Bill Text: OH HB539 | 2013-2014 | 130th General Assembly | Introduced

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Bill Title: To defer the charging of workers' compensation claims to an employer's experience when a third party may be liable for the claim and to create the Subrogation Suspense Account within the State Insurance Fund to which any such deferral will be charged.

Spectrum: Partisan Bill (Republican 7-0)

Status: (Introduced - Dead) 2014-05-14 - To Insurance [HB539 Detail]

Download: Ohio-2013-HB539-Introduced.html

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As Introduced

130th General Assembly Regular Session 2013-2014

H. B. No. 539

Representative Henne 

Cosponsors: Representatives McGregor, Sears, Becker, Wachtmann, DeVitis, Butler 

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A BILL

To amend sections 4123.291, 4123.34, 4123.93, and

1

4123.931 and to enact sections 4123.932 and

2

4123.933 of the Revised Code to defer the charging

3

of workers' compensation claims to an employer's

4

experience when a third party may be liable for

5

the claim and to create the Subrogation Suspense

6

Account within the State Insurance Fund to which

7

any such deferral will be charged.

8

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 4123.291, 4123.34, 4123.93, and	9
4123.931 be amended and sections 4123.932 and 4123.933 of the	10
Revised Code be enacted to read as follows:	11

Sec. 4123.291.  (A) An adjudicating committee appointed by	12
the administrator of workers' compensation to hear any matter	13
specified in divisions (B)(1) to (7)(8) of this section shall hear	14
the matter within sixty days of the date on which an employer	15
files the request, protest, or petition. An employer desiring to	16
file a request, protest, or petition regarding any matter	17
specified in divisions (B)(1) to (7)(8) of this section shall file	18
the request, protest, or petition to the adjudicating committee on	19
or before twenty-four months after the administrator sends notice	20
of the determination about which the employer is filing the	21
request, protest, or petition.	22

(B) An employer who is adversely affected by a decision of an	23
adjudicating committee appointed by the administrator may appeal	24
the decision of the committee to the administrator or the	25
administrator's designee. The employer shall file the appeal in	26
writing within thirty days after the employer receives the	27
decision of the adjudicating committee. The administrator or the	28
designee shall hear the appeal and hold a hearing, provided that	29
the decision of the adjudicating committee relates to one of the	30
following:	31

(1) An employer request for a waiver of a default in the	32
payment of premiums pursuant to section 4123.37 of the Revised	33
Code;	34

(2) An employer request for the settlement of liability as a	35
noncomplying employer under section 4123.75 of the Revised Code;	36

(3) An employer petition objecting to the assessment of a	37
premium pursuant to section 4123.37 of the Revised Code and the	38
rules adopted pursuant to that section;	39

(4) An employer request for the abatement of penalties	40
assessed pursuant to section 4123.32 of the Revised Code and the	41
rules adopted pursuant to that section;	42

(5) An employer protest relating to an audit finding or a	43
determination of a manual classification, experience rating, or	44
transfer or combination of risk experience;	45

(6) An employer request that a claim that is likely subject	46
to third party subrogation be deferred and not included in the	47
employer's experience pursuant to section 4123.932 of the Revised	48
Code.	49

(7) Any decision relating to any other risk premium matter	50
under Chapters 4121., 4123., and 4131. of the Revised Code;	51

(7)(8) An employer petition objecting to the amount of	52
security required under division (D) of section 4125.05 of the	53
Revised Code and the rules adopted pursuant to that section.	54

(C) The bureau of workers' compensation board of directors,	55
based upon recommendations of the workers' compensation actuarial	56
committee, shall establish the policy for all adjudicating	57
committee procedures, including, but not limited to, specific	58
criteria for manual premium rate adjustment.	59

(D) The administrator, with the advice and consent of the	60
board, shall adopt rules to establish requirements and procedures	61
for an adjudicating committee to follow to determine whether a	62
claim is likely to be subrogated under section 4123.931 of the	63
Revised Code.	64

