ARE SUBROGATED EMPLOYERS LIMITED BY THE AMOUNT CLAIMANT RECOUPS IN A PERSONAL INJURY CASE? NO
Self- insured employers have subrogation rights by statute, applicable when an employee is injured by a negligent third party, and the employer incurs claim costs. In most cases, a statutory formula is used to calculate the amount a subrogated employer may recover in an agreed settlement of the injured worker’s personal injury case, and the recoverable amount is a ratio of the entire settlement taking into consideration the injured worker’s attorney fees and expenses, regardless of how much the employer has actually paid or will pay in the future. The statutory formula provides an incentive for the parties to settle and divides the money in an equitable fashion.
Recently, however, LL Patterson encountered a case where this did NOT happen, and we were able to recover for the employer an amount that exceeded the statutory formula calculation. One of the reasons we were able to obtain such an unusual and favorable result is because the injured worker and the third party tortfeasor aligned themselves and attempted to settle the tort case without the consent of the subrogated employer. The Ohio statute that governs workers’ compensation subrogation, R.C. 4123.931, actually addresses this situation and gives subrogated employers the right to recover EVERYTHING paid in the claim PLUS the estimated future claim costs against BOTH the injured worker AND the negligent third party. This “joint and several liability” provision of 4123.931 is a very powerful tool in the employer’s favor. It is also a fact pattern that we do not see play out very often for the reason that, it is not in the best interests of the injured worker or the third party to attempt to settle without the consent of the subrogated employer, as it opens them up to more liability than they would otherwise have under 4123.931.