Holeton v. Crouse Cartage Co. - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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[Cite as Holeton v. Crouse Cartage Co., 92 Ohio St.3d 115, 2001-Ohio-109.]

HOLETON ET AL., PETITIONERS, v. CROUSE CARTAGE COMPANY ET AL.; CONRAD,
ADMR., RESPONDENT.
[Cite as Holeton v. Crouse Cartage Co. (2001), 92 Ohio St.3d 115.]
Workers' compensation -- Subrogation right of statutory subrogee against third
party R.C. 4123.931, in its present form, is unconstitutional.
(No. 00-428 -- Submitted October 10, 2000 -- Decided June 27, 2001.)
ON ORDER from the United States District Court for the Northern District of Ohio,
Western Division, Certifying a Question of State Law, No. 98CV-7578.

ALICE ROBIE RESNICK, J. This case comes to us as certified questions of
state law from the United States District Court for the Northern District of Ohio,
Western Division. The federal district court certified the following facts to us:

"Plaintiff, Rick Holeton, was injured on June 18, 1998. He and his plaintiff
spouse, Shari, have two minor children, also plaintiffs herein. At the time of his
accident, Rick was part of a construction crew employed by Harper Structures, Inc.,
building an overpass across the Ohio Turnpike. The telescoping `manlift' bucket in
which Rick was standing was struck by an eastbound truck owned and/or operated by
defendants, James Parr and Crouse Cartage Company. The force of the impact
propelled Rick out of the bucket, slamming him into the underside of the overpass
and then dropping him on to the highway below.

"Because his injuries occurred in the course and scope of his employment
with Harper Structures, Rick Holeton has received, and may indefinitely continue to
receive, workers' compensation benefits from defendant, Bureau of Workers'
Compensation (BWC), pursuant to Chapter 4123 of the Revised Code. Rick
Holeton's wage and medical benefits to date exceed $190,000.

"BWC is a `statutory subrogee' within the meaning of R.C. § 4123.931,
referred to herein as Ohio's subrogation statute. As a statutory subrogee with respect
to workers' compensation benefits previously or hereafter paid to Rick Holeton,

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BWC has asserted a subrogation claim against any settlement made or judgment paid
to Rick Holeton by or on behalf of the other defendants.1 Plaintiffs dispute the
validity of BWC's subrogation claim and argue that the statute violates relevant
sections of Ohio's Constitution. BWC denies that the statute is unconstitutional and
seeks to enforce its right of subrogation.

"Plaintiffs filed a motion for summary judgment asking the court to declare
the subrogation statute unconstitutional. In the alternative, plaintiffs requested an
order certifying the issue to the Ohio Supreme Court. The court has stayed plaintiffs'
motion for summary judgment and granted plaintiffs' motion to certify the issue to
the Ohio Supreme Court."

On May 3, 2000, this court reviewed the preliminary memoranda pursuant to
S.Ct.Prac.R. XVIII and determined that it will answer the following certified
questions:

"1. Does R.C. § 4123.931 violate Article II, Section 35 of the Ohio
Constitution?

"2. Does R.C. § 4123.931 violate Article I, Section 19 of the Ohio
Constitution?

"3. Does R.C. § 4123.931 violate Article I, Section 16 of the Ohio
Constitution?

"4. Does R.C. § 4123.931 violate Article II, Section 28 of the Ohio
Constitution?

"5. Does R.C. § 4123.931 violate Article I, Section 2 of the Ohio
Constitution?

"6. Does R.C. § 4123.931 violate Article II, Section 15 of the Ohio
Constitution?

"7. Is R.C. § 4123.931 contrary to Ohio Civil Rule 49(C) and, therefore,
invalid and unenforceable?

1.
Footnote one of the order states: "R.C. § 4123.931 provides, in part, that BWC's right of
subrogation is automatic, that no settlement or other recovery is final without notice to BWC, and that
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"8. Does R.C. § 4123.931 constitute an invalid waiver of an injured
employee's right to receive and retain workers' compensation benefits in violation of
R.C. § 4123.80." (2000), 88 Ohio St.3d 1500, 727 N.E.2d 923.

R.C. 4123.931 provides:

"(A) The payment of compensation or benefits pursuant to this chapter or
Chapter 4121., 4127., or 4131., of the Revised Code creates a right of subrogation in
favor of a statutory subrogee against a third party. A statutory subrogee's subrogation
interest includes past payments of compensation and medical benefits and estimated
future values of compensation and medical benefits arising out of an injury to or
disability or disease of a claimant.

"(B) A claimant shall notify a statutory subrogee of the identity of all third
parties against whom the claimant has or may have a right of 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 with prior notice
and a reasonable opportunity to assert its subrogation rights. If a statutory subrogee is
not given that notice, the third party and the claimant shall be jointly and severally
liable to pay the statutory subrogee the full amount of the subrogation interest.

"(C) The right of subrogation under this chapter is automatic, regardless of
whether a statutory subrogee is joined as a party in an action by a claimant against a
third party. A statutory subrogee may assert its subrogation rights through
correspondence with the claimant and the third party or their legal representatives. A
statutory subrogee may institute and pursue legal proceedings against a third party
either by itself or in conjunction with a claimant. 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.

