Ohio Workers’ Compensation Lien Considerations in Personal Injury Settlements

When settling a personal injury lawsuit involving a plaintiff who was injured in the course of scope of plaintiff’s employment, the attorneys representing both the plaintiff injured worker and the third-party tortfeasor should be cognizant of potential lien rights of an Ohio employer who may have paid workers’ compensation benefits to such plaintiff injured worker. If such benefits were paid and the employer’s lien is not satisfied upon settlement, then the injured worker and third-party tortfeasor could be held jointly and severally liable to the employer for its lien in the amount of the benefits paid. Below is a hypothetical of a lawsuit involving such a scenario and citations to the applicable Ohio law describing Company A’s lien rights.
 
Annette, an employee of Company A, was injured in the course and scope of her employment when her car was rear-ended by a car driven by a third-party tortfeasor. Annette filed a workers’ compensation claim. The claim was not contested and over the course of the claim, Company A pays $20,000 to Annette’s medical providers and another $10,000 to Annette for temporary total disability benefits (to compensate her while she was off work recovering from the car accident) and for a permanent partial disability award. Thereafter, Annette sued the third-party tortfeasor.
 
Company A discovered the lawsuit and sent a subrogation notice to Annette and the third-party tortfeasor. The notice informed Annette and the third-party tortfeasor of the Company’s right of recovery in favor of Company A (i.e., the “statutory subrogee”), who is subrogated to the rights of a claimant against a third-party tortfeasor for workers’ compensation benefits paid to plaintiff injured worker for her injuries related to the accident.
 
Annette and the third-party tortfeasor subsequently settle their lawsuit for $25,000 without notifying Company A of the settlement and without setting aside any money from the settlement for Company A.
 
The failure of the attorneys for the plaintiff injured worker and the third-party tortfeasor to consider and satisfy Company A’s lien rights creates the risk that the injured worker and third-party tortfeasor will be jointly and several liable under Ohio law for Company A’s entire lien amount. Because Company A asserted its lien rights and sent notice of such lien rights to Annette and the third-party tortfeasor, Company A has an automatic right to recoup payments it made in the underlying workers’ compensation claim from Annette’s and the other driver’s $25,000 settlement as set forth in the statute: The statute of limitations for Company A to file a cause of action to pursue its lien rights is six years from the date Company A has actual knowledge that a settlement between a claimant and third-party tortfeasor has occurred. See Ohio Bur. Workers’ Comp. v. McKinley, 130 Ohio St.3d 156, 2011-Ohio-4432 (citing R.C. 2305.07).
 
In the above example, Annette and the third-party tortfeasor would likely be jointly and severally liable to pay Company A the full amount of the subrogation lien interest if a cause of action is brought within the six-year statute of limitations period.
 
It is recommended that employers provide their subrogation notice for claims involving a potential personal injury claim.
 
Contact Marisa Bartlette Willis, Amy Flowers or another member of Ice Miller’s Workers’ Compensation or Litigation teams if you desire more information related to an employer’s lien rights and other workers’ compensation questions.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.