Ohio

Automobile Total Loss Thresholds

Total Loss Formula (TLF).

Insurer determines if it is economically impractical to repair vehicle. Ohio Rev. Code Ann. § 4505.11(C)(1).

Deductible Reimbursement

Automobile: Pro-Rata. Ohio Admin. Code § 3901-1-54(H)(10) provides: “An insurer shall include first-party claimant’s deductible, if any, in subrogation demands. The insurer shall share any subrogation recovery received on proportionate basis with the first-party claimant, unless the first-party claimant’s deductible has been paid in advance or recovered. The insurer shall not deduct expenses from this amount except that an outside attorney or collection agency is retained to collect such recovery. The insurer may then be paid only pro-rata share of his expenses for collecting this amount.”

Must include deductible in subrogation demand.

Property: None.

Diminution of Value

First Party: Ohio case law has held in particular cases that the insured was not allowed to recover diminution in value of a damaged auto under the particular policy, and that that there was no cause of action for diminished value of an auto. Nationwide Mut. Ins. Co. v. Shah, 2004 Ohio 1291 (Ohio App. Dist. 5, 2004); Kent v. Cincinnati Ins. Co., No. CA2001-04-100 (Ohio App. Dist. 12, 2001).

Third Party: When a plaintiff proves that the value of his auto after repair is less than the pre-injury value of the auto, the plaintiff or subrogated carrier may also recover the residual diminution in value in addition to the cost of repair, provided that the plaintiff may not recover damages in excess of the difference between the market value of the auto immediately before and after the injury. State Farm Mutual Auto. Ins. Co. v. Cheeks, 2014 WL 470874 (Ohio App. 2014); Rakich v. Anthem Blue Cross and Blue Shield, 875 N.E.2d 993 (Ohio App. 2007).

First Come, First Served: Subrogating Multiple Claims in Excess of Policy Limits

A liability insurer who reserved the right to settle any claim or suit and to make such investigation or negotiation as may be deemed expedient is not liable to the insured for negligence in failing or refusing to settle or compromise a claim brought against insured for an amount within the policy limit but is liable only if it fails to act in good faith with respect to settlement of such claim. Hart v. Republic Mut. Ins. Co., 87 N.E.2d 347 (Ohio 1949).

Funeral Procession Traffic Laws

This law defines a funeral procession as two or more vehicles accompanying a dead person in the daytime and operating with headlights lit and displaying a purple and white pennant. Pedestrians and other vehicles, except emergency vehicles or vehicles directed by a police officer, must yield right-of-way to the procession. The other vehicles in the procession can follow the lead vehicle that lawfully entered the intersection regardless of the traffic signal, provided they exercise due care. Ohio Rev. Code Ann. § 4511.451.

Imputing Contributory Negligence of Driver to Vehicle Owner

Imputed Contributory Negligence Law: Doctrine of imputed contributory negligence not followed in Ohio, unless there is a joint enterprise. Parton v. Weilnau, 158 N.E.2d 719 (Ohio 1959).

Ohio Stat. § 4507.07 also imputes contributory negligence of minor driver to owner who signs driver’s license application. Hartough v. Brint, 140 N.E.2d 34 (Ohio App. 1955).

Vicarious Liability/Family Purpose Doctrine:  No Vicarious Liability Statute.

No Family Purpose Doctrine. Wilson v. Herd, 1 Ohio App.2d 195, 30 Ohio Op.2d 238, 204 N.E.2d 389 (3^rd Dist. Union County 1965).

Sponsor Liability for Minor’s Driving:  Ohio Stat. § 4507.07: Any negligence or willful or wanton misconduct of a minor under 18 years of age, when driving a motor vehicle on a highway, is imputed to the person who has signed the application of the minor absent proof of financial responsibility.

Laws Regarding Using Cell Phones/Headphones/Texting While Driving

Cell Phone/Texting:  No person shall drive a motor vehicle while using a hand-held electronic wireless communications device while using text-based capabilities. Ohio Rev. Code Ann. § 4511.204.

Drivers under 18 may not use any type or electronic wireless communications devices while driving, unless using the electronic device in an emergency situation or when the vehicle is parked. Ohio Rev. Code Ann. § 4511.205.

Other Prohibitions:  No person shall operate a motor vehicle while wearing earphones over or earplugs in both ears. Exceptions include built-in hearing devices in protective headgear, hearing aids, law enforcement and emergency personnel, highway maintenance and refuse collection. Ohio Rev. Code Ann. § 4511.84.

Comments:  State does not preempt substantially equivalent municipal ordinances. Ohio Rev. Code Ann. § 4511.204.

Loss Of Use

Loss of Use: Yes. When a vehicle is damaged only to the extent that it is reparable within a reasonable time, the owner may also recover for the loss of use of vehicle for the reasonable time necessary to make the repairs. Hayes Freight Lines v. Tarver, 73 N.E.2d 192 (Ohio 1947). Loss of use may not be recovered if a vehicle is totaled and the owner has recovered the full value of the vehicle. Id. The injured party elects the proper measure of damages. The preferred method of figuring damages is replacement rental cost. If there is no vehicle available for hire, the value of use to the owner becomes the appropriate measure of damages. Indorf v. B. J. Mcadams, Inc., 1982 WL 5567 (Ohio Ct. App. 1982).

Lost Profits: Yes. You can recover profits lost as a result of a defendant’s tortious conduct if such damages may naturally be expected to follow from the wrongful act and if the damages are reasonably ascertainable. Michigan Millers Mut. Ins. Co. v. Christian, 794 N.E.2d 68 (Ohio 2003). Further, lost profits resulting from an auto accident caused by another’s negligence are certainly cognizable damages. Id.

Comments: Lost profits may be established with reasonable certainty either directly or through an expert witness. Michigan Millers Mutual Ins. Co. v. Christian, supra.

Med Pay/PIP Subrogation

Med Pay: Carrier entitled to subrogation and/or reimbursement, depending on policy language. Craven v. Nationwide Mut. Ins. Co., 1998 WL 158980 (Ohio App. 1998); State Auto. Mut. Ins. Co. v. Manges, 1993 WL 319627 (Ohio App. 1993) (unreported case).

PIP: Coverage can be offered by insurers.

Made Whole: Can be overridden by policy terms. Northern Buckeye Educ. Counsel Group Health Benefits Plan v. Lawson, 814 N.E.2d 1210, 1215 (Ohio 2004). As of 9/29/15, Ohio’s lien reduction statute provides that if the insured recovers less than the full value of the tort action as a result of comparative fault, diminishment due to a party’s liability, or by reason of the collectability of the full value of the claim for injury, death, or loss to person resulting from limited liability insurance, or any other cause, the subrogation claim can be reduced in the same proportion as the injured party’s interest is diminished. If a dispute arises regarding the allocation of a third-party settlement recovery in which there is a subrogation interest, either party can file a declaratory judgment action to resolve the issue. Ohio Rev. Code Ann. § 2323.44.

