Opinion · Ohio Supreme Court
Holeton v. Crouse Cartage Co.
Holeton v. Crouse Cartage Co., 92 Ohio St. 3d 115 (Ohio 2001)
- Type
- Opinion
- Court
- Ohio Supreme Court
- Jurisdiction
- Ohio
- Date
- 2001-06-27
- Topic
- general
stating, in the worker’s compensation context, that “the claimant-plaintiff has a constitutionally protected [property] interest in' his or her tort recovery” | discussing constitutionality of various collateral benefits offset statutes
Citator
- Cited by
- 43 opinions
[This decision has been published in Ohio Official Reports at92 Ohio St.3d 115
.]
HOLETON ET AL., PETITIONERS, v. CROUSE CARTAGE COMPANY ET AL.;
CONRAD, ADMR., RESPONDENT.
[Cite as Holeton v. Crouse Cartage Co., 2001-Ohio-109
.]
Workers’ compensation—Subrogation right of statutory subrogee against third
party–R.C. 4123.931, in its present form, is unconstitutional.
(No. 00-428—Submitted October 10, 2000—Decided June 27, 2001.)
ON ORDER from the United States District Court for the Northern District of Ohio,
Western Division, Certifying a Question of State Law, No. 98CV-7578.
__________________
ALICE ROBIE RESNICK, J.
{¶ 1} This case comes to us as certified questions of state law from the
United States District Court for the Northern District of Ohio, Western Division.
The federal district court certified the following facts to us:
“Plaintiff, Rick Holeton, was injured on June 18, 1998. He and his plaintiff
spouse, Shari, have two minor children, also plaintiffs herein. At the time of his
accident, Rick was part of a construction crew employed by Harper Structures, Inc.,
building an overpass across the Ohio Turnpike. The telescoping ‘manlift’ bucket
in which Rick was standing was struck by an eastbound truck owned and/or
operated by defendants, James Parr and Crouse Cartage Company. The force of
the impact propelled Rick out of the bucket, slamming him into the underside of
the overpass and then dropping him on to the highway below.
“Because his injuries occurred in the course and scope of his employment
with Harper Structures, Rick Holeton has received, and may indefinitely continue
to receive, workers’ compensation benefits from defendant, Bureau of Workers’
Compensation (BWC), pursuant to Chapter 4123 of the Revised Code. Rick
Holeton’s wage and medical benefits to date exceed $190,000.
SUPREME COURT OF OHIO
“BWC is a ‘statutory subrogee’ within the meaning of R.C. § 4123.931,
referred to herein as Ohio’s subrogation statute. As a statutory subrogee with
respect to workers’ compensation benefits previously or hereafter paid to Rick
Holeton, BWC has asserted a subrogation claim against any settlement made or
judgment paid to Rick Holeton by or on behalf of the other defendants.1 Plaintiffs
dispute the validity of BWC’s subrogation claim and argue that the statute violates
relevant sections of Ohio’s Constitution. BWC denies that the statute is
unconstitutional and seeks to enforce its right of subrogation.
“Plaintiffs filed a motion for summary judgment asking the court to declare
the subrogation statute unconstitutional. In the alternative, plaintiffs requested an
order certifying the issue to the Ohio Supreme Court. The court has stayed
plaintiffs’ motion for summary judgment and granted plaintiffs’ motion to certify
the issue to the Ohio Supreme Court.”
{¶ 2} On May 3, 2000, this court reviewed the preliminary memoranda
pursuant to S.Ct.Prac.R. XVIII and determined that it will answer the following
certified questions:
“1. Does R.C. § 4123.931 violate Article II, Section 35 of the Ohio
Constitution?
“2. Does R.C. § 4123.931 violate Article I, Section 19 of the Ohio
Constitution?
“3. Does R.C. § 4123.931 violate Article I, Section 16 of the Ohio
Constitution?
“4. Does R.C. § 4123.931 violate Article II, Section 28 of the Ohio
Constitution?
1. Footnote one of the order states: “R.C. § 4123.931 provides, in part, that BWC’s right of subrogation
is automatic, that no settlement or other recovery is final without notice to BWC, and that the entire
amount of any settlement is subject to BWC’s subrogation right.”
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January Term, 2001
“5. Does R.C. § 4123.931 violate Article I, Section 2 of the Ohio
Constitution?
“6. Does R.C. § 4123.931 violate Article II, Section 15 of the Ohio
Constitution?
“7. Is R.C. § 4123.931 contrary to Ohio Civil Rule 49(C) and, therefore,
invalid and unenforceable?
“8. Does R.C. § 4123.931 constitute an invalid waiver of an injured
employee’s right to receive and retain workers’ compensation benefits in violation
of R.C. § 4123.80.” (2000), 88 Ohio St.3d 1500
,727 N.E.2d 923
.
{¶ 3} R.C. 4123.931 provides:
“(A) The payment of compensation or benefits pursuant to this chapter or
Chapter 4121., 4127., or 4131., of the Revised Code creates a right of subrogation
in favor of a statutory subrogee against a third party. A statutory subrogee’s
subrogation interest includes past payments of compensation and medical benefits
and estimated future values of compensation and medical benefits arising out of an
injury to or disability or disease of a claimant.
“(B) A claimant shall notify a statutory subrogee of the identity of all third
parties against whom the claimant has or may have a right of recovery. No
settlement, compromise, judgment, award, or other recovery in any action or claim
by a claimant shall be final unless the claimant provides the statutory subrogee with
prior notice and a reasonable opportunity to assert its subrogation rights. If a
statutory subrogee is not given that notice, the third party and the claimant shall be
jointly and severally liable to pay the statutory subrogee the full amount of the
subrogation interest.
“(C) The right of subrogation under this chapter is automatic, regardless of
whether a statutory subrogee is joined as a party in an action by a claimant against
a third party. A statutory subrogee may assert its subrogation rights through
correspondence with the claimant and the third party or their legal representatives.
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A statutory subrogee may institute and pursue legal proceedings against a third
party either by itself or in conjunction with a claimant. If a claimant disputes the
validity or amount of an asserted subrogation interest, the claimant shall join the
statutory subrogee as a necessary party to the action against the third party.
“(D) The entire amount of any settlement or compromise of an action or
claim is subject to the subrogation right of a statutory subrogee, regardless of the
manner in which the settlement or compromise is characterized. Any settlement or
compromise that excludes the amount of compensation or medical benefits shall
not preclude a statutory subrogee from enforcing its rights under this section. The
entire amount of any award or judgment is presumed to represent compensation
and medical benefits and future estimated values of compensation and medical
benefits that are subject to a statutory subrogee’s subrogation rights unless the
claimant obtains a special verdict or jury interrogatories indicating that the award
or judgment represents different types of damages.
“(E) Subrogation does not apply to the portion of any judgment, award,
settlement, or compromise of a claim to the extent of a claimant’s attorney’s fees,
costs, or other expenses incurred by a claimant in securing the judgment, award,
settlement, or compromise, or the extent of medical, surgical, and hospital expenses
paid by a claimant from the claimant’s own resources for which reimbursement is
not sought. No additional attorney’s fees, costs, or other expenses in securing any
recovery may be assessed against any subrogated claims of a statutory subrogee.”
{¶ 4} R.C. 4123.93(B) defines “statutory subrogee” as “the administrator of
the bureau of workers’ compensation, a self-insuring employer, or an employer that
contracts for the direct payment of medical services pursuant to division (L) of
section 4121.44 of the Revised Code.”
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January Term, 2001
I
Section 35, Article II—The Great Compromise
{¶ 5} The first certified question is whether R.C. 4123.931 violates Section
35, Article II of the Ohio Constitution, which provides:
“For the purpose of providing compensation to workmen and their
dependents, for death, injuries or occupational disease, occasioned in the course of
such workmen’s employment, laws may be passed establishing a state fund to be
created by compulsory contribution thereto by employers, and administered by the
state, determining the terms and conditions upon which payment shall be made
therefrom. Such compensation shall be in lieu of all other rights to compensation,
or damages, for such death, injuries, or occupational disease, and any employer
who pays the premium or compensation provided by law, passed in accordance
herewith, shall not be liable to respond in damages at common law or by statute for
such death, injuries or occupational disease.”
{¶ 6} Resolution of this issue requires some historical knowledge of the
legal climate that invoked the unanimous adoption of Proposal Number 24, or
Section 35, Article II, at the Constitutional Convention of 1912 and the enactment
of Ohio’s first compulsory workers’ compensation law, 103 Ohio Laws 72, on
February 26, 1913.
