Recent Subrogation News

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0><tr> <td valign="top" colspan=2 height=90 BGCOLOR="#006699" TEXT="#080000" background="04a085a3.jpg"> <div> <FONT SIZE="5" COLOR="#BFBF00" FACE="Arial" ><I><B>Kreiner & Peters Co., L.P.A.</B></I></FONT><I><B>     |    </B></I><B> </B><A HREF="index.htm" TARGET="_top" TITLE="Kreiner Peters Co., L.P.A."><U><B>home</B></U></A></div> <bR> <div> </div> </td> </tr><tr> <td valign="top" width=26.25% BGCOLOR="#FFFFFF" TEXT="#080000" background="04bd2e83.jpg"> <div> <A HREF="index.htm" TARGET="_top" TITLE="Kreiner Peters Co., L.P.A."><U><B>Kreiner & Peters Co., L.P.A.</B></U></A></div> <div> <A HREF="id47.htm" TARGET="_top" TITLE="Subrogation Commission News"><U><B>Subrogation Commission News</B></U></A></div> <div> <A HREF="id17.htm" TARGET="_top" TITLE="Types of Recoveries"><U><B>Types of Recoveries</B></U></A></div> <div> <A HREF="id18.htm" TARGET="_top" TITLE="Services Rendered"><U><B>Services Rendered</B></U></A></div> <div> <A HREF="id22.htm" TARGET="_top" TITLE="Newsletters"><U><B>Newsletters</B></U></A></div> <div> <A HREF="id21.htm" TARGET="_top" TITLE="Clients"><U><B>Clients</B></U></A></div> <div> <A HREF="id19.htm" TARGET="_top" TITLE="Firm Principals"><U><B>Firm Principals</B></U></A></div> <div> <A HREF="id20.htm" TARGET="_top" TITLE="Contact Us"><U><B>Contact Us</B></U></A></div> <bR> </td> <td valign="top" height=390 BGCOLOR="#FFFFFF" TEXT="#080000"> <div> <B>Recent Subrogation News</B></div> <bR> <div> <I><B>May 2006</B></I></div> <bR> <div> <B>         Unanimous U.S. Supreme Court Affirms Federal Court Jurisdiction </B></div> <div> <B>         for ERISA Plan Reimbursement Actions. </B></div> <bR> <div>       In a 9-0 decision released on May 15<FONT SIZE="1" COLOR="#000000" FACE="Arial" >th</FONT>, the U.S. Supreme Court clarified its earlier decision in <U>Great West v. Knudson</U> and made it clear that actions seeking reimbursement under 29 U.S.C. § 1132(A)(3) are proper when brought against an ERISA plan member who has received settlement funds.  The Court resolved a Circuit split, siding with the Fourth, Fifth, Seventh and Tenth Circuits and overruling the Ninth and Sixth Circuits.  See <B><U>Sereboff v. Mid Atlantic Medical Services Inc.</U></B>, 547 U.S. _____ (2006).   </div> <bR> <div>       Speaking for the Court, Chief Justice Roberts ruled that the plan's cause of action for a constructive trust or equitable lien seeks “appropriate equitable relief” as required by the ERISA and as previously stated in <U>Knudson</U>.  The Court rejected arguments that a cause of action based upon a written document was nothing more than a legal claim for breach of contract and therefore not equitable relief, stating:</div> <bR> <div> <B>      “ERISA provides for equitable remedies </B><I><B>to enforce plan terms</B></I><B>, so the fact the action involves a breach of contract can hardly be enough to provide relief is not equitable; that would make §502(a)(3)(B)(ii) an empty promise”.</B> </div> <bR> <div>        The Supreme Court went further providing that the health plan's equitable lien attached upon the receipt of the settlement money by the injured party or attorney.  This equitable lien arose out of the plan language which provided that the plan member had to reimburse the plan out of his settlement.  In doing so, the Court dispelled any notion that restitution's strict “tracing” rules needed to be applied.  The Court noted that equitable liens arising by agreement are a “different species of relief' than those arising out of restitution.  Therefore, the plan only had to identify the settlement fund and did not have to show that it traced the same “res” or property used by the plan to pay the claims.</div> <bR> <div>       Additionally, Counsel for Sereboff, the plan member, argued for the first time at the Supreme Court that if the health plan had a cause of action for equitable relief, that the plan would be subject to equitable defenses.  These include make-whole and common fund.  While the Court refused to rule on this issue since it was not raised in the lower courts, it did comment on it.  The Court suggested that since the plan's cause of action was not a “free standing action for subrogation” but was rather “an action to enforce an equitable lien by agreement”, that the equitable defenses claimed by the Sereboffs were “beside the point.”</div> <bR> <div>       In conclusion, ERISA plans in the 6<FONT SIZE="1" COLOR="#000000" FACE="Arial" >th</FONT> and 9<FONT SIZE="1" COLOR="#000000" FACE="Arial" >th</FONT> Circuits are given back the right to enforce the terms of their plan documents in federal court which has been taken from them in the past three years.   ERISA plans still need to be active in subrogation efforts but they now again have the right to seek reimbursement in federal court when as ERISA participant takes possession of a settlement fund.  </div> <bR> <bR> <div> <B>         Fifth Appellate District finds that ERISA Benefit Plans </B></div> <div> <B>         lack state law subrogation rights.</B></div> <bR> <div>       The Fifth Appellate District of Ohio just released a decision affirming the Stark County Common Pleas Court in ruling that an employee benefit plan established under ERISA has no state law subrogation rights.  <I><B>See,</B></I> <I><B>Shawn Steele vs. Aultcare Corporation, Case No. 2005CA00241</B></I>.  Plaintiff Shawn Steele was a passenger in an auto involved in a collision with a semi tractor trailer.  