Stature of Limitations: The two (2) year personal injury statute of limitations runs from the date of the insured’s accident. Ohio Rev. Code Ann. § 2305.10(A) (2000).

Owner Liability For Stolen Vehicles

Key In The Ignition Statutes: Ohio Rev. Code Ann. § 4511.661.

Common Law Rule: Vehicle owner is not liable to persons injured by the negligent operation of the vehicle by a thief since the chain of causation is broken by the thief’s negligence in operating the vehicle. Pendrey v. Barnes, 479 N.E.2d 283 (Ohio 1985); Fox v. Kia Am., Inc., 2024 WL 1328730 (N.D. Ohio 2024)..

Payment of Sales Tax After Vehicle Total Loss

First-Party Claims:  Insurer may (1) offer a replacement of like kind and quality including all applicable taxes, license fees, or other fees if the insured provides documentation of the purchase of a replacement auto within 30 days, or (2) offer a cash settlement based on the ACV of a comparable vehicle including all applicable taxes, license fees, or other fees. Insurers must only reimburse sales tax for claim amount, not the replacement vehicle cost. Ohio Admin. Code 3901-1-54.

Third-Party Claims:  Ohio Admin. Code 3901-1-54 (C)(3) defines “Claimant” as a first-party claimant or a third-party claimant. Third-party insurers must follow the same rules as first-party insurers.

Pedestrian and Crosswalk Laws

Statute:

Ohio Rev. Code Ann. § 4511.46: When traffic signal is not in place, vehicles must yield to pedestrian in crosswalk on vehicle’s half of road or close to it. Pedestrians must not step off curb and into path of vehicle when vehicle does not have time to stop.

Ohio Rev. Code Ann. § 4511.48: Pedestrians must yield to vehicles when crossing outside crosswalk. Pedestrians must use crosswalk at intersections with traffic control devices. Pedestrians must not cross diagonally. Vehicles must still use due care to avoid pedestrians on roadway.

Summary: Pedestrian entering five-lane highway without a crosswalk violated statute and was negligent per se. Additionally, driver had no duty to look for pedestrian where there was no reason to expect pedestrians to be on the road. Wallace v. Hipp, No. L-11-1052, 2012-Ohio-623, 2012 WL 525530 (Ohio App. 6 Dist., Lucas, 02-17-2012). Fact that driver hit pedestrian does not establish that driver failed to maintain proper lookout. Zieger v. Burchwell, No. CA2009-11-077, 2010-Ohio-2174, 2010 WL 1960570 (Ohio App. 12 Dist., Clermont, 05-17-2010).

Rental Car Company Physical Damage and Loss of Use Claims

Recovery From Renter: Recovery of physical damage and loss of use are not prohibited or otherwise regulated. Terms of rental agreement control. Collision Damage Waivers not regulated.

Recovery From Third-Party: Nothing specifically speaking to car rental company’s right to recover loss of use. Generally, when a vehicle has been negligently damaged in part and is capable of being repaired within a reasonable period of time, the owner may recover two elements of damage: the loss in value (measured by the difference in value of the vehicle immediately before and immediately after the damage); and the loss of the use of the vehicle for such reasonable period of time as is necessary to make the repairs (measured by the reasonable rental value of a vehicle of like kind). Hayes Freight Lines, Inc. v. Tarver, 73 N.E.2d 192 (Ohio 1947); Perry v. Harris, 197 N.E.2d 416 (Ohio 1964). It is reversible error to use the gross earnings of the damaged vehicle or the reasonable value to the owner himself. Cincinnati Traction Co. v. Feldkamp, 1924 WL 2169 (Ohio App. 1924); Pettijohn v. Clark, 277 N.E.2d 455 (Ohio App. 1971); Kreiner & Peters Co., L.P.A. v. Pirman, 2000 WL 1010951 (Ohio App. 2000).

Rental Car Company’s Liability Insurance Primary or Excess

Summary: A car rental company is allowed to enter into a contract with a renter whereby the renter agrees to be solely responsible for maintaining proof of financial responsibility or use of the motor vehicle during the rental period. Ohio Stat. § 4509.101. An excess clause in the car rental agreement versus an excess clause in the driver’s policy means a pro rata sharing of liability coverage. Progressive Max Ins. Co. v. Empire Fire & Marine Ins., 2001 WL 881306 (Ohio 2001).

Slower Traffic Keep Right

Statute: Ohio Rev. Code Ann. § 4511.25 and Ohio Rev. Code Ann. § 4511.27.

Summary: Drivers must drive in the right lane, except when passing another vehicle; when an obstruction exists in the right lane; when driving on a roadway with three or more marked traffic lanes; when driving on a roadway designated for one-way traffic; or when otherwise direct by a police officer or traffic control device. Vehicles proceeding slower than the speed limit must drive in the right. Except when overtaking and passing on the right is permitted, the operator of an overtaken vehicle shall give way to the right in favor of the overtaking vehicle on audible signal.

Sudden Medical Emergencies While Driving

Blackout Defense or Lehman Rule. Where the driver of an automobile is suddenly stricken by a period of unconsciousness which he has no reason to anticipate and which renders it impossible for him to control the car he is driving, he is not chargeable with negligence as to such lack of control. Roman v. Estate of Gobbo, 791 N.E.2d 422 (Ohio 2003).

Lehman Rule: If one was guilty of what would be negligence as to a conscious person and claims not to have been negligent because of an unforeseen unconsciousness, he should have the burden of proving his condition by the preponderance of the evidence. Lehman v. Haynam, 133 N.E.2d 97 (Ohio 1956).

Suspension of Drivers’ Licenses

Administrative Suspension: Within 30 days, the uninsured driver must forward a report along with proof of insurance. The Registrar will suspend the license of anyone who does not comply. Ohio Rev. Code Ann. § 4509.101(3). For first offenses, this suspension lasts only 90 days, after which the uninsured driver must file an SR-22 for three years and pay a fee. The second offense suspension lasts one year, and the third offense lasts three years. Ohio Rev. Code Ann. § 4509.101(5).

Judgment: The Registrar will impose a suspension of the judgment debtor’s license. Ohio Rev. Code Ann. § 4509.02(B)(6). License will remain suspended until judgment debtor provides proof of financial responsibility covering the accident in question. Ohio Rev. Code Ann § 4509.35.

Contact Information: State of Ohio, Bureau of Motor Vehicles, Driver License Suspensions, P.O. Box 16520, Columbus, OH 43216-6520, (614) 752-7700, 7600, 7500, https://www.bmv.ohio.gov/#gsc.tab=0.

Use of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles

Authority: Ohio Rev. Code Ann. § 1345.81.

Summary: Non-OEM parts must be permanently marked with the logo or name of the manufacturer of the part. The name or logo should remain visible after installation if at all practicable. If the insured receives a written estimate, the estimate should list each non-OEM part used and include a disclosure statement that must be signed by the insured as proof that the insured is aware of the disclosure’s contents. If the insured receives an oral estimate or no estimate at all, the required notice must be read to the insured and a copy of the notice should be attached to the final invoice.

