In the Supreme Court of Ohio

Transcription

1 Supreme Court of Ohio Clerk of Court - Filed November 18, Case No In the Supreme Court of Ohio OHIO BUREAU OF WORKERS COMPENSATION Plaintiff-Appellant, v. JEFFREY McKINLEY and HERITAGE-WTI, INC., Defendants-Appellees. : : : : : : : : : : : : : : Case No On Appeal from the Columbiana County Court of Appeals, Seventh Appellate District Court of Appeals Case No. 12 CO 41 MERIT BRIEF OF PLAINTIFF-APPELLANT OHIO BUREAU OF WORKERS COMPENSATION T. JEFFREY BEAUSAY ( ) The Donahey Law Firm 495 S. High Street, Suite 100 Columbus, Ohio fax Counsel for Defendant-Appellee Jeffrey McKinley PATRICK KASSON ( ) GREGORY BRUNTON ( ) MELVIN DAVIS ( ) Reminger Co. LPA 65 E. State Street, 4th Floor Columbus, Ohio fax pkasson@reminger.com Counsel for Defendant-Appellee Heritage-WTI, Inc. MICHAEL DEWINE ( ) Ohio Attorney General ERIC E. MURPHY* ( ) State Solicitor *Counsel of Record STEPHEN P. CARNEY ( ) MATTHEW R. CUSHING ( ) Deputy Solicitors SHERRY M. PHILLIPS ( ) Assistant Attorney General 30 East Broad Street, 17th Floor Columbus, Ohio ; fax eric.murphy@ohioattorneygeneral.gov BRADLEY R. GLOVER ( ) LEE M. SMITH ( ) Lee M. Smith & Associates 929 Harrison Avenue, Suite 300 Columbus, Ohio ; fax Counsel for Plaintiff-Appellant Ohio Bureau of Workers Compensation

2 TABLE OF CONTENTS Page TABLE OF CONTENTS... i TABLE OF AUTHORITIES... iii INTRODUCTION...1 STATEMENT OF THE CASE AND FACTS...3 A. The General Assembly created a subrogation system to reimburse the Bureau when a claimant recovers from a third-party tortfeasor for the same injury....3 B. McKinley received workers compensation benefits from the Bureau for a workrelated injury, and he initially notified the Bureau of a tort claim against Heritage for the same injury. The Bureau asserted its rights and asked to be kept apprised of settlement talks, and the parties set a conference for January C. Before the three-way conference occurred, Heritage and McKinley secretly signed a two-party settlement that did not include any payment to the Bureau or mention the Bureau s interest, but it did include generic language purporting to leave McKinley solely liable for any subrogation claims or liens or any third-party claims....7 D. After the Bureau s interest was not included in the settlement, McKinley sought to eliminate the Bureau s ability to obtain any recovery for the amounts that it had paid him....9 E. The Bureau sought to hold McKinley and Heritage jointly and severally liable for the statutory subrogation interest, but the lower courts held that it could not recover from Heritage because the Bureau s subrogation interest was not clearly excluded from the settlement ARGUMENT...12 Appellant Bureau s Proposition of Law: When a workers compensation claimant settles a lawsuit with a third party for the same injury underlying the workers compensation claim, the claimant and the third party are jointly and severally liable for the interest of the statutory subrogee if the settlement does not include the required payment to the subrogee. The settlement excludes an amount paid by the subrogee, for purposes of R.C (G), if it fails to include that interest, and no express mention of the subrogee is needed to count as exclusion....12

3 A. When a workers compensation claimant settles with a third-party tortfeasor, the Bureau s right of recovery must be satisfied, and the several provisions for including the Bureau are all enforced by joint and several liability imposed on the claimant and the third-party tortfeasor B. Heritage s secret settlement with McKinley, by failing to provide for paying the Bureau, excluded the Bureau s interest, so Heritage remains liable to the Bureau A settlement excludes an amount whenever it does not include a provision for paying the amount Under any reasonable standard, the Settlement excluded the amount owed to the Bureau C. The other provisions reinforce the Bureau s sensible reading of exclude, and those other provisions also create liability in their own right D. The Bureau s reading meets the law s purpose and is consistent with all provisions, while the appeals court s view renders the entire scheme meaningless CONCLUSION...29 CERTIFICATE OF SERVICE APPENDIX: Notice of Appeal, May 15, Exhibit 1 Judgment Entry, Seventh Appellate District Court, March 31, Exhibit 2 Opinion, Seventh Appellate District Court, March 31, Exhibit 3 Nunc Pro Tunc Opinion and Judgment Entry, Columbiana County Common Pleas Court, November 9, Exhibit 4 Opinion and Judgment Entry, Columbiana County Common Pleas Court, August 30, Exhibit 5 R.C Exhibit 6 R.C Exhibit 7 ii

4 TABLE OF AUTHORITIES Cases Page(s) Ohio Bureau of Workers Comp. v. McKinley, 2014-Ohio-1397 (7th Dist.)... passim Groch v. Gen. Motors Corp., 117 Ohio St. 3d 192, 2008-Ohio , 26 McKinley v. Ohio Bureau of Workers Comp., 117 Ohio St. 3d 538, 2008-Ohio McKinley v. Ohio Bureau of Workers Comp., 170 Ohio App. 3d 161, 2006-Ohio-5271 (4th Dist.)...5, 6 Midwest Specialties, Inc. v. Crown Indus. Prods. Co., 940 F. Supp (N.D. Ohio 1996)...20 Ohio Bureau of Workers Comp. v. McKinley, 130 Ohio St. 3d 156, 2011-Ohio passim Ohio Bureau of Workers Comp. v. Smith, No. 12 CV (Lake County Com. Pl. Dec. 26, 2012)...18 Ohio Bureau of Workers Comp. v. Williams, 180 Ohio App. 3d 239 (10th Dist. 2008)...18 Statutes, Rules, and Constitutional Provisions R.C R.C R.C , 25 R.C passim Other Authorities Black s Law Dictionary (10th ed. 2014)...21 iii

