Tag Archive for 'ohio'

Subrogation Claim Under Ohio’s Worker’s Compensation Act Has Six Year Statute of Limitations

The Ohio Supreme Court has recently ruled that a statutory subrogee’s claim under the Ohio’s Worker’s Compensation Act was not derivative of the claimant’s tort claim and therefore, not barred by the two year statute of limitations. See Ohio Bureau of Workers’ Compensation v. McKinley, et al. (2011) 130 Ohio St. 3d 156.

In this case, the injured employee or “claimant” (as defined by O.R.C. § 4123.93(A)), made a recovery from a “third party” (as defined by O.R.C. § 4123.93(C)) and sought to avoid having to reimburse the Bureau of Workers’ Compensation or the “statutory subrogee” (as defined by O.R.C. § 4123.93(B)) out of his personal injury settlement. The BWC brought a lawsuit against the claimant more than two years after the action accrued. The claimant raised a statute of limitations defense. The Court reasoned that the Ohio Worker’s Compensation Act creates a separate right of recovery for a statutory subrogee thus that the BWC’s claim was not derivative of the claimant’s claim. As such, O.R.C. § 2305.07 which allows a six-year statute of limitations for an action on a “liability created by statute” applied.

While it is still true that the early bird gets the worm and I wouldn’t recommend waiting until the statute is about to run on any claim to take action, it is reassuring for statutory subrogee’s to know that they won’t be barred after two years. The six-year limitation applies whether the statutory subrogee is the BWC or a self-insured entity for the purposes of workers’ compensation.

BY:

TED TRAUT, ESQ.

Excess Insurance Clauses – OHIO

Published by August Ober on March 11, 2011 in Auto | 0 Comments

WHEN CLAUSES CONFLICT

By: Jason A. Mosbaugh, Esq. - Cincinnati Office

Often, one of the largest obstacles to the recovery of a client’s subrogation claim is a lack of liability insurance by the tortfeasors. On the opposite side of the spectrum however if the tortfeasor is covered by multiple policies of insurance other issues can arise. Take for instance the case where an individual covered by his own automobile liability insurance policy is driving a vehicle owned by another also covered by an automobile liability insurance policy. If that driver and that vehicle get in a wreck causing injury to a third party, the question becomes which policy is responsible for paying the damages. Nearly any automobile liability insurance policy will contain what is commonly referred to as an “excess insurance clause.” The excess insurance clause states that the policy invoking the clause shall only be excess as to any other available insurance. In layman’s terms, the policy proclaims we will pay but only after any other insurers pay first.

The ubiquity of these clauses however often result in both policies attempting to subjugate themselves to second place while putting the other on the hook first. This is certainly not a new problem and the issue was once thought to be fully resolved by the Ohio Supreme Court in the decision entitled Buckeye Union Insurance Company v. State Automobile Mutual Insurance Company (1977) 49 Oh. St. 2d 213. The Ohio Supreme Court in that decision essentially held that the competing clauses effectively neutralized each other and the dueling insurers were left to share and share alike as to the apportionment of liability.

Following the Buckeye Union case however, certain insurers attempted to modify the language of their excess insurance clauses to avoid the effect in Buckeye Union. These insurers essentially attempted to strengthen the language of their excess insurance clauses to avoid the application of the Buckeye Union case. Until fairly recently, these issues had not yet been fully flushed out by higher courts however in the last year a number of appellate decisions appeared to have a final resolution of this issue. The Sixth Appellate District in the case of The Cincinnati Insurance Company v. The Motorists Mutual Insurance Company, 2010-Oh.-5176 (Oct. 22, 2010); Motorists Mutual Insurance Company v. Progressive Specialty Insurance, 2010-CV-01629 (Nov. 24, 2010) and Progressive Insurance Company v. Motorists Insurance Company CV-10-717046 (Aug. 20, 2010) have all in essence ruled that the Ohio Supreme Court’s precedent in Buckeye Union remains controlling regardless of alternations to the language of the excess insurance clauses by the various insurers. The rationale here is fairly obvious. The Court found that if the intent of each respective insurer is to subjugate itself to the other, the clauses essentially cancel each other out having no effect. In equity then, the remedy is a pro rata division of damages. The Court’s in these various decisions all pointed to the fact that if the above rationale was not extended insurers would effectively begin an arms race against one another for the next best policy language which would afford them opportunity to relegate themselves to second position. In other words, substance over form should prevail.

It should be noted that to this point the case law has exclusively depended on the interpretation of excess insurance clauses and automobile liability insurance policies. The effect on other policies including general commercial liability insurance policies and excess or umbrella insurance policies were not addressed by the Courts in the cases at hand.