Municipal/County/Local Governmental Immunity and Tort Liability

Legal Authority: 

Political Subdivision Tort Liability Act:  Ohio Rev. Code §§ 2744.01 to 3744.10.  Political subdivision is immune from both governmental and proprietary acts, unless exception in statute. Ohio Rev. Code § 2744.03.

Notice Deadlines:  None.  Suit must be filed within two (2) years of accrual. Ohio Rev. Code § 2744.04.

Claims/Actions Allowed: Five Exceptions to Immunity:

• Operating motor vehicle;
• Proprietary acts;
• Repair of roads;
• Defect of grounds/bldg.;
• Liability under § 2743.02; and
• Failure of county to erect and maintain guardrails under § 5591.37. Decision re: upgrading sewer is governmental function. No immunity for failure to repair sewer system, but immunity if complaint requires design or reconstruction of sewer.

Ohio Rev. Code § 2744.03. Matter v. City of Athens, 21 N.E.3d 595 (Ohio 2014); Coleman v. Portage, 975 N.E.2d 952 (Ohio 2012).

Comments/Exceptions: 

Governmental Function: For common good of all citizens. Police, fire, regulation and maintenance of roads, judicial, legislative functions.

Proprietary Function: Action traditionally engaged in by private sector (maintenance/operation of hospital, public utility, sewer system, parking lot).

No liability under five exceptions if defense exists under § 2744.02(B):

• Discretionary act (planning);
• Not in course and scope;
• Malicious/bad faith act.

Ohio Rev. Code § 2744.03.

Damage Caps: No subrogation claims. Damages reduced by other collateral source recoveries received by the claimant.  Ohio Rev. Code § 2744.05(B). No limit on economic damages (medical, lost wages, etc.). Non-economic damages capped at $250,000.

Non-catastrophic medical malpractice claims: $350,000 Per Person. $500,000 Per Occurrence.

Catastrophic medical malpractice claims:  $500,000 Per Person.  $1 Million Per Occurrence.  Ohio Rev. Code § 2744.05.

State Sovereign Immunity And Tort Liability

Tort Claims Act:  Court of Claims.Ohio Rev. Code Ann. §§ 2743.01 – .03 (1985).

Court of Claims – Practice and Procedure. Ohio Rev. Code Ann. §§ 2743.11 to 2743.20.

Notice Deadlines:  Plaintiff must attempt to have claim compromised or satisfied by the State’s liability insurance. If State does not compromise within a reasonable time and at least 60 days prior to the expiration of the statute of limitations, or if the amount of the claim exceeds the State’s liability insurance coverage, plaintiff may commence an action. Ohio Rev. Code Ann. § 2743.16(B). Two year statute of limitations on actions against State. Ohio Rev. Code Ann. § 2743.16(A).

Claims/Actions Allowed:  State waives immunity and consents to be sued and have its liability determined in the Court of Claims by the same rules as a suit between private parties. Ohio Rev. Code Ann. § 2743.02(A)(1).  Claims allowed against State for negligence operation of motor vehicle driven by State employee, even if driving own personal vehicle. Ohio Rev. Code Ann. § 2743.16(B).   State employee cannot be sued personally unless not in scope of employment.

Comments/Exceptions:  No jury trial in Court of Claims. Ohio Rev. Code Ann. § 2743.11; Loc.R. 6 of the Court of Claims.  Settlements must be approved by Attorney General and the Court of Claims. Ohio Rev. Code Ann. § 2743.16.  State immune from liability for claims arising out of the performance or nonperformance of a public duty. Ohio Rev. Code Ann. § 2743.02(3)(a). Subrogation claims not permitted. Ohio Rev. Code Ann. § 2744.05(B).

Damage Caps:  Damages reduced by other collateral source recoveries received by the claimant. Ohio Rev. Code Ann. § 2743.02(D).  No punitive damages.  State may, but is not required to, insure its employees for operation of motor vehicles. Any such insurance must be provided by the Department of Administrative Services (DAS) through the Office of Risk Management (ORM). Ohio Rev. Code Ann. § 9.83.

Anti-Indemnity Statutes

Prohibits Intermediate Indemnity. Applies to Construction Contracts or Agreements. Ohio Rev. Stat. § 2305.31.

Does not affect any person purchasing insurance from an insurance company for his/her own protection. The anti-indemnity statute potentially limits statutory indemnity to contractually required additional insured coverage as well as to indemnity.

Contribution Actions

Modified Joint and Several Liability. Joint and several liability for economic damages where defendant is more than 50% at fault. Ohio Rev. Code Ann. § 2307.22; Gurry v. C.P., 972 N.E. 154 (Ohio 2012). If found liable for intentional torts, joint and several liability applies for plaintiff’s economic damages – non-economic losses are several liability.

Contribution allowed in underlying or separate action where tortfeasor pays more than his share of common liability. Contribution plaintiff only entitled to contribution if liability of contribution defendant was extinguished by a reasonable settlement. Ohio Rev. Code Ann. § 2307.25; Nationwide Ins. Co. v. Shenefield, 620 N.E.2d 866 (1992). A general release of “all other parties” is insufficient. It must name the non-settling party. When there is a settlement, the right to contribution is established under § 2307.25(C), which states: “A liability insurer that by payment has discharged in full or in part the liability of a tortfeasor and has discharged in full by the payment its obligation as insurer is subrogated to the tortfeasor’s right of contribution to the extent of the amount it has paid in excess of the tortfeasor’s proportionate share of the common liability.”

One year statute of limitation after judgment or timely settlement. Ohio Rev. Code Ann. § 2307.26. Westfield Insurance v. Chapel Electric Co., 2024 WL 3466076 (Ohio App. 2024).

Section 2307.26 says: “If there is no judgment for the injury or loss to person or property or the wrongful death against the tortfeasor seeking contribution, that tortfeasor’s right of contribution is barred unless …

…

(B) That tortfeasor has agreed while an action is pending against that tortfeasor to discharge the common liability and has paid within one year after the agreement the common liability and commenced that tortfeasor’s action for contribution.”

Consequently, the following actions must take place:

(1) the tortfeasor must agree to discharge common liability;

(2) the tortfeasor must pay within one year after the agreement; and

 (3) the tortfeasor must commence a contribution action within one year after the agreement.

Even though the equity for contribution arises at the time of the creation of the relationship between the parties, the right to sue thereon accrues when a party has paid more than his share of the joint obligation.”  Westfield Insurance v. Chapel Electric Co., 2024 WL 3466076 (Ohio App. 2024).

Contributory Negligence/Comparative Fault

Modified Comparative Fault: 51% Bar. Damaged party cannot recover if it is 51% or more at fault. If 50% or less at fault, it can recover, although its recovery is reduced by its degree of fault. If plaintiff’s liability exceeds that of the defendant, he may be barred from recovery. Ohio Rev. Code Ann. § 2315.33.

