OHIO BUREAU OF WORKERS’ COMPENSATION, APPELLEE, v. McKINLEY ET AL.; HERITAGE-WTI, INC., APPELLANT.
No. 2010-0720
Supreme Court of Ohio
Submitted March 2, 2011—Decided September 7, 2011.
[Cite as Ohio Bur. of Workers’ Comp. v. McKinley, 130 Ohio St.3d 156, 2011-Ohio-4432.]
{¶ 15} Accordingly, respondent, Jana Bassinger DeLoach, is suspended from the practice of law for a period of six months with the entire six months stayed. Respondent shall also serve two years of monitored probation. If respondent violates the conditions of her monitored probation, the six-month actual suspension will be imposed. Costs of these proceedings shall be taxed to respondent.
Judgment accordingly.
O‘CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, O‘DONNELL, LANZINGER, CUPP, and MCGEE BROWN, JJ., concur.
William G. Chris, Bar Counsel; Richard P. Kutuchief Law Offices and Richard P. Kutuchief; and James S. Thomasson, for relator.
Jana Bassinger DeLoach, pro se.
{¶ 1} This case arises because the settlement of a personal-injury suit brought by a recipient of workers’ compensation benefits against a third-party tortfeasor did not make any provision to repay the statutory subrogee, plaintiff-appellee, the Ohio Bureau of Workers’ Compensation. The bureau brought suit against both the recipient of workers’ compensation benefits and the third-party tortfeasor under
{¶ 2}
{¶ 3} The issue presented is whether a claim under
I. Facts and Procedural History
{¶ 4} Because the trial court dismissed the complaint in this case for failure to state a claim upon which relief could be granted, we construe the material allegations in the complaint as true for purposes of this appeal. Jeffrey McKinley was severely injured on July 13, 2003, while in the course of his employment at a work site in East Liverpool, Ohio. The bureau allowed McKinley‘s claim for workers’ compensation benefits.
{¶ 5} McKinley filed an action against his employer and a third party, defendant-appellant, Heritage-WTI, Inc., the owner of the premises where the accident occurred. McKinley‘s suit against his employer was later dismissed. After McKinley provided notice to the bureau and to the Ohio attorney general in 2004 that he was in settlement negotiations with Heritage, he and Heritage settled for an undisclosed amount.1
{¶ 7} Heritage shortly thereafter moved the trial court under Civ.R. 12(B)(6) to dismiss the complaint for failure to state a claim, arguing that the bureau‘s subrogation claim was derivative of McKinley‘s right to recover against Heritage and that the two-year statute of limitations applicable to McKinley‘s personal-injury claim against Heritage also applied to the bureau‘s claim. Heritage additionally asserted that the bureau sought a “typical,” or traditional, subrogation recovery.
{¶ 8} In its response to the motion to dismiss, the bureau argued that
{¶ 9} The trial court granted Heritage‘s motion to dismiss. It reasoned that the bureau‘s claim was derivative of McKinley‘s claim against Heritage and that the same two-year statute of limitations that applied to McKinley‘s claim against Heritage also applied to the bureau‘s claim, thus rendering the bureau‘s claim untimely. The trial court also dismissed as untimely the bureau‘s claim against McKinley.
{¶ 10} Upon the bureau‘s appeal, the Seventh District Court of Appeals reversed the trial court‘s order of dismissal and remanded for further proceedings. Ohio Bur. of Workers’ Comp. v. McKinley, 7th. Dist. No. 09CO3, 2010-Ohio-1006, 2010 WL 893801, ¶ 63. The appellate court rejected Heritage‘s
{¶ 11} We accepted Heritage‘s appeal under our discretionary jurisdiction for review of a single proposition of law presented: “Ohio Revised Code Section 4123.931 is a typical subrogation statute and does not provide the Ohio Bureau of Workers’ Compensation an independent right of recovery and therefore, claims brought under
II. Analysis
{¶ 12} In order for a trial court to dismiss a complaint under Civ.R. 12(B)(6) for failure to state a claim upon which relief can be granted, it must appear beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to the relief sought. O‘Brien v. Univ. Community Tenants Union, Inc. (1975), 42 Ohio St.2d 242, 245, 71 O.O.2d 223, 327 N.E.2d 753; LeRoy v. Allen, Yurasek & Merklin, 114 Ohio St.3d 323, 2007-Ohio-3608, 872 N.E.2d 254, ¶ 14. The allegations of the complaint must be taken as true, and those allegations and any reasonable inferences drawn from them must be construed in the nonmoving party‘s favor. Id. Appellate review of a trial court‘s decision to dismiss a complaint pursuant to Civ.R. 12(B)(6) is de novo. Perrysburg Twp. v. Rossford, 103 Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44, ¶ 5.