Aultcare, as administrator of an ERISA plan covering Plaintiff at the time of the accident, was named as a defendant in the tort litigation initiated by Steele to assert its subrogation rights for medical benefits paid on his behalf.  Aultcare claimed its right of subrogation for over $240,000.00 in benefits paid in cross claims filed against the various tortfeasors in the accident. </div> <bR> <div>      After Steele settled his claims with the tortfeasors without addressing the subrogation claims, he motioned the court to dismiss Aultcare's subrogation claims arguing that the contract of insurance was governed by ERISA which pre-empts all state law claims, including tort actions.  The trial court agreed and dismissed Aultcare's subrogation claims.</div> <bR> <div>      In affirming the trial court, the Fifth District issued a 2-1 decision reasoning that since Aultcare's contractual right of subrogation arose entirely out of an ERISA plan it was pre-empted based upon 29 U.S.C. § 1144(a) and (b).  The majority differentiated the within matter from its prior holding that a subrogee's rights against a third party for reimbursement arise out of tort rather than contract on the basis that the contract is implicated because it created the right of subrogation. <I>See, Nationwide Mutual Insurance Co. v. Zimmerman</I>, Adm., Stark App. No. 2004CA00007, 2004-Ohio-7115.  The majority also seemingly based its decision on <I>Great West Life & Annuity Insurance Co. v. Knudson</I>, (2002) 534 U.S. 204, even though the U.S. Supreme Court specifically stated that it was not addressing the issue of whether ERISA would pre-empt state law tort claims.  </div> <bR> <div>       In her dissent, Judge Sheila Farmer correctly distinguished the Steele matter with Knudson because the funds at issue were not in possession of Steele.  Judge Farmer also cited the Ohio Supreme Court in stating that “appellant's [Aultcare] claim is a subrogation claim which has been regarded in this state as `the highest equity'.”  <I>Citing, Newcomb v. Cincinnati Ins. Co. (1872), </I>22 Ohio St. 382,387<I>.</I> </div> <bR> <div>      </div> <div>      This decision puts the Fifth District in direct conflict with various other Ohio Appellate Districts.  The Second, Third, Eight, Ninth and Twelfth Appellate Districts have all found state law claims are not preempted by ERISA.  See, <I>Beasecker v. State Auto Insurance Co., et al</I>., (2<FONT SIZE="1" COLOR="#000000" FACE="Arial" >nd</FONT> App. Dist. Darke County 2001) 2001 Ohio App. LEXIS 341; <I>Immediate Pharmaceutical Services, Inc. v. Superior Metal Products, Inc. Employee Benefit Trust</I> (3<FONT SIZE="1" COLOR="#000000" FACE="Arial" >rd</FONT> App. Dist. Allen County 1999), 134 Ohio App. 3d 748; <I>Tri-County Building Trade Fund v. First Benefits Agency, Inc.</I>, (9<FONT SIZE="1" COLOR="#000000" FACE="Arial" >th</FONT> App. Dist. Summit County 1998) 1998 Ohio App. LEXIS 5271; <I>Leasher v. Legett & Platt, Inc.</I> (1994), 96 Ohio App. 3d 367, <I>reaffirmed</I> <I>in, Bradburn v. Merman </I>(Oct. 29, 1999), 12<FONT SIZE="1" COLOR="#000000" FACE="Arial" >th</FONT> District App. No. CA99-02-011. </div> <bR> <div>   </div> <div>      ERISA was enacted to make regulation of employee benefit plans uniform across the country.  However, under the Fifth District's interpretation, all state law causes of action by any ERISA entity, including beneficiaries and participants, should be caught in the preemptive tentacles of ERISA.  If this is true, wouldn't a common tort action by two participants in an ERISA plan be pre-empted? Wouldn't an action to enforce a contract for a sale of a home between two ERISA entities be pre-empted?  In essence, wouldn't the state law rights of each and every ERISA participant or beneficiary in all fifty states be abolished by ERISA?  Clearly, this is not what Congress intended.    </div> <bR> <div>      It is also uncertain what the federal district courts would do with a case filed by an ERISA plan seeking strictly subrogation rights based upon a tort claim.  How will the district courts address such state law based issues as comparative and contributory negligence, traffic laws, insurance coverage if all state laws are pre-empted?  Will the federal courts need to look to archaic federal common law to find answers?  This case will be appealed to the Ohio State Supreme Court. </div> <bR> <bR> <div> <B>     U.S. Supreme Court Limits Medicaid Reimbursement</B></div> <bR> <div>      A unanimous United States Supreme Court meted out a decision which limits Medicaid reimbursement to only those recoveries which are apportioned as recoveries for medical expenses.  See <U>Arkansas Dept. of Health and Human Services v. Heidi Ahlborn, </U>2006 U.S. LEXIS 3455.</div> <bR> <div>      Heidi Ahlborn was a 19 year old college student when she was seriously injured in a motor vehicle accident in January 1996.  Having qualified for medical assistance, the Arkansas Department of Health Services (ADHS) paid approximately $215,000 to providers under the State's Medicaid plan.  ADHS then intervened into Ahlborn's lawsuit against two alleged tortfeasors to assert its statutory subrogation lien on any recovery.</div> <bR> <div>      Ahlborn settled her tort claim out of Court for $550,000 and did not involve ADHS in the settlement negotiations.  At the time of the settlement there was no allocation of the settlement to any category of damages (ie, bodily injury v. medical expenses).