Dog Bite Laws

Dog owner will be held liable for any damages caused by dog. Trespass is a defense. Individuals are protected if they feared a dog bite and killed/maimed the dog. Ohio Rev. Code. Ann. § 955.28.

Economic Loss Doctrine

Majority Rule. In Ohio, the ELD generally prevents recovery in tort damages for purely economic loss. It bars the use of negligence or strict liability theories of recovery of economic losses arising out of commercial transactions where the loss is not a consequence of an event causing personal injury or damage to another’s property. The ELD applies primarily in the absence of contractual privity when a plaintiff seeks to recover in tort for purely economic damages. In the absence of privity of contract between two parties, Ohio says there is no duty to exercise reasonable care to avoid economic loss or damage to others that do not arise from tangible physical harm to persons and tangible things. Therefore, unless there is some agreement between the parties, no duty exists with respect to purely economic harm, and no cause of action exists in tort to recover economic damages. As a result of the ELD, most building project owners are barred from recovering purely economic damages against a subcontractor based on a breach of contractually created duties.

A commercial buyer seeking recovery from a seller for economic losses resulting from damage to a defective product itself could maintain a contract action for breach of warranty under U.C.C., but absent injury to persons or damage to other property, could not recover for economic losses premised on tort theories of strict liability or negligence. Chemtrol Adhesives, Inc. v. American Manufacturers’ Mut. Ins. Co., 537 N.E.2d 634 (Ohio 1989). A non-commercial plaintiff may recover for purely economic damages under the common law theory of implied warranty in tort. Iacono v. Anderson Concrete Corp., 326 N.E.2d 267 (Ohio 1975).

The ELD in Ohio has also been extended to include insurance agents, holding that negligence claims by insureds against their insurance agents for failing to procure coverage are specifically barred by the doctrine. Mafcote, Inc. v. Genatt Associates, 007 U.S. Dist. Lexis 10117 (S.D. Ohio 2007).

However, there are some exceptions to the ELD.

Pre-Existing Independent Tort Duty. A party can pursue a tort claim if it is based exclusively on a discrete pre-existing duty in tort and not on any terms of a contract or rights accompanying privity. In such circumstances, the ELD would not apply, and a party who suffered purely economic damages is allowed to proceed in tort where the defendant breaches a duty that does not arise solely from contract.

Negligent Misrepresentation. A party remains liable for negligent misrepresentation if, in the course of business, it negligently supplies false information, knowing that the recipient intends to rely on it in business. This is because it is based on a separate duty owed in tort and, therefore, the ELD would not apply.

Privity. Economic damages can be recovered in a tort action where privity or a sufficient nexus to substitute for privity is established. Privity establishes a relationship necessary to allow for the bringing of a tort action for purely economic damages. In addition, a lack of privity is not an absolute bar to a claim against a professional when there is a sufficient nexus that can serve as a substitute for privity. As an example, this applies when a plaintiff is a member of a limited class whose reliance is specifically foreseen, such as surveyors and civil engineers.

Parental Responsibility

Various Conduct. Joint and several liability imposed on parents for a child’s acts of vandalism, desecration, or ethnic intimidation. R.C. § 2307.70.

The limit of liability is $15,000.00 plus costs, reasonable expenses and reasonable attorney’s fees. Child must be under 18-years-old.

Property Damage. Liability imposed on parents when a child willfully causes damage to property. R.C. § 3109.09.

The limit of liability is $10,000.00 plus costs. Child must be under 18-years-old.

Personal Injury. Liability imposed on parents when a child willfully and maliciously assaults a person with a force likely to produce great bodily harm. R.C. § 3109.10.

The limit of liability is $10,000.00 plus costs. Child must be under 18-years-old.

Auto Liability. Joint and several liability imposed on parents who signed a child’s application for license or permit and the child commits negligent or willful acts in operation of motor vehicle and such acts cause injury to another person or damage to property. R.C. § 4507.07.

There are no limits to liability. Child must be under 18-years-old.

Spoliation

Tort of Spoliation: The Supreme Court of Ohio held that a cause of action exists in tort for intentional spoliation against parties to the primary action as well as third parties. Smith v. Howard Johnson Co., Inc., 67 Ohio St.3d 28, 29, 615 N.E2d 1037 (Ohio 1993). The elements required are: (1) pending or probable litigation involving the plaintiff; (2) knowledge on the part of the defendant that litigation exists or is probable; (3) willful destruction of evidence by defendant designed to disrupt plaintiff’s case; (4) disruption of plaintiff’s case; and (5) damages proximately caused by defendant’s acts.

Punitive Damages: The Ohio Supreme Court has determined that spoliation of evidence may be the basis of an award of punitive damages in an underlying medical malpractice action. Moskovitz v. Mt. Sinai Med. Ctr., 635 N.E.2d 331 (Ohio App. 1994).

Sanctions/Adverse Inference: Courts also recognize discovery sanctions for an adverse party’s failure to provide evidence if the same was willful and prejudice is established. Barker v. Wal-Mart Stores, Inc., 2001 WL 1661961, 7 (Ohio Ct. App. Dec. 31, 2001). Ohio uses Jury Instruction § 305.1. Tate v. Adena Regional Med. Ctr., 801 N.E.2d 930 (Ohio App. 2003).

Statute of Limitations

Personal Property2 YearsOhio Rev. Code Ann. § 2305.10(A)

Personal Injury/Death2 YearsOhio Rev. Code Ann. § 2305.10(A)

Personal Injury/Medical Malpractice1 YearOhio Rev. Code Ann. § 2305.113(A)

Breach of Contract/Written6 YearsOhio Rev. Code Ann. § 2305.06

Breach of Contract/Oral4 YearsOhio Rev. Code Ann. § 2305.07

Breach of Contract/Sale of Goods6 YearsOhio Rev. Code Ann. § 2305.07(C)

Statute of Repose/Products10 YearsOhio Rev. Code Ann. § 2305.10*

Statute of Repose/Real Property10 YearsOhio Rev. Code Ann. § 2305.131**

Breach of Warranty/U.C.C.4 YearsOhio Rev. Code Ann. § 2305.10

Workers’ Comp Third Party Case2 YearsOhio Rev. Code Ann. § 4123.931

Strict Product Liability2 YearsO.R.C.A. § 2305.10(A)

Statute of Limitations Exceptions

*10 years from delivery date to first purchaser unless warranty longer. O.R.C.A. § 2305.10.

**10 years from substantial completion of improvement to real property. If defect discovered less than two (2) years before expiration of 10 year period may bring action within two (2) years from discovery. O.R.C.A. § 2305.131.

Health and Disability Insurance

Statute of Limitations: 2 Years. Ohio Rev. Code Ann. § 2305.10(A). Medical Malpractice – 1 Year. Ohio Rev. Code Ann. § 2305.113(A).

