How subrogation can affect your business’s workers’ compensation

Unless you’re in the risk business, you probably don’t hear the term ‘subrogation’ often. Subrogation is defined as satisfying someone else’s obligation and then attempting to collect from the party that owes the debt. For example, an insurance company satisfies the claim of one of its clients and then seeks reimbursement from the person or other entity that caused the damage.

However, in Ohio the right to seek subrogation in a workers’ compensation claim does not belong to the employer; it belongs to the Bureau of Workers’ Compensation and the injured party.

“Employers should know that if their employees are injured and there is a workers’ compensation claim due to the negligence of another party, they need to be diligent in their management of the claim,” says Richard DeStefano, a consultant with Ohio Employee Health Partnership. “The employer could probably suggest the injured employee file the suit, but if they don’t file a legal action against that person, or the other party, there won’t be any subrogation. The claim may escalate to the point where it is an expensive claim and the employer will suffer the consequences.”

Smart Business spoke with DeStefano about how subrogation can affect your business, and what you should do about it.

What are some general rules businesses should try to use to ensure they get compensation via subrogation, when warranted?

They must recognize that if they believe an accident happened to one of their employees and it wasn’t their fault, they need to keep track of it. The most common example is a motor vehicle accident, where the other driver is cited. Their employee could be sitting at a traffic light, and somebody rear-ends them and the other person gets the ticket. Or a dog bites a service worker, or employees are delivering a product and one slips and falls because of grease from where a truck was parked. Anytime injuries like that occur, you need to at least make a mental note of it.

Then, if the injured worker pursues action against the other driver, the owners of the dog or the other employer where he was delivering, then it’s incumbent upon that employer to notify the claims service specialist or the bureau’s subrogation unit, so they can recover some of their money.

Can an employer sue for recovery on behalf of an injured worker?

The employer has no rights in this whole ordeal. The right of subrogation actually belongs to the bureau and to the injured worker. However, because the employer has a pretty significant interest in the outcome, it would be beneficial for them to talk to their injured employee and let them know they could file. If they do file, the employer can keep tabs on the injured employee and talk to the bureau’s subrogation unit. Let them know you have an interest in the case.