{¶ 7} Prior to 1913, the employee’s ability to receive compensation for
work-related injuries was governed by the common law of torts. Although the
principle of vicarious liability had long been recognized at common law, it was far
more difficult for the injured worker to recover damages from his or her employer
than it was for the stranger to the employment relationship. The injured employee
was required to prove that the employer violated a duty of care owed specifically
to employees. Even upon overcoming this hurdle, until 1911 the employee was
faced with what became known as the “unholy trinity of common-law defenses”—
contributory negligence, the fellow servant rule, and assumption of risk. 102 Ohio 5
SUPREME COURT OF OHIO Laws 529, Section 21-1. These defenses were truly draconian in their application. The defense of contributory negligence applied to bar any recovery if the employee’s negligence contributed even slightly to the injury. The fellow servant rule was modified in most jurisdictions to exclude from the category of fellow servants all employees charged with carrying out the employer’s common-law duties, but Ohio courts limited the exclusion to employees serving in supervisory capacities. Cleveland, Columbus & Cincinnati RR. Co. v. Keary (1854),3 Ohio St. 201
,1854 WL 3
. And the doctrine of assumption of risk applied to preclude
recovery on the basis that even the barely subsisting worker is free to decline any
service in which he or she apprehends danger. See, generally, Fulton, Ohio
Workers’ Compensation Law (2 Ed.1998) 13-16, Sections 2.1 to 2.5.
{¶ 8} The common-law system proved incapable of dealing with the often
devastating social and economic consequences of industrial accidents. It became
undeniable that the tort system had failed as a regulatory device for distributing
economic losses borne by injured Ohio workers and their families and that it should
be replaced by a workers’ compensation system in which those losses would be
charged, without regard to fault or wrongdoing, to the industry rather than to the
individual or society as a whole. See, e.g., Goodman v. Beall (1936), 130 Ohio St. 427
,5 O.O. 52
,200 N.E. 470
; Indus. Comm. v. Weigandt (1921),102 Ohio St. 1
, 4,130 N.E. 38
, 38-39; State ex rel. Munding v. Indus. Comm. (1915),92 Ohio St. 434
,111 N.E. 299
; State ex rel. Yaple v. Creamer (1912),85 Ohio St. 349
,97 N.E. 602
.
{¶ 9} Accordingly, Section 35, Article II represents a social bargain in
which employers and employees exchange their respective common-law rights and
duties for a more certain and uniform set of statutory benefits and obligations.
Thus, in Blankenship v. Cincinnati Milacron Chem., Inc. (1982), 69 Ohio St.2d 608, 614
,23 O.O.3d 504, 508
,433 N.E.2d 572, 577
, we explained that the Workers’
Compensation Act “operates as a balance of mutual compromise between the
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January Term, 2001
interests of the employer and the employee whereby employees relinquish their
common law remedy and accept lower benefit levels coupled with the greater
assurance of recovery and employers give up their common law defenses and are
protected from unlimited liability.” See, also, Bunger v. Lawson Co. (1998), 82 Ohio St.3d 463, 465
,696 N.E.2d 1029, 1031-1032
. “This compromise is the basic
premise underlying the workers’ compensation system.” Fulton, supra, at 4,
Section 1.2.
{¶ 10} Petitioners contend that R.C. 4123.931 is unconstitutional “because
it effectively deprives employees of the ‘benefit of their bargain’ and destroys the
balance struck between employers and employees by Article II, Section 35 of the
Ohio Constitution.” In support, petitioners argue (1) that “[t]he subrogation statute
unjustifiably permits [the bureau] and self-insuring employers * * * to recover
100% of benefits paid to injured employees, while the subrogees continue to enjoy
immunity from suit,” (2) that the statute does not serve the “purpose of providing
compensation to workmen and their dependents” as required by Section 35, Article
II, but instead operates to take compensation away from them, and (3) that the
statute forces the claimant-plaintiff to choose between workers’ compensation or a
tort remedy, despite the fact that the Constitution guarantees him or her the right to
both.
{¶ 11} We find these arguments unpersuasive. First, at a core level
petitioners are suggesting that the very concept of a workers’ compensation
subrogation statute is repugnant to Section 35, Article II. Indeed, supporting
amicus Ohio Academy of Trial Lawyers observes that, “as argued by the Petitioner,
the Ohio Constitution itself may prevent the legislature from ever validly enacting
a subrogation statute in the workers’ compensation context unless the constitutional
provision enabling that legislation is itself amended.” However, Section 35, Article
II does not preclude the enactment of a subrogation statute any more than it
prohibits the injured claimant from suing the third-party tortfeasor. Section 35,
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Article II enables a displacement of the common law only to the extent necessary
to provide the injured worker with an automatic recovery. Once payment of
workers’ compensation benefits is ensured, the employer may, without any
disparagement to the bargained-for rights of the employee, seek to impose the loss
upon the ultimate wrongdoer.
{¶ 12} Moreover, as revealed by the compilation of statutes in the appendix
to petitioners’ merit brief, virtually every jurisdiction provides some statutory
mechanism enabling the employer or fund to recover its workers’ compensation
outlay from a third-party tortfeasor. Any decision that would hold the mere concept
of a subrogation or reimbursement statute per se invalid in the workers’
compensation context would constitute a legal anomaly.
{¶ 13} Second, petitioners confuse the effect that R.C. 4123.931 may have
on the claimant-plaintiff’s tort recovery with the effect that it has on the claimant’s
workers’ compensation recovery. R.C. 4123.931 does not operate to reduce the
claimant’s workers’ compensation benefits. The statute may indeed operate
beyond its legitimate purpose and unconstitutionally affect the employee’s right to
a full recovery against the third-party tortfeasor. It may be true, as petitioners and
supporting amici argue strenuously, that the statute can diminish or extinguish the
claimant’s tort recovery irrespective of whether a double recovery has actually
occurred. But these concerns are not relevant here. Regardless of whether and to
what extent R.C. 4123.931 impermissibly cuts into a claimant’s tort recovery, it
does nothing to the claimant’s workers’ compensation. After the statute completes
its task, however unjustly to the claimant’s tort recovery, the claimant is always left
with the full measure of compensation and benefits to which he or she is entitled
under the Workers’ Compensation Act.
{¶ 14} Thus, R.C. 4123.931 does not disrupt any of the rights or obligations
of the claimant and the employer with regard to the payment of statutory workers’
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compensation benefits, and the balance of compromise upon which the viability of
the workers’ compensation system depends remains intact.
{¶ 15} Accordingly, we answer the first certified issue in the negative and
hold that R.C. 4123.931 does not violate Section 35, Article II of the Ohio
Constitution.
II
Sections 16 and 19, Article I—The Take-Away
{¶ 16} The second certified issue is whether R.C. 4123.931 violates Section
19, Article I of the Ohio Constitution, which provides that “[p]rivate property shall
ever be held inviolate, but subservient to the public welfare * * * and * * *, where
private property shall be taken for public use, a compensation therefor shall first be
made.”
{¶ 17} As well stated by the court in Direct Plumbing Supply Co. v. Dayton
(1941), 138 Ohio St. 540, 546
,21 O.O. 422, 424-425
,38 N.E.2d 70
, 73:
“No government could long continue to function if all property rights were
unqualifiedly inviolate. But, on the other hand, the constitutional guaranty of the
right of private property would be hollow if all legislation enacted in the name of
the public welfare were per se valid. To be truly in the public welfare within the
meaning of Section 19, and thus superior to private property rights, any legislation
must be reasonable, not arbitrary, and must confer upon the public a benefit
commensurate with its burdens upon private property. This general doctrine was
comprehensively stated by this court in Froelich v. City of Cleveland [1919], 99 Ohio St. 376
, at 391,124 N.E. 212
[216]: ‘It must be remembered that neither the
state in the passage of general laws, nor the municipality in the passage of local
laws, may make any regulations which are unreasonable. The means adopted must
be suitable to the ends in view, they must be impartial in operation, and not unduly
oppressive upon individuals, must have a real and substantial relation to their
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purpose, and must not interfere with private rights beyond the necessities of the
situation.’ ”
{¶ 18} The third certified question is whether R.C. 4123.931 violates
Section 16, Article I of the Ohio Constitution, which provides that every person,
for an injury done, “shall have remedy by due course of law.”
{¶ 19} In dealing with the constitutionality of various collateral-benefits-
offset statutes under Section 16, Article I, this court has recognized that the state
has a legitimate interest in preventing double recoveries. Thus, it is constitutionally
permissible for the state to prevent a tort victim from recovering twice for the same
item of loss or type of damage, once from the collateral source and again from the
tortfeasor. However, we have also recognized that these kinds of statutes are not
rationally related to their purpose where they operate to reduce a plaintiff’s tort
recovery irrespective of whether a double recovery has actually occurred. Thus,
we have consistently and repeatedly held that due process permits deductions for
collateral benefits only to the extent that the loss for which the collateral benefit
compensates is actually included in the award. McMullen v. Ohio State Univ. Hosp.
(2000), 88 Ohio St.3d 332, 341-344
,725 N.E.2d 1117, 1125-1127
; State ex rel. Ohio Academy of Trial Lawyers v. Sheward (1999),86 Ohio St.3d 451, 479-482
,715 N.E.2d 1062, 1088-1090
; Buchman v. Wayne Trace Local School Dist. Bd. of Edn. (1995),73 Ohio St.3d 260
,652 N.E.2d 952
; Sorrell v. Thevenir (1994),69 Ohio St.3d 415
,633 N.E.2d 504
.
{¶ 20} There is no valid justification for dispensing with these principles in
determining the constitutionality of R.C. 4123.931. Like the collateral-benefits-
offset statutes, the subrogation statute is aimed at preventing the tort victim from
keeping a double recovery, the only conceptual difference being that the intended
beneficiary is the statutory subrogee (i.e., the collateral payor) rather than the
tortfeasor. Thus, R.C. 4123.931 must also satisfy the constitutional requirement
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January Term, 2001
that deductible or, in this case, subrogable or recoupable items be matched to those
losses or types of damages that the claimant actually recovered from the tortfeasor.
