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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
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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
Administrative
Designee Process
Insurance
Service Office
Third
Party
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 Requests 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 will
refer to the Standard Claim
File Documentation and Altered Documents policy and procedure for claim
note and documentation requirements; and
2. Must 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 will review the claim
for potential third-party involvement by reviewing the injury description and
identifying whether a third party may be responsible for the injury.
2. Claims services
staff will gather information during their initial contact with the IW to
identify whether:
a. A third party
was involved in the accident; or
b. The IW is
involved in a personal injury claim or has a pending settlement with any
insurance company related to their workplace accident.
3. If claims
services staff determines that the IW is involved in a personal injury claim or
pending settlement with any insurance company, claims services staff must:
a. Obtain as much
contact information as possible regarding the parties of the personal injury
claim or pending settlement; and
b. Enter this
information 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 must 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 must use
the Subrogation Information Gathering Checklist on COR to establish any
needed documentation and the parties from whom it should be requested.
2. Claim services
staff must:
a. Request the
needed information by telephone and/or mail;
b. Document in
claim notes; and
c. Set a seven-day
work item.
3. If updated
subrogation information is received, claims services staff will:
a. Save the
documents in the imaging system;
b. Update claim
notes documenting the information received;
c. Email the Subrogation Department
regarding the newly available information;
d. 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 will:
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 will 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 will
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 will review all claims data for bodily injuries
for the last five years.
b. Claims services
staff will 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:
i.
Document
in claim notes that the report has been ordered;
ii. Image the
report into the claim; and
iii. Immediately notify
the Subrogation Department when it is received.
1. Claims services
staff must not offer advice regarding whether an IW needs an attorney to handle
their workers’ compensation or bodily injury claim. If an IW asks for legal
advice, claims services staff must respond as follows: “I am not qualified to offer
legal advice. If you have legal questions, you must consult your own attorney
for their opinion.”
2. Claims services
staff should never ask the IW if they are going to sue the third party or offer
advice on whether an attorney should be hired.
1. Claims service
staff must make a subrogation referral as early as the 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, they
will staff with their 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 will 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 will 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 will 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 must contact the Subrogation Department if they receive 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 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.