. These claims can have a significant impact on an employer’s rating and eligibility to participate in group discount programs.

Under the new proposal, if a motor vehicle accident is caused by a third party who is clearly at fault, the claim will be charged to the Surplus Fund, rather than the employer’s experience. Given the often serious nature of motor vehicle accidents, this exception would allow employers to avoid the serious implications for claims completely outside of their control and the often detrimental impact on their ratings.

In order to qualify for this abatement, the employer bears the burden of demonstrating: 1) that they pay into the State Fund; 2) the claim arose from a motor vehicle accident involving a third party; 3) who was issued a citation for violation of any law or ordinance regulating the operation of motor vehicle arising from the accident on which the claim was based; and 4) that either some form of insurance or uninsured/underinsured coverage covers the third party.

After the claim is filed, the employer must file a request with the BWC Administrator proving the four requirements. This exception does not apply if the employer is the State or a state institution of higher education (which includes the State’s hospitals).

If this proposal passes the Senate as expected, it also incentivizes the BWC to pursue its subrogation rights in claims where a third party is at fault. All told, the proposal would create much-needed relief for smaller businesses which are often significantly impacted by a single claim outside of the workplace, over which it had no control.

We can answer many of your questions regarding House Bill 207 and how it could impact your situation. Contact your Dinsmore attorney to learn more.