{¶ 21} We are now confronted with similar determinative issues under
Sections 16 and 19, Article I of the Ohio Constitution. Whether expressed in terms
of the right to private property, remedy, or due process, the claimant-plaintiff has a
constitutionally protected interest in his or her tort recovery to the extent that it does
not duplicate the employer’s or bureau’s compensation outlay. Thus, if R.C.
4123.931 operates to take more of the claimant’s tort recovery than is duplicative
of the statutory subrogee’s workers’ compensation expenditures, then it is at once
unreasonable, oppressive upon the claimant, partial, and unrelated to its own
purpose.
{¶ 22} The following two provisions of the statute are called into question
under Sections 16 and 19, Article I of the Ohio Constitution: (1) the portion of R.C.
4123.931(A) that gives the statutory subrogee a right of subrogation with respect to
“estimated future values of compensation and medical benefits,” and (2) the portion
of R.C. 4123.931(D) providing that “[t]he entire amount of any settlement or
compromise of an action or claim is subject to the subrogation right of a statutory
subrogee, regardless of the manner in which the settlement or compromise is
characterized. Any settlement or compromise that excludes the amount of
compensation or medical benefits shall not preclude a statutory subrogee from
enforcing its rights under this section.”
A
Estimated Future Values
{¶ 23} By giving the subrogee a current collectible interest in estimated
future expenditures, R.C. 4123.931(A) creates the conditions under which a
prohibited taking may occur. This would happen in those situations where the
amount of reimbursement for “estimated future values of compensation and
medical benefits” proves to be substantially greater than the subrogee’s eventual
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compensation outlay. In other words, R.C. 4123.931(A) requires the claimant to
reimburse the bureau or self-insuring employer for future benefits that the claimant
may never receive. In that event, the statute operates not to prevent the claimant
from keeping a double recovery but to provide the statutory subrogee with a
windfall at the expense of the claimant’s tort recovery.
{¶ 24} Contrary to the assertions of respondent, there are too many
situations that can eventuate in this kind of taking, and they occur far too often, for
the problem to be considered merely hypothetical. One such situation is described
by amicus curiae Ohio Academy of Trial Lawyers as follows:
“A prime example of this [kind of taking] occurs in a wrongful death
situation where the decedent leaves a surviving spouse—say, a woman in her
thirties or forties. In such circumstances, the BWC or self-insured employer will
calculate estimated future benefits based upon the amounts it expects to pay over
the woman’s life expectancy. However, if the woman remarries, she will cease to
be entitled to workers’ compensation benefits upon remarriage, with the exception
that she will receive a lump sum payment at that time representing two additional
years of benefits. R.C. 4123.59(B)(1). Thus, in those circumstances, if the
subrogee has recovered estimated future benefits based upon the woman’s life
expectancy, and she remarries shortly thereafter, the statute endows the subrogee
with an enormous windfall at the expense of the injured party.”
{¶ 25} In fact, even the court in Yoh v. Schlachter (Mar. 17, 2000), Williams
App. No. WM-99-008, unreported, 2000 WL 281748
, upon which respondent relies
heavily, was compelled to note as follows:
“With respect to appellant’s taking issue, we note that there may exist a
potential problem with respect to the ‘estimated future values of compensation and
medical benefits’ aspect of R.C. 4123.931. For instance, OTC will receive in a
lump sum the entire estimated future amount it is supposed to pay to appellant and
her minor child. The statute, however, fails to specify what is to be done with any
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January Term, 2001
remainder of this sum once OTC is no longer required to pay workers’
compensation, such as, if appellant remarries or dies. The entire amount could be
paid in the form of workers’ compensation benefits, in which case there arguably
would be no taking issue because the beneficiaries would have received the full
amount of compensation and medical benefits to which they were entitled.
However, if OTC’s obligation to pay workers’ compensation benefits expired with
money still remaining in the pool of funds obtained through R.C. 4123.931, then
OTC arguably would have a windfall if it was not required to release the remainder
to appellant or her estate.” Id. at 14.
{¶ 26} Because a claimant may die before his or her life expectancy, the
amount collected by the subrogee for estimated future permanent total disability
payments may far exceed the amount of such compensation actually received by
the claimant. The same would hold true where any other type of ongoing statutory
compensation, for whatever reason, is terminated earlier than was estimated for
purposes of reimbursement. Indeed, any statutory benefit, anticipated for purposes
of reimbursement, may be denied or unrealized.
{¶ 27} In defending the estimated-future-values provision of R.C.
4123.931(A), respondent quotes various passages from Wilken v. Internatl.
Harvester Co. (Minn.1985), 363 N.W.2d 763
, and Kempa v. E.W. Coons Co. (Minn.1985),370 N.W.2d 414
, which, as appearing on the pages of respondent’s
brief, seem to suggest that estimating future workers’ compensation benefits in a
subrogation claim is tantamount to estimating future damages in a tort claim, and
that the disadvantage of imprecise estimates must yield to the advantages of a final
one-time resolution of the subrogation claim. Respondent argues that “[t]hese same
principles apply in Ohio,” and thus the estimated-future-values provision of R.C.
4123.931(A) is reasonable and constitutionally valid.
{¶ 28} Upon closer examination, however, it becomes apparent that Wilken
and Kempa do not support R.C. 4123.931(A)’s constitutionality. First, neither of
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these cases involves any constitutional issue whatsoever, let alone those addressed
in Direct Plumbing Supply Co., McMullen, Sheward, Buchman, and Sorrell.
{¶ 29} Second, the Minnesota cases have nothing to do with the subrogation
rights of employer and employee inter se. Instead, they involve issues of
contribution and subrogation between the tortfeasor and the employer that have no
effect on claimant’s tort recovery. In fact, the employee in Kempa actually settled
his claims against the tortfeasor exclusive and not duplicative of workers’
compensation benefits paid or to be paid by his employer, which is a third-party
procedural mechanism expressly forbidden under R.C. 4123.931(D).
{¶ 30} Third, the issue of estimating future workers’ compensation
obligations never arises between the Minnesota claimant and his or her employer,
or the fund. This is because Minn.Stat. 176.061(6) does not give the employer or
the fund any immediate right of subrogation or reimbursement with regard to future
payable compensation or medical benefits. Instead, the Minnesota statute provides
a formula under which the employer or fund can obtain reimbursement for
compensation paid and then provides that certain remaining tort proceeds shall be
paid to the employee and constitute a credit to the subrogee against future
compensation payments.
{¶ 31} The Minnesota cases aside, we cannot accept the hypothesis that the
constitutional infirmities inherent in R.C. 4123.931(A) can be justified by a
presumed state interest in providing for a “final resolution.” Contrary to
respondent’s assessment, R.C. 4123.931(A) does not provide for a final resolution
similar to the tort verdict. The application of the estimated-future-values provision
of R.C. 4123.931(A) does not, like the tort verdict, finally determine the rights and
obligations of the affected parties. Despite the application of R.C. 4123.931(A),
the subrogee remains under a continuing obligation to pay future compensation and
medical benefits to the claimant, the claimant continues to be entitled to receive
those payments as his or her rights accrue, and these rights and obligations still
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remain to be determined and administered. The only “final resolution” achieved
by R.C. 4123.931(A) is to provide immediate recovery to the subrogee by imposing
the risk of liability for overestimated future expenditures upon the claimant. But
the claimant is not a wrongdoer, and has not, in any legal or moral sense, caused
harm to the subrogee. Indeed, the subrogee’s loss is based entirely upon
compensation it owes to the injured claimant. Thus, unlike the tortfeasor, the
claimant is innocent; and it is irrational and arbitrary to impose this kind of risk
upon an innocent party, especially when a full (and more accurate) reimbursement
can be obtained by simply giving the subrogee the same kind of offset or credit
against future payments that has always been used to recoup overpayments of
compensation. See R.C. 4123.511(J); State ex rel. Weimer v. Indus. Comm. (1980),
62 Ohio St.2d 159
,16 O.O.3d 174
,404 N.E.2d 149
.
B
Settlements
{¶ 32} R.C. 4123.931(D) establishes a procedural framework under which
an unconstitutional taking of the claimant’s property or a denial of remedy by due
course of law can occur. This framework distinguishes between third-party claims
that are tried and third-party claims that are settled. In the case where an award or
judgment is rendered in the third-party action, R.C. 4123.931(D) allows the
claimant to obtain jury interrogatories segregating damages that do not represent
workers’ compensation or medical benefits and, therefore, are not subject to the
reimbursement right of the statutory subrogee. In contrast, the entire amount of any
settlement or compromise is deemed subject to the reimbursement right of the
statutory subrogee, and the claimant is precluded, under any circumstances, from
showing that his or her settlement or portions thereof do not represent or duplicate
workers’ compensation or medical benefits.