"(D) The entire amount of any settlement or compromise of an action or
claim is subject to the subrogation right of a statutory subrogee, regardless of the
manner in which the settlement or compromise is characterized. Any settlement or

the entire amount of any settlement is subject to BWC's subrogation right."
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compromise that excludes the amount of compensation or medical benefits shall not
preclude a statutory subrogee from enforcing its rights under this section. The entire
amount of any award or judgment is presumed to represent compensation and
medical benefits and future estimated values of compensation and medical benefits
that are subject to a statutory subrogee's subrogation rights unless the claimant
obtains a special verdict or jury interrogatories indicating that the award or judgment
represents different types of damages.

"(E) Subrogation does not apply to the portion of any judgment, award,
settlement, or compromise of a claim to the extent of a claimant's attorney's fees,
costs, or other expenses incurred by a claimant in securing the judgment, award,
settlement, or compromise, or the extent of medical, surgical, and hospital expenses
paid by a claimant from the claimant's own resources for which reimbursement is not
sought. No additional attorney's fees, costs, or other expenses in securing any
recovery may be assessed against any subrogated claims of a statutory subrogee."

R.C. 4123.93(B) defines "statutory subrogee" as "the administrator of the
bureau of workers' compensation, a self-insuring employer, or an employer that
contracts for the direct payment of medical services pursuant to division (L) of
section 4121.44 of the Revised Code."
I
Section 35, Article II--The Great Compromise

The first certified question is whether R.C. 4123.931 violates Section 35,
Article II of the Ohio Constitution, which provides:

"For the purpose of providing compensation to workmen and their
dependents, for death, injuries or occupational disease, occasioned in the course of
such workmen's employment, laws may be passed establishing a state fund to be
created by compulsory contribution thereto by employers, and administered by the
state, determining the terms and conditions upon which payment shall be made
therefrom. Such compensation shall be in lieu of all other rights to compensation, or
damages, for such death, injuries, or occupational disease, and any employer who
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pays the premium or compensation provided by law, passed in accordance herewith,
shall not be liable to respond in damages at common law or by statute for such death,
injuries or occupational disease."

Resolution of this issue requires some historical knowledge of the legal
climate that invoked the unanimous adoption of Proposal Number 24, or Section 35,
Article II, at the Constitutional Convention of 1912 and the enactment of Ohio's first
compulsory workers' compensation law, 103 Ohio Laws 72, on February 26, 1913.

Prior to 1913, the employee's ability to receive compensation for work-
related injuries was governed by the common law of torts. Although the principle of
vicarious liability had long been recognized at common law, it was far more difficult
for the injured worker to recover damages from his or her employer than it was for
the stranger to the employment relationship. The injured employee was required to
prove that the employer violated a duty of care owed specifically to employees. Even
upon overcoming this hurdle, until 1911 the employee was faced with what became
known as the "unholy trinity of common-law defenses"--contributory negligence,
the fellow servant rule, and assumption of risk. 102 Ohio Laws 529, Section 21-1.
These defenses were truly draconian in their application. The defense of contributory
negligence applied to bar any recovery if the employee's negligence contributed even
slightly to the injury. The fellow servant rule was modified in most jurisdictions to
exclude from the category of fellow servants all employees charged with carrying out
the employer's common-law duties, but Ohio courts limited the exclusion to
employees serving in supervisory capacities. Cleveland, Columbus & Cincinnati RR.
Co. v. Keary (1854), 3 Ohio St. 201, 1854 WL 3. And the doctrine of assumption of
risk applied to preclude recovery on the basis that even the barely subsisting worker
is free to decline any service in which he or she apprehends danger. See, generally,
Fulton, Ohio Workers' Compensation Law (2 Ed.1998) 13-16, Sections 2.1 to 2.5.

The common-law system proved incapable of dealing with the often
devastating social and economic consequences of industrial accidents. It became
undeniable that the tort system had failed as a regulatory device for distributing
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economic losses borne by injured Ohio workers and their families and that it should
be replaced by a workers' compensation system in which those losses would be
charged, without regard to fault or wrongdoing, to the industry rather than to the
individual or society as a whole. See, e.g., Goodman v. Beall (1936), 130 Ohio St.
427, 5 O.O. 52, 200 N.E. 470; Indus. Comm. v. Weigandt (1921), 102 Ohio St. 1, 4,
130 N.E. 38, 38-39; State ex rel. Munding v. Indus. Comm. (1915), 92 Ohio St. 434,
111 N.E. 299; State ex rel. Yaple v. Creamer (1912), 85 Ohio St. 349, 97 N.E. 602.

Accordingly, Section 35, Article II represents a social bargain in which
employers and employees exchange their respective common-law rights and duties
for a more certain and uniform set of statutory benefits and obligations. Thus, in
Blankenship v. Cincinnati Milacron Chem., Inc. (1982), 69 Ohio St.2d 608, 614, 23
O.O.3d 504, 508, 433 N.E.2d 572, 577, we explained that the Workers'
Compensation Act "operates as a balance of mutual compromise between the
interests of the employer and the employee whereby employees relinquish their
common law remedy and accept lower benefit levels coupled with the greater
assurance of recovery and employers give up their common law defenses and are
protected from unlimited liability." See, also, Bunger v. Lawson Co. (1998), 82 Ohio
St.3d 463, 465, 696 N.E.2d 1029, 1031-1032. "This compromise is the basic premise
underlying the workers' compensation system." Fulton, supra, at 4, Section 1.2.