5 INTRODUCTION This is a straightforward case of applying a statute s plain meaning to simple facts, and of asking if a statute means what it says. The statute, R.C (G), says that when a workers compensation claimant also receives money for the same injury by settling with a third-party tortfeasor, both the claimant and tortfeasor remain liable to the Bureau of Workers Compensation if the settlement excludes any amount paid by the Bureau to the claimant. Here, Defendant-Appellee Heritage-WTI ( Heritage ) settled with a claimant, Jeffrey McKinley, and the settlement did not include a payment to the Bureau. As this Court noted in an earlier look at this case, the dispute arises because the settlement of a personal-injury suit brought by a recipient of workers compensation benefits against a third-party tortfeasor did not make any provision to repay the Bureau. Ohio Bureau of Workers Comp. v. McKinley, 130 Ohio St. 3d 156, 2011-Ohio (emphasis added). The Bureau sees this case as simple: A settlement that fails to include payment to the Bureau is one that excludes any amount paid by the Bureau, so a tortfeasor here, Heritage remains liable to the Bureau. The Court need only say so. The decision below wrongly said otherwise. The Seventh District held that a settlement excludes the Bureau, triggering the tortfeasor s liability, only if the settlement expressly eliminates payment to the Bureau, either by saying so or by not paying enough for the claimant to repay the Bureau himself. It held that the Bureau could not pursue Heritage, the tortfeasor, because the settlement contract did not expressly include language that specifically and clearly excludes amounts owed to the Bureau. Ohio Bureau of Workers Comp. v. McKinley, No. 12 CO 41, 2014-Ohio (7th Dist.) ( App. Op., Ex. 3). That is, the court held that only a settlement that says something like the Bureau should get none of these settlement

6 funds triggers tortfeasor liability. That view is wrong, as it violates the statute s plain text and purpose. No savvy tortfeasor will sign a contract that, by expressly purporting to disclaim liability, will instead guarantee liability. Settlements will remain silent on the issue, all but eliminating, in the appeals court s view, the Bureau s direct right of recovery against the tortfeasor. Ohio s statute for reimbursement, or statutory subrogation, is based on the sensible principle that a worker injured on the job should have his medical expenses and lost wages paid once, but should not double recover for the same injury by collecting overlapping amounts from the workers compensation system and separately from a tortfeasor. Thus, R.C requires workers compensation claimants to notify the Bureau of their related tort suits and recoveries, and it creates a cause of action for the Bureau to seek reimbursement from both claimants and tortfeasors following a settlement that does not include the Bureau. Defendant- Appellee Jeffrey McKinley s case is or should have been a textbook example of subrogation triggered by double recovery, because he received both a tort settlement and workers compensation benefits after he was injured on the job. Under R.C (G), McKinley and Heritage should be jointly and severally liable for the Bureau s subrogation interest, which was not included in that settlement. The Court should apply the statute s plain meaning, and it should reverse the decision below. 2

7 STATEMENT OF THE CASE AND FACTS A. The General Assembly created a subrogation system to reimburse the Bureau when a claimant recovers from a third-party tortfeasor for the same injury. Under Ohio s workers compensation system, certain employees receive no-fault compensation from the Ohio Bureau of Workers Compensation for workplace injuries. Injured employees may, and often do, also bring separate claims against third-party tortfeasors who allegedly caused the employee s injury. To prevent double recovery for the same injury, the General Assembly created a statutory subrogation scheme that provides for the Bureau (or a self-insured employer) to be reimbursed for payments the Bureau (or employer) made previously to the injured employee. See R.C ; R.C The reimbursement comes from funds the employee recovers from the third-party tortfeasor, whether by settlement or judgment. While the statute uses the term subrogation, the statutory scheme is not traditional subrogation, but is instead an independent right of recovery that the Bureau has against both the claimant and the third-party tortfeasor. McKinley, 2011-Ohio The recovery scheme involves three actors: (1) the claimant (i.e., the injured employee) is the person who is eligible to receive compensation from the Bureau for workrelated injuries; (2) the statutory subrogee is either the Bureau or a self-insured employer who pays funds under the workers compensation system; and (3) the third party is the tortfeasor or separate insurer who may be liable for the claimant s injuries regardless of the workers compensation system. R.C (A)-(C). When the Bureau pays benefits to an injured employee it receives a right of recovery... against [the] third party, and... is subrogated to the rights of [the employee] against that third party. R.C (A). This right attaches automatically upon payment to the injured employee, regardless of whether [the Bureau] is joined as a party in an action by [the injured 3

8 employee] against a third party. R.C (H). The Bureau may assert its right to subrogation through informal correspondence with the claimant and tortfeasor, or by suing the tortfeasor. Id. A statutory formula sets the amount of the Bureau and claimant s respective shares of any recovery from a settlement among the three parties, see R.C (B), or from a damages award against the tortfeasor to the claimant after a trial, see R.C (D). The General Assembly recognized that this formula incentivized claimants and thirdparty tortfeasors to settle without the Bureau s participation thereby leaving the Bureau to foot a higher percentage of the final bill than the statutory formula would otherwise dictate. Accordingly, the Assembly enacted several provisions to counteract these incentives. First, the General Assembly included a requirement in the subrogation scheme that claimants notify the Bureau of all potential tortfeasors. See R.C (G). Second, it required claimants to provide the Bureau with notice and a reasonable opportunity to assert the Bureau s subrogation rights before any settlement, compromise, judgment, award, or other recovery can be final. Id. Finally, if a claimant fails to give the Bureau that requisite notice and opportunity, or if the settlement excludes any amount paid by [the Bureau], then the claimant and the tortfeasor are jointly and severally liable to the Bureau for the full amount of the Bureau s interest. Id. In full, subsection (G) provides: A claimant shall notify a statutory subrogee and the attorney general of the identity of all third parties against whom the claimant has or may have a right of recovery, except that when the statutory subrogee is a self-insuring employer, the claimant need not notify the attorney general. No settlement, compromise, judgment, award, or other recovery in any action or claim by a claimant shall be final unless the claimant provides the statutory subrogee and, when required, the attorney general, with prior notice and a reasonable opportunity to assert its subrogation rights. If a statutory subrogee and, when required, the attorney general[,] are not given that notice, or if a settlement or compromise excludes any amount paid by the statutory subrogee, the third party and the claimant shall be jointly and severally liable to pay the statutory subrogee the full amount of the subrogation interest. 4

9 Id. (emphasis added). Thus, the law ensures that the Bureau has a right to repayment in all cases of double recovery, and it requires the other two parties to take several interlocking steps to ensure that the Bureau is included in settlements. All of those are enforced by joint and several liability to the Bureau, imposed on both an injured employee and a third-party tortfeasor. B. McKinley received workers compensation benefits from the Bureau for a workrelated injury, and he initially notified the Bureau of a tort claim against Heritage for the same injury. The Bureau asserted its rights and asked to be kept apprised of settlement talks, and the parties set a conference for January On July 13, 2003, Jeffrey McKinley, an employee at Safway Services, was severely burned when he fell while building scaffolding inside a boiler at Defendant-Appellant Heritage- WTI s facility in East Liverpool, Ohio. McKinley filed a claim with the Bureau for compensation for his injuries, and the Bureau approved his claim. He has now received several hundred-thousand dollars from the Bureau for workers compensation and medical benefits. McKinley v. Ohio Bureau of Workers Comp., 170 Ohio App. 3d 161, 2006-Ohio (4th Dist.). He continues to receive benefits, and the Bureau has calculated significant reserves for him. In addition to receiving workers compensation benefits, McKinley filed a personal injury lawsuit against Heritage based on a theory of premises liability. He sued in August 2003, and discovery proceeded, leading to summary judgment motions and an October 2004 trial date. Settlement discussions apparently began by September, and the October trial date was reset to January At that point, the Bureau was finally notified. On October 25, 2004, McKinley s lawyer sent a letter to the Bureau, notifying it of McKinley s claim against Heritage and that the parties were engaged in settlement negotiations. See Letter from T. Jeffrey Beausay to Ohio Bureau of Workers Compensation (Oct. 25, 2004), Supp. at S-1. The letter stated that the Bureau s statutory subrogation lien was a major obstacle 5

