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Policy and Procedure Name:
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Subrogation
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Policy #:
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CP-19-04
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Code/Rule Reference:
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R.C.
4123.93, 4123.931,
4121, 4127, 4131
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Effective Date:
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01/08/2021
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Approved:
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Ann M. Shannon, Chief of Claims Policy and Support
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Origin:
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Claims Policy
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Supersedes:
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Policy # CP-19-04, effective 12/21/17
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History:
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Previous versions of this policy are available upon
request
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Table of Contents
I. POLICY PURPOSE
II. APPLICABILITY
III. DEFINITIONS
IV. POLICY
A. Requirements for
Subrogation and Statutory Effective Date
B. BWC Independent Right
of Recovery & Responsibility
V. PROCEDURE
A. General Claim Note and
Documentation Requirements
B. Identifying Potential
Subrogation
C. Subrogation Information
Gathering Checklist
D. Investigation and Gathering
Evidence for Subrogation
E. Handling IW Request for
Legal Advice
F. Subrogation Referral to
BWC Legal Division
G. Subrogation Recovery
H. Subrogation and Lump Sum
Settlements
I. Self-Insured (SI)
Employers
The purpose of this policy is to ensure that claims services
staff can identify potential subrogation issues and make referrals to the
Subrogation Department so that BWC may recover the costs of applicable workers’
compensation benefits from a third party in accordance with Ohio law.
This policy applies to BWC Claims Services staff, BWC Legal
Division’s Subrogation Department, and BWC Actuarial Division.
Administrative designee process: an alternative
dispute resolution process for pre-litigation settlements which have reached an
impasse during negotiations.
Insurance Service Office: a proprietary database that
contains bodily injury claims information pertaining to automobile, workers’
compensation, homeowners, general liability, product liability and disability
insurance injury claims for the last ten years on a particular individual. This
system is also referred to as ISO.
Third party: defined in Ohio Revised Code
section 4123.93 C) as “an individual, private insurer, public or private
entity, or public or private program that is or may be liable to make payments
to a person without regard to any statutory duty contained in this chapter or
Chapter 4121., 4127., or 4131. of the Revised Code.”
1. It is the
policy of BWC to actively pursue recoupment of claims costs caused by the
actions of a third party by identifying subrogation indicators and pursuing
legal recourse as outlined in R. C. 4123.93, et seq.. With
a few exceptions, subrogation is pursued in claims with a date of injury on or
after April 9, 2003.
2. A third
party must be the cause or a contributing factor in the accident or injury. BWC
has a statutory right to pursue collection of workers’ compensation payments if
the subrogation interest is projected to be greater than zero. The subrogation
interest is defined in Ohio Revised Code section 4123.93 (D) as the following: “past,
present, and estimated future payments of compensation, medical benefits,
rehabilitation costs, or death benefits, and any other costs or expenses paid
to or on behalf of the claimant by the statutory subrogee pursuant to this
chapter or Chapter 4121., 4127., or 4131. of the Revised Code.”
1. BWC has
the right to initiate subrogation action independently without the involvement or
approval of an injured worker.
2. It is the
responsibility of the BWC’s Subrogation Department to protect the State
Insurance Fund by collecting subrogation liens and crediting the risk of employers.
The subrogation recovery is calculated utilizing the formula provided in
Section 4123.931 of the Ohio Revised Code.
1. BWC staff
shall refer to the Standard
Claim File Documentation and Altered Documents policy and procedure for
claim note and documentation requirements; and
2. Shall
follow any other specific instructions for claim notes and documentation
included in this procedure.
1. During the
initial investigation of a claim, claims services staff shall review the claim
for potential third party involvement by reviewing the injury description and
identifying whether or not a third party may be responsible for the injury.
2. Claims
services staff shall gather information during their intial contact with the IW
to identify the following:
a. If a third
party was involved in the accident; or
b. If the IW
is involved in a personal injury claim or has a pending settlement with any
insurance company related to their workplace accident.
3. In the
event that claims services staff determines that the IW is involved in a
personal injury claim or pending settlement with any insurance company, claims
services staff shall obtain as much contact information as possible regarding
the parties of the personal injury claim or pending settlement. This
information should be added in notes and in the subrogation application when
making the referral. Claims services staff may email the Subrogation Department
when additional assistance is needed.