Subrogation of Medical and Disability Benefits are allowed. Blue Cross & Blue Shield Mut. of Ohio v. Hrenko, 647 N.E.2d 1358 (Ohio 1995); Leasher v. Leggett & Platt, Inc., 96 Ohio App.3d 367, 373, 645 N.E.2d 91, 95 (Ohio Ct. App. 1994).

Made Whole Doctrine does not apply. Ohio Rev. Code Ann. § 2323.44 mandates pro-rata reduction if the recovery is less than the full value of the tort action based on comparative fault or limits of liability coverage. Common Fund Doctrine does apply. Common Fund Doctrine applies. Hoeppner v. Jess Howard Elect. Co., 780 N.E.2d 290 (Ohio App. 2002).

Admissibility of Expert Testimony

Admissibility Standards:  Daubert

Case/Statutory Law:  State v. Martens, 629 N.E.2d 462 (3d Dist. Mercer County 1993).

Pre-Suit Disclosure of Liability Policy Limits in Third-Party Claims

Duty To Disclose: No.

Failure To Disclose A Basis For Bad Faith: It is an insurance unfair claims practice to not offer “first party or third party claimants, or their authorized representatives who have made claims which are fair and reasonable and in which liability has become reasonably clear, amounts which are fair and reasonable as shown by the insurer’s investigation of the claim, providing the amounts so offered are within policy limits and in accordance with the policy provisions.” Section 3901-1-07 Unfair Trade Practices, OH ADC § 3901-1-07.

Recording Conversations

One-Party Consent: It is not unlawful for an individual who is a party to or has consent from a party of an in-person or electronic communication to record and or disclose the content of said communication unless the person is doing so for the purpose of committing a tortious or criminal act. Ohio Rev. Code Ann. § 2933.52(B)(4); Ohio Rev. Code Ann. § 2933.51.

Product Liability Law

Statute of Limitations/Repose: 2 years for personal injury and wrongful death. O.R.C.A. § 2305.10(A). Discovery Rule Applies. Statute of Repose is 10 years. O.R.C.A. § 2305.10(C)(1).

Liability Standards: Strict Liability

Fault Allocations: Modified Comparative. O.R.C.A. § 2315.33.

Non-Economic Caps/Limits On Actual Damages: Yes (With Exceptions).

Punitive Y/N and Limits: Yes.

Heeding Presumption?: Yes. Rebuttable. Seley v. G.D. Searle Co., 423 N.E.2d 831, 838 (Ohio 1981).

Innocent Seller Statute: Yes.

Joint and Several Liability: Yes. O.R.C.A. § 2307.22.

Available Defenses: Assumption of Risk; Unforeseeable Misuse; Alteration; Learned Intermediary; Inherently Unsafe Products; Sophisticated User.

Restatement 2nd or 3rd?: Both.

“Matching Regulations” And Laws Affecting Homeowners Property Claims

Statute/Regulation: When interior or exterior loss requires replacement of item and replaced item does not match the quality, color, or size of the item suffering the loss, insurer must “replace as much of the item as to result in a reasonably comparable appearance.” O.A.C. Ann. § 3901-1-54(I).

Caselaw: Ohio Admin. Code 3901-1-54 did not require the insurer to replace entire wind-damaged roof with wood shake roof tiles because insured failed to present evidence that the proposed roof repair would not result in a reasonably comparable appearance. The insureds presented an affidavit from their expert (a roofer) that the roof required total replacement because the new wood shake tiles would not match the existing tiles. The said, “although unweathered shakes would not exactly match the color of the weathered shakes, * * * unweathered replacement shakes * * * [would] result in a reasonably comparable appearance” and “satisfy the requirements of the Administrative Code.” The court found summary judgment was appropriate because the insureds presented no evidence, beyond their opinion, of special circumstances that would require total replacement. Wright v. State Farm Fire & Cas. Co., 555 F. Appx. 575 (6th Cir. 2014).

Comments: Insured must put forth evidence, beyond his mere opinion, that the proposed replacement materials wouldn’t result in a reasonably comparable appearance. Zinser v. Auto-Owners Ins. Co., 2017 WL 2838393 (Ohio App. 2017).

Condominium/Co-Op Waiver of Subrogation Laws

Unless otherwise provided by the by-laws, the board of directors shall insure all unit owners and their tenants against liability for personal injury and property damage relating to the common elements. There is no requirement of waiver of subrogation. Ohio Rev. Code Ann. § 5311.16.

Damage to Property Without Market Value

Service Value:  “The cost of the post and the facilities attached thereto based on reproduction cost less accrued depreciation of the damaged pole and the facilities attached thereto.” Ohio Power Co. v. Zemelka, 251 N.E.2d 2 (Ohio Ct. App. 1969).

Intrinsic Value:  “When market value cannot be feasibly obtained, a more elastic standard is resorted to, sometimes called the standard of value to the owner.” Bishop v. East Ohio gas Co., 546 N.E.2d 184 (Ohio 1944).

Sentimental Value:  “We are therefore in disagreement with the few sister state decisions cited by appellee wherein recovery for sentimental value was permitted.” Craft v. Olney, 1984 WL 4060 (Ohio Ct. App. 1984).

General Contractor Overhead And Profit Payments In First-Party ACV Property Damage Claims

Payment Of Depreciation Of GCOP/Sales Tax: No applicable case law, statutes, administrative rules or other guidance with regard to the calculation and/or depreciation of GCOP.

Landlord/Tenant Subrogation

A tenant’s liability to the landlord’s insurer for negligently causing a fire depends on the intent and reasonable expectations of the parties to the lease as ascertained from the lease as a whole. U.S. Fire Ins. Co. v. Phil-Mar Corp., 166 Ohio St. 85, 139 N.E.2d 330, 332 (Ohio 1956) (denied subrogation because lease provided that tenant would pay possible increase in fire insurance premiums due to tenant’s activities). In Phil–Mar, the court looked at the words expressed in the totality of the lease agreement to ascertain the intent of the parties. The court found that where a lease agreement contained (1) a surrender clause requiring the lessee to return possession of the leased premises to the lessor upon the expiration or termination of the lease, with said premises being “in as good condition and repair as the same shall be at the commencement of said term (loss by fire * * * excepted),” and (2) a provision requiring the lessee to pay the lessor any additional premium charged for the fire insurance on the premises that resulted from the lessee’s occupancy, the lessor had relieved the lessee of liability for fire caused by the lessee’s negligence, and thus the lessor had no right of recovery against the lessee. The court, after “considering the lease as a whole,” found that it was apparent under the circumstances of the case that “the parties intended to relieve the lessee from its common-law liability to the lessor for loss by fire.” In Cincinnati Ins. Co. v. Control Service Technology, Inc., 677 N.E.2d 388 (Ohio App. 2011), the lease provided that the lessor agreed to restore the leased premises under certain conditions in the event of a fire or other casualty. The trial court found that this lease provision constituted “a waiver of any negligence on the part of CST.” The Court of Appeals disagreed, finding that the provision was ambiguous and was not the type of waiver ordinarily relied upon to excuse a party from the results of the party’s own negligence. The Court of Appeals also found that the parties’ lease did not contain a surrender clause similar to the “rather explicit” surrender clauses in Phil–Mar. It must be clear and apparent from the terms of the lease agreement, looked at as a whole, that the parties intended to relieve tenant from her common-law liability to landlord for negligence. If the landlord cannot sue, its insurer cannot sue. Cincinnati Ins. Co. v. Getter, 958 N.E.2d 202 (Ohio App. 2011).