</div> <bR> <div>      Ahlborn filed a declaratory judgment against ADHS action in Federal Court.  <B>The parties stipulated that the full value of Ahlborn's claim was just over $3 Million, that the settlement was one-sixth of that sum and that following a pro rata formula, approximately $35,000 of the settlement was attributed to medical expenses.</B></div> <bR> <div>      Federal law requires states who participate in the Medicaid program to ascertain the legal liability of third parties and facilitate reimbursement of medical expenses from them.  See 42 U.S.C. § 1396 <I>et seq.  </I>In light of this, the State of Arkansas enacted a statute which granted it a lien on the injured persons recovery, applied to the entire recovery regardless of whether it was designated as recovery for medical expenses or not, and regardless of any contributory of comparative fault on behalf of the injured person. </div> <bR> <div>      The Supreme Court ruled that the Arkansas statute went too far in that the federal third-party liability provisions only focuses on recovery of payments for medical care.  Since the parties had already agreed that only $35,000 of the settlement was attributed to reimbursement for medical care, the Court would limit ADHS's recovery to that amount.  Since this case involved the limited issue of the interplay between State and Federal Medicaid laws, and since the allocation of the settlement was not determined by the Court, it is unlikely that this case holds any weight over settlements not involving Medicaid.</div> <bR> <bR> <div> <B>April 2005</B></div> <bR> <bR> <div> <B>       Ohio House Considers Subrogation Reform;</B></div> <div> <B>       Trial Attorneys Only Want to Be Paid First!</B></div> <bR> <div>       The Ohio House will again entertain legislation in an attempt to unconstitutionally restrict contractual subrogation rights established in health plans, disability plans and possibly even in “auto” insurance policies.   H.B. 555 was introduced on April 4, 2006.  This bill is similar to the House amendment that failed passage as part of S.B. 80 (tort reform) in December 2004.  H.B. 555 would invalidate contract subrogation provisions by providing a formula that would pay a full fee to the personal injury attorney with the balance or “net recovery” to be allocated between the subrogated entity and the injured party. This formula does not protect the injured party, the employer sponsored health plan or Ohio.  <B>The sole group to benefit from such a bill is the trial attorneys who seek to protect their fees.</B> For the text of the statute, go to <FONT SIZE="3" COLOR="#0000FF" FACE="Arial" ><A HREF="http://www.legislature.state.oh.us/bills.cfm?ID=126_HB_555" TARGET="_top" TITLE="http://www.legislature.state.oh.us/bills"><U><U>http://www.legislature.state.oh.us/bills.cfm?ID=126_HB_555</U></U></A></FONT></div> <bR> <div>       H.B. 555, as with the prior failed amendment, was crafted by the Ohio Academy of Trial Lawyers Association “OATLA”.  According to OATLA's subrogation commission representative Mark Kitrick, the goal of the legislation is to adopt a “pro rata” formula <I>only if</I> the legislature will not adopt the “make whole” doctrine in Ohio.  However, the only party ever “made whole” is the OATLA attorney who gets a full fee and all expenses in every case regardless of the recovery dollars. For OATLA links & testimony go to: <FONT SIZE="3" COLOR="#0000FF" FACE="Arial" ><A HREF="http://www.oatlaw.org/oh/index.cfm?event=showPage&pg=Subrogation" TARGET="_top" TITLE="http://www.oatlaw.org/oh/index.cfm?event"><U><U>http://www.oatlaw.org/oh/index.cfm?event=showPage&pg=Subrogation</U></U></A></FONT></div> <bR> <bR> <div>      The injury attorneys claim that the formula does not harm subrogation recoveries while protecting the injured party.  On September 5<FONT SIZE="1" COLOR="#000000" FACE="Arial" >th</FONT>, 2005, OATLA president Phillip Fulton presented testimony to the Subrogation Commission in which an e-mail from the Ohio Bureau of Worker's compensation was presented touting the fact that the Bureau continued to receive subrogation recoveries after similar legislation was enacted.  This e-mail showed recovery dollars under the 1993/1995 subrogation statute for the bureau of $51 million dollars compared with $5million dollars recovered under the “pro rata” formula enacted in 2003. Does a 90% reduction in subrogation recoveries sound so good that it should be extended to all health insurance plans, disability plans and even auto insurance?? See OATLA Testimony at:<FONT SIZE="3" COLOR="#0000FF" FACE="Arial" ><A HREF="http://www.oatlaw.org/oh/index.cfm?event=showPage&pg=Subrogation" TARGET="_top" TITLE="http://www.oatlaw.org/oh/index.cfm?event"><U><U>http://www.oatlaw.org/oh/index.cfm?event=showPage&pg=Subrogation</U></U></A></FONT></div> <bR> <bR> <div> <B>      The truth is H.B. 555 is all about protecting the fees and expenses of OATLA's attorney members</B>.  In fact, H.B. 555 absolutely guarantees that the injury attorney receives a full fee and all expenses in every case regardless of the amount of the settlement.  The attorneys' fee comes off the top before the injured party receives any compensation for their injury. In fact, the injured party and the subrogation entities share only what is left once the attorney is paid in full per their fee agreement.  Does this sound like they are concerned with making the injured party “whole”?