Ohio Bureau of Workers' Comp. v. Mckinley

• Decision Date: 07 September 2011
• Docket Number: No. 2010–0720.,2010–0720.
• Citation: 2011 -Ohio- 4432,956 N.E.2d 814,130 Ohio St.3d 156
• Parties: OHIO BUREAU OF WORKERS' COMPENSATION, Appellee,v.MCKINLEY et al.; Heritage–WTI, Inc., Appellant.
• Court: Ohio Supreme Court

130 Ohio St.3d 156
956 N.E.2d 814
2011 -Ohio- 4432

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 Sept. 7, 2011.

[956 N.E.2d 816]

[Ohio St.3d 156] Syllabus of the Court

A claim brought by a statutory subrogee pursuant to R.C. 4123.931(G) to recover its subrogation interest is a claim “upon a liability created by statute” and is therefore subject to the six-year statute of limitations of R.C. 2305.07.

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, Columbus, and Benjamin W. Crider, for appellee.

Reminger Co., L.P.A., Gregory D. Brunton, Melvin J. Davis, and Patrick Kasson, Columbus, for appellant.Law Office of Russell Gerney and Russell Gerney, Toledo, urging reversal for amicus curiae, Ohio Association for Justice.

CUPP, J.

[Ohio St.3d 157] {¶ 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 R.C. 4123.931(G) to recover the full amount of its subrogation interest. The third-party tortfeasor raised a statute-of-limitations defense. The trial court held that a two-year limitations period applied and that it had expired. The court of appeals reversed and held that a six-year limitations period applied and that it had not yet run out.

{¶ 2} R.C. 4123.931(G) provides that if a settlement or compromise between a workers' compensation “claimant” (as defined in R.C. 4123.93(A)) and a “third party” (as defined in R.C. 4123.93(C)) excludes any amount paid by a “statutory subrogee” (as defined in R.C. 4123.93(B)), “the third party and the claimant shall be jointly and severally liable to pay the statutory subrogee the full amount of the subrogation interest.”

{¶ 3} The issue presented is whether a claim under R.C. 4123.931(G) brought by a statutory subrogee to recover its subrogation interest is subject to a two-year statute of limitations (the same limitations period applicable to the injured worker's personal-injury suit against the third party) or to a six-year statute of limitations for an action on “a liability created by statute,” R.C. 2305.07. For the reasons that follow, we hold that the claim in this case is an action upon a liability created by statute and that the statute of limitations is six years. We accordingly affirm the judgment of the court of appeals.

I. Facts and Procedural History

{¶ 4} Because the trial court dismissed the complaint in this case for failure to

[956 N.E.2d 817]

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

[Ohio St.3d 158] {¶ 6} On November 4, 2008, the bureau filed suit in Columbiana County Common Pleas Court against McKinley and Heritage, asserting that they were jointly and severally liable under R.C. 4123.93 and 4123.931 for failing to honor the bureau's subrogation lien in the settlement that had been reached. The bureau asserted that on the date of the complaint's filing, it had paid more than $460,000 in medical bills and compensation on McKinley's workers' compensation claim, and that additional future payments were expected to be made.

{¶ 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 R.C. 4123.931 creates an independent right of recovery for a statutory subrogee, in that the bureau's subrogation claim arose from that statute, and that the six-year statute of limitations of R.C. 2305.07 for an action on “a liability created by statute” is the one that applies to claims brought pursuant to R.C. 4123.931(G).

{¶ 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.

[956 N.E.2d 818]

{¶ 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 [Ohio St.3d 159] arguments that R.C. 4123.931 is a typical derivative subrogation statute, and instead held that R.C. 4123.931 “creates an independent right of recovery for the statutory subrogee” so that R.C. 2305.07's six-year statute of limitations applies. Id. at ¶ 55. Accordingly, the appellate court held that the bureau's complaint was timely because it was filed within six years of McKinley's injury. Id.

{¶ 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 R.C. 4123.931 are subject to the same statute of limitations that governs the claimant's underlying cause of action.” See 126 Ohio St.3d 1512, 2010-Ohio-3331, 930 N.E.2d 331.

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, R.C. 4123.931 sets forth the statutory subrogee's right of subrogation and details how that right is implemented, while R.C. 4123.93 is a definitional section that explains the meaning of terms appearing in R.C. 4123.931. Neither of those statutes specifically supplies a limitations period applicable to a subrogation claim brought by a statutory subrogee pursuant to R.C. 4123.931. In Groch, at paragraph one of the syllabus, we upheld the facial constitutionality of the workers' compensation subrogation statutes, but no statute-of-limitations issue was presented in that case.

{¶ 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 [Ohio St.3d 160] that we explore here, is whether R.C. 4123.931(G) creates an independent right of recovery for a statutory subrogee. If it does, then the recovery by the statutory subrogee is not a “typical” derivative subrogation recovery, and the six-year statute of limitations for an action “upon a liability created by statute” of R.C. 2305.07 applies to a workers' compensation subrogation claim.

[956 N.E.2d 819]

See McAuliffe v. W. States Import Co., Inc. (1995), 72 Ohio St.3d 534, 538, 651 N.E.2d 957 (R.C. 2305.07's six-year limitations period applies when no statute of limitations is legislatively specified and an action would not exist “but for” the statute creating it). If a six-year statute of limitations applies, the trial court erred in dismissing the bureau's complaint.

{¶ 16} Alternatively, if R.C. 4123.931(G) is a typical subrogation statute that allows a subrogation recovery that is derivative of a claimant's ability to recover from a third party, then the same two-year personal-injury statute of limitations of R.C. 2305.10 that applies to a claimant's personal-injury action also applies to a statutory...