Groch v. General Motors Corp., Slip Opinion No. 2008-Ohio-546
On February 21, 2008, the Supreme Court of Ohio upheld the constitutionality of the Ohio workers’ compensation subrogation statute in the decision of Groch v. General Motors Corporation. The relevant facts of Groch are as follows. On March 3, 2005 Douglas Groch was injured at work when a trim press came down on his right arm and wrist. In addition to filing a workers’ compensation claim, Groch sued GM in intentional tort as well as the manufacturers of the trim press in products liability. The employer, General Motors asserted a subrogation claim for the amount paid to the claimant through his workers’ compensation claim. In turn, Groch challenged the constitutionality of the current Ohio subrogation statutes.
To place the Groch decision in perspective, recall the Supreme Court of Ohio had previously held in the Holeton decision that the former workers’ compensation subrogation statute was unconstitutional. The Holeton court further indicated that, in theory, workers’ compensation subrogation statutes, could be constitutional, and left it to the Ohio General Assembly to draft a constitutional subrogation statute. In response to Holeton, the General Assembly drafted S.B. 227 (later effective as 4123.93 and 4123.931), and sought to create such a constitutional statute.
In Groch the Supreme Court of Ohio held that the “new” subrogation statute was constitutional. The Court explained that while the facts of the Groch case are very similar to the facts of the Holeton case, there were a few significant differences. Unlike the Holeton statute, the current law does not contain an “estimated future values” provision, which, under the former statute, potentially provided a windfall for the subrogee because the former statute allowed amounts never paid to the claimant to be recovered in subrogation. The current statute allows a claimant to establish a trust account from which the claimant will periodically reimburse the bureau for amounts paid in the claim. The duty to reimburse ends, appropriately, when the bureau is fully reimbursed. If the claimant chooses not to establish an account, the claimant is obligated to pay the full amount of estimated future payments. Groch argued the trust account was “unrealistic” and “illusory” due to fees which will deplete the amount of principal. However, the Court rejected this argument, noting that although fees may be paid by interest accrued on the trust account, the new statute does not mandate that there be a highly compensated trustee to manage the trust.
The current statute divides the net amount recovered (the settlement amount) in a way to ensure that the statutory subrogee gets a proportionate share of that amount based upon its subrogation interest and the claimant gets an amount proportionate to his uncompensated damages. The settlement amount is statutorily divided based upon a specific formula. The formula ensures the claimant retains the subrogation interest already received and additionally gets a fair portion of the settlement proceeds while compensating the subrogee for its interests.
The claimant in Groch also asserted an equal protection challenge to the new legislation. The court overruled the assertion because the formula applies both to settlements and to trial awards. The court found the statute met the rational basis test in allowing differing treatment. Moreover, under the new statute, a claimant who settles with a tortfeasor has options in addition to the above formula. A settling claimant may (1) use the formula, (2) agree to divide the net amount recovered “on a more fair and reasonable basis”, (3) the claimant can request a conference with the administrator of the bureau, or (4) use alternative dispute resolution. On the other hand, a claimant who recovers at trial is entitled to judicial findings of fact or jury interrogatories which specify the precise amount of economic and non-economic damages. Such a distinction between claimants who settle or try their claim, the Court held, is not founded upon an unreasonable justification. The Court also noted a claimant may bring a declaratory judgment action to show that not all of the recovery from the tortfeasor was a double recovery.
If you wish a copy of the complete decision, or if you have any questions regarding subrogation or workers’ compensation issues, please feel free to contact one of our Practice Area Leaders.