</div> <bR> <div>       The injured party and the subrogated entity are left to split the remaining money after such expenses and attorney fees are deducted from the gross recovery.  If an attorney fee agreement calls for a 40% contingency fee plus expenses, it is conceivable that more than half of the settlement could go to the attorney leaving less than half the recovery to be divided between the injured party and subrogated entity. How does such an arrangement protect the injured party and ensure fairness?</div> <bR> <div>   </div> <div> <B>       H.B. 555 also ensures that the insurance community, employers and Ohio workers will be paying fees to injury attorneys.</B>  A health plan which is self-funded (meaning money used to pay claims comes from the employer and employees) would essentially be paying the injury attorneys (hired by the injured employee) fees through reduced subrogation recoveries.  In essence, OATLA seeks a subsidy from Ohio employers and employees through fees taken on funds which do not rightfully belong to their clients.  How does this help Ohioans and Ohio employers?  Does this make Ohio competitive?</div> <div>      </div> <bR> <div>        Insurance companies, health plans, employers, Ohio workers and all Ohioans should be concerned by the introduction of H.B. 555.  They claim it is a bill to assist injured parties but the bill clearly seeks first and foremost to protect attorney fee arrangements.  This bill will only ensure that all Ohioans pay more for their insurance!</div> <bR> <div>        It is time for Ohioans to stop the personal injury attorney from collecting their fees at the expense of all Ohioans.  Please contact Representative Bill Seitz by e-mail at <FONT SIZE="3" COLOR="#0000FF" FACE="Arial" ><A HREF="mailto:district30@ohr.state.oh.us" TARGET="_top" TITLE="mailto:district30@ohr.state.oh.us"><U><U>mailto:district30@ohr.state.oh.us</U></U></A></FONT> as he has been a strong advocate for OATLA.  Let him know you oppose paying attorney fees to injury attorneys as part of your insurance bill for your family.  </div> <bR> <bR> <div> <B>      Insurance defense attorneys should add subrogated carrier or risk   </B></div> <div> <B>      overpaying claims through jury trial.</B></div> <bR> <div>      The Ninth Appellate district of Ohio recently issued a decision rejecting a post trial reduction in a jury verdict based upon the amount actually paid for medical expenses as opposed to the billed amounts. This case is F<U>errell v. Summa Health Systems</U>, 165 Ohio App. 3d 110 (Summit 2005)   At trial, the injured party introduced $117,799.28 in medical expenses which were awarded in full by the jury in this professional negligence claim.  After trial, the defendants sought a reduction to $43,740.69 as the amount actually paid by Medicare for the bills of the injured party.  In fact, the difference of $74,058.59 was the amount written off by the providers for the treatment which no one would have to repay.</div> <bR> <div>       In a 2 to 1 decision, the Court found that the collateral source rule barred any reduction in favor of the defendants.  The majority ruled that Medicare provided health benefits outside of the litigation and any reduction of the jury's award would be impermissible.  In dissent Judge Slaby argues that the injured party should only be made whole by the recovery and not profit from it.  This decision highlights the need for defense attorneys to seek joinder of the medical insurer or other collateral source so that they are a party to the case.  By joining the Medicare plan to the action, the defendant's counsel would have been able to introduce the write-off amounts since the collateral source is a party in the litigation.  Rule 19 joinder of the medical insurers provides the defense the ability for the jury to consider the correct amount of medical expenses and not the inflated billed charges.</div> <bR> <div>        Adding the medical insurer with a right of subrogation comports with changes in the medical negligence statute and latest tort reform legislation enacted by the General Assembly.  See R.C. 2315.20 and 2323.41   Both statutes now allow the defendant to introduce evidence of collateral sources to reduce a jury verdict when the source has no right of subrogation.   Both statutes <B>do not </B>allow for such reduction when the source does have.  <B>If you want the reduction where sub rogation rights exist, Ohio statute and the </B><B><U>Ferrell</U></B><B> case require defense counsel to join them as parties to the action.  The amount paid in subrogation generally will pale in comparison to the billed amount if used at trial</B>.</div> <bR> <div> <B>     </B> Stay tuned as the Ohio Supreme Court is entering the fray on this issue in the case of <U>Robinson v. Bates</U> Case number 2005-998.  The Supreme Court of Ohio heard oral arguments on March 29<FONT SIZE="1" COLOR="#000000" FACE="Arial" >th</FONT>, 2006 and could issue a ruling at any time. </div> <bR> <bR> <bR> <div> <I><B>August 2005</B></I></div> <bR> <div> <B>Attacks on Subrogation Rights:</B></div> <div> <B>Can New York Happen in Ohio?</B></div> <bR> <div> As the fall approaches, subrogation entities in Ohio brace for the hearings of the Ohio Subrogation Rights Commission.  The Commission was the product of lobby efforts by personal injury attorneys in Ohio.  The Commission was created to investigate perceived problems with the way subrogation is handled in Ohio.</div> <bR> <div> To understand what type of legislation personal injury attorneys desire, we need only look to what New York is considering regarding subrogation.  