Anti-Subrogation Rule

An insurance company has no subrogation rights against its own insured. Chenowerth Motor Co. v. Cotton, 207 N.E.2d (Ohio 1965). An insurer may not subrogate against a tortfeasor if the tortfeasor is insured under the policy which gave rise to right of subrogation. In Chenoweth, the defendant was in an auto accident while driving a vehicle loaned to him by Chenoweth Motor Co. Chenoweth had a collision insurance policy on the auto with Ohio Farmers Insurance Co. The defendant, as bailee of the insured auto, was included as an additional insured under the Ohio Farmers policy. Ohio Farmers paid a portion of the property damages pursuant to the policy, and then joined Chenoweth in filing suit against the tortfeasor to recover the amounts paid under the policy. However, because the tortfeasor was a co-insured, the court held that Ohio Farmers had no right to subrogation. Aetna Cas. & Sur. Co. v. Urban Imperial Bldg. & Rental Corp., 526 N.E.2d 819 (Ohio Ct. App. 1987). “Subrogation does not permit an insurer to stand in the shoes of one insured to recover losses occasioned by another insured under the same policy.” Indiana Ins. Co. v. Barnes, 846 N.E.2d 73 (Ohio Ct. App. 2005). In Urban Imperial Bldg. & Rental Corp., a residence, which was titled to the Urban Imperial Building & Rental Corporation (“Urban”), the president of the corporation, and his wife, was severely damaged by a fire that Urban employees negligently started. Urban, the president, and his wife were all listed as named insureds on the building’s insurance policy that was issued by the Aetna Casualty & Surety Company (“Aetna”). Aetna paid the president and his wife for the damages they had suffered as a result of the fire and then Aetna attempted to subrogate against Urban for the fire on the basis that Urban’s employees had negligently started the fire. The court barred Aetna from subrogating against Urban by invoking the rule that no right of subrogation exists where the tortfeasor is insured under the policy which gave rise to the right of subrogation.

Criminal Restitution

Ohio statute allows for recovery of restitution by “victim” from liable criminal defendant. Ohio Rev. Code Ann. § 2929.18. Applicable case law has included an insurer as a victim entitled to restitution recovery. State v. Martin, 747 N.E.2d 318, 338 (Ohio Ct. App. 2000).

Made Whole Doctrine

Ohio courts enforce the Made Whole Doctrine. Huron County Bd. of Comm’rs v. Sounders, 775 N.E.2d 892 (Ohio App. 2002). An insurer’s subrogation interest will not be given priority where doing so will result in less than a full recovery to the insured. Porter v. Tabern, 1999 WL 812357 (Ohio App. 1999) (unreported decision). However, the Made Whole Doctrine in Ohio may be disclaimed by the policy or Plan language. N. Buckeye Educ. Council Group Health Benefits Plan v. Lawson, 798 N.E.2d 667 (Ohio App. 2003), motion to certify allowed by, N. Buckeye Educ. Council Group Health Benefits Plan v. Lawson, 800 N.E.2d 749 (Ohio 2003), judgment aff’d by, N. Buckeye Educ. Council Group Health Benefits Plan v. Lawson, 814 N.E.2d 1210 (2004), reconsideration denied by, N. Buckeye Educ. Council Group Health Benefits Plan v. Lawson, 818 N.E.2d 712 (Ohio 2004). Sometimes known as the “Full Compensation Rule,” Ohio has followed the more logical although minority approach among states, and held that cases of contractual interpretation should not be decided on the basis of what is just or equitable, even where a party has made a bad bargain, contracted away all of his rights, or has been left in the position of doing the work while another may benefit from the work. Ervin v. Garner, 267 N.E.2d 769 (Ohio 1971). Ohio bases this position on the Federal Made Whole Doctrine, quoted extensively in the following chapter. The Federal Made Whole Doctrine is based upon “general equitable principles of insurance law that, absent an agreement to the contrary, an insurance company may not enforce a right to subrogation unless the insured has been fully compensated for his or her injuries, that is, has been made whole.” Barnes v. Indep. Auto. Dealers of California, 64 F.3d 1389 (9^th Cir. 1995); Galusha v. Pass, 2003 WL 859083 (Ohio App. 2003) (unreported decision).

In Peterson v. Ohio Farmers Ins. Co., 191 N.E.2d 157 (Ohio 1963), the Ohio Supreme Court considered a subrogation dispute which arose out of fire damage to the insured’s barn. The insurance company, Ohio Farmers, paid the insured $7,814 on a real and personal property claim stipulated to be in excess of $17,629. The insureds, upon receipt of the proceeds, signed a proof-of-loss and executed the insurer’s standard subrogation receipt. Thereafter, both jointly filed a petition against the third party claiming that the insured’s loss was $17,629.56. A joint verdict in favor of both parties against the tortfeasor was subsequently returned in the amount of $11,514 and judgment was entered. Thereafter, a dispute arose between the insured and insurer as to the division of the proceeds of the judgment. The Supreme Court determined that the key to resolving the dispute was to be found in the language of the subrogation provision of the policy and the subrogation receipt signed by the insured. According to the Court the language providing that the insured “hereby subrogates said Insurance Company, to all of the rights, claims and interest which the undersigned may have” conveyed every bit of the insured’s rights of recovery up to $7,814. Therefore, the insurer being the owner of all the rights of the insured “must have priority in payment out of the funds recovered.” Ultimately the Court held that an insurer who has cooperated and assisted against the tortfeasor is entitled to be compensated first out of the proceeds of any recovery where the subrogation provision or receipt conveys all of the rights of recovery to the extent of payment by the insurer.

Three decades later, the Ohio Supreme Court revisited the issue of priority of rights in the context of health insurance in Blue Cross & Blue Shield Mut. of Ohio v. Hrenko, 647 N.E.2d 1358 (Ohio 1995). The Court reiterated its position that the dispositive consideration was the language of the policy or subrogation receipts. While the Court found the language of the policy to be clear, unambiguous and enforceable, it was also influenced by the fact that the insured had received the full benefits of his bargain. Consequently, the Court concluded that pursuant to the terms of the policy, an insurer who has paid benefits to its insured and has been subrogated to the rights of its insured may enforce that right after the insured receives full compensation.