{¶ 13} A complaint may be dismissed under Civ.R. 12(B)(6) for failing to comply with the applicable statute of limitations when the complaint on its face conclusively indicates that the action is time-barred. Doe v. Archdiocese of Cincinnati, 109 Ohio St.3d 491, 2006-Ohio-2625, 849 N.E.2d 268, ¶ 11.
{¶ 14} As we observed in Groch v. Gen. Motors Corp., 117 Ohio St.3d 192, 2008-Ohio-546, 883 N.E.2d 377, ¶ 48,
{¶ 15} The key issue of law in this case, as framed by Heritage‘s arguments based on case law interpreting subrogation statutes in contexts different from
{¶ 16} Alternatively, if
{¶ 17} An important point of dispute is
{¶ 18} In defending the trial court‘s determination that
{¶ 19} In Ohio Dept. of Human Servs. v. Kozar (1995), 99 Ohio App.3d 713, 717, 651 N.E.2d 1039, the Eighth Appellate District held that former
{¶ 20} In Montgomery v. John Doe 26 (2000), 141 Ohio App.3d 242, 250, 750 N.E.2d 1149, the Tenth Appellate District held that a former version of
{¶ 21} However, a consideration of
{¶ 22} The third phrase of the text of
{¶ 24} The Second Appellate District, in Corn v. Whitmere, 183 Ohio App.3d 204, 2009-Ohio-2737, 916 N.E.2d 838, ¶ 30, accurately observed that subrogation in the workers’ compensation context cannot be analogized to subrogation arising from contract or equitable principles and concluded that workers’ compensation subrogation is not the same as typical subrogation, which often arises in the insurance context.
{¶ 25} Subrogation generally is “[t]he substitution of one party for another whose debt the party pays, entitling the paying party to rights, remedies, or securities that would otherwise belong to the debtor.” Black‘s Law Dictionary (9th Ed.2009) 1563-1564. Insurance is the context in which subrogation most commonly arises. In that context, subrogation is “[t]he principle under which an insurer that has paid a loss under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy.” Id. at 1564. In the insurance context, “[a] subrogated insurer stands in the shoes of the insured-subrugor and has no greater rights than those of its insured-subrogor. * * * Further, where the insured‘s claim against a tortfeasor is based on negligence, the insurer‘s subrogated claim is also necessarily based on negligence, rather than on the insurance contract. * * * Consequently, where an insured‘s tort claim is subject to a statute of limitations, so too is the insurer‘s subrogation claim.” Nationwide Mut. Ins. Co. v. Zimmerman, 5th Dist. No. 2004 CA 00007, 2004-Ohio-7115, 2004 WL 3038032, ¶ 16; see Corn, 183 Ohio App.3d 204, 2009-Ohio-2737, 916 N.E.2d 838, at ¶ 35 (“in the insurance context, subrogation is derivative in nature, and no new cause of action is created“).