Petitioners contend that R.C. 4123.931 is unconstitutional "because it
effectively deprives employees of the `benefit of their bargain' and destroys the
balance struck between employers and employees by Article II, Section 35 of the
Ohio Constitution." In support, petitioners argue (1) that "[t]he subrogation statute
unjustifiably permits [the bureau] and self-insuring employers * * * to recover 100%
of benefits paid to injured employees, while the subrogees continue to enjoy
immunity from suit," (2) that the statute does not serve the "purpose of providing
compensation to workmen and their dependents" as required by Section 35, Article II,
but instead operates to take compensation away from them, and (3) that the statute
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January Term, 2001
forces the claimant-plaintiff to choose between workers' compensation or a tort
remedy, despite the fact that the Constitution guarantees him or her the right to both.

We find these arguments unpersuasive. First, at a core level petitioners are
suggesting that the very concept of a workers' compensation subrogation statute is
repugnant to Section 35, Article II. Indeed, supporting amicus Ohio Academy of
Trial Lawyers observes that, "as argued by the Petitioner, the Ohio Constitution itself
may prevent the legislature from ever validly enacting a subrogation statute in the
workers' compensation context unless the constitutional provision enabling that
legislation is itself amended." However, Section 35, Article II does not preclude the
enactment of a subrogation statute any more than it prohibits the injured claimant
from suing the third-party tortfeasor. Section 35, Article II enables a displacement of
the common law only to the extent necessary to provide the injured worker with an
automatic recovery. Once payment of workers' compensation benefits is ensured, the
employer may, without any disparagement to the bargained-for rights of the
employee, seek to impose the loss upon the ultimate wrongdoer.

Moreover, as revealed by the compilation of statutes in the appendix to
petitioners' merit brief, virtually every jurisdiction provides some statutory
mechanism enabling the employer or fund to recover its workers' compensation
outlay from a third-party tortfeasor. Any decision that would hold the mere concept
of a subrogation or reimbursement statute per se invalid in the workers'
compensation context would constitute a legal anomaly.

Second, petitioners confuse the effect that R.C. 4123.931 may have on the
claimant-plaintiff's tort recovery with the effect that it has on the claimant's workers'
compensation recovery. R.C. 4123.931 does not operate to reduce the claimant's
workers' compensation benefits. The statute may indeed operate beyond its
legitimate purpose and unconstitutionally affect the employee's right to a full
recovery against the third-party tortfeasor. It may be true, as petitioners and
supporting amici argue strenuously, that the statute can diminish or extinguish the
claimant's tort recovery irrespective of whether a double recovery has actually
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occurred. But these concerns are not relevant here. Regardless of whether and to
what extent R.C. 4123.931 impermissibly cuts into a claimant's tort recovery, it does
nothing to the claimant's workers' compensation. After the statute completes its task,
however unjustly to the claimant's tort recovery, the claimant is always left with the
full measure of compensation and benefits to which he or she is entitled under the
Workers' Compensation Act.

Thus, R.C. 4123.931 does not disrupt any of the rights or obligations of the
claimant and the employer with regard to the payment of statutory workers'
compensation benefits, and the balance of compromise upon which the viability of
the workers' compensation system depends remains intact.

Accordingly, we answer the first certified issue in the negative and hold that
R.C. 4123.931 does not violate Section 35, Article II of the Ohio Constitution.
II
Sections 16 and 19, Article I--The Take-Away

The second certified issue is whether R.C. 4123.931 violates Section 19,
Article I of the Ohio Constitution, which provides that "[p]rivate property shall ever
be held inviolate, but subservient to the public welfare * * * and * * *, where private
property shall be taken for public use, a compensation therefor shall first be made."

As well stated by the court in Direct Plumbing Supply Co. v. Dayton (1941),
138 Ohio St. 540, 546, 21 O.O. 422, 424-425, 38 N.E.2d 70, 73:

"No government could long continue to function if all property rights were
unqualifiedly inviolate. But, on the other hand, the constitutional guaranty of the
right of private property would be hollow if all legislation enacted in the name of the
public welfare were per se valid. To be truly in the public welfare within the
meaning of Section 19, and thus superior to private property rights, any legislation
must be reasonable, not arbitrary, and must confer upon the public a benefit
commensurate with its burdens upon private property. This general doctrine was
comprehensively stated by this court in Froelich v. City of Cleveland [1919], 99 Ohio
St. 376, at 391, 124 N.E. 212 [216]: `It must be remembered that neither the state in
8

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the passage of general laws, nor the municipality in the passage of local laws, may
make any regulations which are unreasonable. The means adopted must be suitable
to the ends in view, they must be impartial in operation, and not unduly oppressive
upon individuals, must have a real and substantial relation to their purpose, and must
not interfere with private rights beyond the necessities of the situation.' "

The third certified question is whether R.C. 4123.931 violates Section 16,
Article I of the Ohio Constitution, which provides that every person, for an injury
done, "shall have remedy by due course of law."