In subsequent opinions involving health insurance subrogation disputes courts of appeals have construed the relevant analysis to turn on an examination of the policy language and a consideration of whether the insured had been made whole. Whether the insured had received complete compensation however, ultimately was accorded greater weight in the analysis and became the dispositive consideration. Huron County Bd. of Comm’rs v. Saunders, 775 N.E.2d 892, 897 (Ohio Ct. App. 2002); Grine v. Payne, No. WD-00-044, 2001 Ohio App. LEXIS 1342, at *8 (Ohio Ct. App. 2001); Central Reserve Life Ins. Co. v. Hartzell, No. 94AP120094, 1995 Ohio App. LEXIS 6027, at *5 (Ohio Ct. App. 1995).

The Court explained the critical nature of the requirement that the insured be made whole before the insurer can assert its subrogation right in Hartzell. Hartzell, 1995 Ohio App. LEXIS 6027, at *7. In Hartzell, the Court of Appeals went further than any court before and declared that any attempt by the insurer to claim priority over a partially compensated insured via a subrogation clause was “unenforceable and contrary to public policy.” Thus, the Court concluded that it is contrary to the public policy of Ohio to allow an insurer to contractually establish priority over an insured’s claim before the latter has been made whole.

In 2006, the Ohio Court of Appeals confirmed the Made Whole Doctrine was a defense to subrogation which could only be asserted by the insured, and only in certain situations. Wilson v. Sanson, 2006 WL 3446213 (Ohio App. 2006). The “Make-Whole” Doctrine provides that “unless the terms of a subrogation agreement clearly and unambiguously provide otherwise, a health insurer’s subrogation interests will not be given priority where doing so will result in less than a full recovery to the insured.” Lawson, supra. In Wilson v. Sanson, a health plan paid $141,000 in benefits to two plan beneficiaries injured in an automobile accident. The third-party tortfeasor carried only $100,000 in liability policy limits, so the plan beneficiaries’ underinsured motorist carrier made substitute payments for the $100,000 limits and preserved its right of subrogation against the third party. However, the UIM carrier was not aware of the health plan’s lien, and later argued that the lien should not be repaid out of the $100,000 third-party limits because the plan beneficiaries were not “made whole.” The Ohio Court of Appeals stated that the Made Whole Doctrine only applies to an “insured” that has not been made whole. It does not apply to an insurance company. Thus, the UIM carrier did not have any standing to assert this claim. The Court also noted that the plan beneficiaries’ claims against the third party was settled and dismissed with prejudice. The third party also signed a release with the UIM carrier. Thus, there was some evidence tending to prove that the Wilsons were fully compensated for their injuries. Id. Interestingly, the Court found that both the UIM carrier and the health plan had equal subrogation rights to the $100,000 third-party proceeds. The UIM carrier had subrogation rights under the Ohio UM statute. R.C. §3937.18(J). The fully insured health plan had subrogation language which read as follows:

“To the extent we provide or pay benefits for covered Medical Services, your legal rights to claim or receive compensation damages or other payment for that same illness or injury is transferred to us.”

The Federal Made Whole Doctrine says that when the language of an ERISA Plan is silent or ambiguous as to subrogation or reimbursement rights, Federal Common Law requires that the insured be made whole before the insurer can recover. Copeland Oaks v. Haupt, 209 F.3d 811 (6^th Cir. 2000). Therefore, Ohio has borrowed from the Federal Made Whole Doctrine to craft the Ohio Made Whole Rule, which is that the health insurer can opt out of this “default” Made Whole Doctrine by using specific and clear language in its Plan that establishes both a priority to recovered funds and a right to full or partial recovery. Hiney Printing Co. v. Brantner, 243 F.3d 956 (6^th Cir. 2001). Language providing a health insurer with a right to the proceeds of “any recovery” from a third party has been held to be sufficient to overcome the Made Whole Doctrine. Risner v. Erie Ins. Co., 633 N.E.2d 588 (Ohio App. 1993). Likewise, if the Plan provides for an apportionment scheme in the event that the third-party tortfeasor has insufficient insurance or means to satisfy a judgment for all of the damages suffered by the insured, then these contract provisions will govern and the recovery will be apportioned. Aetna Life Ins. Co. v. Martinez, 454 N.E.2d 1338 (Ohio App. 1982). In addition, if the insured has interfered with the insurer’s subrogation rights, then the “Make Whole” Doctrine does not apply. Acuff v. Motorists Mut. Ins. Co., 2007 WL 661561 (Ohio App. 2007).

The Ohio Supreme Court has clearly indicated that clear and unambiguous language allows subrogation even where the insured is not fully compensated. Lawson, supra.

Medical Expenses, Insurance Write-Offs, and The Collateral Source Rule

Collateral Source Rule: Common law CSR. Robinson v. Bates, 857 N.E.2d 1195 (Ohio 2006). CSR modified by statute. Ohio Rev. Code Ann. § 2315.20(A) provides that evidence of collateral source allowed unless: (1) federal right of subrogation; (2) contractual right of subrogation; (3) statutory right of subrogation; or (4) life insurance or disability payments.

Recovery Of Medical Expenses Rule: Ohio has not adopted a categorical rule. The difference between the amount billed and amount paid for medical expenses is not a “payment” for purposes of the CSR. Because different insurance arrangements exist, the fairest approach is to make the defendant liable for the reasonable value of plaintiff’s medical treatment. It is not necessarily the amount paid or amount billed. Instead, the reasonable value of medical services is a matter for the jury to determine from all relevant evidence. Both the amounts billed, and the amounts paid, are admissible to prove reasonableness and necessity of charges rendered for medical care. Robinson v. Bates, 857 N.E.2d 1195 (Ohio 2006). Probably applies to Medicare and Medicaid, although no case has decided a Medicare or Medicaid case since Jaques.

Related Law/Comments: The CSR does not prevent a defendant from introducing evidence of write-offs because they are not paid by third parties and such evidence permits permit jury to determine the actual amount of medical expenses incurred as a result of a defendant’s actions. Jaques v. Manton. 928 N.E.2d 434 (Ohio 2010). In medical malpractice action, defendant may introduce evidence of any amount payable as a benefit to the plaintiff as a result of the damages from an injury, death, or loss to person or property that is the subject of the claim, except if the source of collateral benefits has a mandatory self-effectuating federal right of subrogation, a contractual right of subrogation, or a statutory right of subrogation. Ohio R.C. § 2323.41.

Employee Leasing Laws

Neither the Ohio Workers’ Compensation Act nor case law directly addresses the issue. However, employee leasing and temporary employee situations are dealt with in the Bureau of Workers’ Compensation Rules. Ohio Adm. Code § 4123-17-15. Workers provided by an employee leasing company are considered employees of the employee leasing company. An employee leasing company is referred to as a Professional Employer Organization (PEO) in Ohio. There does not appear to be any cases clearly delineating whether the client company is entitled to protection under the Exclusive Remedy Rule.

Hospital Lien Laws

Statute: No statutory provision in Ohio.

Comments: Ohio is one of nine states without statewide lien laws.