10 to settlement, and requested that the Bureau waive or reduce its subrogation lien.... [o]therwise, the entire case, and the Bureau s lien along with it, may very well be extinguished. Id. On October 25, the same day that the Bureau received McKinley s initial notice, the Bureau sent letters immediately to McKinley and his lawyer notifying them of the Bureau s subrogation rights and offering to provide documentation of what the Bureau had paid McKinley in compensation and benefits if such documentation was required [w]hen... [the] action is about to settle with Heritage-WTI. See Letter from Ohio Bureau of Workers Compensation to Jeffrey McKinley (Oct. 25, 2004), Supp. at S-3; Letter from Ohio Bureau of Workers Compensation to T. Jeffrey Beausay (Oct. 25, 2004), Supp. at S-4. The Bureau also asked McKinley s counsel to update it concerning the progress of your settlement negotiations. Letter from Tom Woodruff to T. Jeffrey Beausay (Oct. 25, 2004), Supp. at S-5. The Bureau did not receive a response from McKinley s counsel, so it sent another letter on October 28 requesting an update on the progress of your settlement negotiations with the third party. The Bureau also informed McKinley s counsel that the total value of its subrogation lien was $885,808.56, representing what the Bureau calculated would be its past and future benefits paid to McKinley. Letter from Tom Woodruff to T. Jeffrey Beausay (Oct. 28, 2004), Supp. at S-6; see also McKinley, 2006-Ohio The next day, McKinley s counsel responded to the Bureau, stating that because counsel anticipated that the case can be settled for approximately 30% of its value, counsel request[ed] that the Bureau accept 30% of its lien in light of the possibility that McKinley could lose on summary judgment or at trial. Letter from T. Jeffrey Beausay to Tom Woodruff (Oct. 29, 2004), Supp. at S-7-8. On November 1, counsel again wrote to the Bureau and 6

11 requested that it accept 30% of its lien. Counsel also informed the Bureau that he believe[d] we can settle the third-party action for $1,500,000 but reiterated that the BWC lien still remains a major obstacle to settlement. Letter from T. Jeffrey Beausay to Tom Woodruff (Nov. 1, 2004), Supp. at S-9. The Bureau agreed to compromise, and offered to accept a full and final settlement of [its] subrogation interest for $338, Letter from Tom Woodruff to T. Jeffrey Beausay (Nov. 3, 2004), Supp. at S-10. Despite purporting to agree and accept the Bureau s compromise, counsel for McKinley requested that the Bureau accept 30% of [the statutory formula], or [2%] of the net amount recovered, rather than the $338, offered by the Bureau. Letter from T. Jeffrey Beausay to Tom Woodruff (Nov. 3, 2004), Supp. at S-13. Based on his estimation that the settlement would be for $1.5 million, McKinley s counsel was, in essence, asking the Bureau to accept approximately $30,000, or 1/10th of its compromise settlement offer. The Bureau refused to depart from its offer, creating an impasse. See Letter from Tom Woodruff to T. Jeffrey Beausay (Nov. 4, 2004); Supp. at S-14. McKinley requested a hearing before the Administrator s Designee. Letter from Tom Woodruff to Linda Wycuff (Nov. 4, 2004), Supp. at S-15. The hearing was scheduled for January 10, Letter from Brenda Andrews to T. Jeffrey Beausay (Nov. 17, 2004), Supp. at S-16. C. Before the three-way conference occurred, Heritage and McKinley secretly signed a two-party settlement that did not include any payment to the Bureau or mention the Bureau s interest, but it did include generic language purporting to leave McKinley solely liable for any subrogation claims or liens or any third-party claims. During December 2004, while the Bureau awaited the January 2005 conference, McKinley and Heritage negotiated without the Bureau, and the two parties reached a then-secret settlement agreement on December 10. Release and Settlement Agreement ( Settlement ), 7

12 Supp. at S (The Bureau refers to it as a Settlement for brevity, but believes it is merely a purported settlement, as it cannot be a valid final settlement with the Bureau excluded.) Neither of the two parties notified the Bureau that settlement was imminent or was reached; neither notified the Bureau immediately after it was signed. The two-party Settlement called for Heritage to pay McKinley over $2 million in two components. First, Heritage paid McKinley a lump sum of $1.1 million. Settlement, III(A), Supp. at S-24. Second, Heritage agreed to make periodic payments to McKinley totaling $972, over 30 years. Id. III(B). The Settlement did not refer to the Bureau by name, or note its interest or right of recovery, anywhere in the document. The Settlement included a generic indemnification clause, though, purporting to absolve Heritage of any liability, and leaving McKinley solely liable, for any subrogation claims or liens or any other claims from the incident. Specifically, it said this: VII. INDEMNIFICATION In further consideration of the payments and the promise to make the future Periodic Payments set forth herein, Plaintiff hereby discharges and agrees to indemnify and to save and hold harmless Defendant, Insurer and all parties released from and against any and all medical or other liens or claims, or subrogation claims or liens, that are, have been in the past or may be in the future asserted against anyone as a result of the aforesaid incident. Id. VII, Supp. at S-26 (emphases added). The Settlement was signed by McKinley (and his wife) on December 10, and by Heritage s insurer on December 20. The court record does not show precisely when or how the Bureau learned of the Settlement. The Bureau had not learned the amount, nor received a copy, as of June See Woodruff Aff. of June 25, 2012, 20, Supp. at S-22 ( Further, affiant was not provided with a copy of any agreements or releases. ); see McKinley, 2011-Ohio (noting that, as of 2011, settlement was for undisclosed amount ). The Bureau first saw the Settlement when Heritage attached it as an exhibit to its summary-judgment motion in