In dealing with the constitutionality of various collateral-benefits-offset
statutes under Section 16, Article I, this court has recognized that the state has a
legitimate interest in preventing double recoveries. Thus, it is constitutionally
permissible for the state to prevent a tort victim from recovering twice for the same
item of loss or type of damage, once from the collateral source and again from the
tortfeasor. However, we have also recognized that these kinds of statutes are not
rationally related to their purpose where they operate to reduce a plaintiff's tort
recovery irrespective of whether a double recovery has actually occurred. Thus, we
have consistently and repeatedly held that due process permits deductions for
collateral benefits only to the extent that the loss for which the collateral benefit
compensates is actually included in the award. McMullen v. Ohio State Univ. Hosp.
(2000), 88 Ohio St.3d 332, 341-344, 725 N.E.2d 1117, 1125-1127; State ex rel. Ohio
Academy of Trial Lawyers v. Sheward (1999), 86 Ohio St.3d 451, 479-482, 715
N.E.2d 1062, 1088-1090; Buchman v. Wayne Trace Local School Dist. Bd. of Edn.
(1995), 73 Ohio St.3d 260, 652 N.E.2d 952; Sorrell v. Thevenir (1994), 69 Ohio St.3d
415, 633 N.E.2d 504.

There is no valid justification for dispensing with these principles in
determining the constitutionality of R.C. 4123.931. Like the collateral-benefits-offset
statutes, the subrogation statute is aimed at preventing the tort victim from keeping a
double recovery, the only conceptual difference being that the intended beneficiary is
the statutory subrogee (i.e., the collateral payor) rather than the tortfeasor. Thus, R.C.
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4123.931 must also satisfy the constitutional requirement that deductible or, in this
case, subrogable or recoupable items be matched to those losses or types of damages
that the claimant actually recovered from the tortfeasor.

We are now confronted with similar determinative issues under Sections 16
and 19, Article I of the Ohio Constitution. Whether expressed in terms of the right to
private property, remedy, or due process, the claimant-plaintiff has a constitutionally
protected interest in his or her tort recovery to the extent that it does not duplicate the
employer's or bureau's compensation outlay. Thus, if R.C. 4123.931 operates to take
more of the claimant's tort recovery than is duplicative of the statutory subrogee's
workers' compensation expenditures, then it is at once unreasonable, oppressive upon
the claimant, partial, and unrelated to its own purpose.

The following two provisions of the statute are called into question under
Sections 16 and 19, Article I of the Ohio Constitution: (1) the portion of R.C.
4123.931(A) that gives the statutory subrogee a right of subrogation with respect to
"estimated future values of compensation and medical benefits," and (2) the portion
of R.C. 4123.931(D) providing that "[t]he entire amount of any settlement or
compromise of an action or claim is subject to the subrogation right of a statutory
subrogee, regardless of the manner in which the settlement or compromise is
characterized. Any settlement or compromise that excludes the amount of
compensation or medical benefits shall not preclude a statutory subrogee from
enforcing its rights under this section."
A
Estimated Future Values

By giving the subrogee a current collectible interest in estimated future
expenditures, R.C. 4123.931(A) creates the conditions under which a prohibited
taking may occur. This would happen in those situations where the amount of
reimbursement for "estimated future values of compensation and medical benefits"
proves to be substantially greater than the subrogee's eventual compensation outlay.
In other words, R.C. 4123.931(A) requires the claimant to reimburse the bureau or
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January Term, 2001
self-insuring employer for future benefits that the claimant may never receive. In that
event, the statute operates not to prevent the claimant from keeping a double recovery
but to provide the statutory subrogee with a windfall at the expense of the claimant's
tort recovery.

Contrary to the assertions of respondent, there are too many situations that
can eventuate in this kind of taking, and they occur far too often, for the problem to
be considered merely hypothetical. One such situation is described by amicus curiae
Ohio Academy of Trial Lawyers as follows:

"A prime example of this [kind of taking] occurs in a wrongful death situation
where the decedent leaves a surviving spouse--say, a woman in her thirties or forties.
In such circumstances, the BWC or self-insured employer will calculate estimated
future benefits based upon the amounts it expects to pay over the woman's life
expectancy. However, if the woman remarries, she will cease to be entitled to
workers' compensation benefits upon remarriage, with the exception that she will
receive a lump sum payment at that time representing two additional years of
benefits. R.C. 4123.59(B)(1). Thus, in those circumstances, if the subrogee has
recovered estimated future benefits based upon the woman's life expectancy, and she
remarries shortly thereafter, the statute endows the subrogee with an enormous
windfall at the expense of the injured party."

In fact, even the court in Yoh v. Schlachter (Mar. 17, 2000), Williams App.
No. WM-99-008, unreported, 2000 WL 281748, upon which respondent relies
heavily, was compelled to note as follows:

"With respect to appellant's taking issue, we note that there may exist a
potential problem with respect to the `estimated future values of compensation and
medical benefits' aspect of R.C. 4123.931. For instance, OTC will receive in a lump
sum the entire estimated future amount it is supposed to pay to appellant and her
minor child. The statute, however, fails to specify what is to be done with any
remainder of this sum once OTC is no longer required to pay workers' compensation,
such as, if appellant remarries or dies. The entire amount could be paid in the form of
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workers' compensation benefits, in which case there arguably would be no taking
issue because the beneficiaries would have received the full amount of compensation
and medical benefits to which they were entitled. However, if OTC's obligation to
pay workers' compensation benefits expired with money still remaining in the pool of
funds obtained through R.C. 4123.931, then OTC arguably would have a windfall if it
was not required to release the remainder to appellant or her estate." Id. at 14.

