Subrogee's claim saved by 6-year deadline for liability created by statute

In Ohio, a claim brought by a statutory subrogee to recover its subrogation interest is subject to a six-year statute of limitations.

Case name: Ohio Bureau of Workers' Compensation v. McKinley, et al., No. 2010-0720 (Ohio 09/07/11).

Ruling: The Ohio Supreme Court held that the bureau of workers' compensation's subrogation claim against an injured worker and a third party was brought within the six-year statute of limitations.

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What it means: In Ohio, a claim brought by a statutory subrogee to recover its subrogation interest is subject to a six-year statute of limitations.

Summary: A worker was severely injured while in the course of his employment. The bureau of workers' compensation allowed his claim for benefits. The worker also sued his employer and a third party, the owner of the premises where the accident occurred. The suit against the employer was dismissed, and the worker settled with the third party. Four years later, the bureau sued the worker and third party, asserting that they were liable for failing to honor its subrogation lien in the settlement. The third party sought to dismiss the suit, asserting that the two-year statute of limitations applicable to the worker's claim against the third party also applied to the bureau's claim. The Ohio Supreme Court held that a six-year statute of limitations applied, so the suit could continue.

The court explained that the laws setting forth a subrogee's right of subrogation do not specifically establish a limitations period applicable to a subrogation claim brought by a statutory subrogee. The court said that a workers' compensation statutory subrogee has an "automatic and independent right of recovery" that is atypical of traditional subrogation statutes arising from contract or equitable principles often arising in the insurance context.

The court said that a workers' compensation statutory subrogee's subrogation interest arises from the workers' compensation law, which allows a subrogee that paid benefits to a worker to be reimbursed out of any recovery the worker obtained from a third party responsible for causing the injury. Therefore, a statutory subrogee pursuing recovery of its subrogation interest does more than substitute for the worker. The court concluded that the six-year statute of limitations for a liability created by statute applied.

Read more at the WorkersComp Forum homepage.

October 27, 2011

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