13 D. After the Bureau s interest was not included in the settlement, McKinley sought to eliminate the Bureau s ability to obtain any recovery for the amounts that it had paid him. After the Settlement, McKinley, Heritage, and the Bureau attended a conference with the Administrator s Designee, where the designee decided that the amount of $338, asked by [the Bureau] was reasonable and should be remitted to [the Bureau]. Ohio Bureau of Workers Comp. v. McKinley, No. 12 CO 41, 2014-Ohio (7th Dist.) ( App. Op. ); see Decision of Designee of Subrogation Matters, issued Mar. 3, 2005, regarding conference of Jan. 10, 2005, Supp. at S-17 ( Designee Decision ). The Designee apparently accepted an indication by McKinley s counsel that, as of January 10, 2005, the case against Heritage will settle for 1.5 million dollars. Designee Decision, Supp. at S-17. The December settlement remained secret, but at some point it was apparent that McKinley had or would soon receive funds from Heritage, and the Bureau continued to press its interest in correspondence. Rather than paying the amount owed based on the Bureau s subrogation interest, McKinley sought to defeat the entire interest. He filed a declaratory-judgment action in the Washington County Court of Common Pleas (as he lived in Washington County) challenging the constitutionality of the subrogation statutes and the amount of the BWC subrogation lien. McKinley, 2014-Ohio The trial court stayed the Bureau s attempts to collect on its interest while McKinley s case against the Bureau was pending, delaying recovery of the Bureau s $338, statutory subrogation interest. Id. The trial court agreed with McKinley, and held that the subrogation interest was unconstitutional. Id. The Fourth District reversed, and this Court affirmed, upholding the statutory subrogation scheme as constitutional. Id.; see McKinley v. Ohio Bureau of Workers Comp., 117 Ohio St. 3d 538, 2008-Ohio-1736 (deciding summarily on authority of Groch v. Gen. Motors Corp., 117 Ohio St. 3d 192, 2008-Ohio-546). 9

14 E. The Bureau sought to hold McKinley and Heritage jointly and severally liable for the statutory subrogation interest, but the lower courts held that it could not recover from Heritage because the Bureau s subrogation interest was not clearly excluded from the settlement. Soon after this Court upheld the statute in Groch and McKinley, the Bureau filed this case in the Columbiana County Court of Common Pleas on November 4, 2008, seeking to hold both McKinley and Heritage jointly and severally liable for the statutory subrogation interest. App. Op. 12. (Heritage and the site of the injury are in Columbiana County, so this case was venued separately from McKinley s case against the Bureau.) The common pleas court initially dismissed the complaint against Heritage only on the grounds that the two-year statute of limitations for personal injury claims had run against it. Id. The Seventh District reversed, holding that the Bureau s claim asserting its statutory subrogation interest was a statutory right with a six-year statute of limitations. Id. This Court affirmed the Seventh District and remanded to the trial court to proceed on the merits. Id.; see Ohio Bureau of Workers Comp. v. McKinley, 130 Ohio St. 3d 156, 2011-Ohio On remand, the court of common pleas again said that the Bureau could not recover from Heritage, but for a different reason. On August 30, 2012, the Columbiana County Court of Common Pleas granted Heritage s motion for summary judgment, finding that [the Bureau] had notice of the settlement talks and that there was no evidence that the payments made by [the Bureau] to McKinley were excluded from settlement. App. Op. 14. See Opinion and Judgment Entry (Columbiana Cty. Com. Pl. Aug. 30, 2012), Ex. 5; Nunc Pro Tunc Opinion and Judgment Entry (Columbiana Cty. Com. Pl. Nov. 9, 2012), Ex. 4. (The trial court s later entry added no just reason for delay language to ensure a final appealable order.) The Seventh District affirmed. First, the court explained its view that there is nothing in the settlement that can be interpreted to exclude this lien or BWC s rights to collect on the lien as 10

15 permitted by the subrogation statute. App. Op. 26. The court did not mention or discuss the Settlement s paragraph VII, titled Indemnification (and quoted in full above at 8), in which McKinley agreed to indemnify Heritage against any... subrogation claim or lien. See Settlement VII, Supp. at S-26. Second, the Seventh District held that [s]ince [the Bureau] was given notice of the settlement and a reasonable opportunity to present its claim, and because its lien amount was clearly not excluded from the settlement, Heritage-WTI is not liable under R.C (G). Id. 33. The Seventh District rested this holding on its interpretation of the term excluded in R.C (G). It said that exclusion meant more than a failure to include the Bureau s interest in the settlement, but required instead an express exclusion: Pursuant to R.C (G), a court is not required to ensure that a dollar amount paid by the statutory subrogee is specifically included in the settlement; rather, courts are required to determine whether such a settlement specifically excludes the amount paid by the statutory subrogee. If this sum is clearly excluded from the settlement, then the third party is liable. Id. 25. In the Seventh District s view, the exclusion must be clear : The statute merely directs that if the settlement clearly excludes amounts owed to [the Bureau], [the Bureau] has other recourse to collect. But the language is written clearly in the negative and at no time are the parties required to specifically include subrogation amounts so long as it remains apparent that these amounts have not been deliberately excluded. Id. (emphases added). In other words, the Seventh District held that the General Assembly intended the joint and several liability provision of R.C to apply only if the settling parties expressly stated an intent to exclude the Bureau from recovering, by naming the Bureau deliberately. Such a deliberate, attempted exclusion would, however, be ineffective and would trigger liability. But, said the appeals court, the Settlement did not contain such a clear exclusion, so 11

16 Heritage was not subject to the joint and several liability that R.C imposes. Consequently, it affirmed the grant of summary judgment for Heritage. The Bureau appealed, and this Court granted jurisdiction to hear the appeal on September 3, See 09/03/2014 Case Announcements, 2014-Ohio Appellant Bureau s Proposition of Law: ARGUMENT When a workers compensation claimant settles a lawsuit with a third party for the same injury underlying the workers compensation claim, the claimant and the third party are jointly and severally liable for the interest of the statutory subrogee if the settlement does not include the required payment to the subrogee. The settlement excludes an amount paid by the subrogee, for purposes of R.C (G), if it fails to include that interest, and no express mention of the subrogee is needed to count as exclusion. As this Court summarized the case in 2011, [t]his case arises because the settlement of a personal-injury suit brought by a recipient of workers compensation benefits against a thirdparty tortfeasor did not make any provision to repay the statutory subrogee. McKinley, Ohio (emphasis added). That is, Heritage, the third-party tortfeasor, purported to settle with McKinley in a bilateral agreement that did not provide for the Bureau to be paid. The statute here says that if a settlement or compromise excludes any amount paid by the statutory subrogee, the third party and the claimant shall be jointly and severally liable for the amount. R.C (G). Simply applying the statute to the facts shows that Heritage is liable, as the Settlement here did exclude the Bureau s amount. Any alternative reading of the statute not to cover these facts is untenable. The General Assembly designed the statutory subrogation law to reach all cases of double recovery that is, all cases in which an injured worker collects both workers compensation benefits and a tort recovery from a third party for the same injury. The law seeks to ensure recovery of the Bureau s (or other subrogee s) statutory subrogation interest by 12