During this past year, New York<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s legislature has been considering a new statutory amendment to eliminate all state law subrogation rights.  The new statute seeks to amend CPLR 4545, adding a new section (e) which eliminates all subrogation rights (including <B>auto property damage claims</B>).</div> <bR> <div> New York<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s collateral payments law CPLR 4545 was initially enacted in the 1980s to respond to the "medical malpractice insurance crisis".  The twin goals of the initial law were to reduce medical malpractice premiums and prevent double recovery. This statute was eventually extended to apply the collateral set off to all other tort actions.  Currently, CPLR 4545 does not bar the subrogated carrier from filing suit or intervening to seek recovery of their claims against the responsible party. </div> <bR> <div> Now, Senator DeFrancisco, who is a personal injury attorney in New York, introduced legislation to eliminate all subrogation rights under state law.  Senate Bill S5555-A seeks to eliminate any right of subrogated entities to seek repayment from the responsible party <B>and</B> from the injured party in reimbursement whether there is settlement or trial. The statute goes even further to classify all settlement money as pain and suffering only and not compensation for past or future medical expenses.  The statute calls for the abolition of subrogation for health plans, medical payments <B>and</B> also property damage claims such as auto damages.</div> <bR> <div> In his Sponsor Memorandum, Senator DeFrancisco alleges that subrogation acts as a "toll" for settling cases and delays trials as subrogated parties "intervene" to protect their claims.  These arguments are specious at best.  This alleged "toll" is that the injury attorney must actually negotiate with the subrogated interest instead of not paying them or sending them a check for some nominal amount they deemed fair.  Injury attorneys consider it a "toll" to assist their clients in honoring their contractual obligations to the insurer and health plans.  In addition, intervention of the subrogated entity generally is obtained well in advance of trial to prevent delay.  The presence of the subrogated entity gives the jury the accurate picture of health coverage which they may have to assume without such involvement.  Again, the injury attorneys oppose intervention because it forces them to negotiate with the subrogated entity.     To see the full memorandum and legislation, go to: </div> <bR> <div> <A HREF="http://public.leginfo.state.ny.us/menug" TARGET="_top" TITLE="http://public.leginfo.state.ny.us/menug"><U><U>http://public.leginfo.state.ny.us/menugetf.cgi  </U></U></A></div> <div> <I>Then type in "S5555" and select all boxes below for the status, text and sponsor memo for this legislation.</I></div> <bR> <div> Senator DeFrancisco<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s memorandum characterizes this amendment as serving the purpose of reducing liability insurance premiums.  In reality, the premiums for auto coverage as well as health insurance will have to increase to make up for the lost recovery dollars from subrogation.  The amendment shifts the risk of paying for a loss from the party responsible for the injury to all New Yorkers who will now pay more for all types of insurance.  In the end, the only winner is the personal injury attorney who will receive a higher fee in each case.</div> <bR> <div> In Ohio, personal injury attorneys are looking to alter over forty years of legal precedent in the area of subrogation.  Ohio insurers and others need only look east to New York to understand that their motivation is the elimination of all subrogation.  The Ohio Subrogation Commission is merely another avenue to reach their goal.  As the fall hearings in Ohio occur, it is important to understand the opposition<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s goals and motives in undermining Ohio<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s long standing law.</div> <bR> <div> Ohio<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s prior experience with the elimination of subrogation did not produce the desired effect in the area of medical malpractice.  In 2003, Ohio repealed its medical malpractice bar to subrogation from the 1970<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s which was similar to CPLR 4545.    Ohio<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s experience without subrogation in medical malpractice cases did not cause stability in premiums as desired.  As of April 2003, Ohio<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s statutes allow for full subrogation in medical malpractice and other tort claims.  This legislative change suggests that non-economic damages and not subrogation are the problem for medical malpractice premiums. </div> <bR> <div> As the commission meets, Ohioans need to ask who would really benefit from changes in subrogation. The simple answer is trial attorneys and their injured clients!!  They would rather all citizens pay more for insurance coverage just to protect their fees and recovery dollars.  Who is harmed if subrogation is eliminated?  All Ohioans especially ones who are not involved in accident claims!!  