In a decision released on September 7, 2011, the Supreme Court of Ohio ruled 7-0 (Justice Pfeifer concurring in judgment only) that a claim asserted by the state under R.C. 4123.931(G) seeking subrogation (reimbursement) of workers’ compensation benefits from the proceeds of a lawsuit judgment or settlement recovered by an injured worker from a third party is subject to the six-year statute of limitations set forth in R.C. 2305.07 for claims “upon a liability created by statute.”

The case, Ohio Bur. of Workers’ Compensation v McKinley, 2011-Ohio-4432, arose out of injuries Jeffrey McKinley suffered in 2003 while working for his employer at a work site owned by Heritage-WTI. McKinley was granted state workers’ compensation benefits. McKinley subsequently filed suit against his employer and Heritage. In 2004, McKinley and Heritage settled for an undisclosed amount and notified the BWC of the settlement.

In November 2008, BWC filed suit against McKinley and Heritage in Columbiana County, Ohio, asserting that they were jointly and severally liable to the state for failing to honor the state’s subrogation interest in the settlement that had been reached between them. Heritage filed a motion to dismiss the state’s claim as untimely, arguing that the state’s subrogation claim was derivative of McKinley’s tort claim against Heritage, and therefore subject to the same two-year statute of limitations applicable to McKinley’s claim. The trial court agreed and granted the motion to dismiss.

The BWC appealed. On review, the 7th District Court of Appeals reversed the trial court and reinstated the bureau’s claims. The court held that BWC’s claim was not subject to the two-year limitations period applicable to McKinley’s tort claim because R.C. 4123.931(G) “creates an independent right of recovery for the statutory subrogee.”  Accordingly, the court of appeals held that the BWC’s 2008 subrogation lawsuit was timely because it had been filed within the six-year statute of limitations set forth in R.C. 2305.07 for claims based on “a liability created by statute.”

Heritage sought Supreme Court review. The Court agreed to determine whether BWC’s subrogation claim was subject to the two-year limitations period applicable to McKinley’s underlying tort claim, or the six-year limitations period applicable to claims based on a liability created by statute.

Justice Cupp, affirming the decision of the 7th District, wrote:  

(A) statutory subrogee that pursues recovery of its subrogation interest under R.C. 4123.931(G) clearly does much more than merely substitute for and “stand in the shoes of” a claimant. These subrogation statutes set forth an overall scenario in which the claimant, the third party, and the statutory subrogee are three independent actors playing discrete and delineated roles. The statutory subrogee pursues an independent recovery in its own right under R.C. 4123.931(G) as a separate and distinct actor.

Workers’ compensation subrogation recovery would not exist ‘but for’ R.C. 4123.93 and 4123.931. ... Because R.C. 4123.931 creates an independent right of recovery that would not otherwise exist, we conclude that a statutory subrogee’s claim under R.C. 4123.931(G) to recover its subrogation interest is governed by the six-year statute of limitations of R.C. 2307.05 for a liability created by statute. 

Justice Pfeifer entered a separate opinion in which he concurred with the majority judgment that the claim asserted by BWC under R.C. 4123.931(G) in this case was subject to a six-year limitations period, but wrote that state reimbursement claims advanced against third parties under other subsections of the same statute are not subject to the same time limit.