17 mandating that the Bureau have a chance to meaningfully participate in settlement negotiations. Further, if the other parties the claimant and the third-party tortfeasor reach a settlement that excludes the statutory subrogee, those parties are jointly and severally liable for the statutory subrogation interest. R.C (G). The Bureau s right to pursue Heritage here is mandated by both the details of the statute and by its overarching structure. Heritage s attempt to evade liability, by signing a deal that omitted the Bureau and purported to leave McKinley solely liable, violates the statute at several levels. Specifically, the Settlement here excludes any amount paid by the Bureau. The statute s excludes clause is triggered by failing to include the Bureau, as a matter of plain English and common sense, as shown by that clause and all of the surrounding requirements. More generally, the Settlement violates the entire idea that the third party and the claimant shall be jointly and severally liable to the Bureau: The Settlement s entire purpose was to let Heritage walk away and leave only McKinley liable to the Bureau, contrary to the statute s core idea that the parties are both liable to the Bureau. For these and other reasons below, Heritage is liable to the Bureau, along with McKinley, and the decision below should be reversed. A. When a workers compensation claimant settles with a third-party tortfeasor, the Bureau s right of recovery must be satisfied, and the several provisions for including the Bureau are all enforced by joint and several liability imposed on the claimant and the third-party tortfeasor. This case can be resolved easily by applying just the statute s excludes clause which imposes joint liability when a settlement excludes the Bureau s interest as shown below in Part B. Nevertheless, that provision is best understood is light of the statute s several provisions, which together erase any remaining doubt. The statute s three sentences include multiple layers 13

18 of protection to ensure that the Bureau s right of recovery is enforced against both a claimant such as McKinley and a third-party tortfeasor such as Heritage. The first sentence requires an initial notice to the Bureau that the claimant may have a claim against a third party: A claimant shall notify a statutory subrogee and the attorney general of the identity of all third parties against whom the claimant has or may have a right of recovery, except that when the statutory subrogee is a self-insuring employer, the claimant need not notify the attorney general. R.C (G). That initial notice partly serves to get the Bureau involved if the claimant chooses to pursue the third party, as happened here, and thus to ensure that the Bureau shares in any recovery. But the initial notice also serves a separate purpose: It notifies the Bureau so that the Bureau may choose to pursue a third party even if the claimant, for whatever reason, does not do so. That separate option is provided in R.C (H), and is not at issue here: A statutory subrogee may institute and pursue legal proceedings against a third party either by itself or in conjunction with a claimant. That other path shows that the initial notice is the starting point for either path, and confirms that the Bureau s right is an independent one against the tortfeasor. It is based, to be sure, on the existence of the tortfeasor s underlying liability to the claimant, but it does not rely upon the fact of the claimant s recovery against that third party; it is not a derivative claim in that respect. See McKinley, 2011-Ohio , The second sentence of R.C (G) provides for further notice before a settlement or other recovery is finalized, along with a reasonable opportunity for the Bureau to participate in any process leading to recovery: No settlement, compromise, judgment, award, or other recovery in any action or claim by a claimant shall be final unless the claimant provides the statutory subrogee and, when required, the attorney general, with prior notice and a reasonable 14

19 opportunity to assert its subrogation rights. R.C (G). This notice of an impending recovery is distinct from the initial notice of a potential claim, as the first notice merely says a claim may exist, and this says that a recovery is expected. More important, it adds the requirement of a reasonable opportunity for the Bureau to assert its rights. To be sure, as a factual matter, the initial notice required by the first sentence might collapse into the second notice, as a claimant might satisfy both at once. A notice could easily be the first contact with the Bureau about a potential claim, while also stating that a recovery seems on the way and giving the Bureau an opportunity to participate. But a mere notice of a claim, in satisfaction of the statute s first sentence, will not satisfy the second sentence if it does not notify of a recovery process underway whether by settlement or trial or whatever and more important, if it does not include the requisite reasonable opportunity for the Bureau to participate. So, for example, the requirement would not be met by an eve-of-settlement notice that a settlement is being signed tomorrow, with no chance for participation. Finally, R.C (G) s third sentence enforces the above procedural requirements and adds substantive provisions, stating that both a tortfeasor and claimant remain liable to the Bureau if the above process is not followed or if a settlement excludes the Bureau s interest: If a statutory subrogee and, when required, the attorney general are not given that notice, or if a settlement or compromise excludes any amount paid by the statutory subrogee, the third party and the claimant shall be jointly and severally liable.... Id. That sentence breaks down into three parts. First, it is triggered by a procedural violation: if the subrogee is not given that notice. That refers to the notice in the previous sentence, meaning the notice of recovery including the reasonable opportunity to participate. Second, it is also triggered by a substantive violation: if the settlement excludes any amount paid by the Bureau. Third, either violation is enforced by the most important feature: if either trigger 15

20 occurs, the third-party tortfeasor and the claimant are jointly and severally liable to pay the statutory subrogee the full amount of the subrogation interest. Notably, that substantive liability is imposed on the tortfeasor even though the two previous sentences put the procedural duties solely on the claimant. That is, the first sentence of R.C (G) says the claimant shall notify, and the second says [n]o settlement... or other recovery... shall be final unless the claimant provides... prior notice and a reasonable opportunity for the Bureau to assert its subrogation rights. (Emphasis added). The statute does not say that the tortfeasor must provide notice and opportunity. Nevertheless, if the Bureau is not given that notice by the claimant, both the tortfeasor and claimant are liable. That shows that the tortfeasor remains responsible, even if the claimant makes the mistakes. The statute does not punish the party or parties for ducking the statute, but provides joint liability ultimately to preserve the Bureau s interests and to ensure that the Bureau gets paid. Each of these separate components is crucial on its own, and taken together, they show that the right of recovery here is not meant to be easily evaded. Heritage says that it is not liable because the Bureau was notified that McKinley had a claim, and it says that the Settlement here did not exclude the Bureau s interest. As shown below, that is wrong, as the Settlement did exclude the Bureau s interest, and Heritage remains liable. B. Heritage s secret settlement with McKinley, by failing to provide for paying the Bureau, excluded the Bureau s interest, so Heritage remains liable to the Bureau. No one doubts that Heritage is liable if the Settlement exclude[d] any amount paid by the Bureau; the question is whether the Settlement did exclude the Bureau s interest. A settlement improperly excludes an amount when it does not include the amount, that is, when it does not affirmatively provide for payment of any amount owed to the Bureau. The Settlement here violated the statute, so Heritage remains liable to the Bureau. 16

