In addition to paying for medical expenses, death benefits, funeral costs and/or indemnity benefits for lost wages resulting from a compensable injury, workers’ compensation insurance carriers also expend considerable dollars for case management costs, medical bill audit fees, independent medical exam (IME) fees, expert fees, functional capacity evaluation charges, rehabilitation benefits, physician advisor fees, behavioral health or social worker support service fees, third-party vendor costs, nurse case management fees, workers’ compensation case attorneys’ fees, and the like. They pay significant attorney’s fees on permanency awards and incur other expenses in conjunction with the handling and adjusting of workers’ comp claims. Which of these benefits are recoverable in workers’ compensation subrogation remains a point of considerable confusion and contention for workers’ compensation carriers in all 50 states. See MWL’s “Which Workers’ Compensation “Benefits” Can Be Subrogated?” chart details the law in every state with regard to which benefits are properly included in the “lien”.
The law in this respect in Ohio was largely undecided, largely because Ohio’s old workers’ compensation subrogation statute was declared unconstitutional in its entirety in 2001.[1] On April 9, 2003, a new statute was enacted by the Ohio legislature which returned the right of subrogation to Ohio workers’ compensation carriers and self-insured employers.[2] The Ohio Court of Appeals recently became the first Ohio court since the new workers’ compensation subrogation statute was enacted in 2003 to weigh in on the specifics of which benefits, costs, or payments can be recovered via a workers’ compensation subrogation lien. In Thomas v. Logue, the Bureau of Workers’ Compensation (BWC) held that the cost of a medical record review by an IME doctor and the cost of writing the report were properly included in a workers’ compensation lien under § 4123.93.[3] The employee disagreed and appealed to the Court of Appeals. On appeal, the Court of Appeals reversed, holding that the cost of having a physician review the employee’s medical records was part of its ministerial purpose of administering workers’ compensation system, and the carrier (BWC) was required to bear this cost. The court concluded, “administrative costs include those costs and expenses that are incident to the discharge of its duties and performances of its activities. BWC, along with subject employers, is required to bear the burden of paying for such administrative costs and is prohibited from passing such costs on to claimants.”
MWL had been fairly successful arguing that the actual wording of the statute allowed the recovery of “any costs or expenses” incurred on behalf of an injured employee. Section 4123.931 provides as follows:
(D) “Subrogation interest” includes 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.[4]
Another argument used successfully in the past was that, as of 2003, Ohio requires compliance with ODG Guidelines. Official Disability Guidelines (ODG) are medical treatment guidelines proposed by an Austin, Texas-based workers’ compensation treatment company called “ODG by MCG.” ODG offers a subscription program utilized by “healthcare providers and/or case managers.” The Commissions of several states now have mandated compliance with the Medical Treatment Guidelines of ODG by MCG Health (“ODG Guidelines”). For example, in Kentucky, as of January 1, 2016, the Kentucky Workers Compensation Department of Worker Claims (DWC) requires compliance with ODG Guidelines. The guidelines have been adopted by the Kentucky DWC under K.R.S. § 342.035 (8) (a). The Kentucky DWC website states that the purpose of the treatment guidelines is to facilitate evidence-based, safe, and appropriate medical treatment of work-related injuries and occupational diseases, in order to expedite recovery of health and return to work. The ODG guidelines contain independent, evidence-based, nationally recognized treatment guidelines for the most common work-related injuries and conditions. ODG’s treatment guidelines contain a comprehensive list of treatments that may be prescribed for injuries to specific body parts or for general conditions based on diagnosis. Under Kentucky Statutes/Admin. Regs., which require adoption of the OMG Medical Treatment Guidelines, the carrier can take the position it may recover the “case manager’s” fee for development of a “treatment plan,” utilizing the ODG guidelines, which is maintained by the “designated physician” under Title 9803, Ch. 025, Kentucky Regulation 096. That regulation states that the fee for preparation of a “treatment plan” which is “maintained by the designated physician” is considered to be an “integral part of the fee authorized in the medical fee schedule for the underlying services.” The Kentucky DWC website states that the ODG Guidelines have been adopted by 11 states’ workers’ compensation systems including Kentucky. Ten other states have also adopted the ODG guidelines, including Arizona, Indiana, Kansas, Montana, New Mexico, North Dakota, Ohio, Oklahoma, Tennessee, and Texas. Similar arguments in these states have proven helpful, but following the Thomas v. Logue decision, the chances for success with this argument in Ohio appear less likely.
The MWL chart referenced above provides definitions, explanations, and arguments which can be used when the issue of which “benefits” can be subrogated has not been established already. When attempting to recover for costs or expenses beyond the basic indemnity and medical benefit payments, a subrogation professional’s first strategy should be to look at the law of the particular state involved, determine exactly what the subrogation statute allows the carrier to recover, and craft an argument accordingly. For example, if it allows for recovery of “benefits” or “compensation” paid, then the definitions of those terms in other areas of the workers’ compensation law should be determined, and an argument fashioned that those definitions include case management type fees and expenses. If that proves to be a dead end, a logical argument should be made that by discouraging the spending of such amounts, the subrogation lien will actually increase, and the recovery of the injured worker will decrease. Such expenditures actually assist in holding down the cost of workers’ compensation insurance premiums, and every incentive to hold down liens and reduce fraud will make workers’ compensation systems more cost-effective and affordable for businesses. As a last resort, simply include these reasonable costs in the lien totals provided to plaintiffs’ lawyers, putting the burden on them to affirmatively challenge such expenses. A court may be asked to decide, and voilà; we have precedent, good or bad. Where the recovery of such costs is not proscribed, it is reasonable to expect reimbursement of expenses and costs which fall within the definition of the amount recoverable under the applicable workers’ compensation subrogation statute or which actually benefit the employee by keeping the benefits total to its absolute minimum. If the totals are not questioned, there is no foul. If they are, remember the words of Mark Twain, “Whatever you say, say it with conviction.”
For information or questions regarding workers’ compensation subrogation, contact Gary Wickert at gwickert@mwl-law.com.
[1] Holeton v. Crouse Cartage Co., 748 N.E.2d 1111 (Ohio 2001).
[2] Senate Bill 227 (amending Ohio Rev. Code Ann. § 4123.93).
[3] Thomas v. Logue, 191 N.E.3d 1155 (Ohio App. 2022).
[4] Ohio Rev. Code Ann. § 4123.93(D).