Sec. 4123.34.  It shall be the duty of the bureau of workers'	65
compensation board of directors and the administrator of workers'	66
compensation to safeguard and maintain the solvency of the state	67
insurance fund and all other funds specified in this chapter and	68
Chapters 4121., 4127., and 4131. of the Revised Code. The	69
administrator, in the exercise of the powers and discretion	70
conferred upon the administrator in section 4123.29 of the Revised	71
Code, shall fix and maintain, with the advice and consent of the	72
board, for each class of occupation or industry, the lowest	73
possible rates of premium consistent with the maintenance of a	74
solvent state insurance fund and the creation and maintenance of a	75
reasonable surplus, after the payment of legitimate claims for	76
injury, occupational disease, and death that the administrator	77
authorizes to be paid from the state insurance fund for the	78
benefit of injured, diseased, and the dependents of killed	79
employees. In establishing rates, the administrator shall take	80
into account the necessity of ensuring sufficient money is set	81
aside in the premium payment security fund to cover any defaults	82
in premium obligations and in the subrogation suspense account to	83
cover any claim amounts for which the administrator temporarily	84
suspends charging the experience of an employer pursuant to	85
section 4123.932 of the Revised Code. The administrator shall	86
observe all of the following requirements in fixing the rates of	87
premium for the risks of occupations or industries:	88

(A) The administrator shall keep an accurate account of the	89
money paid in premiums by each of the several classes of	90
occupations or industries, and the losses on account of injuries,	91
occupational disease, and death of employees thereof, and also	92
keep an account of the money received from each individual	93
employer and the amount of losses incurred against the state	94
insurance fund on account of injuries, occupational disease, and	95
death of the employees of the employer.	96

(B) A portion of the money paid into the state insurance fund	97
shall be set aside for the creation of a surplus fund account	98
within the state insurance fund. Any references in this chapter or	99
in Chapter 4121., 4125., 4127., or 4131. of the Revised Code to	100
the surplus fund, the surplus created in this division, the	101
statutory surplus fund, or the statutory surplus of the state	102
insurance fund are hereby deemed to be references to the surplus	103
fund account. The administrator may transfer the portion of the	104
state insurance fund to the surplus fund account as the	105
administrator determines is necessary to satisfy the needs of the	106
surplus fund account and to guarantee the solvency of the state	107
insurance fund and the surplus fund account. In addition to all	108
statutory authority under this chapter and Chapter 4121. of the	109
Revised Code, the administrator has discretionary and contingency	110
authority to make charges to the surplus fund account. The	111
administrator shall account for all charges, whether statutory,	112
discretionary, or contingency, that the administrator may make to	113
the surplus fund account. A revision of basic rates shall be made	114
annually on the first day of July.	115

Notwithstanding any provision of the law to the contrary, one	116
hundred eighty days after the effective date on which	117
self-insuring employers first may elect under division (D) of	118
section 4121.66 of the Revised Code to directly pay for	119
rehabilitation expenses, the administrator shall calculate the	120
deficit, if any, in the portion of the surplus fund account that	121
is used for reimbursement to self-insuring employers for all	122
expenses other than handicapped reimbursement under section	123
4123.343 of the Revised Code. The administrator, from time to	124
time, may determine whether the surplus fund account has such a	125
deficit and may assess all self-insuring employers who	126
participated in the portion of the surplus fund account during the	127
accrual of the deficit and who during that time period have not	128
made the election under division (D) of section 4121.66 of the	129
Revised Code the amount the administrator determines necessary to	130
reduce the deficit.	131

Revisions of basic rates shall be in accordance with the	132
oldest four of the last five calendar years of the combined	133
accident and occupational disease experience of the administrator	134
in the administration of this chapter, as shown by the accounts	135
kept as provided in this section, excluding the experience of	136
employers that are no longer active if the administrator	137
determines that the inclusion of those employers would have a	138
significant negative impact on the remainder of the employers in a	139
particular manual classification; and the administrator shall	140
adopt rules, with the advice and consent of the board, governing	141
rate revisions, the object of which shall be to make an equitable	142
distribution of losses among the several classes of occupation or	143
industry, which rules shall be general in their application.	144