21 1. A settlement excludes an amount whenever it does not include a provision for paying the amount. The meaning of excludes any amount is shown by text and context, whether looking at the word excludes alone, or by looking at the entire sentence (and, as shown below in Part C, its meaning is confirmed by the rest of the statute, too). However viewed, the phrase excludes any amount is met whenever a settlement does not expressly provide for paying an amount. First, start with dictionaries, and with just the term exclude : All point to not including as excluding. Merriam-Webster defines exclude as to leave out (something): to not include (something). See (visited Nov. 14, 2014). It also defines exclude as to prevent (someone) from doing something or being a part of a group. Id. MacMillan says to exclude is to deliberately not include something. See (visited Nov. 14, 2014). And Cambridge says exclude means to keep out or omit (something or someone). See (visited Nov. 14, 2014). Beyond dictionaries, thesauruses list include, ignore, and omit as antonyms of exclude. See and (visited Nov. 14, 2014). None of these refer to an express statement of exclusion; at most, they require deliberate exclusion rather than accidental non-inclusion. Common sense and usage also show that failing to include is to exclude. Anyone not included on a guest list is excluded. If she does not receive an invitation, she is not invited. The host need not send an express you are not invited card. While the meaning of the word exclude is plain enough standing alone, the phrase excludes any amount further confirms the meaning in the statute. What is at issue as being excluded or included is not just a reference to the Bureau or other statutory subrogee, but 17

22 also the amount at issue. That is, the exclusion of an amount is a violation, even if the Bureau is mentioned by name or indirectly. That in turn points to failure to include as a meaning, because any express exclusion standard, while odd enough as to naming the Bureau, is even odder as applied to an amount: An exclusion would need not only to say we hereby exclude the Bureau, but would need to add we hereby exclude the Bureau s claim for X dollars. Further, on top of the any amount phrase after excludes, the sentence concludes by imposing joint and several liability on a tortfeasor and claimant. That shows that the overall meaning of all parts of R.C (G) is to ensure specifically that the tortfeasor does not, merely by settling with the claimant, exclude its own independent liability to the Bureau. After all, the claimant would be liable to the Bureau under traditional subrogation, without the unique feature of the Bureau s statutory, independent right of recovery against the tortfeasor. Thus, the creation of the independent right of recovery, and the protections against any evasion of that recovery whether by procedural omissions of (the claimant s) notification duties or duty to give reasonable opportunity, or by a substantive exclusion of the Bureau s interest are all aimed at preserving the tortfeasor s joint liability. That is what cannot be excluded by two parties bilateral action. See Ohio Bureau of Workers Comp. v. Smith, No. 12 CV (Lake County Com. Pl. Dec. 26, 2012) (attached as Appendix C to Br. of Apt., Ohio Bureau of Workers Compensation (7th Dist. Jan. 11, 2013)) (holding that failure to include payment to Bureau constitutes excluding Bureau, triggering join liability); cf. Ohio Bureau of Workers Comp. v. Williams, 180 Ohio App. 3d 239, 2008-Ohio-6685 (10th Dist. 2008) (enforcing joint liability against tortfeasor for failure to notify Bureau; settlement also excluded Bureau). 18

23 2. Under any reasonable standard, the Settlement excluded the amount owed to the Bureau. Applying the statute to the Settlement here is easy: The Settlement did not include any provision for paying the Bureau any amount, so it excluded that amount. That is so under the better reading of excludes detailed above, but it is also true under any reasonable meaning affixed to excludes. As detailed in the Facts above, the Settlement did not mention the Bureau by name at all, nor did it list any amount, let alone have any provision that guaranteed payment to the Bureau from Heritage s payment to McKinley. Instead, the Settlement included only the generic Indemnification provision, which said that McKinley would indemnify Heritage for any subrogation claims or liens or any other liens or claims that have been in the past or may be in the future asserted against anyone as a result of the aforesaid incident. Settlement VII, Supp. at S-26. And that Settlement was not provided to the Bureau at the time in December 2004, nor at the three-party conference in January The Bureau did not see it until Before resolving the application of the excludes term to the Settlement s indemnification provision, two points are critical and indisputable about the provisions: (1) what the appeals court said or did not say about it, and (2) what the provision actually does. First, the appeals court never mentioned the provision at all, and held that silence on the matter would allow a tortfeasor to escape liability. The court did not cite, quote, or otherwise describe the indemnification provision. It said only that the Settlement does not mention [the Bureau s] lien by name, that there is nothing in the settlement that can be interpreted to exclude this lien or BWC s rights to collect, and that the Settlement is well in excess of the Bureau s claim, so it could be repaid from that amount. More important, the appeals court held that the statutory excludes clause would be triggered only by an express provision in the 19

24 settlement disclaiming the amount or as a practical matter based on the terms of the settlement, which it seemed to describe as underpaying so that the Bureau s amount could not be recovered. App. Op. 31. Thus, under the appeals court s legal rule, Heritage would still win even if the indemnification provision did not exist. To the extent that Heritage defends based on that provision, as it seemed to do exclusively in opposing jurisdiction, it is offering a rationale distinct from the appeals court s indefensible rule. See Heritage Mem. Opp. at 10. That means, at a minimum, that the appeals court s approach should be rejected. And if the Court adopts a standard that does not plainly favor either side (though the Bureau urges that it wins on any standard), then summary judgment for Heritage was inappropriate, and the Court should remand for applying the correct standard and further factfinding as needed. Second, the indemnification provision, like any such provision, concerns only McKinley s obligations to Heritage; it cannot control or alter Heritage s liability to the Bureau. That is, regardless of the interaction of this statute with this provision, an indemnification provision has limited scope by its nature. When McKinley indemnified Heritage against any other claims from the incident, that meant only that if a court finds Heritage liable to the Bureau (or to anyone else), then McKinley is liable to reimburse Heritage for that judgment. It does not control courts or redirect liability from Heritage to McKinley. A party as a general rule cannot extinguish its own liability to third parties by contractually transferring it to another, or parties would routinely do so. (It may occur in successor-in-interest scenarios, as when a company buys another, but not as a purely contractual transfer of liability.) After all, a right to indemnity or contribution does not even arise until the indemnified party is forced to pay someone else, and only then can the indemnified pursue the indemnifier. See Midwest Specialties, Inc. v. Crown Indus. Prods. Co., 940 F. Supp. 1160, 1168 (N.D. Ohio 1996) ( Under Ohio law,... [t]he right 20