OCIP/CCIP Subrogation In Workers’ Compensation Construction Cases

OCIP Law: A subcontractor enrolled in a CCIP or OCIP has immunity from a tort claim for workplace injury by an employee of another enrolled subcontractor on the same project. All subcontractors are entitled to “horizontal” immunity from a lawsuit brought by an injured employee of any another subcontractor working on the project. Until the Stolz decision, subcontractors were only entitled to “vertical immunity” from suit by their own employees. Subcontractors must carry additional CGL coverage to address the possibility of suit by employees of other subcontractors. The “horizontal immunity” should only apply to large, self-insured construction projects. Stolz v. J & B Steel Erectors, Inc., 55 N.E.3d 1082 (Ohio 2016). (Monopolistic State Fund).

Statutory Employer Law: Section 4123.35 is confusing and short on detail. There is not much guidance given with regard to subrogation rights against general contractors by employees of subcontractors.

Comments: An “employee” is defined to include:

“Every person in the service of any independent contractor or subcontractor who has failed to pay into the state insurance fund the amount of premium determined and fixed by the administrator of workers’ compensation for the person’s employment or occupation or who is a self-insuring employer and who has failed to pay compensation and benefits directly to the employer’s injured and to the dependents of the employer’s killed employees as required by section 4123.35 of the Revised Code, shall be considered as the employee of the person who has entered into a contract, whether written or verbal, with such independent contractor unless such employees or their legal representatives or beneficiaries elect, after injury or death, to regard such independent contractor as the employer.” Ohio Stat. § 4123.01(A)(1)(c).

Recovery Of Increased Workers’ Compensation Premiums By Employer

Recovery For Increased Premiums? No.

Statute/Case Law: Cincinnati Bell Tel. Co. v. Straley, 533 N.E.2d 764 (Ohio 1988).

Rule Summary: No duty owed to employer regarding insurance premiums. It would appear that such a duty could only exist based on contract or warranty.

Which Workers’ Compensation “Benefits” Can Be Subrogated?

Section 4123.931 provides as follows:

(D) “Subrogation interest” includes past, present, and estimated future payments of compensation, medical benefits, rehabilitation costs, or death benefits, and any other costs or expenses paid to or on behalf of the claimant by the statutory subrogee pursuant to this chapter or Chapter 4121., 4127., or 4131. of the Revised Code. Ohio Rev. Code Ann. § 4123.93(D).

In Thomas v. Logue, 234 N.E.3d 380 (Ohio 2023), the Ohio Supreme Court weighed in on independent medical reviews (IME). In that case, the BRC ruled that “The cost of an independent medical review, which the [BWC] pays in order to complete the record, is a cost paid ‘on behalf of the claimant’ and thus subject to subrogation. On appeal, the court was asked to determine if administrative costs (including the cost of a medical record review and independent medical report necessitated by the employee’s request for additional benefits) was properly included in the workers’ compensation lien. The carrier argued that report should be included in its subrogation interest because it was a cost or expense paid “on behalf of” the employee as that term is used in R.C. 4123.93(D). The trial court ruled that “the costs and expenses incurred by BWC in connection with an injured worker’s medical review are included within the statutory definition of ‘subrogation interest’ under R.C. 4123.93(D) because it is an expenditure paid by BWC on the part of a claimant.” On appeal, the Court of Appeals reversed, holding that the cost of having a physician review the employee’s medical records was part of its ministerial purpose of administering workers’ compensation system, and the carrier (BWC) was required to bear this cost. The court concluded, “administrative costs include those costs and expenses that are incident to the discharge of its duties and performances of its activities. BWC, along with subject employers, is required to bear the burden of paying for such administrative costs and is prohibited from passing such costs on to claimants.” The Supreme Court affirmed, but a dissent by Justice Kennedy argued that under the plain language of § 4123.93(D), the costs incurred by the compensation carrier for an independent medical review to evaluate a claimant’s entitlement to additional workers’ compensation benefits are paid “on behalf of the claimant.” The dissent noted that the phrase “on behalf of” is not defined by § 4123.93. “When a term is undefined, we give the term its ‘plain and ordinary meaning’.” Great Lakes Bar Control, Inc. v. Testa, 124 N.E.3d 803 (Ohio 2018). The plain and ordinary meaning of “on behalf of” is “in the interest of: as the representative of: for the benefit of.” Webster’s Third New International Dictionary 198 (1993).

The BWC was unwilling to allow the employee’s additional workers’ compensation claim, notwithstanding his attending physician’s opinion that the workplace injury aggravated a preexisting condition. But rather than deny the employee’s additional claim outright, the BWC spent money on an independent medical review. By having his medical file reviewed by an independent physician, the employee received a second chance to persuade the BWC that the workplace injury did in fact aggravate his preexisting condition and support his claim for additional compensation. Because the BWC was unwilling to grant the employee additional benefits without the independent medical review, that review could only benefit him. The dissent conduced that the BWC’s payment for the independent medical review was therefore for the employee’s benefit and in his interest, and for this reason, that cost was paid “on behalf of” the employee.

Also, as of 2003, Ohio requires compliance with ODG Guidelines. See the state of Kentucky and the Preamble above for an argument that the subrogated carrier can recover the “case manager’s” fee for development of a “treatment plan,” utilizing the ODG guidelines. However, such an argument might not prevail following the Thomas v. Logue decision described above.

Workers’ Compensation Subrogation Waiver Endorsements

Subrogation Statute: Ohio Rev. Code Ann. § 4123.931

Waiver Allowed? Nothing in the Ohio Workers’ Compensation Act or applicable case law prohibits the use or efficacy of a waiver of subrogation.

Effect Of Waiver Endorsement on Carrier’s Right To Assert A Lien On Claimant’s Recovery: The effect of a waiver of subrogation on the carrier’s rights, including its right to enforce its statutory lien, has not yet been decided.

Other Applicable Law: None.

Workers’ Compensation

Statute of Limitations:  2 Years.  Ohio Rev. Code Ann. § 4123.931.

Can Carrier Sue Third Party Directly:  Yes.

Right to Intervene:  Yes.

Recovery from UM/UIM Benefits:  Yes.

Subrogation Against Medical Malpractice:  Probably.

Subrogation Against Legal Malpractice:  Probably.

Recovery Allocation/Equitable Limitations:  Statutory allocation formulas for trials and settlements.

Employer Contribution/Negligence:  No.

Attorney’s Fees/Costs:  Yes.

Future Credit:  Yes, but a trust is set up in the amount of futures.

Auto No-Fault:  No.

Workers’ Compensation Claims by Undocumented Employees

Y/N/U:  Y

Statute:  The statute includes aliens, but does not speak on their legal status. Ohio Rev. Code § 4123.01 (A)(1)(b).

Case Law:  Rajeh v. Steel City Corp., 813 N.E.2d 697 (Ohio Ct. App. 2004).

Comments/Explanation/Other:  Rajeh ruled that if illegal aliens were meant to be excluded from the legislation, the legislature would have done so.