On July 23, 2015, by a vote of 5-2, the Supreme Court of Ohio dismissed as improvidently allowed Ohio Bur. of Workers’ Comp. v. McKinley, Slip Opinion No. 2015-Ohio-2927. Justices Kennedy and French dissented. The issue in the case was whether, pursuant to R.C. 4123.931, a settlement in a personal injury action that does not expressly provide for the payment of a subrogation lien to the Bureau of Workers’ Compensation means that both the claimant and the tortfeasor remain liable to the Bureau for the subrogated amount. The case was argued June 23, 2015. Read the oral argument preview of the case here and the analysis of the argument here.
This case has a long and tortured history. The short version is that Jeffrey McKinley, who worked for Safway Services, was seriously injured in a workplace accident at a Heritage boiler facility. McKinley brought a tort claim against Heritage (which was not his employer). McKinley received nearly $900,000 in worker’s compensation benefits. The Bureau was willing to accept $340,000 in settlement of its lien. McKinley and Heritage settled the tort claim.
The Bureau brought this case because the settlement agreement between Heritage and McKinley did not mention the Bureau’s subrogation lien at all. The Bureau argued it was excluded from the settlement agreement, and thus under R.C. 4123.931, the subrogation statute, it had the right to recover the $340,000 from McKinley and Heritage, jointly and severally. Heritage argued that there is no joint and several liability under the subrogation statute unless the Bureau is not given notice of the settlement talks, or is excluded from the settlement, and that neither had happened here. Jeffrey McKinley was not involved in the appeal.
The trial court found the Bureau had received notice of the settlement talks, and that the settlement did not exclude payments by the Bureau. Thus, the trial court granted summary judgment to Heritage. The Seventh District affirmed, finding that the settlement agreement did not expressly exclude the amount paid by the Bureau, the settlement amount was more than three times the amount owed to the Bureau, and the Bureau could collect its lien through the appropriate statutory mechanisms.
After this case was argued, I wrote that “if I had the power, I would declare this case a draw, with neither side winning,” adding that if I had to, I’d call it for Heritage. The effect of this dismissal is that Heritage wins because the decision of the Seventh District affirming summary judgment for Heritage stands. But the Bureau can still try and collect from McKinley, who, as Chief Justice O’Connor put it, “is alive and well in the trial court.” When she asked if the Bureau lost, it still had its action against McKinley, the answer was yes. Both lawyers were vague or not knowledgeable about McKinley’s present financial situation. He did receive a substantial settlement in the case.
At oral argument, the deputy solicitor acknowledged that most parties who settle their cases do make express provision for payment of the Bureau’s subrogation lien. That is clearly a best practice, which wasn’t practiced here.