(C) The administrator may apply that form of rating system	145
that the administrator finds is best calculated to merit rate or	146
individually rate the risk more equitably, predicated upon the	147
basis of its individual industrial accident and occupational	148
disease experience, and may encourage and stimulate accident	149
prevention. The administrator shall develop fixed and equitable	150
rules controlling the rating system, which rules shall conserve to	151
each risk the basic principles of workers' compensation insurance.	152

(D) The administrator, from the money paid into the state	153
insurance fund, shall set aside into an account of the state	154
insurance fund titled a premium payment security fund sufficient	155
money to pay for any premiums due from an employer and uncollected	156
that are in excess of the employer's premium security deposit.	157

The fund shall be in the custody of the treasurer of state.	158
All investment earnings of the fund shall be deposited in the	159
fund. Disbursements from the fund shall be made by the bureau of	160
workers' compensation upon order of the administrator to the state	161
insurance fund. The use of the moneys held by the premium payment	162
security fund is restricted to reimbursement to the state	163
insurance fund of premiums due and uncollected in excess of an	164
employer's premium security deposit. The moneys constituting the	165
premium payment security fund shall be maintained without regard	166
to or reliance upon any other fund. This section does not prevent	167
the deposit or investment of the premium payment security fund	168
with any other fund created by this chapter, but the premium	169
payment security fund is separate and distinct for every other	170
purpose and a strict accounting thereof shall be maintained.	171

(E) There is hereby created in the state insurance fund the	172
subrogation suspense account, to be used to defer costs related to	173
subrogation claims so that the experience of an employer is not	174
affected by a claim that is likely eligible for third-party	175
subrogation. The use of the moneys held in the subrogation	176
suspense account is restricted to reimbursement to the state	177
insurance fund of amounts paid on a claim that is not charged to	178
an employer's experience pursuant to division (B) of section	179
4123.932 of the Revised Code.	180

(F) The administrator may grant discounts on premium rates	181
for employers who meet either of the following requirements:	182

(1) Have not incurred a compensable injury for one year or	183
more and who maintain an employee safety committee or similar	184
organization or make periodic safety inspections of the workplace.	185

(2) Successfully complete a loss prevention program	186
prescribed by the superintendent of the division of safety and	187
hygiene and conducted by the division or by any other person	188
approved by the superintendent.	189

(F)(G)(1) In determining the premium rates for the	190
construction industry the administrator shall calculate the	191
employers' premiums based upon the actual remuneration	192
construction industry employees receive from construction industry	193
employers, provided that the amount of remuneration the	194
administrator uses in calculating the premiums shall not exceed an	195
average weekly wage equal to one hundred fifty per cent of the	196
statewide average weekly wage as defined in division (C) of	197
section 4123.62 of the Revised Code.	198

(2) Division (F)(G)(1) of this section shall not be construed	199
as affecting the manner in which benefits to a claimant are	200
awarded under this chapter.	201

(3) As used in division (F)(G) of this section, "construction	202
industry" includes any activity performed in connection with the	203
erection, alteration, repair, replacement, renovation,	204
installation, or demolition of any building, structure, highway,	205
or bridge.	206

(G)(H) The administrator of workers' compensation shall not	207
place a limit on the length of time that an employer may	208
participate in the bureau of workers' compensation drug free	209
workplace and workplace safety programs.	210

Sec. 4123.93.  As used in sections 4123.93 and 4123.931to	211
4123.933 of the Revised Code:	212

(A) "Claimant" means a person who is eligible to receive	213
compensation, medical benefits, or death benefits under this	214
chapter or Chapter 4121., 4127., or 4131. of the Revised Code.	215

(B) "Statutory subrogee" means the administrator of workers'	216
compensation, a self-insuring employer, or an employer that	217
contracts for the direct payment of medical services pursuant to	218
division (P) of section 4121.44 of the Revised Code.	219

(C) "Third party" means an individual, private insurer,	220
public or private entity, or public or private program that is or	221
may be liable to make payments to a person without regard to any	222
statutory duty contained in this chapter or Chapter 4121., 4127.,	223
or 4131. of the Revised Code.	224