Non-injured residents will have to pay more in premiums for their health, auto and property coverage so a personal injury attorney and his client can get more recovery dollars.</div> <bR> <div> Ohio subrogation entities need to voice their support of subrogation to ensure that the Commission does not change Ohio law in order to benefit injury parties and attorneys at the expense of all other Ohioans.  Ohio<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s Subrogation Rights Commission needs to recommend to the legislature that it leave subrogation alone.  <B>This answer is the only one which benefits all Ohioans.</B></div> <div> <I><B>July 2005</B></I></div> <bR> <div> <B>Ohio's Fifth District Court of Appeals Enforces Doctor's Lien Against Personal Injury Attorney</B></div> <bR> <div>  <U>Dickey v. Burick</U>, 161 Ohio App. 3d 224 (2005) involved an action brought by a massage therapist and a chiropractor to recover the value of the services they had rendered from an injury attorney who had signed a “doctor's lien” guaranteeing payment.  </div> <bR> <div> The Appellate Court affirmed the judgment against the attorney as an individual finding that she signed the lien in that capacity.  However, the Appellate Court dismissed the claim against the attorney's law firm.  The Court reasoned that the attorney signed only in her individual capacity since there was no indication that she was signing the lien “on behalf of” the legal professional association.</div> <bR> <div> The Appellate Court also rejected the attorney's argument that she should not responsible for payment of charges that could be related to the auto accident.  Instead the Court held that all that was required was that the bills submitted sufficiently specify the nature of the services rendered.  It remains to be seen whether this precedent would be applied in situations where an injury attorney has signed a “lien” or “letter of protection” in favor of an insurance company. </div> <bR> <div> <I><B>June 2005</B></I></div> <bR> <div> <B>Ohio Appeals Court Rules That Landlord's Statutory Duties Trump The Open & Obvious Doctrine and That Injured Parties May Recover The Entire “Billed Amount” of Their Medical Expenses Under The Collateral Source Rule.</B></div> <bR> <div> <B><U>I. Landlord's Duties</U></B></div> <bR> <div> In <U>Robinson v. Bates</U> (2005) 160 Ohio App. 3d 668, the First District Court of Appeals in Ohio held that the “open and obvious doctrine” was not a bar to finding that a Landlord was negligent per se failing to keep its premises in a “fit and habitable condition” as required by Ohio Revised Code § 5321.04.  </div> <bR> <div> The tenant broke her foot when she stepped on an uneven concrete slab that was left after a contractor had torn down a retaining wall that was next to the driveway.  The tenant testified that she was aware of this dangerous condition as she had passed it for several days to get to her car.</div> <bR> <div> The Appeals Court reversed the Trial Court which had granted a directed verdict to the Landlord based upon the “open and obvious doctrine.”  The Court reasoned that since open and obvious is a common law doctrine which limits a premises owner's duty, it could not be used to abrogate a landlord's duty which is specifically set forth in the Ohio Revised Code.</div> <bR> <div> <B><U>II. Plaintiff Allowed to Recover Full Amount Of Medical Bills</U></B></div> <bR> <div> The Appeals Court also ruled that the Trial Court improperly excluded the Plaintiff's medical bills from evidence.  The Trial Court refused to admit the medical bills since they were paid off by insurance at a reduced rate.  The Trial Court reasoned that only the amount actually paid should go to the jury to prevent the bills from being inflated.</div> <bR> <div> The Appeals Court reversed the Trial Court and stated that the “collateral source rule” applied.  The rule provides that a Plaintiff's recovery cannot be reduced by payments or benefits from other sources, whether these payments or benefits are gratuitous or not.  The Robinson Court reasoned that the Plaintiff's recovery should be the reasonable value of her medical expenses which is demonstrated best by the full billed amount.  Further, public policy dictates that when one of the parties will receive a windfall, it should be the plaintiff-victim rather than the defendant-tortfeasor. </div> <bR> <div> <I><B>June 2005</B></I></div> <bR> <div> <B>Ohio Appeals Court Rules (1) Expert Testimony Is Not Required To Prove Standard Of Care In “Hot Wire Smell” Auto Fire Case and (2) Common Law Products Liability Claims Survived The Enactment Of The Pre-Tort Reform Products-Liability Act</B></div> <bR> <div> <B><U>I. Expert Testimony Not Required</U></B></div> <bR> <div> In <U>State Farm Mut. Auto. Ins. Co. v. Kia Motors, et al.</U> (2005) 160 Ohio App. 3d 727, the Fourth District Court of Appeals in Ohio held that expert testimony was not required to establish the standard of care when the issue in the case “is not a matter which is highly technical, scientific in nature, or beyond the experience or knowledge of the average jury.”  <U>Id.</U> at 733 (citations omitted.)  </div> <bR> <div> This case arose when a 2000 Kia Sportage insured by State Farm was completely destroyed by fire 5 months after State Farm's insureds had purchased the vehicle.  State Farm sued Kia Motors.  Kia Motors filed a third party complaint against the dealership where the vehicle was allegedly serviced.  Testimony of the State Farm insureds established that they took the vehicle in to the dealer upon noticing an intermittent “hot wire” smell.  