On June 23, 2009, the Ohio Supreme Court held that an accident victim could not assign her right to proceeds from a prospective settlement or judgment to a health care provider in exchange for medical care, when liability and a present right to such proceeds had not been established.
Three days after she was injured in an automobile accident, Kristy Norregard (Norregard) was treated at West Broad Chiropractic (West Broad) for injuries sustained in the accident. Instead of paying West Broad at the time of treatment, she assigned to West Broad her right to receive compensation from the tortfeasor’s insurance company, American Family Insurance (AFI), in exchange for treatment. The assignment provided that any payment made by AFI was to be made directly to West Broad.
Years after the accident, Norregard settled her claims with AFI, and AFI disbursed the settlement proceeds directly to Norregard. West Broad filed suit against AFI to recover the value of the treatment rendered to Norregard. The trial court found the assignment to be enforceable. The Tenth District Court of Appeals reversed, concluding that Norregard had no “right in being” when she assigned potential settlement proceeds.
In a 4-3 decision, the Ohio Supreme Court found that because Norregard “had not established liability or the right to damages,” at the time she was treated, “[n]o settlement proceeds existed at the time of assignment.” See W. Broad Chiropractic v. Am. Family Ins., Slip Opinion No. 2009-Ohio-3506, at ¶ 15. “Because no settlement proceeds existed at the time of the assignment and Norregard then had no right to any funds, she had no rights to assign.” Id. at ¶ 16. The Court held that West Broad had a contract (i.e., the assignment) that may be enforceable against Norregard, but not against AFI.
The Court also considered whether R.C. 3929.06(B) precludes an assignee, such as West Broad, from bringing a direct action against a third-party insurer that had prior notice of the written assignment but nevertheless paid the settlement proceeds contrary to it. The Court held that an assignee is precluded from bringing a direct action under these circumstances. Based on the express language in the statute, the Court reasoned that “if an injured person has no direct action against the tortfeasor’s insurer until 30 days after judgment and an injured person may assign only those rights that presently exist, then it follows that at the time of the assignment, Norregard had no direct right of recovery against AFI that could be assigned.” Id. at ¶ 30.
The majority opinion authored by Justice Lundberg Stratton, was joined by Justices O’Connor, O’Donnell and Lanzinger. Chief Justice Moyer, wrote a dissenting opinion, which was joined by Justices Pfeifer and Cupp.