{¶ 33} The problem with this procedure is that it assumes that settlements
are always reached with third-party defendants who possess sufficient wealth or
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insurance to satisfy the claimant’s actual total damages and thus that the retention
of the settlement proceeds and workers’ compensation would result in a double
recovery. However, this assumption proves false in those situations where the
claimant is forced to settle his or her tort claim for the limits of an insurance policy
and the combined amount of the insurance proceeds and workers’ compensation
benefits is insufficient to cover all of the claimant’s actual loss. It can hardly be
said that a double recovery results where a tort victim is allowed to retain two
recoveries that, when combined, still do not make him or her whole. Indeed, in
some situations the available insurance may not even be sufficient to cover the
subrogee’s interest, in which case the entire amount of the settlement will be taken
by the subrogee. R.C. 4123.931(D) operates unconstitutionally in these situations
because it allows for reimbursement from proceeds that do not constitute a double
recovery.
{¶ 34} Again, contrary to respondent’s assertions, this situation cannot be
considered merely hypothetical. Indeed, we need look no further than In re Estate
of Ross (1997), 116 Ohio App.3d 402
,688 N.E.2d 303
, for an illustration. James
Ross was killed in a motor vehicle accident during the course of, and arising out of,
his employment with appellee Wendy’s. His surviving spouse, appellant RaShell
Ross, and two minor children, Joshua and James Ross, filed an application for death
benefits pursuant to R.C. 4123.59. Wendy’s, a self-insured employer, certified the
claim and began paying death benefits at a rate of $493 per week.
{¶ 35} Appellant then filed a wrongful death claim against the tortfeasor,
James Horn, who was insured by Trinity Universal Insurance Company. Appellant
settled with Horn and Trinity for Horn’s liability limits of $100,000. Wendy’s and
appellee Kemper Risk Management Services asserted Wendy’s subrogation rights
pursuant to R.C. 4123.931. The settlement proceeds were distributed as follows:
payment of attorney fees, expenses, and court costs first, and the remaining balance
of $64,906.85 to appellees. The decedent’s wife and two minor children received
16
January Term, 2001
nothing out of the settlement, serving merely as collection agents for the statutory
subrogee.
{¶ 36} The Third District Court of Appeals upheld the constitutionality of
the statute under Section 19, Article I, ruling that R.C. 4123.931 does not constitute
a taking of any property right in this situation because “[t]he statute merely allows
the employer to be reimbursed for the benefits paid by the employer to an employee
as a result of the third-party tortfeasor’s tortious conduct. The employee is not
deprived of adequate compensation for any injury suffered, as the benefits received
by the employee under the workers’ compensation laws are not diminished by the
operation of R.C. 4123.931. Moreover, the statute allows the employee to retain
any portion of the settlement or award greater than the employer’s reimbursement
expenses.” Id.,
116 Ohio App.3d at 406-407
,688 N.E.2d at 306
.
{¶ 37} The theory that the subrogating employer takes only the tortfeasor’s
money is offensive in the situation where the third-party recovery is no greater than
the employer’s compensation outlay. Reimbursement must be preceded by a
double recovery for the statute to operate constitutionally. It is spurious to say that
these tort victims were not deprived of adequate compensation because they still
get to keep workers’ compensation benefits. Workers’ compensation laws are not
intended to provide a full recovery, and they are not designed to restore injured
workers or their families to what they lost. See Blankenship, supra,
69 Ohio St.2d at 614
,23 O.O.3d at 508
,433 N.E.2d at 577
; Indus. Comm. v. Drake (1921),103 Ohio St. 628
, 635,134 N.E. 465
, 467. And it is pure sophistry to argue that
claimants who are staring at an empty coffer get to keep the unreimbursed portion
of their settlement.
{¶ 38} Moreover, if the decedent in Ross had been survived not only by his
wife and two minor children, but also by his parents, an adult child, and siblings,
the statute would operate to extinguish their recovery as well. However, these
persons, who are beneficiaries for purposes of a wrongful death action, are not
17
SUPREME COURT OF OHIO
workers’ compensation claimants and do not qualify for workers’ compensation
benefits. Compare R.C. 2125.02(A)(1) with R.C. 4123.59 and 4123.60. In this
situation, the statute operates unconstitutionally to allow one person’s tort recovery
to be reduced or extinguished by another person’s workers’ compensation benefits.
See McMullen, supra, 88 Ohio St.3d at 343, 725 N.E.2d at 1126
.
{¶ 39} While it may be accurate to say that R.C. 4123.931, in its effort to
reimburse the employer or bureau for its outlay of compensation, always leaves the
injured worker with the full measure of compensation and benefits to which he or
she is entitled under the Workers’ Compensation Act, this fact alone does not
automatically determine R.C. 4123.931’s constitutionality. What must be
considered, and what the court in Ross failed to consider, is that a person who
receives injuries in the course of employment as a proximate result of a third party’s
negligent act or omission possesses certain constitutionally protected rights of
recovery beyond those provided in the workers’ compensation statutes and that
those rights are not necessarily preserved by statutory workers’ compensation
benefits.
{¶ 40} Yet these are the very arguments raised by respondent and its
supporting amici in defense of R.C. 4123.931(D), with one addition. Respondent
argues that there is no “absolute right to settle regardless of the rights of other
interested parties.” When settling with a third-party tortfeasor, plaintiffs must be
aware that “the entire settlement award is subject to the right of the subrogee. *
* * Therefore, if the parties involved do not wish to lose certain rights due to
settlement, they can opt to proceed to trial and submit interrogatories to the jury [in
order to designate the types of damages awarded].”
{¶ 41} However, respondent adds nothing to the analysis by invoking the
platitude that there is no “absolute” right to settle. If a right had to be absolute
before it could be vindicated, virtually all rights would be worthless. Absolute or
not, this court has never tolerated an “illegal restriction upon the right to
18
January Term, 2001
compromise.” Davy v. Fid. & Cas. Ins. Co. (1908), 78 Ohio St. 256
, 270,85 N.E. 504
, 507. “ ‘[T]he law of Ohio will tolerate no lien in or out of the profession, as a general rule, which will prevent litigants from compromising, or settling their controversies, or which, in its tendencies, encourages, promotes or extends litigation.’ “ Id., 78 Ohio St. at 268-269, 85 N.E. at 507, quoting Weakly v. Hall (1844),13 Ohio 167
, 175,1844 WL 22
. Indeed, settlement is part of the essential core of our judicial process. It finds expression in Civ.R. 16, which specifically recognizes that one objective of pretrial procedure is to facilitate “[t]he possibility of settlement of the action”; in R.C. 1343.03(C), which imposes prejudgment interest upon a party who fails “to make a good faith effort to settle the case”; and in Vahila v. Hall (1997),77 Ohio St.3d 421, 426
,674 N.E.2d 1164, 1169
, where
the court unanimously rejected a strict “but for” test in legal malpractice cases,
partially on the basis that it “ ‘ignores settlement opportunities lost’ “ and tends to
“ ‘exclude evidence about settlement, * * * the most common form of client
recovery,’ “ quoting Note, The Standard of Proof of Causation in Legal Malpractice
Cases (1978), 63 Cornell L.Rev. 666, 670.
{¶ 42} Nor is it very meaningful to argue that plaintiffs who are faced with
the prospect of settling for policy limits in these situations can opt for a trial of the
third-party action and obtain jury interrogatories to designate the types of damages
awarded. Trying the tort case in order to have damages designated does not obviate
the problem in these situations. Despite any allocation of damages, the claimant’s
tort recovery is still fixed by the insurance policy limits, the combined amount of
those limits and workers’ compensation is still insufficient to cover the claimant’s
actual total loss, and there is still no double recovery to justify a right of subrogation
to any of the insurance proceeds. The only result of trying the tort claim in these
situations would be to clutter the trial court’s docket with unnecessary litigation
that serves only to eat away at the finite amount of available recovery.
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SUPREME COURT OF OHIO
{¶ 43} Thus, none of the theories advanced by respondent or supporting
amici changes the fact that under certain familiar conditions, R.C. 4123.931
operates to take away or reduce the claimant’s tort recovery irrespective of whether
a double recovery has actually occurred.
C
Propriety of Considering Additional Situations
{¶ 44} Respondent has urged us not to address the arguments raised by
petitioners and supporting amicus regarding R.C. 4123.931(A) and (D), as they are
based on “several hypothetical fact patterns, which have no bearing on the
resolution of the matter pending before the federal court.” We disagree, for several
reasons.
{¶ 45} First, respondent argued in its preliminary memorandum that this
court should address all eight certified questions in this case because “many cases
will be resolved and judicial economy will be promoted.” In so doing, the bureau
represented as follows:
“[T]he present case is only one of numerous recent cases challenging the
constitutionality of the subrogation provisions found in R.C. 4123.931. The
[bureau] is aware of approximately fifty such cases in twenty-two counties and two
federal district courts. Approximately seven of these cases were appealed to courts
of appeals in the second, third, sixth, eighth, and ninth Ohio appellate districts.
Several of the cases (in both common pleas courts and in the courts of appeals) have
now been settled, but most remain pending, including three cases before the eighth
and ninth district courts of appeals.”
{¶ 46} It would be more than a bit anomalous to now limit our consideration
of R.C. 4123.931’s constitutionality to the present certified facts.
{¶ 47} Second, after respondent’s merit brief was filed in this cause, this
court allowed discretionary appeals in Yoh, supra, and in In re Estate of Stewart
(June 28, 2000), Lorain App. No. 99CA007422, unreported, 2000 WL 840512
.
