Holeton v. Crouse Cartage Co.

• Decision Date: 27 June 2001
• Docket Number: No. 00-428.,00-428.
• Citation: 748 NE 2d 1111,92 Ohio St.3d 115
• Parties: HOLETON ET AL., PETITIONERS, v. CROUSE CARTAGE COMPANY ET AL.; CONRAD, ADMR., RESPONDENT.
• Court: Ohio Supreme Court

92 Ohio St.3d 115

748 NE 2d 1111

HOLETON ET AL., PETITIONERS, v. CROUSE CARTAGE COMPANY ET AL.; CONRAD, ADMR., RESPONDENT.

No. 00-428.

Supreme Court of Ohio.

Submitted October 10, 2000.

Decided June 27, 2001.

Shumaker, Loop & Kendrick, L.L.P., Jack G. Fynes and Stefanie E. Berk, for petitioners.

[92 Ohio St.3d 143]

Betty D. Montgomery, Attorney General, James A. Barnes, G. James Van Heyde and James M. Evans, Assistant Attorneys General, for respondent C. James Conrad, Administrator of Workers' Compensation.

Nurenberg, Plevin, Heller & McCarthy Co., L.P.A., Kathleen J. St. John and David M. Paris, in support of petitioners, for amicus curiae Ohio Academy of Trial Lawyers.

Manley, Burke & Lipton, Andrew S. Lipton and Steven M. Ingram, in support of petitioners, for amicus curiae Armco Employees Independent Federation, Inc.

Stewart Jaffy & Associates Co., L.P.A., Stewart R. Jaffy and Marc J. Jaffy, in support of petitioners, for amicus curiae Ohio AFL-CIO.

Scott, Scriven & Wahoff, L.L.P., Timothy E. Cowans, William J. Wahoff and Richard Goldberg, in support of respondent, for amicus curiae Ohio Council of Retail Merchants.

Brickler & Eckler, L.L.P., and Kurtis A. Tunnell, in support of respondent, for amicus curiae Ohio Manufacturers' Association.

Brickler & Eckler, L.L.P., Thomas R. Sant and Nan M. Still, in support of respondent, for amici curiae Ohio Chapter of the National Federation of Independent Business and Ohio Farm Bureau Federation, Inc.

Vorys, Sater, Seymour & Pease, L.L.P., Robert A. Minor and Robin R. Obetz, in support of respondent, for amici curiae Kokosing Construction Company, Inc., the Ohio Self-Insurers' Association, and the American Insurance Association.

Garvin & Hickey and Preston J. Garvin, in support of respondent, for amicus curiae Ohio Chamber of Commerce.

Vozar, Roberts & Matejczyk Co., L.P.A., Thomas J. Vozar, Glenna M. Roberts and David M. Matejczyk, in support of respondent, for amicus curiae National Association of Subrogation Professionals.

ALICE ROBIE RESNICK, J.

This case comes to us as certified questions of state law from the United States District Court for the Northern District of Ohio, Western Division. The federal district court certified the following facts to us:

"Plaintiff, Rick Holeton, was injured on June 18, 1998. He and his plaintiff spouse, Shari, have two minor children, also plaintiffs herein. At the time of his accident, Rick was part of a construction crew employed by Harper Structures, Inc., building an overpass across the Ohio Turnpike. The telescoping `manlift' bucket in which Rick was standing was struck by an eastbound truck owned and/or operated by defendants, James Parr and Crouse Cartage Company. The force of the impact propelled Rick out of the bucket, slamming him into the underside of the overpass and then dropping him on to the highway below. "Because his injuries occurred in the course and scope of his employment with Harper Structures, Rick Holeton has received, and may indefinitely continue to receive, workers' compensation benefits from defendant, Bureau of Workers' Compensation (BWC), pursuant to Chapter 4123 of the Revised Code. Rick Holeton's wage and medical benefits to date exceed $190,000.

"BWC is a `statutory subrogee' within the meaning of R.C. § 4123.931, referred to herein as Ohio's subrogation statute. As a statutory subrogee with respect to workers' compensation benefits previously or hereafter paid to Rick Holeton, BWC has asserted a subrogation claim against any settlement made or judgment paid to Rick Holeton by or on behalf of the other defendants.¹ Plaintiffs dispute the validity of BWC's subrogation claim and argue that the statute violates relevant sections of Ohio's Constitution. BWC denies that the statute is unconstitutional and seeks to enforce its right of subrogation.

"Plaintiffs filed a motion for summary judgment asking the court to declare the subrogation statute unconstitutional. In the alternative, plaintiffs requested an order certifying the issue to the Ohio Supreme Court. The court has stayed plaintiffs' motion for summary judgment and granted plaintiffs' motion to certify the issue to the Ohio Supreme Court."