Because a claimant may die before his or her life expectancy, the amount
collected by the subrogee for estimated future permanent total disability payments
may far exceed the amount of such compensation actually received by the claimant.
The same would hold true where any other type of ongoing statutory compensation,
for whatever reason, is terminated earlier than was estimated for purposes of
reimbursement. Indeed, any statutory benefit, anticipated for purposes of
reimbursement, may be denied or unrealized.

In defending the estimated-future-values provision of R.C. 4123.931(A),
respondent quotes various passages from Wilken v. Internatl. Harvester Co.
(Minn.1985), 363 N.W.2d 763, and Kempa v. E.W. Coons Co. (Minn.1985), 370
N.W.2d 414, which, as appearing on the pages of respondent's brief, seem to suggest
that estimating future workers' compensation benefits in a subrogation claim is
tantamount to estimating future damages in a tort claim, and that the disadvantage of
imprecise estimates must yield to the advantages of a final one-time resolution of the
subrogation claim. Respondent argues that "[t]hese same principles apply in Ohio,"
and thus the estimated-future-values provision of R.C. 4123.931(A) is reasonable and
constitutionally valid.

Upon closer examination, however, it becomes apparent that Wilken and
Kempa do not support R.C. 4123.931(A)'s constitutionality. First, neither of these
cases involves any constitutional issue whatsoever, let alone those addressed in
Direct Plumbing Supply Co., McMullen, Sheward, Buchman, and Sorrell.

Second, the Minnesota cases have nothing to do with the subrogation rights of
employer and employee inter se. Instead, they involve issues of contribution and
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January Term, 2001
subrogation between the tortfeasor and the employer that have no effect on claimant's
tort recovery. In fact, the employee in Kempa actually settled his claims against the
tortfeasor exclusive and not duplicative of workers' compensation benefits paid or to
be paid by his employer, which is a third-party procedural mechanism expressly
forbidden under R.C. 4123.931(D).

Third, the issue of estimating future workers' compensation obligations never
arises between the Minnesota claimant and his or her employer, or the fund. This is
because Minn.Stat. 176.061(6) does not give the employer or the fund any immediate
right of subrogation or reimbursement with regard to future payable compensation or
medical benefits. Instead, the Minnesota statute provides a formula under which the
employer or fund can obtain reimbursement for compensation paid and then provides
that certain remaining tort proceeds shall be paid to the employee and constitute a
credit to the subrogee against future compensation payments.

The Minnesota cases aside, we cannot accept the hypothesis that the
constitutional infirmities inherent in R.C. 4123.931(A) can be justified by a presumed
state interest in providing for a "final resolution." Contrary to respondent's
assessment, R.C. 4123.931(A) does not provide for a final resolution similar to the
tort verdict. The application of the estimated-future-values provision of R.C.
4123.931(A) does not, like the tort verdict, finally determine the rights and
obligations of the affected parties. Despite the application of R.C. 4123.931(A), the
subrogee remains under a continuing obligation to pay future compensation and
medical benefits to the claimant, the claimant continues to be entitled to receive those
payments as his or her rights accrue, and these rights and obligations still remain to
be determined and administered. The only "final resolution" achieved by R.C.
4123.931(A) is to provide immediate recovery to the subrogee by imposing the risk
of liability for overestimated future expenditures upon the claimant. But the claimant
is not a wrongdoer, and has not, in any legal or moral sense, caused harm to the
subrogee. Indeed, the subrogee's loss is based entirely upon compensation it owes to
the injured claimant. Thus, unlike the tortfeasor, the claimant is innocent; and it is
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irrational and arbitrary to impose this kind of risk upon an innocent party, especially
when a full (and more accurate) reimbursement can be obtained by simply giving the
subrogee the same kind of offset or credit against future payments that has always
been used to recoup overpayments of compensation. See R.C. 4123.511(J); State ex
rel. Weimer v. Indus. Comm. (1980), 62 Ohio St.2d 159, 16 O.O.3d 174, 404 N.E.2d
149.
B
Settlements

R.C. 4123.931(D) establishes a procedural framework under which an
unconstitutional taking of the claimant's property or a denial of remedy by due course
of law can occur. This framework distinguishes between third-party claims that are
tried and third-party claims that are settled. In the case where an award or judgment
is rendered in the third-party action, R.C. 4123.931(D) allows the claimant to obtain
jury interrogatories segregating damages that do not represent workers' compensation
or medical benefits and, therefore, are not subject to the reimbursement right of the
statutory subrogee. In contrast, the entire amount of any settlement or compromise is
deemed subject to the reimbursement right of the statutory subrogee, and the claimant
is precluded, under any circumstances, from showing that his or her settlement or
portions thereof do not represent or duplicate workers' compensation or medical
benefits.