In summary, in an automobile subrogation case where the tortfeasor is potentially insured by two automobile liability insurance policies, the Plaintiff should look to both insurers for contribution to be made whole. If either of the two insurers elects to front the total amount of the Plaintiff’s damages then that insurer has a strong argument that it is subrogated to the extent of its pro-rata share of liability against the non-paying insurer.

Good News (in Ohio for now)…And Bad News (in New York)

Published by Michael Dougherty on November 12, 2009 in Auto and PIP/MedPay | 0 Comments

Ohio

On November 6, 2009 the Ohio State Bar Association’s (OSBA) Council of Delegates voted 61 to 38 to not go forward with the proposed anti-subrogation at this time. Instead, the Council will send the matter back for further study to a new joint committee that has yet to be formed. This matter will be revisited when the Council meets in May 2010. While this is good news for now, there is a very real movement afoot to limit subrogation rights in Ohio. In fact, it is widely believed that the Ohio Association for Justice will introduce its own bill without regard to what the OSBA does with this issue.

New York

Meanwhile, the news out of New York is much more dire. On November 10, 2009 both houses of the New York legislature passed an anti-subrogation bill that was promoted by the Governor. It is expected that the Governor will sign this bill into law.

While the actual wording of the bill may be subject to some interpretation, the term “benefit provider” is broadly defined to include “any insurer…which provides for payment or reimbursement of health care expenses.” This potentially could be construed to reach insurers who pay auto medical payments, personal injury protection (PIP), or other like first party coverage.

The bill further provides that when a Plaintiff settles with one or more Defendant in an action that includes personal injuries that neither party would be subject to a benefit provider’s claim for subrogation or reimbursement. Certainly, the bill leaves open for argument whether it applies to property damages that occur in conjunction with personal injury. However interpreted, the future of subrogation in the State of New York is certainly murky at this point.

A Call To Action

Clearly, there is a trend where subrogation rights are coming under attack in several states. What can insurance carriers and others in the industry do? If your company employs a legislative affairs liaison, please forward this message to them. They will need to start educating those in the legislature regarding subrogation. It is also important for everyone in the industry to tout the benefits that subrogation provides to society. Subrogation makes sure that those responsible for damages or injury are held accountable for their actions. This discourages risky behavior. It also helps lower premiums.

Ohio Court Allocates Liability Between Competing “Other Insurance” Clauses

Published by Michael Dougherty on November 3, 2009 in Auto | 0 Comments

State Auto Mut. Ins. Co. v. Progressive Cas. Ins. Co., 180 Ohio App. 3d 139, involved competing underinsured motorist policies. This case arises out of a motor vehicle accident in April 2004 wherein Tiffany Sharrett was killed while her passengers Angela and Michaelia Smith were injured. The collision was the result of the negligence of the tortfeasor whose policy was insufficient to cover the damages of the accident victims. Sharrett, the driver and owner of the victim’s vehicle, had in place an underinsured policy with State Auto which had limits of $50,000 per person and $100,000 per accident. Meanwhile, the Smiths had underinsured motorists coverage through Progressive with limits of $100,000 per person and $300,000 per accident.

State Auto brought a declaratory judgment action to determine how liability should be apportioned. After applying the torfeasor’s limits, Angela Smith had remaining damages of $84,000 and Michaelia Smith had damages remaining of $27,500. Both policies contained “other insurance” clauses.

The State Auto other insurance clause stated in pertinent part:

“[i]f there is other applicable insurance available under one or more policies or provisions of coverage that is similar to the insurance provided by this endorsement; [a]ny insurance we provide with respect to a vehicle you do not own shall be excess over any collectible insurance providing such coverage on a primary basis.”

Progressive’s other insurance clause stated:

“If there is other applicable uninsured or underinsured motorist coverage, we will pay only our share of the damages. Our share is the proportion that our limit of liability bears to the total of all available coverage limits. However, any insurance we provide shall be excess over any other uninsured or underinsured motorist coverage, except for bodily injury to you or a relative when occupying a covered vehicle.”

The Appellate Court construed both clauses as triggering excess insurance and therefore applied Ohio Supreme Court precedent that competing excess clauses are treated as providing pro rata liability amongst the carriers. See Buckeye Union Ins. Co. v. State Auto Mut. Ins. Co., 49 Ohio St. 2d 215. Although the Buckeye Union case involved liability insurance, the First District has extended its application to underinsured policies as well.

Because both insurers requested that the Court use the per person limits of liability, the Court did not address whether the per person or per accident limits were the appropriate limits to be used for the proration. As a result, State Auto would be responsible for one-third of the Smiths’ damages while Progressive would be responsible for two-thirds.