20
January Term, 2001
Collectively, these cases embody all of the issues and factual situations that
respondent urges us not to consider. Yet in both cases, the court has ordered that
briefing be stayed and the cause held for the decision in this case. See (2000), 89 Ohio St.3d 1490
,734 N.E.2d 377
; (2000),90 Ohio St.3d 1471
,738 N.E.2d 383
.
That is, Yoh and Stewart are poised to be decided upon the authority of the decision
in this case. Thus, as it stands now, if we did as respondent suggests, this court
could uphold the constitutionality of the statute as applied in situations that we
declined to consider.
{¶ 48} It may be argued that the court can nevertheless decline to consider
additional factual situations in this case, then lift the stay on briefing in Yoh and
Stewart and hear those cases on the merits. But this approach would produce an
absurd result. Assuming that a refusal to consider additional factual situations in
this case would result in a decision in favor of constitutionality, that decision would
stand only so long as it took us to reverse it in Yoh and Stewart.
{¶ 49} Finally, the consideration of additional situations is particularly
warranted in judging the constitutionality of R.C. 4123.931 because it is the statute
itself that creates those situations by virtue of its classifications and presumptions.
Otherwise, there would be no way to determine whether the statute is reasonable or
rationally related to its presumed constitutional goal of preventing claimants from
collecting and keeping a double recovery. Moreover, the situations considered
above are not merely speculative factual scenarios that may or may not arise at
some future time but are instead familiar and repeated circumstances that
necessarily arise by virtue of the interplay between the common law and the
workers’ compensation statutes. In addition, the district court has certified this
cause to us without any knowledge as to what situations relevant to the application
of the statute will arise after trial. Thus, the federal court is actually asking us to
evaluate the constitutionality of R.C. 4123.931 under the various situations that
may arise in this case.
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SUPREME COURT OF OHIO
{¶ 50} Thus, we find it absolutely essential to a determination of R.C.
4123.931’s constitutionality that the court consider how the statute operates in the
situations described above.
{¶ 51} Accordingly, for all of the foregoing reasons, we answer certified
questions two and three in the affirmative and hold that R.C. 4123.931 violates
Sections 16 and 19, Article I of the Ohio Constitution.
III
Section 28, Article II—The Compromise Revisited
{¶ 52} The fourth certified question is whether R.C. 4123.931 violates
Section 28, Article II of the Ohio Constitution, which provides that “[t]he general
assembly shall have no power to pass * * * laws impairing the obligation of
contracts.”
{¶ 53} This is essentially the same challenge that was made under Section
35, Article II, but dressed in contractual attire. The gist of the challenge is that the
workers’ compensation bargain as reflected in R.C. Chapter 4123 constitutes
contractual legislation that cannot be impaired. However, this challenge fails for
the same reasons already stated with regard to Section 35, Article II.
{¶ 54} Accordingly, we answer the fourth certified issue in the negative and
hold that R.C. 4123.931 does not violate Section 28, Article II of the Ohio
Constitution.
22
January Term, 2001
IV
Section 2, Article I—Reclassifying the Arguments
{¶ 55} The fifth certified question is whether R.C. 4123.931 violates
Section 2, Article I of the Ohio Constitution, which provides that government is
instituted for the “equal protection and benefit” of the people and that “no special
privileges or immunities shall ever be granted.”
{¶ 56} Petitioners argue that R.C. 4123.931 violates the Privileges and
Immunities Clause because it allows employers to recover all of their workers’
compensation expenditures while continuing to enjoy immunity from suit. Thus,
“the statute grants employers the special privilege of immunity from suit without
having paid or provided consideration for it.”
{¶ 57} Contrary to petitioners’ assertion, however, the employer has
provided consideration for its immunity from suit by paying workers’
compensation benefits; and the theory that subrogation is intrinsically antithetical
to the workers’ compensation system lacks merit here as well.
{¶ 58} Petitioners also argue that R.C. 4123.931(D) creates arbitrary
classifications and, therefore, violates the Equal Protection Clause. Under an equal
protection analysis, the challenged statute will be upheld if the classification bears
a rational relationship to a legitimate governmental interest or if reasonable grounds
exist for drawing the distinction. See State ex rel. Patterson v. Indus. Comm.
(1996), 77 Ohio St.3d 201, 205
,672 N.E.2d 1008
, 1011; Roseman v. Firemen & Policemen’s Death Benefit Fund (1993),66 Ohio St.3d 443, 447
,613 N.E.2d 574, 577
.
{¶ 59} First, petitioners maintain that the statute creates “arbitrary
classifications of tort victims—employees injured on the job and employees injured
off the job. The subrogation statute creates a presumption against the former by
mandating that the ‘entire amount of any award or judgment is presumed to
represent compensation * * * subject to a statutory subrogee’s subrogation rights.’
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SUPREME COURT OF OHIO
“ According to petitioners, “[t]he strict scrutiny test is appropriate here because the
fundamental rights of access to Ohio workers’ comp system and access to Ohio’s
civil justice system are clearly at stake.”
{¶ 60} The problem with this argument is that it assumes too much. Since
R.C. 4123.931 guarantees full workers’ compensation in all cases, the right of
access to the workers’ compensation system is not implicated. Nor does this
classification implicate the right of access to Ohio’s civil justice system. The
presumption created in the case of awards or judgments can be rebutted by “jury
interrogatories indicating that the award or judgment represents different types of
damages.” In providing the claimant with the means to segregate damages that do
not duplicate workers’ compensation benefits, R.C. 4123.931(D) avoids offending
the claimant’s rights to remedy, due process, and private property. Thus, in drawing
a distinction between workers’ compensation claimants and other tort victims, the
statute does not involve any fundamental right.
{¶ 61} In this context, it can hardly be said that tort victims who are injured
“on the job” or, more appropriately, in the course of and arising out of their
employment, are similarly situated to tort victims who are injured “off the job” or,
more precisely, who do not receive an injury in the course of and arising out of their
employment. The former tort victim recovers compensation and medical benefits
under the Workers’ Compensation Act; the latter does not. Contrary to the
assertions of Ohio Academy of Trial Lawyers, equal protection does not require the
General Assembly to pass a valid collateral-benefits-offset statute covering tort
claims in general before it can enact a workers’ compensation subrogation statute.
Accordingly, we reject petitioners’ first equal protection argument.
{¶ 62} Petitioners’ second equal protection argument is that R.C.
4123.931(D) arbitrarily distinguishes between claimants who proceed to trial on
their tort claims and claimants who settle their tort claims. Petitioners argue that
claimants who settle receive less favorable treatment because, unlike claimants who
24
January Term, 2001
try their tort claims, they are precluded from showing that their tort recovery or
portions thereof do not duplicate workers’ compensation benefits and, therefore, do
not represent a double recovery. Thus, while claimants who go to trial “may have
some portion of their award excluded from the subrogee’s right of reimbursement,
the injured employees who settle their claims * * * have no comparable method or
opportunity to shield a portion of their damages from the subrogee.” We agree.
{¶ 63} R.C. 4123.931(D) essentially creates a presumption that a double
recovery occurs whenever a claimant is permitted to retain workers’ compensation
and tort recovery. Claimants who try their tort claims are permitted to rebut this
presumption, while claimants who settle their tort claims are not. Such disparate
treatment of claimants who settle their tort claims is irrational and arbitrary because,
as demonstrated in Part II above, there are situations where claimants’ tort recovery
is necessarily limited to amounts that if retained along with workers’ compensation
cannot possibly result in a double recovery.
{¶ 64} Contrary to respondent’s assertions, these claimants are not free to
make the decision to proceed to trial or to settle. Their only freedom is to choose
the mechanism by which to forfeit their rights to property and remedy. And in
those situations where claimants are forced to settle for amounts that are insufficient
to satisfy more than the subrogee’s claim, as happened in Ross, supra,
their only
freedom is to have their tort recovery obliterated.
{¶ 65} Respondent further argues that “R.C. 4123.931 is a rational response
to a legitimate state concern to minimize the loss to the workers’ compensation
fund caused by the wrongful actions of a third-party tortfeasor.” However, this
concern justifies the statute only so far as the statute operates to assess the
subrogee’s loss against the tortfeasor. But when the statute operates irrespectively
of whether a double recovery has occurred, it can no longer be said that the fund is
being replenished at the tortfeasor’s expense. The state’s interest in conserving the
fund can no more justify the denial of a claimant’s nonduplicative tort recovery
25
SUPREME COURT OF OHIO
than it can serve as a viable basis for denying workers’ compensation benefits to
those entitled to it. See State ex rel. Nyitray v. Indus. Comm. (1983), 2 Ohio St.3d 173, 177
, 2 OBR 715, 718-719,443 N.E.2d 962, 966
.
{¶ 66} Finally, several amici in support of respondent argue that
distinguishing between settlements and trial “is also rational because settling parties
will rarely, if ever, allocate a settlement to lost wages, medical expenses and pain
and suffering.” The corollary to this argument is that the distinction may be a
rational method to preclude collusive settlements. However, there is no purpose to
allocating damages in the absence of a double recovery and, in these situations, it
is difficult to conceive how collusion could occur, unless the tortfeasor’s financial
and insurance coverage decisions were somehow made in collaboration with the
claimant.