(D) "Subrogation interest" includes past, present, and	225
estimated future payments of compensation, medical benefits,	226
rehabilitation costs, or death benefits, and any other costs or	227
expenses paid to or on behalf of the claimant by the statutory	228
subrogee pursuant to this chapter or Chapter 4121., 4127., or	229
4131. of the Revised Code.	230

(E) "Net amount recovered" means the amount of any award,	231
settlement, compromise, or recovery by a claimant against a third	232
party, minus the attorney's fees, costs, or other expenses	233
incurred by the claimant in securing the award, settlement,	234
compromise, or recovery. "Net amount recovered" does not include	235
any punitive damages that may be awarded by a judge or jury.	236

(F) "Uncompensated damages" means the claimant's demonstrated	237
or proven damages minus the statutory subrogee's subrogation	238
interest.	239

Sec. 4123.931.  (A) The payment of compensation or benefits	240
pursuant to this chapter or Chapter 4121., 4127., or 4131., of the	241
Revised Code creates a right of recovery in favor of a statutory	242
subrogee against a third party, and the statutory subrogee is	243
subrogated to the rights of a claimant against that third party.	244
The net amount recovered is subject to a statutory subrogee's	245
right of recovery.	246

(B) If a claimant, statutory subrogee, and third party settle	247
or attempt to settle a claimant's claim against a third party, the	248
claimant shall receive an amount equal to the uncompensated	249
damages divided by the sum of the subrogation interest plus the	250
uncompensated damages, multiplied by the net amount recovered, and	251
the statutory subrogee shall receive an amount equal to the	252
subrogation interest divided by the sum of the subrogation	253
interest plus the uncompensated damages, multiplied by the net	254
amount recovered, except that the net amount recovered may instead	255
be divided and paid on a more fair and reasonable basis that is	256
agreed to by the claimant and statutory subrogee. If while	257
attempting to settle, the claimant and statutory subrogee cannot	258
agree to the allocation of the net amount recovered, the claimant	259
and statutory subrogee may file a request with the administrator	260
of workers' compensation for a conference to be conducted by a	261
designee appointed by the administrator, or the claimant and	262
statutory subrogee may agree to utilize any other binding or	263
non-binding alternative dispute resolution process.	264

The claimant and statutory subrogee shall pay equal shares of	265
the fees and expenses of utilizing an alternative dispute	266
resolution process, unless they agree to pay those fees and	267
expenses in another manner. The administrator shall not assess any	268
fees to a claimant or statutory subrogee for a conference	269
conducted by the administrator's designee.	270

(C) If a claimant and statutory subrogee request that a	271
conference be conducted by the administrator's designee pursuant	272
to division (B) of this section, both of the following apply:	273

(1) The administrator's designee shall schedule a conference	274
on or before sixty days after the date that the claimant and	275
statutory subrogee filed a request for the conference.	276

(2) The determination made by the administrator's designee is	277
not subject to Chapter 119. of the Revised Code.	278

(D) When a claimant's action against a third party proceeds	279
to trial and damages are awarded, both of the following apply:	280

(1) The claimant shall receive an amount equal to the	281
uncompensated damages divided by the sum of the subrogation	282
interest plus the uncompensated damages, multiplied by the net	283
amount recovered, and the statutory subrogee shall receive an	284
amount equal to the subrogation interest divided by the sum of the	285
subrogation interest plus the uncompensated damages, multiplied by	286
the net amount recovered.	287

(2) The court in a nonjury action shall make findings of	288
fact, and the jury in a jury action shall return a general verdict	289
accompanied by answers to interrogatories that specify the	290
following:	291

(a) The total amount of the compensatory damages;

292

(b) The portion of the compensatory damages specified	293
pursuant to division (D)(2)(a) of this section that represents	294
economic loss;	295

(c) The portion of the compensatory damages specified	296
pursuant to division (D)(2)(a) of this section that represents	297
noneconomic loss.	298