4. Common
causes of third party accidents that claims service staff shall look and listen
for include the following (list is not all inclusive):
a. Third
party motor vehicle involvement (e.g., motor vehicle accident, pedestrian
struck, injury while riding in a motor vehicle);
b. Malfunctioning
product (e.g., exploding aerosol container);
c. Medical
malpractice (e.g., a slip of the surgical knife, operating on the incorrect
body part, prescribing incorrect medication);
d. Defective
or faulty design (e.g., malfunctioning air bag or protective cover for a
machine, brakes not working properly, safety harness not holding specified
product weight);
e. Failure to
provide adequate warning of dangerous condition or equipment (e.g., lack of signs
that warn of wet floor in public building, inadequate warning on cleaning
solutions);
f. Failure
of or failure to provide safety device features (e.g., seatbelts not working,
company not supplying lockout devices);
g. Failure of
someone or something to perform a job or maintain an environment which is free
of hazards to others (e.g., outside contractor sets up welding, pouring
concrete, etc.);
h. Exposure
to toxic fumes, chemicals, or dust (e.g., smoke or vapor inhalation);
i. Animal
bites or attack;
j. Construction
site accidents (e.g., equipment malfunction, machinery or equipment falls on
individual);
k. Premises
liability (e.g., slips and falls, struck by fallen object, assault);
l. Explosions
or fires; and
m. Machinery
accidents due to inadequate or improper maintenance.
1. If the
facts of the claim reveal possible third-party involvement, claims services
staff shall use the “Subrogation
Information Gathering Checklist” to establish any needed documentation
and the parties from whom it should be requested. The checklist can be found on
the Subrogation policy page on Claims Online Resources (COR) under Tips and
Tools.
a. Request
the needed information by telephone and/or mail, document in claim notes, and
set a 7-day work item.
b. If updated
subrogation information is received claims services staff shall:
i. Save
the documents in the imaging system;
ii. Update
claim notes documenting the information received;
iii. Email the Subrogation
Department regarding the newly available information;
iv. Delete the
subrogation task from the worklist.
1. If the
facts of the claim reveal possible third-party involvement during the initial
review of the claim, claims services staff shall:
a. Verify the
cause of the accident with the IW/IW representative and employer/employer
representative while making initial contacts.
b. Determine
who/what caused the accident.
i. If
the IW caused the accident, then claims services staff no longer needs to
consider subrogation.
ii. If a
third party was cited for being at fault or appears to be responsible for the
injury, claims services staff shall move forward with an investigation.
2. Check with
the employer, IW, or employer services specialist (ESS) to determine if an
onsite safety report or Occupational Safety and Health Administration (OSHA)
report was completed. If so, document in claim notes that a copy of the report
has been requested.
3. During initial
contact, claims services staff may find that the IW has already settled a personal
injury claim against the responsible party (and/or any insurance company) that
caused or is responsible for injuries that are part of, the workers’
compensation claim. When this occurs, claims services staff shall attempt to
obtain the following information and then refer the claim to the Subrogation
Department.
a. Was a
lawsuit or an insurance claim filed?
b. Did the IW
receive a judgment or settlement? If yes, how much and when?
c. Who
did the IW settle the injury claim with? If it was an insurance company,
obtain the insurance company name, claim number, address and phone number of
the adjuster.
d. Obtain the
name and phone number of the IW’s personal injury attorney.
4. Review the
existing Insurance Service Office report in the claims management system.
a. If a match
exists, claims services staff shall review all claims data for bodily injuries
for the last five years.
b. Claims services
staff shall review the Index System reports to identify a potential for
subrogation and make a referral to the Subrogation Department if appropriate.
5. Contact
witnesses and obtain statements in writing if possible, or document a summary
of the statement and who provided it in the claim notes.
6. Obtain/order
a copy of the police report if one was completed.
a. Check with
the IW or employer to obtain a copy of the report or contact the appropriate
police department.
b. Some law enforcement agencies require claims services staff
to complete a request form when ordering an accident report and may require a
fee for the service. This fee can be paid through miscellaneous payments using
code 94000.
c. If the claim is referred to the Subrogation Department
before claims services staff receives the report, document in claim
notes that the report has been ordered, image the report into the claim and immediately
notify the Subrogation Department when it is received.