On May 3, 2000, this court reviewed the preliminary memoranda pursuant to S.Ct.Prac.R. XVIII and determined that it will answer the following certified questions:

"1. Does R.C. § 4123.931 violate Article II, Section 35 of the Ohio Constitution?

"2. Does R.C. § 4123.931 violate Article I, Section 19 of the Ohio Constitution?

"3. Does R.C. § 4123.931 violate Article I, Section 16 of the Ohio Constitution?

"4. Does R.C. § 4123.931 violate Article II, Section 28 of the Ohio Constitution?

"5. Does R.C. § 4123.931 violate Article I, Section 2 of the Ohio Constitution?

"6. Does R.C. § 4123.931 violate Article II, Section 15 of the Ohio Constitution?

"7. Is R.C. § 4123.931 contrary to Ohio Civil Rule 49(C) and, therefore, invalid and unenforceable? "8. Does R.C. § 4123.931 constitute an invalid waiver of an injured employee's right to receive and retain workers' compensation benefits in violation of R.C. § 4123.80." (2000), 88 Ohio St.3d 1500, 727 N.E.2d 923.

R.C. 4123.931 provides:

"(A) The payment of compensation or benefits pursuant to this chapter or Chapter 4121., 4127., or 4131., of the Revised Code creates a right of subrogation in favor of a statutory subrogee against a third party. A statutory subrogee's subrogation interest includes past payments of compensation and medical benefits and estimated future values of compensation and medical benefits arising out of an injury to or disability or disease of a claimant.

"(B) A claimant shall notify a statutory subrogee of the identity of all third parties against whom the claimant has or may have a right of recovery. No settlement, compromise, judgment, award, or other recovery in any action or claim by a claimant shall be final unless the claimant provides the statutory subrogee with prior notice and a reasonable opportunity to assert its subrogation rights. If a statutory subrogee is not given that notice, the third party and the claimant shall be jointly and severally liable to pay the statutory subrogee the full amount of the subrogation interest.

"(C) The right of subrogation under this chapter is automatic, regardless of whether a statutory subrogee is joined as a party in an action by a claimant against a third party. A statutory subrogee may assert its subrogation rights through correspondence with the claimant and the third party or their legal representatives. A statutory subrogee may institute and pursue legal proceedings against a third party either by itself or in conjunction with a claimant. If a claimant disputes the validity or amount of an asserted subrogation interest, the claimant shall join the statutory subrogee as a necessary party to the action against the third party.

"(D) The entire amount of any settlement or compromise of an action or claim is subject to the subrogation right of a statutory subrogee, regardless of the manner in which the settlement or compromise is characterized. Any settlement or compromise that excludes the amount of compensation or medical benefits shall not preclude a statutory subrogee from enforcing its rights under this section. The entire amount of any award or judgment is presumed to represent compensation and medical benefits and future estimated values of compensation and medical benefits that are subject to a statutory subrogee's subrogation rights unless the claimant obtains a special verdict or jury interrogatories indicating that the award or judgment represents different types of damages.

"(E) Subrogation does not apply to the portion of any judgment, award, settlement, or compromise of a claim to the extent of a claimant's attorney's fees, costs, or other expenses incurred by a claimant in securing the judgment, award, settlement, or compromise, or the extent of medical, surgical, and hospital expenses paid by a claimant from the claimant's own resources for which reimbursement is not sought. No additional attorney's fees, costs, or other expenses in securing any recovery may be assessed against any subrogated claims of a statutory subrogee."

R.C. 4123.93(B) defines "statutory subrogee" as "the administrator of the bureau of workers' compensation, a self-insuring employer, or an employer that contracts for the direct payment of medical services pursuant to division (L) of section 4121.44 of the Revised Code."

I Section 35, Article II—The Great Compromise

The first certified question is whether R.C. 4123.931 violates Section 35, Article II of the Ohio Constitution, which provides:

"For the purpose of providing compensation to workmen and their dependents, for death, injuries or occupational disease, occasioned in the course of such workmen's employment, laws may be passed establishing a state fund to be created by compulsory contribution thereto by employers, and administered by the state, determining the terms and conditions upon which payment shall be made therefrom. Such compensation shall be in lieu of all other rights to compensation, or damages, for such death, injuries, or occupational disease, and any employer who pays the premium or compensation provided by law, passed in accordance herewith, shall not be liable to respond in damages at common law or by statute for such death, injuries or occupational disease."

Resolution of this issue requires some historical knowledge of the legal climate that invoked the unanimous adoption of Proposal Number 24, or Section 35, Article II, at the Constitutional Convention of 1912 and the enactment of Ohio's first compulsory workers' compensation law, 103 Ohio Laws 72, on February 26, 1913.

Prior to 1913, the employee's ability to receive compensation for work-related injuries was governed by the common law of torts. Although the principle of vicarious liability had long been recognized at common law, it was far...