Without A Subrogation Statute, Previous Subrogation Settlements Come Under Attack

In 2001, the Ohio Supreme Court declared unconstitutional and invalid the workers' compensation subrogation statute found under 4123.931 of the Ohio Revised Code. As a result of that decision, questions were raised concerning prior settlements reached with the Bureau of Workers' Compensation under the old statute. In particular, under the old statute personal injury plaintiffs saw part of their monetary settlements paid back to the Bureau of Workers' Compensation to cover both present and future medical costs and disability benefits.

As a result of the Supreme Court's decision in Holeton, many plaintiffs have begun to challenge in the courts prior settlements reached with the Bureau, Recently, the Court of Claims of Ohio rendered a decision involving one of these actions. In the case of Clark v. Ohio Bureau of Workers' Compensation, 119 Ohio Misc. 2d. 17, 2002-Ohio-3522, the Court of Claims ruled that the BWC's contractual right to the subrogation settlement payment, even though it was based upon an unconstitutional statute, vested once the settlement agreement was executed and payment was received. The Court held that it had no authority to vacate the contract entered into between the Bureau, tortfeasor, and plaintiff. Again, this finding was made although the subrogation statute, upon which the settlement was based, was found unconstitutional.

This decision does not come as a surprise since it is a rare occurrence to see the Court of Claims ever award damages against the State of Ohio or its agencies. We are likely to see other challenges in different forums on this issue. It is also probable that we will see the Clark decision appealed to the Ohio Supreme Court.