A recent Ohio Supreme Court ruling offers some clarification for workers compensation insurers looking to subrogate in cases where claimants recover damages through third-party litigation, but experts say the decision creates confusion as to which costs may be subject to subrogation.
The court, in its Oct. 3 decision in Thomas v. Logue, ruled that costs borne by the Ohio Bureau of Workers’ Compensation stemming from a physician review of an injured worker’s claim were improperly subject to a subrogation lien because the administrative fees were not related to specific medical treatment for the injured worker.
The worker, Lamar Thomas, was injured in a vehicle accident and later sued the at-fault motorist. He received comp benefits but subsequently sought to expand his claim to include an aggravation of preexisting conditions.
The bureau hired a doctor to review Mr. Thomas’ medical records, and the doctor determined the additional conditions were degenerative and unrelated to the injury.
The bureau attempted through subrogation proceedings to recover the fees it paid to the doctor who conducted the medical review, which the state’s highest court rejected.
A spokeswoman for the Ohio Bureau of Workers’ Compensation declined to address the matter because the state Supreme Court has remanded the case to the Court of Claims and the bureau is “unable to comment on pending litigation,” she said.
Woodmere, Ohio-based attorney David Steiger, of Karp Steiger LPA, who represented Mr. Thomas, said the additional costs that were incurred to fight the claim “made no sense” in the light of subrogation and that seeking to recover costs related to state-initiated physician reviews has long been the practice in Ohio, where the state provides workers comp insurance for all employers.
“I’ve been dealing with this issue for a number of years, and it just doesn’t seem right,” he said of the ruling that sets a precedent for future subrogation proceedings.
The doctor retained by the comp bureau wasn’t Mr. Thomas’ treating physician but was retained by the bureau to provide a medical opinion, Mr. Steiger said. In order for the bureau to recoup a cost, that cost would have to be one that is paid to or on behalf of the claimant, which was not the case, he said.
Mr. Steiger said the bureau should reimburse past claimants who lost money in similar cases.
Comp subrogation attorney Gary Wickert, president of Austin, Texas-based Matthiesen, Wickert & Lehrer S.C. said the Ohio ruling — which caught national attention — leaves open the possibility for some confusion.
When adjusting a comp claim, there are various associated costs that don’t directly benefit the injured worker. These include case management costs, auditing fees, independent medical exam fees, functional evaluation charges, nurse case management fees and third-party vendor fees, so questions remain over what costs may be subject to subrogation in third-party recovery, Mr. Wickert said.
Typically, costs related to medical benefits and lost wages are subject to subrogation when claimants recover through third-party litigation, but the Ohio ruling calls into question what other costs might be subrogated by a comp insurer, Mr. Wickert said.
Subrogation, which prevents double recovery for injured workers and also helps keep down insurance premiums for employers, is a nuanced area of comp law, Mr. Wickert said, adding it stands to reason that confusion would remain over what costs could be subrogated.
While the Thomas ruling appears to set clearer standards for comp subrogation in Ohio, it is unlikely to have an impact elsewhere where insurers have attached similar fees to subrogation claims.
“That is one of the difficulties with subrogation and making general statements,” said Steve Bennett, Washington-based vice president of workers’ compensation programs and counsel for the American Property Casualty Insurance Association. “I would have to emphasize cases are extremely fact-specific and very state-specific.”