25 to indemnity and/or contribution becomes complete and enforceable only upon payment by the claimant satisfying the whole of the obligation. (citing Nat l Mut. Ins. Co. v. Whitmer, 70 Ohio St. 2d 149, 152 (1982))); see also Black s Law Dictionary 886 (10th ed. 1990) (defining indemnify as To reimburse (another) for a loss suffered because of a third party s or one s own act or default (emphasis added)). The indemnified party cannot force the indemnifier to stand in its shoes in a court case filed against it for its own baseline liability. That fundamental principle goes beyond this case. If Heritage is to win somehow, it must be because the statute applies in a way that favors Heritage, but it cannot win by showing that some general rule of liability transfer applies, and then showing only that the statute leaves that principle untouched, as no such general rule exists. With these principles in mind, the Settlement did exclude the amount owed to the Bureau, whether under the proper standard or under any reasonable standard. First, the proper standard is that a settlement excludes any amount owed the Bureau when it fails to include a provision for paying the amount owed the Bureau and that provision must make the payment, not merely transfer that duty to the claimant. That is the plain meaning of exclude to not include. The standard must be failed to include, and cannot require an express exclusion by saying something such as we two parties hereby agree that the Bureau gets nothing. Indeed, to the extent that Heritage abandons the appeals court s rationale and says that the indemnification provision qualifies as including a provision for payment, Heritage should not object to a failure to include test. Heritage in effect argues that it did include a payment provision, and if that were so though it is not then an includes standard does not harm them. 21

26 Second, substituting any of the other terms used in some of the dictionary definitions above such as to omit or ignore, (visited Nov. 14, 2014); (visited Nov. 14, 2014); and (visited Nov. 14, 2014), or adding the qualifier to deliberately not include, (visited Nov. 14, 2014), does not change the outcome. Of course the exclusion was deliberate, not accidental. The settling parties knew of the Bureau s demand, and decided not to include a direct payment. And omit or ignore is the same as not to include. Third, the indemnification provision cannot satisfy the need to include any amount paid by the Bureau. That is so for several reasons. First, the indemnification provision does not, on its own terms, actually say that McKinley shall pay the Bureau a fixed amount, or an amount to be determined, or any amount. It says that McKinley shall indemnify Heritage for such claims, and McKinley shall hold Heritage harmless, and so on. It does not even purport to transfer liability and as explained above, such a provision could not do so if it tried. Second, the statute says that the included, or not-excluded, item is the amount paid by the Bureau. The indemnification provision leaves open whatever future claims may exist between the indemnified and the indemnifying party; it does not cover the amount paid by the Bureau, whether as a specific amount or by referring to the Bureau. Finally, the whole point of the provision is to render the tortfeasor liable along with the claimant, so a provision that merely shifts responsibility solely to the claimant is basically an impermissible contractual agreement to trump the statute. 22

27 On top of all that, the action consummating the Settlement is as important as anything in the written document: the payment to McKinley. Heritage of course paid only McKinley, and did not pay the Bureau anything, so its act of settling excluded the Bureau. All this means that the Settlement here excluded the amount paid by the Bureau, so Heritage remains liable to the Bureau. In the alternative, even if the Court for some reason cannot conclusively say that Heritage is liable though the Court can and should say Heritage is the summary judgment awarded to Heritage must be reversed, as the Settlement does not show, beyond a genuine factual dispute, that it provides for payment to the Bureau. C. The other provisions reinforce the Bureau s sensible reading of exclude, and those other provisions also create liability in their own right. While this case can and should be resolved solely on the excludes clause in the third sentence of R.C (G), the other provisions all reinforce, and even mandate, the same result. First, the third sentence not only declares a tortfeasor jointly liable if a settlement excludes any amount paid by the Bureau, but it also does so if the Bureau does not receive that notice required by the second sentence namely, notice and a reasonable opportunity for the Bureau to press its claim. Here, the appeals court rejected that argument, folding it in with its excludes analysis, by saying that the Bureau asserted its claim both in the November 2004 dialogue with McKinley s counsel and in the January 2005 conference. But that does not satisfy the reasonable opportunity standard. The November correspondence took place with a settlement with Heritage still just a hoped-for goal, and it ended with McKinley s demand for a conference, which was set for January. Then, Heritage and McKinley settled without the Bureau (before the conference) and without notifying the Bureau that the Settlement was imminent or that it had been reached. Whatever the precise contours of reasonable opportunity are, the 23

28 standard is violated when parties settle secretly without telling the Bureau, which is awaiting a conference that the claimant requested. The Court need not address that as a separate violation, though it may, but can and should consider that in pari materia with the excludes question, as the parts are interlocking: The Bureau was substantively excluded from the settlement because it was procedurally excluded from the critical stage. Second, allowing Heritage to escape liability here conflicts with the statute s imposition of joint and several liability, and it conflicts with the entire notion of this cause of action as an independent right of recovery one not derivative of the claimant s recovery, as it would be with traditional subrogation. Indeed, Heritage s argument here, although based on a different theory from the statute-of-limitations attack that this Court rejected in 2011, is ultimately based on the same rejected conceptual framework. In 2011, Heritage argued that the Bureau inherited a two-year statute of limitations, because, Heritage said, the Bureau s action derived from McKinley s tort claim, which had a two-year deadline. This Court disagreed, explaining that the statutory right of recovery is independent of the underlying tort claim, and that it rests on the underlying tort liability, but not on the actual claim of the injured worker. McKinley, Ohio By statute, the Bureau s claim runs directly against the third-party tortfeasor. Here, Heritage seeks to revive the derivative claim theory by contract: It says that it contracted with its co-liable party, McKinley, to make McKinley solely liable. Heritage says that after McKinley collects from Heritage, the Bureau must collect solely from McKinley, without pursuing Heritage directly. In other words, it seeks to contractually override the statute s provision of joint liability, and it says that the statute blesses that, because doing so provides for payment to the Bureau just indirectly, through McKinley. But the General Assembly 24

29 would not have needed to enact the direct right of recovery to do that, and it surely did not intend for its approach to be overridden by the other two parties contract. Third, the Bureau s approach is supported by both R.C (H), regarding a Bureau-driven action against the tortfeasor, and by R.C , which establishes the formula for recovery and the process for a conference with the administrator s designee. As noted above, the initial notice provided in R.C (G) allows the Bureau to wait for the claimant to take the lead, or separately allows the Bureau to sue the tortfeasor directly under R.C (H). Under subsection (H), the Bureau may go it alone or name the claimant as a party, or the claimant may intervene. That confirms that the Bureau s right is not derivative, and confirms that the tortfeasor s role is not extinguished merely because a claimant provides the initial notice required by the first sentence of subsection (G). Moreover, while subsection (H) says the claimant s participation is optional in a case between the Bureau and the tortfeasor, the Bureau s participation is mandated when a claimant sues a tortfeasor and the Bureau s claim is disputed: If a claimant disputes the validity or amount of an asserted subrogation interest, the claimant shall join the statutory subrogee as a necessary party to the action against the third party. Separately, R.C provides for a formula for the amount to which the Bureau is entitled so it cannot be lowered or eliminated by the other two parties unilateral action. And it provides for the designee or other process to set a binding or non-binding amount, not subject to appeal under R.C. 119 showing that the final word may be by the designee, or by another decisionmaker agreed to by the Bureau, but not by the other two parties say-so. In sum, all parts of the statute point to the Bureau s view, while Heritage s view, or the appeals court s, conflicts with every part of the scheme and with its overall purpose. 25