{¶ 26} However, workers’ compensation subrogation under
{¶ 27} The subrogation statutes are designed to permit the statutory subrogee, who paid the workers’ compensation benefits to the claimant in the first instance, to be at least partially reimbursed out of any recovery that the claimant may obtain from the third party responsible for causing the injury. See Corn at ¶ 41. “Far from a modification of a common-law cause of action, [the statutory subrogee‘s] right to reimbursement * * * is nonexistent but for the statute.” Id. Because workers’ compensation subrogation cannot be analogized to typical insurance subrogation, the court in Corn recognized that
{¶ 28} Other aspects of the statutory subrogation recovery considered here support the conclusion that
{¶ 29} Black‘s Law Dictionary (9th Ed.2009) 1564 defines a subrogee as “[o]ne who is substituted for another in having a right, duty, or claim; esp., the person or entity that assumes the right to attempt to collect on another‘s claim against a third party by paying the other‘s claim-related debts or expenses.” But a concurrent right of recovery against a claimant, as the bureau has here under
{¶ 30} In light of the above considerations, a statutory subrogee that pursues recovery of its subrogation interest under
{¶ 31} In Santos v. Ohio Bur. of Workers’ Comp., 101 Ohio St.3d 74, 2004-Ohio-28, 801 N.E.2d 441, ¶ 15, the bureau acknowledged that when this court in Holeton, 92 Ohio St.3d at 135, 748 N.E.2d 1111, held the former subrogation statute unconstitutional, the bureau “could no longer assert subrogation rights.” Consistent with that concession, this court in Santos stated that after the decision in Holeton, “any collection or retention of moneys collected under the statute by the [bureau] was wrongful.” Id. at ¶ 17. This court therefore recognized that in the absence of a constitutional workers’ compensation subrogation statute, a statutory subrogee has no basis to pursue any portion of a claimant‘s personal-injury award from a third party as reimbursement for workers’ compensation benefits paid to the claimant. See also Modzelewski v. Yellow Freight Sys., Inc., 151 Ohio App.3d 666, 2003-Ohio-827, 785 N.E.2d 501, ¶ 27 (self-insured statutory subrogee had no subrogation right under predecessor statute to the statute held unconstitutional in Holeton, in that the predecessor statute was also unconstitutional), judgment of unconstitutionality affirmed by Modzelewski v. Yellow Freight Sys., Inc., 102 Ohio St.3d 192, 2004-Ohio-2365, 808 N.E.2d 381.
{¶ 32} Workers’ compensation subrogation recovery would not exist “but for”
{¶ 33} Heritage lists a number of reasons why the bureau should not be able to recover its subrogation interest in this case, including reasons based on the bureau‘s notice of the settlement and on public policy. The bureau counters with its view of why recovery should be available here and justifies the manner in which it has pursued that recovery.
{¶ 34} As to Heritage‘s arguments based on the bureau‘s notice of the settlement, we observe that
{¶ 35} The bureau asserts that no statute of limitations should be applicable to its attempts to collect on its excluded statutory subrogation interest, under Ohio Dept. of Transp. v. Sullivan (1988), 38 Ohio St.3d 137, 527 N.E.2d 798, in which this court held at the syllabus that “[t]he state, absent express statutory provision to the contrary, is exempt from the operation of a generally worded statute of limitations.” We decline to consider applying Sullivan for two independent reasons.
{¶ 36} First, the bureau did not raise this argument in the trial court. Rather, it specifically urged the trial court to find the six-year statute of limitations of
{¶ 37} Finally, the bureau asserts that the limitations period for recovery of its subrogation interest under
III. Conclusion
{¶ 38} For all the foregoing reasons, we hold that a claim brought by a statutory subrogee pursuant to
{¶ 39} Because the bureau‘s complaint in this case was timely filed, the trial court erred in dismissing the complaint. We affirm the judgment of the court of appeals.
Judgment affirmed.
O‘CONNOR, C.J., and MOORE, O‘DONNELL, LANZINGER, and MCGEE BROWN, JJ., concur.
PFEIFER, J., concurs in judgment.
CARLA D. MOORE, J., of the Ninth Appellate District, sitting for LUNDBERG STRATTON, J.
PFEIFER, J., concurring.
{¶ 40}
{¶ 41}
{¶ 42} Thus, pursuant to
{¶ 43} A statutory subrogee has another method to recover benefits. Pursuant to
{¶ 44} “A statutory subrogee may institute and pursue legal proceedings against a third party either by itself or in conjunction with a claimant. If a
{¶ 45} Again in
{¶ 46} The BWC‘s claim here is brought pursuant to
{¶ 47} A claim brought under
{¶ 48} This appeal concerns only Heritage. Any battles between McKinley and the BWC over the distribution of the settlement amount subject to the BWC‘s rights under
Michael DeWine, Attorney General, Alexandra T. Schimmer, Chief Deputy Solicitor General, Stephen P. Carney, Deputy Solicitor, and Mia M. Yaniko, Assistant Solicitor; and Lee M. Smith & Associates Co., L.P.A., Lee M. Smith, and Benjamin W. Crider, for appellee.
Reminger Co., L.P.A., Gregory D. Brunton, Melvin J. Davis, and Patrick Kasson, for appellant.
Law Office of Russell Gerney and Russell Gerney, urging reversal for amicus curiae, Ohio Association for Justice.