House Bill 539 has the potential to reduce claims costs for Ohio employers as they navigate through cases ripe for subrogation. There are two elements to H.B. 539: 1) to defer charging workers’ compensation claims to an employer’s experience when a third party may be liable for the claim, and 2) to create a subrogation suspense account to which any deferral will be charged. In other words, the Bureau of Workers’ Compensation (BWC) would create a fund to insulate employers from the cost of claims from a workplace accident caused by a third party.
Although all the details of this bill have not yet been ironed out, it has been proposed that the BWC create a subrogation suspense account within the State Insurance Fund to hold individual accounts for each employer seeking insulation from subrogation. In this proposal, an employer would request an individual account through the adjudicating committee when it believes a claim could be subrogated. The adjudicating committee would then decide whether an account should be created for that employer based on the facts of each case.
If it is determined that an individual account should be created, the BWC shall not charge the experience of the employer for any compensation or benefits paid in relation to the claim. The employer will be entitled to this benefit for three years from the date of injury, occupational disease, or death, or until the case involving the BWC as the statutory subrogee for the claimant concludes – whichever comes first. This is referred to as the “deferral period.”
Once the case is resolved, the monies received will be distributed accordingly. Currently, after a favorable resolution of a subrogation case, monies received by the BWC are deposited into the State Insurance Fund. If H.B. 539 passes, that would remain the same, except when a subrogation suspense account is in effect. When a subrogation suspense account is in effect, the monies received by the BWC after a favorable resolution of the case will be deposited back into the employer’s subrogation suspense account.
In the event the subrogation case is not favorable to the BWC, the amount charged to the subrogation suspense account will be charged against the employer’s experience. The State Insurance Fund would then credit the subrogation suspense account the amount charged to the employer’s experience to recoup its costs.
Additionally, should the case involving the BWC run beyond the three-year deferral period, the claims costs will be charged against the employer’s experience.
While H.B. 539 seems to be a great idea for all parties involved, with all new legislation comes unintended consequences. Some lingering questions include:
- How will the adjudicating committee determine which cases are ripe for inclusion in the subrogation suspense account to weed out employers attempting to “pass the burden” for a few years?
- How will the BWC and third party administrators deal with re-rating when/if, as the statutory subrogee, it fails to prevail in the subrogation case? How will this affect the individual employer’s rates and the group rates?
- What should or shouldn’t the employer do during the administrative process to defend the claim in general?
- Will the BWC subrogate at the full amount or continue to subrogate at only partial amounts? If only partial amounts, how does this affect the employer’s rates and claims costs?