{¶ 67} Accordingly, we answer the fifth certified question in the affirmative
and hold that R.C. 4123.931 violates the Equal Protection Clause of Section 2,
Article I of the Ohio Constitution to the extent that it distinguishes between
claimants who try their tort claims and claimants who settle their tort claims.
V
Section 15, Article II—One Subject
{¶ 68} The sixth certified question is whether R.C. 4123.931 violates
Section 15, Article II of the Ohio Constitution. Specifically, petitioners claim that
R.C. 4123.931 violates Section 15(D), Article II, which provides that “[n]o bill shall
contain more than one subject.”
{¶ 69} 1995 Am.Sub.H.B. No. 278, which enacted R.C. 4123.93 and
4123.931, comes nowhere close to violating the one-subject rule. In addition to
enacting these new sections, Am.Sub.H.B. No. 278 amended four sections of R.C.
Chapters 4121 and 4123 and made appropriations for the bureau for the biennium
beginning July 1, 1995, and ending June 30, 1997. 146 Ohio Laws, Part II, 3581.
26
January Term, 2001
The bill contains one subject, and only one subject—workers’ compensation. There
is no disunity of subject matter.
{¶ 70} Accordingly, we answer the sixth certified question in the negative
and hold that R.C. 4123.931, or more appropriately, Am.Sub.H.B. No. 278, does
not violate Section 15(D), Article II of the Ohio Constitution.
VI
Civ.R. 49(C)—Special Verdict
{¶ 71} The seventh certified question is whether R.C. 4123.931 is contrary
to Civ.R. 49(C) and, therefore, invalid and unenforceable.
{¶ 72} In an effort to provide the claimant with the means to rebut the
presumption that the entire amount of any third-party award or judgment represents
workers’ compensation, R.C. 4123.931(D) allows the use of “a special verdict or
jury interrogatories” to segregate different types of damages. However, Civ.R.
49(C) provides, to the contrary, that “[s]pecial verdicts shall not be used.” Thus, to
this extent R.C. 4123.931 is contrary to Civ.R. 49(C) and the latter must control.
See Rockey v. 84 Lumber Co. (1993), 66 Ohio St.3d 221
,611 N.E.2d 789
,
paragraph two of the syllabus.
{¶ 73} However, this certainly does not render the entire statute invalid and
unenforceable, nor does it cause the provision of R.C. 4123.931(D) for classifying
damages to become inoperative. The provision can still operate without the use of
a special verdict, since it also provides for the use of special interrogatories.
{¶ 74} Accordingly, we answer the seventh certified issue in the negative
and hold that while R.C. 4123.931 is contrary to Civ.R. 49(C) to the extent that it
provides for the use of a special verdict, no part of the statute is thereby rendered
invalid or unenforceable.
VII
R.C. 4123.80—Waiver of Compensation
27
SUPREME COURT OF OHIO
{¶ 75} The eighth and final certified question is whether R.C. 4123.931
constitutes an invalid waiver of an injured employee’s right to receive and retain
workers’ compensation benefits in violation of R.C. 4123.80.
{¶ 76} R.C. 4123.80 provides that “[n]o agreement by an employee to
waive his rights to compensation under this chapter is valid.” Petitioners argue that
R.C. 4123.931 forces the employee who pursues a third-party claim to pay back his
or her workers’ compensation benefits and, therefore, constitutes an invalid waiver
under R.C. 4123.80.
{¶ 77} This is the same argument that was used in an attempt to invalidate
the very concept of a workers’ compensation subrogation statute under Sections 28
and 35, Article II of the Ohio Constitution, and it fails once again for the same
reasons. In no event does R.C. 4123.931 ever cause the claimant to end up with
less than the full amount of workers’ compensation benefits to which he or she is
entitled under R.C. Chapter 4123. The statute may be construed as imposing an
obligation upon an injured employee to waive his or her right to tort compensation,
but it never causes the injured employee to relinquish any right to workers’
compensation.
{¶ 78} Accordingly, we answer the eighth certified question in the negative
and hold that R.C. 4123.931 does not constitute an invalid waiver of an injured
employee’s right to receive and retain workers’ compensation benefits in violation
of R.C. 4123.80.
28
January Term, 2001
VIII
Conclusion
{¶ 79} We hold that R.C. 4123.931 does not violate Sections 15, 28, or 35,
Article II of the Ohio Constitution, is not rendered invalid by Civ.R. 49(C), and
does not constitute an invalid waiver under R.C. 4123.80. We hold, however, that
R.C. 4123.931 does violate Sections 2, 16, and 19, Article I of the Ohio
Constitution. In so holding, we do not accept the proposition that a workers’
compensation subrogation statute is per se unconstitutional, and nothing in this
opinion shall be construed to prevent the General Assembly from ever enacting
such a statute. We hold only that R.C. 4123.931, in its present form, is
unconstitutional.
{¶ 80} Accordingly, we advise the federal court that R.C. 4123.931 is
unconstitutional under Ohio law.
Judgment accordingly.
DOUGLAS, F.E. SWEENEY and PFEIFER, JJ., concur.
MOYER, C.J., COOK and LUNDBERG STRATTON, JJ., dissent.
__________________
MOYER, C.J., dissenting.
{¶ 81} “The courts must declare the sense of the law; and if they should be
disposed to exercise will instead of judgment, the consequence would equally be
the substitution of their pleasure to that of the legislative body.” The Federalist No.
78 (Alexander Hamilton) (Clinton Rossiter Ed. 1961) 468-469.
{¶ 82} The principle that courts are not the creators of public policy and
should not decide cases based on disagreement with a legislature has guided courts
since the creation of the American judicial system.
{¶ 83} This court has adhered to the view. See State ex rel. Bowman v.
Allen Cty. Bd. of Commrs. (1931), 124 Ohio St. 174, 196
,177 N.E. 271, 278
; State ex rel. Bishop v. Mt. Orab Village School Dist. Bd. of Edn. (1942),139 Ohio St. 29
SUPREME COURT OF OHIO 427, 438,22 O.O. 494, 498
,40 N.E.2d 913, 919
; State v. Warner (1990),55 Ohio St.3d 31, 43
,564 N.E.2d 18, 30-31
; Cent. Motors Corp. v. Pepper Pike (1995),73 Ohio St.3d 581, 584
,653 N.E.2d 639
, 642-643; Desenco, Inc. v. Akron (1999),84 Ohio St.3d 535, 538
,706 N.E.2d 323, 328
.
{¶ 84} The majority’s determination that R.C. 4123.931 violates Sections
2, 16, and 19, Article I, appears to derive from its disagreement with the substance
of the legislation. The reasons stated for declaring the statute unconstitutional are
generally policy arguments, not principles of constitutional law. The majority
disregards the principle so cogently stated by Justice Harlan Stone in his dissent in
United States v. Butler. He cautioned that “the only check upon our own exercise
of power is our own sense of self-restraint. For the removal of unwise laws from
the statute books appeal lies, not to the courts, but to the ballot and to the processes
of democratic government.” United States v. Butler (1936), 297 U.S. 1, 79
,56 S.Ct. 312, 325
,80 L.Ed. 477, 495
.
{¶ 85} As I wrote in DeRolph II, “constitutional history, precedent, and
logic warrant the conclusion that [these types of] qualitative judgments should be
committed to the will of the people as expressed in the election of representatives
to the General Assembly.” DeRolph v. State (2000), 89 Ohio St.3d 1, 48
,728 N.E.2d 993, 1029
(Moyer, C.J., dissenting).
{¶ 86} Our role here is to determine whether R.C. 4123.931 violates the
Ohio Constitution, not to determine whether R.C. 4123.931 represents the policy
decision that we would have chosen were we legislators.
I. Sections 16 and 19, Article I, Ohio Constitution
{¶ 87} The majority holds that because R.C. 4123.931 “operates to take
more of the claimant’s tort recovery than is duplicative of the statutory subrogee’s
workers’ compensation expenditures,” it is impermissibly “unreasonable,
oppressive upon the claimant, partial, and unrelated to its own purpose.”
Specifically, the majority holds that R.C. 4123.931 “creates the conditions under
30
January Term, 2001
which a prohibited taking may occur” when R.C. 4123.931(A) gives the statutory
subrogee the right of subrogation with respect to “estimated future values of
compensation and medical benefits.” I disagree.
{¶ 88} The majority argues that the employee is unconstitutionally required
to reimburse the Bureau of Workers’ Compensation or the self-insured employer
for future benefits that the employee may never receive. For instance, an injured
employee may die before benefits equaling the subrogation amount have been
received. It is also suggested that the surviving spouse may remarry, at which point
he or she is entitled to a lump-sum payment representing two additional years of
benefits, but, under workers’ compensation law, is not entitled to further benefits.
R.C. 4123.59(B). Because of this potential inequity, the majority holds that because
the General Assembly did not include an offset or credit against future payments in
the subrogation scheme, R.C. 4123.931 unconstitutionally represents a taking and
denial of a remedy in violation of Sections 16 and 19, Article I.