The problem with this procedure is that it assumes that settlements are always
reached with third-party defendants who possess sufficient wealth or insurance to
satisfy the claimant's actual total damages and thus that the retention of the
settlement proceeds and workers' compensation would result in a double recovery.
However, this assumption proves false in those situations where the claimant is
forced to settle his or her tort claim for the limits of an insurance policy and the
combined amount of the insurance proceeds and workers' compensation benefits is
insufficient to cover all of the claimant's actual loss. It can hardly be said that a
double recovery results where a tort victim is allowed to retain two recoveries that,
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January Term, 2001
when combined, still do not make him or her whole. Indeed, in some situations the
available insurance may not even be sufficient to cover the subrogee's interest, in
which case the entire amount of the settlement will be taken by the subrogee. R.C.
4123.931(D) operates unconstitutionally in these situations because it allows for
reimbursement from proceeds that do not constitute a double recovery.

Again, contrary to respondent's assertions, this situation cannot be considered
merely hypothetical. Indeed, we need look no further than In re Estate of Ross
(1997), 116 Ohio App.3d 402, 688 N.E.2d 303, for an illustration. James Ross was
killed in a motor vehicle accident during the course of, and arising out of, his
employment with appellee Wendy's. His surviving spouse, appellant RaShell Ross,
and two minor children, Joshua and James Ross, filed an application for death
benefits pursuant to R.C. 4123.59. Wendy's, a self-insured employer, certified the
claim and began paying death benefits at a rate of $493 per week.

Appellant then filed a wrongful death claim against the tortfeasor, James
Horn, who was insured by Trinity Universal Insurance Company. Appellant settled
with Horn and Trinity for Horn's liability limits of $100,000. Wendy's and appellee
Kemper Risk Management Services asserted Wendy's subrogation rights pursuant to
R.C. 4123.931. The settlement proceeds were distributed as follows: payment of
attorney fees, expenses, and court costs first, and the remaining balance of
$64,906.85 to appellees. The decedent's wife and two minor children received
nothing out of the settlement, serving merely as collection agents for the statutory
subrogee.

The Third District Court of Appeals upheld the constitutionality of the statute
under Section 19, Article I, ruling that R.C. 4123.931 does not constitute a taking of
any property right in this situation because "[t]he statute merely allows the employer
to be reimbursed for the benefits paid by the employer to an employee as a result of
the third-party tortfeasor's tortious conduct. The employee is not deprived of
adequate compensation for any injury suffered, as the benefits received by the
employee under the workers' compensation laws are not diminished by the operation
15

SUPREME COURT OF OHIO
of R.C. 4123.931. Moreover, the statute allows the employee to retain any portion of
the settlement or award greater than the employer's reimbursement expenses." Id.,
116 Ohio App.3d at 406-407, 688 N.E.2d at 306.

The theory that the subrogating employer takes only the tortfeasor's money is
offensive in the situation where the third-party recovery is no greater than the
employer's compensation outlay. Reimbursement must be preceded by a double
recovery for the statute to operate constitutionally. It is spurious to say that these tort
victims were not deprived of adequate compensation because they still get to keep
workers' compensation benefits. Workers' compensation laws are not intended to
provide a full recovery, and they are not designed to restore injured workers or their
families to what they lost. See Blankenship, supra, 69 Ohio St.2d at 614, 23 O.O.3d
at 508, 433 N.E.2d at 577; Indus. Comm. v. Drake (1921), 103 Ohio St. 628, 635, 134
N.E. 465, 467. And it is pure sophistry to argue that claimants who are staring at an
empty coffer get to keep the unreimbursed portion of their settlement.

Moreover, if the decedent in Ross had been survived not only by his wife and
two minor children, but also by his parents, an adult child, and siblings, the statute
would operate to extinguish their recovery as well. However, these persons, who are
beneficiaries for purposes of a wrongful death action, are not workers' compensation
claimants and do not qualify for workers' compensation benefits. Compare R.C.
2125.02(A)(1) with R.C. 4123.59 and 4123.60. In this situation, the statute operates
unconstitutionally to allow one person's tort recovery to be reduced or extinguished
by another person's workers' compensation benefits. See McMullen, supra, 88 Ohio
St.3d at 343, 725 N.E.2d at 1126.

While it may be accurate to say that R.C. 4123.931, in its effort to reimburse
the employer or bureau for its outlay of compensation, always leaves the injured
worker with the full measure of compensation and benefits to which he or she is
entitled under the Workers' Compensation Act, this fact alone does not automatically
determine R.C. 4123.931's constitutionality. What must be considered, and what the
court in Ross failed to consider, is that a person who receives injuries in the course of
16

January Term, 2001
employment as a proximate result of a third party's negligent act or omission
possesses certain constitutionally protected rights of recovery beyond those provided
in the workers' compensation statutes and that those rights are not necessarily
preserved by statutory workers' compensation benefits.

Yet these are the very arguments raised by respondent and its supporting
amici in defense of R.C. 4123.931(D), with one addition. Respondent argues that
there is no "absolute right to settle regardless of the rights of other interested parties."
When settling with a third-party tortfeasor, plaintiffs must be aware that "the entire
settlement award is subject to the right of the subrogee. * * * Therefore, if the parties
involved do not wish to lose certain rights due to settlement, they can opt to proceed
to trial and submit interrogatories to the jury [in order to designate the types of
damages awarded]."

