Ohio has a rich tradition in affirming subrogation recoveries under Ohio law. In fact, Ohio courts maintain that the subrogated claim has first right to any recovery from the wrongdoer. This principle of Ohio law was recently affirmed in Northern Buckeye Education Council Group Health Plan v. Lawson (2004), 103 Ohio St. 3d 188, 814 N.E. 2d 1210. The Ohio Supreme Court affirmed forty years of precedent in allowing subrogation provisions in contract to control who can recover first from the wrongdoer. On December 4, 2004, the Ohio's highest court rejected a request to reconsider its decision and affirmed its position as set forth in Lawson

At the same time, the Ohio House of Representatives had introduced an amendment to Ohio Tort Reform legislation that would have essentially wiped out court precedent from 1963 forward favoring subrogation. The Ohio Academy of Trial Lawyers succeeded in having the Ohio House amend the Tort Reform bill to subject all subrogation claims to paying them a fee and limiting the subrogated insurer to only a very small portion of the balance of any recovery. This proposed amendment ensured that only the personal injury attorney would recovery completely in every case.

The following fact pattern gives you an idea of what the recovery dollars would be. Under the proposal amendment, a subrogated interest of $20,000.00 with an agreed value of the claim (including pain and suffering) of the injured party at $100,000.00 and a recovery of $100,000.00 would result in a net recovery to the insurance company of $14,000.00 or 70% of its interest. The 30% reduction on this case represents the fee due the personal injury attorney from the subrogated carrier. If the “value of the claim” above is doubled to $200,000, the result would be the subrogated carrier recovers $7,000.00 (35%), the injured party victim recovers $63,000.00 (35%) and the injured attorney gets $30,000 (100%).

The Ohio House and Senate were presented with a counter-proposal from the insurance industry. Despite this alternative proposal, a consensus could not be reach before the end of the session. However, the Ohio House succeeded in amending Tort Reform to create a subrogation commission to make recommendations to the Legislature regarding the perceived injustice created by the decision in Lawson. If you wish to be kept informed as the commission meets, please email your contact information to ealert@subrogation-recovery.com