(E)(1) After a claimant and statutory subrogee know the net	299
amount recovered, and after the means for dividing it has been	300
determined under division (B) or (D) of this section, a claimant	301
may establish an interest-bearing trust account for the full	302
amount of the subrogation interest that represents estimated	303
future payments of compensation, medical benefits, rehabilitation	304
costs, or death benefits, reduced to present value, from which the	305
claimant shall make reimbursement payments to the statutory	306
subrogee for the future payments of compensation, medical	307
benefits, rehabilitation costs, or death benefits. If the workers'	308
compensation claim associated with the subrogation interest is	309
settled, or if the claimant dies, or if any other circumstance	310
occurs that would preclude any future payments of compensation,	311
medical benefits, rehabilitation costs, and death benefits by the	312
statutory subrogee, any amount remaining in the trust account	313
after final reimbursement is paid to the statutory subrogee for	314
all payments made by the statutory subrogee before the ending of	315
future payments shall be paid to the claimant or the claimant's	316
estate.	317

(2) A claimant may use interest that accrues on the trust	318
account to pay the expenses of establishing and maintaining the	319
trust account, and all remaining interest shall be credited to the	320
trust account.	321

(3) If a claimant establishes a trust account, the statutory	322
subrogee shall provide payment notices to the claimant on or	323
before the thirtieth day of June and the thirty-first day of	324
December every year listing the total amount that the statutory	325
subrogee has paid for compensation, medical benefits,	326
rehabilitation costs, or death benefits during the half of the	327
year preceding the notice. The claimant shall make reimbursement	328
payments to the statutory subrogee from the trust account on or	329
before the thirty-first day of July every year for a notice	330
provided by the thirtieth day of June, and on or before the	331
thirty-first day of January every year for a notice provided by	332
the thirty-first day of December. The claimant's reimbursement	333
payment shall be in an amount that equals the total amount listed	334
on the notice the claimant receives from the statutory subrogee.	335

(F) If a claimant does not establish a trust account as	336
described in division (E)(1) of this section, the claimant shall	337
pay to the statutory subrogee, on or before thirty days after	338
receipt of funds from the third party, the full amount of the	339
subrogation interest that represents estimated future payments of	340
compensation, medical benefits, rehabilitation costs, or death	341
benefits.	342

(G) A claimant shall notify a statutory subrogee and the	343
attorney general of the identity of all third parties against whom	344
the claimant has or may have a right of recovery, except that when	345
the statutory subrogee is a self-insuring employer, the claimant	346
need not notify the attorney general. No settlement, compromise,	347
judgment, award, or other recovery in any action or claim by a	348
claimant shall be final unless the claimant provides the statutory	349
subrogee and, when required, the attorney general, with prior	350
notice and a reasonable opportunity to assert its subrogation	351
rights. If a statutory subrogee and, when required, the attorney	352
general are not given that notice, or if a settlement or	353
compromise excludes any amount paid by the statutory subrogee, the	354
third party and the claimant shall be jointly and severally liable	355
to pay the statutory subrogee the full amount of the subrogation	356
interest.	357

(H) The right of subrogation under this chapter is automatic,	358
regardless of whether a statutory subrogee is joined as a party in	359
an action by a claimant against a third party. A statutory	360
subrogee may assert its subrogation rights through correspondence	361
with the claimant and the third party or their legal	362
representatives. A statutory subrogee may institute and pursue	363
legal proceedings against a third party either by itself or in	364
conjunction with a claimant. If a statutory subrogee institutes	365
legal proceedings against a third party, the statutory subrogee	366
shall provide notice of that fact to the claimant. If the	367
statutory subrogee joins the claimant as a necessary party, or if	368
the claimant elects to participate in the proceedings as a party,	369
the claimant may present the claimant's case first if the matter	370
proceeds to trial. If a claimant disputes the validity or amount	371
of an asserted subrogation interest, the claimant shall join the	372
statutory subrogee as a necessary party to the action against the	373
third party.	374

(I) The statutory subrogation right of recovery applies to,	375
but is not limited to, all of the following:	376

(1) Amounts recoverable from a claimant's insurer in	377
connection with underinsured or uninsured motorist coverage,	378
notwithstanding any limitation contained in Chapter 3937. of the	379
Revised Code;	380

(2) Amounts that a claimant would be entitled to recover from	381
a political subdivision, notwithstanding any limitations contained	382
in Chapter 2744. of the Revised Code;	383

(3) Amounts recoverable from an intentional tort action.

