Ohio: Injured Employee Settles 3rd Party Claim for $15,000, Owes Subrogated Employer $61,000

In Ohio, like most jurisdictions, an employer or carrier that provides an injured worker with workers’ compensation benefits enjoys a subrogation interest, to the extent of such payment, in any third party recovery that the injured employee may recover [Larson’s Workers’ Compensation Law, § 117.01, et seq.]. Most states require that the employee provide prior notice to the employer and/or carrier of any proposed settlement with the third party. The Ohio statute, Ohio Rev. Code 4123.931(G), also provides in relevant part that if the injured employee settles with the third party without giving such notice, the employee and the third party are jointly and severally liable to pay the employer or carrier the full amount of the subrogation interest. Applying that statute, an Ohio appellate court recently affirmed an employer/self-insurer’s summary judgment against an injured employee in the amount of $61,527.42, in spite of the fact that the employee’s third party settlement was only for $15,000 [Rivers v. Otis Elevator, 2013-Ohio–3917, 2013 Ohio App. LEXIS 4080 (Sept. 12, 2013)]. Disregarding the employee’s contention that the employer did not have “clean hands,” the court indicated the clean hands doctrine was a defense only to equitable claims. Here the employer’s claim for recover was based on its unequivocal statutory right to subrogation, not an equitable claim.

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