{¶ 89} It is true that an employee may die before benefits equaling the
subrogation amount have been received. However, it is also true that an employee
may live far beyond his or her life expectancy as determined by the court in
estimating those future benefits. The estimated future values are the amount of
compensation and medical benefits reasonably projected to be paid in the claim by
the subrogee as a result of the actions of the tortfeasor. The court in determining
these values hears evidence from both the claimant and the subrogee, and may
reject the subrogee’s projections if it finds them not well supported.
{¶ 90} This method of calculation of estimated future values is similar to
the concept of future damages in a typical personal injury claim. Courts routinely
estimate the value of future payments in these cases, aided by expert testimony,
mortality tables, and formulas for reducing future payments to present value. Ohio
Jury Instructions currently provides for estimating future values regarding earnings,
1 Ohio Jury Instructions (1996), Section 23.20, present value of future damage, 1
31
SUPREME COURT OF OHIO
Ohio Jury Instructions (1996), Section 23.77, and damages relating to permit injury
and death, 1 Ohio Jury Instructions (1996), Sections 23.90 through 23.91. In
addition, jurors are provided with mortality tables to determine “the probable
normal length of life of the decedent.” 1 Ohio Jury Instructions (1996), Section
23.76. Jurors are empowered to make these types of determinations in numerous
situations.
{¶ 91} The future values of workers’ compensation benefits can be
calculated with more certainty than the typical personal injury claim, since an
injured employee’s rate of compensation is computed according to a statutorily set
scheme. R.C. 4123.61. Therefore, like the tort verdict, the subrogation amount for
future benefits is based on reasonable assumptions that, although inherently
uncertain, provide for a final resolution.
{¶ 92} The majority contends that this final resolution is neither final nor
enough to justify the constitutional infirmities of R.C. 4123.931. This argument
misses the point. The fact that the subrogee continues to administer benefits does
not, as the majority finds, make the goal of a final resolution invalid. While the
subrogee may eventually pay out greater or fewer benefits to the claimant than the
court determined was reasonable at the time of the lawsuit, the procedure of a one-
time payment to the subrogee is reasonable. The Constitution does not demand a
method of calculation that results in a perfect and exact determination, only a
reasonable one. The credit system is also a reasonable method. However, we are
not empowered to choose between reasonable methods. Our authority extends only
to determining whether the method chosen by the General Assembly is clearly
unconstitutional. Desenco, Inc. v. Akron, 84 Ohio St.3d at 538
,706 N.E.2d at 328
.
This is a reasonable method of calculation and not clearly unconstitutional beyond
a reasonable doubt. Therefore, I would hold that R.C. 4123.931 does not violate
Sections 16 or 19, Article I of the Ohio Constitution.
II. Section 2, Article I, Ohio Constitution
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January Term, 2001
{¶ 93} The majority holds that R.C. 4213.931(D) violates Section 2, Article
I of the Ohio Constitution because although claimants who opt for trial can request
jury interrogatories, claimants who opt for settlement “ ‘have no comparable
method or opportunity to shield a portion of their damages from the subrogee,’ ”
quoting the petitioners’ brief. My disagreement with this holding is analogous to
my concerns raised regarding the court’s role in determining the constitutionality
of a statute and relates to the same fundamental difference between my view of that
role and the view of the majority. Again, I disagree.
{¶ 94} Injured employees are not a suspect class. State v. Williams (2000),
88 Ohio St.3d 513, 530
,728 N.E.2d 342
, 359. Nor does R.C. 4123.931 implicate a fundamental constitutional right.Id.
Accordingly, we evaluate R.C. 4123.931 using a rational-basis analysis.Id.
{¶ 95} As stated previously, the workers’ compensation scheme relies on
compulsory contributions by employers to a statewide fund. Injured employees
and their beneficiaries are paid workers’ compensation benefits from this fund.
Prior to adoption of R.C. 4123.931, employees injured by the wrongful actions of
a third-party tortfeasor could recover damages from third-party tortfeasors and
receive compensation benefits from the Workers’ Compensation Fund. R.C.
4123.931 was enacted to preserve the Workers’ Compensation Fund. A rational-
basis analysis requires us to uphold this remedy “unless it constitutes a plain affront
to a specific provision of the Constitution.” Am. Assn. of Univ. Professors, Cent.
State Univ. Chapter v. Cent. State Univ. (1999), 87 Ohio St.3d 55, 61
,717 N.E.2d 286
, 292. Accordingly, we must analyze the Holetons’ equal protection arguments
to determine whether R.C. 4123.931 constitutes such an affront to Section 2, Article
I.
{¶ 96} R.C. 4123.931 affects no fundamental right of an employee. If an
employee is dissatisfied with settlement policies, the employee may proceed with
a jury trial. R.C. 4123.931 does not force employees to litigate. Instead, like all
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SUPREME COURT OF OHIO
claimants, injured employees are free to decide whether to proceed to trial or to
settle. Each process has its own advantages and disadvantages, and the employee
must decide whether to submit his or her claim to a trial that would determine the
portion of the award that should be shielded from subrogation, or to settle with the
tortfeasor, taking into consideration that the settlement amount will be subject to
subrogation.
{¶ 97} Without the restriction regarding settlement awards in R.C.
4123.931(D), employees could accept a lower settlement amount from the
tortfeasor, in exchange for an agreement stating that the entire amount was not
subject to subrogation. In according only those employees who choose a trial the
right to ask the jury to determine what portion of the award should be shielded, the
General Assembly could have rationally conceived that this was a method to
preclude collusive settlements. Although the majority argues that it is difficult to
anticipate how these would occur, the situation is no more hypothetical than the
many hypothetical situations the majority claims could result in subrogation
without double recovery.
{¶ 98} Even more important, legislation aimed at preventing collusive
settlements that would prevent a statutory subrogee from being reimbursed is a
reasonable use of legislative power, especially when the legislation is aimed at
preserving the integrity of the State Fund for the benefit of all workers’
compensation claimants. Accordingly, I would hold that R.C. 4123.931 does not
violate Section 2, Article I of the Ohio Constitution.
III. Conclusion
{¶ 99} For the forgoing reasons, I would answer the certified questions by
advising the United States District Court for the Northern District of Ohio that R.C.
4123.931 does not violate Sections 2, 16, or 19, Article I.
COOK and LUNDBERG STRATTON, JJ., concur in the foregoing dissenting
opinion.
34
January Term, 2001
__________________
COOK, J., dissenting.
{¶ 100} Like the Chief Justice, I would answer “no” to each certified
question. And I agree with much of what the Chief Justice expresses in his
dissenting opinion. I write separately to address the majority’s unfortunate decision
to declare R.C. 4123.931 unconstitutional on its face for violating the Takings and
Right to Remedy Clauses of the Ohio Constitution.
{¶ 101} A party may challenge a statute as unconstitutional either on its face
or as applied to a particular state of facts. Belden v. Union Cent. Life Ins. Co.
(1944), 143 Ohio St. 329
,28 O.O. 295
,55 N.E.2d 629
, paragraph four of the syllabus. The effect of a successful challenge will differ depending on whether the court strikes the statute on its face or as applied. “If a statute is unconstitutional as applied, the State may continue to enforce the statute in different circumstances where it is not unconstitutional, but if a statute is unconstitutional on its face, the State may not enforce the statute under any circumstances.” Women’s Med. Professional Corp. v. Voinovich (C.A.6, 1997),130 F.3d 187
, 193. This case necessarily presents a facial challenge to R.C. 4123.931. Because there has been no verdict or settlement to which the statute has been applied, this case presents no set of facts upon which we can base an as-applied constitutional analysis. See State v. Beckley (1983),5 Ohio St.3d 4, 6-7
, 5 OBR 66, 68-69,448 N.E.2d 1147
, 1148-
1149 (constitutional challenge had to be a facial one when there was no “presently
existing state of facts to which to apply the challenged statutes”).
{¶ 102} The majority fails to appreciate the distinction between facial and
as-applied constitutional challenges. Because the majority deems R.C. 4123.931
unpalatable when applied to various factual scenarios not presented in this case, the
majority declares the statute unconstitutional on its face. As noted above, this
decision precludes future application of the statute under any circumstances. But
the majority’s approach fails to acknowledge important precepts that are supposed
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SUPREME COURT OF OHIO
to guide an analysis of facial challenges. “A facial challenge to a legislative Act is,
of course, the most difficult challenge to mount successfully, since the challenger
must establish that no set of circumstances exists under which the Act would be
valid. The fact that [a statute] might operate unconstitutionally under some
conceivable set of circumstances is insufficient to render it wholly invalid * * *.”
United States v. Salerno (1987), 481 U.S. 739, 745
,107 S.Ct. 2095, 2100
,95 L.Ed.2d 697, 707
; see, also, Emerson Elec. Co. v. Tracy (2000),90 Ohio St.3d 157, 162
,735 N.E.2d 445, 449-450
(Cook, J., dissenting). By ignoring this principle, the majority loses sight of “the strong presumption in favor of the constitutionality of legislation and the judicial obligation which exists to support the enactment of a lawmaking body if this can be done.” Beckley,5 Ohio St.3d at 7
, 5 OBR at 69,448 N.E.2d at 1149
. Today’s decision thus stands for the bizarre (and unsupportable)
proposition that a court may declare a statute unconstitutional on its face simply
because it may be applied unconstitutionally in some situations, under a set of facts
not at bar.