After several hours where the vehicle was not driven, the dealership returned the vehicle saying they found nothing wrong.  The fire occurred a few weeks later.</div> <bR> <div> The Appeals Court upheld the jury verdict in favor of Plaintiffs and denied the dealership's argument that its Motion For a Directed verdict should be granted.  In fact, the Court went so far as to say that no testimony or affirmative evidence is required to establish the standard of care in order to survive a Directed Verdict motion.  The Court reasoned that issues of this nature are best dealt with by allowing the jury to weigh the evidence.</div> <bR> <bR> <div> <B><U>II. Common Laws Products Liability Claim Survived Pre-Tort Reform Products Liability Act.</U></B></div> <bR> <div> The Appeals Court also addressed whether Ohio law precludes products-liability claims which seek only economic damages.  By definition, in order to be considered a “products liability claim” under O.R.C. § 2307.71 the complaint must allege damages other than economic damages.  Therefore, The Fourth District Court of Appeals for Ohio concluded that pure common law products liability such as negligent design and failure to warn survived the enactment of the Products Liability Act.</div> <bR> <div> <B>The Product Liability Act discussed in this case is former O.R.C. § 2307.71.</B>  This statute was recently amended by Tort Reform.  New O.R.C. § 2307.71 enacted April 7. 2005 addresses this issue. It states “(B) Sections 2307.71 to 2307.80 of the Revised Code are intended to abrogate all common law product liability causes of action.”  As such, whether a common law products liability claim exists, may depend on whether the occurrence happened prior to Tort Reform or not.</div> <bR> <bR> <div> <I><B>June 2005</B></I></div> <bR> <div> <B>Ohio Subrogation Commission Coming Soon</B></div> <bR> <div> The Ohio House Committee on Commercial and Civil Law just voted to send to the floor of the Senate Bill 124 which would establish the Ohio Subrogation Rights Commission.  In the Committee hearing, the Ohio Academy of Trial Lawyers sought to add an injured party victim and a MADD representative to the Commission.  The Committee agreed to amend S.B. 124 to include an injured party to put a face on subrogation issues. </div> <bR> <div> The Committee also amended S.B. 124 to rush the work of the Commission to have a report back to the House and Senate by December 31, 2005 rather than the December 31, 2006 deadline placed in the law by the Senate.  Again, the Ohio Academy of Trial Lawyers sought this change.  The vote in the House Committee was unanimous.</div> <bR> <bR> <div> <I><B>May 2005</B></I></div> <bR> <div> <B>4</B><FONT SIZE="1" COLOR="#000000" FACE="Arial" ><B>th</B></FONT><B> Circuit Allows Reimbursement Enforcement</B></div> <bR> <div> The U.S. Court of Appeals for the Fourth Circuit joins the majority of appellate courts in allowing enforcement of ERISA plans under <FONT SIZE="3" COLOR="#000000" FACE="Shruti" >§</FONT>1132(a)(3) when the party sued has possession of a fund of money.  See <U>Mid Atlantic Medical Services, LLC. v. Sereboff</U>,  2005 U.S. App LEXIS 7699.  Again, employers in the Sixth Circuit remain unable to bring such actions in the federal court to enforce their language.  The Fourth Circuit joins the majority of courts in allows for such actions.  Hopefully, the United States Supreme Court will weigh in on this issue soon.</div> <bR> <bR> <div> <I><B>April 2005</B></I></div> <bR> <div> <B>Compensatory Damages Reduced for HMO write-off</B></div> <bR> <div> The Florida Supreme Court recently reduced an award of past medical bills as compensatory damages for an injured party.  The case is called <U>Goble v. Frohmand</U> and involved an award of $574,554.31 for past medical bills.  The HMO had paid the medical providers the sum of $145,970.76 and the balance of the bills was written off.  As such, the award for past medicals was reduced by the Court after the trial.  This has potential impact on Ohio subrogation in light of the new tort reform which went into effect in April.  Tort defendants in Ohio may be able to reduce awards for past medical expenses when a health plan, HMO or other entity paid a reduced amount.  This may lead to more plans and carriers who have paid medical expenses being brought into suits by defense counsel.</div> <bR> <bR> <div> <I><B>March 2005</B></I></div> <bR> <div> <B>U.S. Supreme Court Denies Petition for Certiorari</B></div> <bR> <div> In the <U>QualChoice v. Rowland </U>case, the United States Supreme Court denied the petition for certiorari on March 21, 2005.   This is not good news for health insurers and plans which have employees within the Sixth Circuits reach.  Essentially, the <U>Rowland</U> decision says that no ERISA written document can be enforced under § 1132(a)(3) since there is a written contract/ plan document.  Allowing this decision to stand, the Sixth Circuit stands alone as the only Court of Appeals to reject enforcement of ERISA written plans under § 1132(a)(3).  </div> <bR> <div> <B>3</B><FONT SIZE="1" COLOR="#000000" FACE="Arial" ><B>rd</B></FONT><B> Circuit Hold New Jersey Anti-Subrogation Not "Saved From ERISA Pre-emption."</B></div> <bR> <div> In the case of <U>Levine v. United HealthCare</U>, the U.S. Court of Appeals for the 3<FONT SIZE="1" COLOR="#000000" FACE="Arial" >rd</FONT> District  ruled that New Jersey<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s anti-subrogation state statute was not "saved" from ERISA preemption as the regulation of insurance.   