30 D. The Bureau s reading meets the law s purpose and is consistent with all provisions, while the appeals court s view renders the entire scheme meaningless. As explained above, the Bureau s reading of the excludes clause not only is the best reading of that clause, but also works with the other provisions individually and with the scheme s overall purpose. See R.C (statutes should be read so entire statute is effective); R.C (statute should be read in light of its intended purpose). The appeals court s view, by contrast, does not merely sit uncomfortably with the scheme, but renders it completely meaningless. Under the appeals court s approach, the Bureau s independent claim against the tortfeasor is easily extinguished every time. The purpose of the scheme is for the Bureau to be repaid its fair share, for the claimant not to receive double recovery, and for the tortfeasor to remain jointly liable with the claimant to enforce those first goals. No one doubts that Ohio s right-to-recovery law was designed to prevent double recoveries, and to ensure that the Bureau will recover overlapping outlays. Heritage seems to question whether tortfeasor liability is needed to achieve the other goals, but as this Court has said, that principle is so rooted in common sense that this Court has recognized that virtually every jurisdiction provides some statutory mechanism enabling the employer or fund to recover its workers compensation outlay from a third-party tortfeasor. Groch v. Gen. Motors Corp., 117 Ohio St. 3d 192, 2008-Ohio The Seventh District s decision would make the statute s establishment of this commonsense principle that tortfeasor liability ensures the other parts a nullity. To establish joint and several liability following a settlement, the Seventh District s decision requires the settlement to specifically, deliberately, and clearly exclude the statutory subrogation interest (App. Op. 25, 33) even though there is no such requirement in the statute. R.C (G) has no mens rea requirement that the settling parties exclude the statutory interest deliberately, nor 26

31 does it require any special linguistic formula that would specifically or clearly exclude that interest. It makes no sense for the General Assembly to create joint and several liability, but then ensure that it is triggered only by an easily avoidable choice of the parties to the settlement. Under the decision below, R.C (G) would never serve any practical function because no tortfeasors would ever include a provision expressly indicating that the payment excludes amounts paid by the Bureau. That would especially be so if this Court were to adopt the appeals court s view. If a near-final settlement contained such an express exclusion, the parties would quickly realize that the attempted exclusion would create, rather than negate, liability. Then they would delete it. And in the appeals court s view, that silence would be golden to the settling parties, not to the Bureau. At the jurisdictional stage, Heritage seemed to reject the appeals court s reasoning, highlighting the Settlement s indemnification provision rather than the silence rationale, and stressing the fact that the amount Heritage paid McKinley is more than what the Bureau offered to accept as a compromise. See Ape. Heritage-WTI, Inc. s Mem. in Opp. at (June 13, 2014). The indemnification provision does not count, for the reasons above. And any argument that the amount was high enough overlooks that Heritage kept that amount secret for over seven years. In its view, the Bureau should have accepted the compromise amount which was tentatively offered in expectation of a Heritage settlement in a certain range without ever learning whether Heritage paid McKinley $2 million or $5 million or $10 million. The Bureau s actual outlays were over $858,000 at the time, but it was willing to accept about $339,000 with the understanding of a settlement in the million-dollar range. Had the settlement reached higher rangers, then the Bureau s actual outlays, and the statutory formula, would have justified more. 27

32 Moreover, the legal rule here must sensibly govern all cases, including those with tort settlements of $40,000, with Bureau claims for $10,000, or whatever amounts. Heritage also mistakenly urged, at the jurisdictional stage, that the Bureau s view would unfairly saddle them with paying twice, if it will have to pay the Bureau after already paying McKinley what Heritage considered the full amount. But that it what the statute means by joint and several liability, and that is why Heritage and McKinley alike should have included the Bureau. The indemnification provision means that Heritage can be the one to pursue McKinley to be indemnified. And if there is any risk in collecting from McKinley, that is a risk Heritage took when it joined McKinley in trying to keep the Bureau out of their two-way deal, rather than including the Bureau. All that shows that the idea of notice and reasonable opportunity is a three-way process, with all parties at the table. Secret side deals do not meet the letter or purpose of the statute, and the Court should follow the statute rather than bless Heritage s evasion of it. In sum, McKinley and Heritage settled in a way that would improperly let Heritage walk away from its liability. Because the Settlement does not include an amount for the Bureau, the Settlement has excluded those amounts under that term s plain meaning. McKinley and Heritage are thus jointly and severally liable for that interest. The Court should reverse the Seventh District erroneous interpretation of the statute and remand to the trial court. 28

33 CONCLUSION For the above reasons, the Court should reverse the decision below. Respectfully submitted, MICHAEL DEWINE ( ) Ohio Attorney General s/eric E. Murphy ERIC E. MURPHY* ( ) State Solicitor *Counsel of Record STEPHEN P. CARNEY ( ) MATTHEW R. CUSHING ( ) Deputy Solicitors SHERRY M. PHILLIPS ( ) Assistant Attorney General 30 East Broad Street, 17th Floor Columbus, Ohio ; fax BRADLEY R. GLOVER ( ) LEE M. SMITH ( ) Lee M. Smith & Associates 929 Harrison Avenue, Suite 300 Columbus, Ohio ; fax Counsel for Plaintiff-Appellant Ohio Bureau of Workers Compensation 29

34 CERTIFICATE OF SERVICE I certify that a copy of the foregoing Merit Brief of Plaintiff-Appellant Ohio Bureau of Workers Compensation was served by U.S. mail this 18th day of November, 2014 upon the following counsel: T. Jeffrey Beausay The Donahey Law Firm 495 S. High Street, Suite 100 Columbus, Ohio Counsel for Defendant-Appellee Jeffrey McKinley Patrick Kasson Gregory Brunton Melvin Davis Reminger Co. LPA 65 E. State Street, 4th Floor Columbus, Ohio Counsel for Defendant-Appellee Heritage-WTI, Inc. s/eric E. Murphy Eric E. Murphy State Solicitor

35 APPENDIX

36 EXHIBIT 1

37

38