{¶ 103} The majority goes to great lengths in defending its mode of
analyzing the constitutionality of R.C. 4123.931 under the Takings and Right to
Remedy Clauses. For example, the majority claims that it “would be more than a
bit anomalous to now limit our consideration of R.C. 4123.931’s constitutionality
to the present certified facts” in light of the respondent’s representations to this
court that numerous pending cases may be resolved by our decision in this one.
The majority also contends that the factual scenarios it considers in this case are
“familiar and repeated circumstances that necessarily arise” from R.C. 4123.931’s
“interplay” with the common law. But these arguments are unresponsive to the
mistake that the majority actually makes in its constitutional analysis.
{¶ 104} The majority’s error is not the consideration of additional
situations; indeed, when entertaining a facial challenge, the court necessarily
considers how the statute may apply to a variety of circumstances. Rather, the
36
January Term, 2001
majority’s mistake comes in considering too few additional situations before
declaring the statute facially unconstitutional. Before we may strike the statute as
facially unconstitutional, and therefore invalid in toto, we must do more than simply
find that the statute operates unconstitutionally in some situations. See Village of
Hoffman Estates v. Flipside, Hoffman Estates, Inc. (1982), 455 U.S. 489, 494-497
,102 S.Ct. 1186, 1191-1193
,71 L.Ed.2d 362, 369-370
. Finding a law facially unconstitutional requires us “to hold that under no reasonable set of circumstances” could the statute operate constitutionally. (Emphasis added.) Beckley,5 Ohio St.3d at 7
, 5 OBR at 69,448 N.E.2d at 1149
; see, also, Salerno,481 U.S. at 745
,107 S.Ct. at 2100
,95 L.Ed.2d at 707
. The majority’s analysis falls far short of this
exhaustive standard. Instead of striking R.C. 4123.931 because it violates the Right
to Remedy and Takings Clauses in virtually all of its applications, the majority has
instead voided the statute simply because it deems the law invalid under the limited
circumstances it has chosen to address.
{¶ 105} The majority also justifies its departure from the proper mode of
constitutional analysis by painting a misleading picture about how this court
manages its docket. The majority notes that this court has allowed discretionary
appeals in Yoh v. Schlachter (Mar. 17, 2000), Williams App. No. WM-99-008,
unreported, 2000 WL 281748
, and In re Estate of Stewart (June 28, 2000), Lorain App. No. 99CA007422, unreported,2000 WL 840512
. See (2000),89 Ohio St.3d 1490
,734 N.E.2d 377
, and (2000),90 Ohio St.3d 1471
,738 N.E.2d 383
. In both
of these cases, this court sua sponte ordered the briefing schedules stayed and the
causes “held” for the decision in this case. According to the majority, this means
that these cases “are poised to be decided” summarily “upon the authority” of this
case. Thus, the majority concludes that a decision upholding the facial
constitutionality of R.C. 4123.931 could result in this court “uphold[ing] the
constitutionality of the statute as applied in situations that we declined to consider.”
But this explanation is just plain wrong, for it is based on an inaccurate depiction
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SUPREME COURT OF OHIO
of how other cases currently pending before this court would be affected in the
event that we upheld the facial validity of R.C. 4123.931 in this case.
{¶ 106} This court does not summarily decide all held causes when we have
decided the case for which those causes are held. The disposition of a given case
may not warrant summary disposition of causes held for it, particularly if the held
causes present unique issues that are not addressed in the lead case. For example,
this court ordered briefing in at least two recent cases that were originally held for
dispositions in other cases. Compare State v. Eppinger (2000), 89 Ohio St.3d 1447
,731 N.E.2d 1136
, and Paton v. Paton (2000),89 Ohio St.3d 1436
,730 N.E.2d 990
(lifting stays on briefing), with State v. Eppinger (1999),86 Ohio St.3d 1465
,715 N.E.2d 568
, and Paton v. Paton (1999),86 Ohio St.3d 1465
,715 N.E.2d 568
(holding causes for decisions in cases already pending before this court). In
Eppinger and Paton, this court examined each case and found it inappropriate to
decide them summarily, despite the fact that we had originally held them for other
cases pending here. Similarly, if Yoh and Stewart present issues not adequately
addressed by the decision in this case, this court would lift the stay on briefing and
hear the cases on the merits. Thus, if the majority had (correctly) upheld the facial
constitutionality of R.C. 4123.931, it would be inappropriate for this court to
summarily decide Yoh and Stewart if those cases challenge the constitutionality of
the statute as applied to the facts of those cases. We would instead order briefing
on the merits and the parties would have the opportunity to focus their arguments
on the as-applied challenges without having to address the facial challenges we
have already decided here.
{¶ 107} The majority discounts this orderly (and correct) procedure by
claiming that a supposedly “absurd result” would flow from it. The majority states,
“Assuming that a refusal to consider additional factual situations in this case would
result in a decision in favor of constitutionality, that decision would stand only so
long as it took us to reverse it in Yoh and Stewart.” But this assertion is woefully
38
January Term, 2001
wrong and further illuminates the majority’s failure to distinguish between facial
and as-applied constitutional challenges. If a majority of this court had (correctly)
decided here that the statute was not facially unconstitutional, only to decide later
that the statute was unconstitutional as applied to the situations presented in Yoh
and Stewart, we would not “reverse” our decision in this case. The statute would
merely be unenforceable as applied to the circumstances presented in those
previously held cases; the statute would remain facially valid, meaning that the law
could still be enforced in other circumstances where its operation would be
constitutional. Simply put, a decision upholding the facial constitutionality of R.C.
4123.931 in this case would not preclude this court (or any other court for that
matter) from finding the statute unconstitutional as applied to a particular set of
facts in a later case.
{¶ 108} Finally, the majority contends that the district court, by certifying
the constitutional questions, “is actually asking us to evaluate the constitutionality
of R.C. 4123.931 under the various situations that may arise in this case.” The
majority says this is so because the district court is “without any knowledge” of
what facts will arise after trial. But this explanation is curious, given that the
certified questions dealing with constitutionality ask only abstract questions of
whether R.C. 4123.931 is constitutional under various provisions of the Ohio
Constitution. How the majority gleans the district court’s desire to have us decide
the constitutionality of the statute “under the various situations that may arise in
this case” is anyone’s guess. It is more likely, given the general phrasing of the
certified constitutional questions, that the district court wanted to know whether
R.C. 4123.931 is unconstitutional on its face and therefore incapable of any
application to the Holetons’ lawsuit. With our answer to that question, the district
court would know whether it had to consider R.C. 4123.931 at all. See Women’s
Med. Professional Corp., 130 F.3d at 193 (statute unconstitutional on its face
cannot be enforced under any circumstances).
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SUPREME COURT OF OHIO
{¶ 109} For these reasons, in addition to those stated by the Chief Justice, I
dissent. I would uphold the facial validity of R.C. 4123.931 and advise the district
court accordingly.
LUNDBERG STRATTON, J., concurs in the foregoing dissenting opinion.
__________________
Shumaker, Loop & Kendrick, L.L.P., Jack G. Fynes and Stefanie E. Berk,
for petitioners.
Betty D. Montgomery, Attorney General, James A. Barnes, G. James Van
Heyde and James M. Evans, Assistant Attorneys General, for respondent C. James
Conrad, Administrator of Workers’ Compensation.
Nurenberg, Plevin, Heller & McCarthy Co., L.P.A., Kathleen J. St. John
and David M. Paris, in support of petitioners, for amicus curiae Ohio Academy of
Trial Lawyers.
Manley, Burke & Lipton, Andrew S. Lipton and Steven M. Ingram, in
support of petitioners, for amicus curiae Armco Employees Independent
Federation, Inc.
Stewart Jaffy & Associates Co., L.P.A., Stewart R. Jaffy and Marc J. Jaffy,
in support of petitioners, for amicus curiae Ohio AFL-CIO.
Scott, Scriven & Wahoff, L.L.P., Timothy E. Cowans, William J. Wahoff and
Richard Goldberg, in support of respondent, for amicus curiae Ohio Council of
Retail Merchants.
Brickler & Eckler, L.L.P., and Kurtis A. Tunnell, in support of respondent,
for amicus curiae Ohio Manufacturers’ Association.
Brickler & Eckler, L.L.P., Thomas R. Sant and Nan M. Still, in support of
respondent, for amici curiae Ohio Chapter of the National Federation of
Independent Business and Ohio Farm Bureau Federation, Inc.
40
January Term, 2001
Vorys, Sater, Seymour & Pease, L.L.P., Robert A. Minor and Robin R.
Obetz, in support of respondent, for amici curiae Kokosing Construction Company,
Inc., the Ohio Self-Insurers’ Association, and the American Insurance Association.
Garvin & Hickey and Preston J. Garvin, in support of respondent, for
amicus curiae Ohio Chamber of Commerce.
Vozar, Roberts & Matejczyk Co., L.P.A., Thomas J. Vozar, Glenna M.
Roberts and David M. Matejczyk, in support of respondent, for amicus curiae
National Association of Subrogation Professionals.
__________________
41