Understanding Workers’ Compensation Litigation in Ohio: What State Fund Employers Need to Know

For some state fund employers in Ohio, receiving a court complaint as a defendant in workers’ compensation litigation can be unexpected. Employers experiencing this for the first time are often surprised that an employee can file a lawsuit for benefits even after the Industrial Commission’s orders disallowing the claim during the administrative hearing process.

Understanding the Workers’ Compensation Appeals Process

State court litigation is an intrinsic part of the Ohio workers’ compensation system, offering the losing party a final appeal after exhausting all available administrative remedies. Under Ohio Revised Code Section 4123.512, any order of the Industrial Commission other than a decision as to the extent of disability—in other words, any order allowing or disallowing conditions in a claim, including the initial allowance of the claim itself—can be appealed by either the claimant or the employer to the court of common pleas in the county where the injury occurred.

This appeals process is initiated by:

• Filing of a notice of appeal with the court within 60 days from their receipt of the Commission’s order refusing their final administrative appeal.
• Submitting a formal complaint naming both the employer and the Ohio Bureau of Workers’ Compensation (BWC) as defendants within 30 days of the notice of appeal.

Even if the employer initiates the court appeal, they are always named as defendants, while claimants are always the plaintiffs and must always be the party to file the complaint.

Key Considerations for Employers

Beyond procedural nuances, the biggest concern for employers unfamiliar with the process is understanding the stakes in workers’ compensation litigation. Being named as a defendant in a civil lawsuit involving alleged injuries typically raises concerns about potential liability. However, workers’ compensation appeals only determine whether the claimant has the right to participate in the state fund for their alleged injury or occupational disease.

If a claim is allowed, the Ohio BWC is responsible for directly paying any benefits and compensation, not the employer.  Because the BWC has an interest in defending itself in litigation upon a claimant’s court appeal, the Ohio Attorney General’s (AG) office represents the BWC in these cases. This means that, regardless of whether the state fund employer chooses to participate in a workers’ compensation appeal, the AG will always be there to defend the BWC against a claimant’s efforts to get the Industrial Commission’s decision overturned and his or her claim allowed.

Why Employers May Choose to Participate

This begs the question: why would a state fund employer participate in claimant-initiated workers’ compensation litigation when the AG’s office is already defending against the claim and the BWC is the party paying out on the claim even if it ends up allowed? Despite the AG’s role, employers have a strategic reason to engage litigation:

• Impact on BWC Premiums: While the BWC does directly pay any claim costs, those costs may dramatically impact an employer’s experience rating, potentially increasing annual premium payments. Employers often retain a Third-Party Administrator (“TPA”) to handle their policy issues and attend day-to-day administration of their The TPA can also provide estimates of the impact of claims costs (including settlements) on premiums.

Claim settlements paid out by the BWC are included in claim costs, so employers may want to be involved in the settlement discussions and negotiations to try to limit the amount offered to the claimant based on the premium impact projections from their TPA. Moreover, due in part to that potential impact on an employer’s premiums, the AG will coordinate with an employer’s lawyer on strategy and generally defer to the employer regarding settlement authority.

• The AG represents the BWC, and while employers’ and the BWC’s interests are often naturally aligned, the AG will not consult an employer on defense strategy nor include them in any settlement discussions if the employer has not participated in the litigation by way of an appearance by a lawyer and the filing of an answer on their behalf. Employers that do not participate in workers’ compensation litigation risk how the outcome of the case—especially with respect to settlement, which is how the vast majority of these matters are resolved in litigation—may impact their annual premiums.
• Violation of Specific Safety Requirement Claims: If a claim involves a VSSR allegation, the employer is ordered to directly pay 15% to 50% of the maximum workers’ compensation rate for any indemnity benefit paid in a state fund workers’ compensation claim due to an industrial injury occurring as the direct result of an employer’s violation of a specific safety code adopted by the Industrial Commission of Ohio.
• Current or former employee settlement: If the claimant is still-employed, there is an inherent risk that they may reinjure themselves or file a subsequent claim for the same or similar medical conditions as those of the now-settled claim. To avoid that risk, employers may insist on the claimant’s resignation from their employment as a condition of settlement—often accompanied by a full separate confidential release of claims. Even for former employees, the nature of the separation from employment may warrant the need for a separate release as part of any settlement if there are concerns over future claims or actions stemming from their employment or termination. As noted above, however, employers cannot negotiate these terms or require any separate releases if they do not participate in the litigation.

There are cases when factors such as the value of the underlying claim, the potential impact on premiums or lack thereof, and the claimant’s employment status all align to make participation in workers’ compensation litigation simply not worth the time, money, and hassle from the employer’s perspective. For those cases, employers may choose to sit it out and let the AG handle the defense without fear of any default judgment or individual liability.

If you have any questions regarding state fund court appeals, or any other Workers’ Compensation matter, please feel free to contact Maris McNamara or any member of Frantz Ward’s Workers’ Compensation practice.