The Ohio Bureau of Workers’ Compensation (BWC) must be notified of potential outside legal settlements that would compensate a worker for injuries, and the bureau retains the right to recoup money from a settlement reached without notice, the Ohio Supreme Court ruled today.

In a unanimous opinion, the Supreme Court vacated a decision by the Ninth District Court of Appeals. The district court found that a Summit County woman whose workers’ compensation claim had initially been denied did not have to notify the BWC that she settled with two insurance companies for the injuries she suffered.

Loretta Verlinger denied she was a “claimant” under the law at the time of the settlement, even though she was appealing the bureau’s initial claim rejection. The BWC’s appellate body, the Ohio Industrial Commission, reversed the rejection and the bureau began paying her benefits.

Writing for the Court, Chief Justice Maureen O’Connor stated that for the purposes of R.C. 4123.931(G), a “claimant” is any party who is eligible to receive compensation, medical benefits, or death benefits from BWC. Further, a claimant becomes eligible at the time of the injury or death that occurred during the course of employment and, if the claimant files a claim, remains eligible “unless and until” a final determination that there is not entitlement to benefits. The BWC may enforce its subrogation rights against any claimant who receives a third-party settlement for the workplace injury or death. That right allows the bureau to seek reimbursement from the claimant, the Court concluded.

Motorcycle Crash Inures Worker
A car struck the motorcycle Verlinger was riding, causing her serious injury, in August 2011. She applied for workers’ compensation, which was disallowed by the BWC in early September. The bureau stated she had not established that the accident happened during the course of her employment.

She appealed to the Industrial Commission. While Verlinger’s appeal was pending, she settled her claims with Metropolitan Property and Casualty Insurance, the insurer of the driver who caused the crash, and Foremost Property and Casualty Insurance, her insurer.

Verlinger and the insurance companies finalized the settlement in mid-December 2011. A week later, the Industrial Commission ruled in her favor and BWC began paying benefits on her claim. The BWC later became aware of the settlement and filed a complaint in Summit County Common Pleas Court in July 2013 against Verlinger and the insurers.

The bureau argued that under R.C. 4123.931, it had the right to be notified of all third parties against whom the claimant may have a right of recovery and that no settlement could be final unless BWC has an opportunity to assert its subrogation rights. It asked the trial court to order Verlinger and the insurance companies to pay BWC for the amount of benefits it already paid, or estimated it would pay in the future, for Verlinger’s claim.

Verlinger and the insurers requested that the trial court grant them summary judgment, arguing that at the time of the settlement, Verlinger was not a claimant who was required to provide notice to the state because BWC had denied her claim. The trial court sided with Verlinger and the insurers, and the BWC appealed to the Ninth District. In a 2-1 decision, the appellate court affirmed the trial court’s decision, and the BWC appealed to the Supreme Court, which agreed to hear the case.

Definition of ‘Claimant’ Examined
The Supreme Court’s opinion noted that R.C. 4213.931(G) requires a claimant to notify a “statutory subrogee” and the attorney general of all the parties from whom the claimant may have the right to a recovery. The statute states that a settlement or other type of recovery cannot be final until the subrogee, in this case the BWC, and the attorney general have a chance to assert their subrogation rights. If a settlement is reached without giving the state and the attorney general notice, the parties to the settlement are required to pay back the state for the money it expended or will expend on the claim.

The opinion defined a “claimant” who is eligible to receive BWC benefits by citing Webster’s Third New International Dictionary. The Court ruled “eligible” means “qualified to be chosen.” Verlinger argued that because her claim was denied she was not eligible for benefits at the time she reached the settlement, so she was not a claimant.

“However, it is clear that Verlinger was qualified to be chosen for benefits at the time she settled with the insurers, because just eight days later, the Industrial Commission allowed her claim and ordered BWC to start paying her benefits,” the opinion stated. “Nothing about Verlinger’s qualifications changed during those eight days. Indeed, Verlinger’s qualifications did not change at any time between the time of her injury and the commission’s decision.”

The opinion noted that by appealing her denial, Verlinger “at all times acted as though she was eligible for benefits.” The Court concluded that a worker injured, or the family of a worker killed, during the course of employment is eligible for benefits until a final determination is made that the person is not eligible and all appeals of that decision are exhausted. Also, a worker is no longer eligible if no one appeals the denial of benefits or the time to file a claim lapses without a claim being filed, the opinion stated.

Lack of Benefit Payments Not an Eligibility Factor
Verlinger also argued that even if she was a claimant, she was not required to notify the BWC of the settlement because the bureau had not made any payments on her claim at the time of the settlement. The Court stated that nothing in the law requires the BWC to identify the worker as being entitled to benefits or to pay any benefits in order to trigger the notification requirement.

Foremost, which was Verlinger’s insurer at the time of the accident, had argued it was unfair to hold insurers and other third-parties “jointly and severally liable” for paying back the state if the parties did not know of the subrogation interest. Foremost noted that another statute, R.C. 5160.37(F), which governs the Department of Medicaid, limits the obligation of settling parties, if the party is not told about Medicaid’s subrogation rights.

The Court wrote Foremost’s contention is “a policy argument best made to the General Assembly.” The opinion stated that the BWC subrogation statute does not have the same limitation as the Medicaid law, and that “it is our job to apply the law as written, not as we might choose to write it.”

The Court remanded the case to Summit County Common Pleas Court for further proceedings.

2017-0102. Bur. Of Workers’ Comp. v. Verlinger, Slip Opinion No. 2018-Ohio-1481.

View oral argument video of this case.

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