However, respondent adds nothing to the analysis by invoking the platitude
that there is no "absolute" right to settle. If a right had to be absolute before it could
be vindicated, virtually all rights would be worthless. Absolute or not, this court has
never tolerated an "illegal restriction upon the right to compromise." Davy v. Fid. &
Cas. Ins. Co. (1908), 78 Ohio St. 256, 270, 85 N.E. 504, 507. " `[T]he law of Ohio
will tolerate no lien in or out of the profession, as a general rule, which will prevent
litigants from compromising, or settling their controversies, or which, in its
tendencies, encourages, promotes or extends litigation.' " Id., 78 Ohio St. at 268-
269, 85 N.E. at 507, quoting Weakly v. Hall (1844), 13 Ohio 167, 175, 1844 WL 22.
Indeed, settlement is part of the essential core of our judicial process. It finds
expression in Civ.R. 16, which specifically recognizes that one objective of pretrial
procedure is to facilitate "[t]he possibility of settlement of the action"; in R.C.
1343.03(C), which imposes prejudgment interest upon a party who fails "to make a
good faith effort to settle the case"; and in Vahila v. Hall (1997), 77 Ohio St.3d 421,
426, 674 N.E.2d 1164, 1169, where the court unanimously rejected a strict "but for"
test in legal malpractice cases, partially on the basis that it " `ignores settlement
opportunities lost' " and tends to " `exclude evidence about settlement, * * * the most
17

SUPREME COURT OF OHIO
common form of client recovery,' " quoting Note, The Standard of Proof of
Causation in Legal Malpractice Cases (1978), 63 Cornell L.Rev. 666, 670.

Nor is it very meaningful to argue that plaintiffs who are faced with the
prospect of settling for policy limits in these situations can opt for a trial of the third-
party action and obtain jury interrogatories to designate the types of damages
awarded. Trying the tort case in order to have damages designated does not obviate
the problem in these situations. Despite any allocation of damages, the claimant's
tort recovery is still fixed by the insurance policy limits, the combined amount of
those limits and workers' compensation is still insufficient to cover the claimant's
actual total loss, and there is still no double recovery to justify a right of subrogation
to any of the insurance proceeds. The only result of trying the tort claim in these
situations would be to clutter the trial court's docket with unnecessary litigation that
serves only to eat away at the finite amount of available recovery.

Thus, none of the theories advanced by respondent or supporting amici
changes the fact that under certain familiar conditions, R.C. 4123.931 operates to take
away or reduce the claimant's tort recovery irrespective of whether a double recovery
has actually occurred.
C
Propriety of Considering Additional Situations

Respondent has urged us not to address the arguments raised by petitioners
and supporting amicus regarding R.C. 4123.931(A) and (D), as they are based on
"several hypothetical fact patterns, which have no bearing on the resolution of the
matter pending before the federal court." We disagree, for several reasons.

First, respondent argued in its preliminary memorandum that this court should
address all eight certified questions in this case because "many cases will be resolved
and judicial economy will be promoted." In so doing, the bureau represented as
follows:

"[T]he present case is only one of numerous recent cases challenging the
constitutionality of the subrogation provisions found in R.C. 4123.931. The [bureau]
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January Term, 2001
is aware of approximately fifty such cases in twenty-two counties and two federal
district courts. Approximately seven of these cases were appealed to courts of
appeals in the second, third, sixth, eighth, and ninth Ohio appellate districts. Several
of the cases (in both common pleas courts and in the courts of appeals) have now
been settled, but most remain pending, including three cases before the eighth and
ninth district courts of appeals."

It would be more than a bit anomalous to now limit our consideration of R.C.
4123.931's constitutionality to the present certified facts.

Second, after respondent's merit brief was filed in this cause, this court
allowed discretionary appeals in Yoh, supra, and in In re Estate of Stewart (June 28,
2000), Lorain App. No. 99CA007422, unreported, 2000 WL 840512. Collectively,
these cases embody all of the issues and factual situations that respondent urges us
not to consider. Yet in both cases, the court has ordered that briefing be stayed and
the cause held for the decision in this case. See (2000), 89 Ohio St.3d 1490, 734
N.E.2d 377; (2000), 90 Ohio St.3d 1471, 738 N.E.2d 383. That is, Yoh and Stewart
are poised to be decided upon the authority of the decision in this case. Thus, as it
stands now, if we did as respondent suggests, this court could uphold the
constitutionality of the statute as applied in situations that we declined to consider.

It may be argued that the court can nevertheless decline to consider additional
factual situations in this case, then lift the stay on briefing in Yoh and Stewart and
hear those cases on the merits. But this approach would produce an absurd result.
Assuming that a refusal to consider additional factual situations in this case would
result in a decision in favor of constitutionality, that decision would stand only so
long as it took us to reverse it in Yoh and Stewart.

Finally, the consideration of additional situations is particularly warranted in
judging the constitutionality of R.C. 4123.931 because it is the statute itself that
creates those situations by virtue of its classifications and presumptions. Otherwise,
there would be no way to determine whether the statute is reasonable or rationally
related to its presumed constitutional goal of preventing claimants from collecting
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SUPREME COURT OF OHIO
and keeping a double recovery. Moreover, the situations considered above are not
merely speculative factual scenarios that may or may not arise at some future time but
are instead familiar and repeated circumstances that necessarily arise by virtue of the
interplay between the common law and the workers' compensation statutes. In
addition, the district court has certified this cause to us without any knowledge as to
what situations relevant to the application of the statute will arise after trial. Thus,
the federal court is actually asking us to evaluate the constitutionality of R.C.
4123.931 under the various situations that may arise in this case.