384

(J) If a claimant's claim against a third party is for	385
wrongful death or the claim involves any minor beneficiaries,	386
amounts allocated under this section are subject to the approval	387
of probate court.	388

(K)(1) The administrator shall deposit any money collected	389
under this section into the public fund or the private fund of the	390
state insurance fund, as appropriate. IfExcept as provided in	391
division (K)(2) of this section, any amount deposited under	392
division (K)(1) of this section shall be credited to the	393
experience of the employer against whom the experience of the	394
corresponding claim was charged.	395

(2) If, at the time an amount is deposited under division	396
(K)(1) of this section, the corresponding claim is not being	397
charged to the experience of an employer, pursuant to section	398
4123.932 of the Revised Code, any amount deposited shall be	399
credited to the individual account of the employer to whose	400
experience the claim would have been charged.	401

(3) If a self-insuring employer collects money under this	402
section of the Revised Code, the self-insuring employer shall	403
deduct the amount collected, in the year collected, from the	404
amount of paid compensation the self-insured employer is required	405
to report under section 4123.35 of the Revised Code.	406

Sec. 4123.932.  (A) An employer who pays premiums into the	407
state insurance fund and who believes that a claim filed under	408
this chapter or Chapter 4121., 4127., or 4131. of the Revised Code	409
may be subject to third-party subrogation under section 4123.931	410
of the Revised Code may file a request with an adjudicating	411
committee in accordance with section 4123.291 of the Revised Code	412
to defer the experience resulting from that claim.	413

(B) Upon a final determination made pursuant to section	414
4123.291 of the Revised Code, or upon the administrator's own	415
determination, that the administrator is likely to be subrogated	416
to the rights of a claimant under section 4123.931 of the Revised	417
Code, the administrator shall not charge the experience of that	418
employer for any compensation, benefits, or both paid in relation	419
to that claim until the earlier of the following:	420

(1) Three years after the date the injury occurred or	421
occupational disease was diagnosed or, if an employee dies in the	422
course of and arising out of the employee's employment, the date	423
of the employee's death;	424

(2) The conclusion or settlement of any actions that involve	425
the administrator as a statutory subrogee in relation to the	426
claim.	427

Sec. 4123.933.  (A) If a final determination is made pursuant	428
to section 4123.291 of the Revised Code that the administrator of	429
workers' compensation is likely to be subrogated to the rights of	430
a claimant under section 4123.931 of the Revised Code, the	431
administrator shall create an individual account within the	432
subrogation suspense account created in section 4123.34 of the	433
Revised Code for the employer whose experience the claimant's	434
claim would otherwise affect.	435

(B) The administrator shall charge any compensation or	436
benefits paid from the state insurance fund for a claim that is	437
deferred pursuant to section 4123.932 of the Revised Code to the	438
employer's individual account within the subrogation suspense	439
account.	440

(C) Upon the conclusion of the deferral period described in	441
division (B) of section 4123.932 of the Revised Code, the	442
administrator shall charge an employer's experience for the amount	443
of compensation or benefits paid in a claim and charged to the	444
employer's individual account within the subrogation suspense	445
account for that claim, except that the administrator shall not	446
charge the employer's experience for any amount credited to the	447
employer's individual subrogation suspense account pursuant to	448
division (K)(2) of section 4123.931 of the Revised Code. The	449
administrator shall credit the subrogation suspense account in the	450
amount the administrator charges to the employer's experience. Any	451
additional compensation or benefits incurred in that claim after	452
the deferral period shall be charged to the employer's experience.	453

Section 2.  That existing sections 4123.291, 4123.34,	454
4123.93, and 4123.931 of the Revised Code are hereby repealed.	455