The result being that the anti-subrogation statute was pre-empted.  The 3<FONT SIZE="1" COLOR="#000000" FACE="Arial" >rd</FONT> Circuit relied heavily upon the recent U.S. Supreme Court case of  <U>Kentucky Assoc. of Health Plans Inc. v. Miller.</U></div> <bR> <bR> <div> <I><B>February 2005</B></I></div> <bR> <div> <B>FEHBA Subrogation & Reimbursement</B></div> <bR> <div>  There is a split in the Appellate Courts regarding federal jurisdiction for FEHBA reimbursement cases.  The 2<FONT SIZE="1" COLOR="#000000" FACE="Arial" >nd</FONT> Circuit held in a 2-1 decision that FEHBA did not create federal jurisdiction in the case of <U>Empire Choice Health Assurance Inc. v. Mc Veigh</U> saying no federal common law existed and there was no demonstrable conflict presented with state law.  In contrast, the 7<FONT SIZE="1" COLOR="#000000" FACE="Arial" >th</FONT> Circuit found that FEHBA<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s pre-emption provision created federal jurisdiction so as to promote uniform application of the law to all federal employees and to prevent application of the <FONT SIZE="3" COLOR="#000000" FACE="Shruti" >“</FONT>common fund<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >”</FONT> doctrine.  The 7<FONT SIZE="1" COLOR="#000000" FACE="Arial" >th</FONT> Circuit reversed the district court<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s dismissal of the action for lack of jurisdiction.  Under FEHBA, these cases require plan administrators to demonstrate an actual conflict with state law to bring a case in federal court.</div> <bR> <div> <I><B>December 2004</B></I></div> <div> QualChoice Inc. v. Rowland decision by the U.S. Sixth Circuit Court of Appeals has been appealed to the United States Supreme Court through a petition for certiorari.  The Supreme Court case number is 04-787.  The Supreme Court has the discretion to take the case or not.  The court will decide whether to hear the case or not through committee decision possibly in late 2005.</div> <bR> <div> <B>SUPREME COURT DENIES MOTION TO RECONSIDER</B></div> <bR> <div> The Ohio Supreme Court refuses to reconsider its decision in <U>Northern Buckeye Education Council Group Health Benefit Plan v. Lawson</U>.  Counsel for Lawson had requested the Court reconsider and reverse its recent ruling. The Supreme Court refused to reconsider its ruling which affirmed Ohio long standing principle of enforcing subrogation rights found in contracts of insurance or benefit plans.  The order denying the motion to reconsider was issued December 1, 2004.</div> <bR> <div> <B>OHIO LEGISLATURE CREATES SUBROGATION COMMISSION</B></div> <bR> <div> Ohio legislature creates Subrogation Commission in 2005 to study the effects of the <U>Lawson</U> ruling when it comes to subrogated interests in Ohio.  The Ohio House added the commission as an amendment to S.B. 80 Tort Reform legislation which had previously passed the Ohio Senate.  The Ohio Senate passed the omnibus amendment including the Subrogation Commission early in the morning of December 9, 2004.  Revised Code <FONT SIZE="3" COLOR="#000000" FACE="Shruti" >§</FONT> 2323.44 established a 13 member commission to make recommendations to the Ohio Legislature regarding subrogation in Ohio.  The work of this commission may alter or affect all subrogated rights under Ohio law.  If you want us to keep you informed on the progress of this Commission, please send us your email information to <FONT SIZE="3" COLOR="#0000FF" FACE="Arial" ><A HREF="mailto:ealert@subrogation-recovery.com" TARGET="_top" TITLE="mailto:ealert@subrogation-recovery.com"><U><U>ealert@subrogation-recovery.com</U></U></A></FONT>.</div> <bR> <bR> <div> <I><B>September 2004</B></I></div> <div> <B>Ohio Supreme Court rejects Public Policy of "Make Whole"</B></div> <div>   </div> <div>      In a 4-3 decision, the Ohio Supreme Court reaffirmed Ohio<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s long standing tradition to favor subrogated interests at law when based upon a written contract or agreement. See <U>Northern Buckeye Educ. Council. F. Lawson</U>, 103 Ohio St. 3d 188 (Sept. 29, 2004) The Supreme Court adopted a clear test for what subrogation and reimbursement language is necessary to avoid application of "make whole".  Health insurers contracts, self-funded plans and medical payment insurance provisions should be reviewed to ensure they contain language required by the Court to avoid "make whole".  This concept is applicable even where a party has made a bad bargain, contracted away all his rights, and has been left in the position of doing the work while another may benefit from the work.  Where various written documents exist, it is the court<FONT SIZE="3" COLOR="#000000" FACE="Shruti" >'</FONT>s duty to interpret their meaning, and reach a decision by using the usual tools of contractual interpretation (<I>e.g.,</I> the written documents, the intent of the parties, and the acts of the parties) and not by a determination of what is fair, equitable, or just."  25 Ohio St.2d at 239-240, 54 O.O2d 361, 267 N.E.2d 769.</div> <bR> <div>  Link:   <A HREF="http://www.sconet.state.oh.us/rod/newpdf/0/2004/2004-Ohio-4886.pdf" TARGET="_top" TITLE="http://www.sconet.state.oh.us/rod/newpdf"><U>http://www.sconet.state.oh.us/rod/newpdf/0/2004/2004-Ohio-4886.pdf</U></A></div> </td> </tr></table></body>