1. Claims services
staff shall not offer advice regarding whether or not an IW needs an attorney
to handle their workers’ compensation or bodily injury claim. If an IW asks for
legal advice, claims services staff shall respond as follows: “I am not
qualified to offer legal advice. If you have legal questions, you must consult
your own attorney for his/her opinion.”
2. Claims
services staff should never ask the IW if he/she is going to sue the third
party, or offer advice on whether or not an attorney should be hired.
1. Claims
service staff shall make a subrogation referral as early as potential
subrogation is identified so the Subrogation Department has the earliest opportunity
to assert BWC’s right of recovery prior to any third party settlements taking
place.
2. A valid
subrogation referral includes:
a. A
description of the type of accident; and
b. Documentation
to establish that a third party may be responsible for the accident.
3. If claims
services staff has any questions about whether a referral should be made,
he/she will staff with his/her supervisor or service office Subrogation
Coordinator. The Subrogation Department may be contacted to review the facts of
the claim and may determine that a referral is appropriate or the claim does
not have subrogation potential. When in doubt, a referral should be made so the
Subrogation Department can review the claim.
4. Claims services
staff shall input the names and addresses of all parties associated with the
subrogation claim (insurance companies, attorneys, etc.) representing any party
in a third party action into the Subrogation Information Window.
5. Claims services
staff shall complete the referral to the Subrogation Department so that the
Subrogation Department is notified of the referral.
a. If the
Subrogation Department reviews the referred claim and determines that the
referral is invalid, the Subrogation Department will close the referral and
enter a note in the claim.
b. If the
referral is incomplete, the Subrogation Department may request additional
information regarding the claim from claims services staff who shall partner
with the Subrogation Department to obtain any additional information pertaining
to the possible subrogation claim.
6. The
Subrogation Department is responsible for pursuing subrogation collections in
accordance with Ohio Revised Code section 4123.93 et seq. and is
responsible for third-party notifications.
7. When BWC
has a subrogation right against a third party for causing injuries or damages
to the injured worker, the Subrogation Department will send an assertion letter
to the responsible party(ies) asserting the rights of BWC to collect benefits
paid out in the claim. This letter will appear on claims services staff’s work
item list for that claim and serve as notification that the referral was
accepted.
8. Previous
subrogation tasks may be closed when:
a. Requested
documentation arrives and the Subrogation Department is notified; or
b. An
Insurance Service Office match occurs and the Subrogation Department is notified.
1. The BWC
Subrogation Department collects funds pursuant to Ohio Revised Code section
4123.93 and 4123.931. BWC may refer claims to the Ohio Attorney General’s
Collections Enforcement Division anytime and for any reason BWC feels
representation is needed.
2. When a
subrogation collection is successful, the Subrogation Department will send
notification via letter to the employer notifying them of the recovery.
3. The
Actuarial Department will make appropriate recovery adjustments to the
employer’s risk at the time of recovery. Any questions from employers regarding
this credit should be directed to the Actuarial Department.
1. Claims
services staff shall contact the Subrogation Department if he/she receives a
Lump Sum Settlement application or request in a claim that has an open subrogation
case.
2. When claims
services staff makes contact with the Subrogation Department, the Subrogation
Department will add the LSS override in the subrogation application so the LSS
can be paid.
3. When
workers’ compensation settlements and subrogation happen at the same time, two
checks are received. BWC pays the IW for the settlement and they write a check
back to BWC for subrogation to ensure that the employer’s risk account is
properly credited with the subrogation recovery.
4. Claims services
staff should never agree to settle the workers’ compensation claim without
consulting the Subrogation Department to see if there is an active working
subrogation case.
1. SI employers
are responsible for recovering their own subrogation lien unless the SI
employer is bankrupt, and the claim has been reverted back to BWC to handle the
claim. An exception to this rule is if BWC has paid for a prosthetic device in
a claim. In those situations both the self insuring employer and the BWC would
be statutory subrogees.
2. SI employers
may utilize the Administrative Designee Process.