Thus, we find it absolutely essential to a determination of R.C. 4123.931's
constitutionality that the court consider how the statute operates in the situations
described above.

Accordingly, for all of the foregoing reasons, we answer certified questions
two and three in the affirmative and hold that R.C. 4123.931 violates Sections 16 and
19, Article I of the Ohio Constitution.
III
Section 28, Article II--The Compromise Revisited

The fourth certified question is whether R.C. 4123.931 violates Section 28,
Article II of the Ohio Constitution, which provides that "[t]he general assembly shall
have no power to pass * * * laws impairing the obligation of contracts."

This is essentially the same challenge that was made under Section 35, Article
II, but dressed in contractual attire. The gist of the challenge is that the workers'
compensation bargain as reflected in R.C. Chapter 4123 constitutes contractual
legislation that cannot be impaired. However, this challenge fails for the same
reasons already stated with regard to Section 35, Article II.

Accordingly, we answer the fourth certified issue in the negative and hold
that R.C. 4123.931 does not violate Section 28, Article II of the Ohio Constitution.
IV
Section 2, Article I--Reclassifying the Arguments
20

January Term, 2001

The fifth certified question is whether R.C. 4123.931 violates Section 2,
Article I of the Ohio Constitution, which provides that government is instituted for
the "equal protection and benefit" of the people and that "no special privileges or
immunities shall ever be granted."

Petitioners argue that R.C. 4123.931 violates the Privileges and Immunities
Clause because it allows employers to recover all of their workers' compensation
expenditures while continuing to enjoy immunity from suit. Thus, "the statute grants
employers the special privilege of immunity from suit without having paid or
provided consideration for it."

Contrary to petitioners' assertion, however, the employer has provided
consideration for its immunity from suit by paying workers' compensation benefits;
and the theory that subrogation is intrinsically antithetical to the workers'
compensation system lacks merit here as well.

Petitioners also argue that R.C. 4123.931(D) creates arbitrary classifications
and, therefore, violates the Equal Protection Clause. Under an equal protection
analysis, the challenged statute will be upheld if the classification bears a rational
relationship to a legitimate governmental interest or if reasonable grounds exist for
drawing the distinction. See State ex rel. Patterson v. Indus. Comm. (1996), 77 Ohio
St.3d 201, 205, 672 N.E.2d 1008, 1011; Roseman v. Firemen & Policemen's Death
Benefit Fund (1993), 66 Ohio St.3d 443, 447, 613 N.E.2d 574, 577.

First, petitioners maintain that the statute creates "arbitrary classifications of
tort victims--employees injured on the job and employees injured off the job. The
subrogation statute creates a presumption against the former by mandating that the
`entire amount of any award or judgment is presumed to represent compensation * *
* subject to a statutory subrogee's subrogation rights.' " According to petitioners,
"[t]he strict scrutiny test is appropriate here because the fundamental rights of access
to Ohio workers' comp system and access to Ohio's civil justice system are clearly at
stake."
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SUPREME COURT OF OHIO

The problem with this argument is that it assumes too much. Since R.C.
4123.931 guarantees full workers' compensation in all cases, the right of access to the
workers' compensation system is not implicated. Nor does this classification
implicate the right of access to Ohio's civil justice system. The presumption created
in the case of awards or judgments can be rebutted by "jury interrogatories indicating
that the award or judgment represents different types of damages." In providing the
claimant with the means to segregate damages that do not duplicate workers'
compensation benefits, R.C. 4123.931(D) avoids offending the claimant's rights to
remedy, due process, and private property. Thus, in drawing a distinction between
workers' compensation claimants and other tort victims, the statute does not involve
any fundamental right.

In this context, it can hardly be said that tort victims who are injured "on the
job" or, more appropriately, in the course of and arising out of their employment, are
similarly situated to tort victims who are injured "off the job" or, more precisely, who
do not receive an injury in the course of and arising out of their employment. The
former tort victim recovers compensation and medical benefits under the Workers'
Compensation Act; the latter does not. Contrary to the assertions of Ohio Academy
of Trial Lawyers, equal protection does not require the General Assembly to pass a
valid collateral-benefits-offset statute covering tort claims in general before it can
enact a workers' compensation subrogation statute. Accordingly, we reject
petitioners' first equal protection argument.

Petitioners' second equal protection argument is that R.C. 4123.931(D)
arbitrarily distinguishes between claimants who proceed to trial on their tort claims
and claimants who settle their tort claims. Petitioners argue that claimants who settle
receive less favorable treatment because, unlike claimants who try their tort claims,
they are precluded from showing that their tort recovery or portions thereof do not
duplicate workers' compensation benefits and, therefore, do not represent a double
recovery. Thus, while claimants who go to trial "may have some portion of their
award excluded from the subrogee's right of reimbursement, the injured employees
22

January Term, 2001
who settle their claims * * * have no comparable method or opportunity to shield a
portion of their damages from the subrogee." We agree.

R.C. 4123.931(D) essentially creates a presumption that a double recovery
occurs whenever a claimant is permitted to retain workers' compensation and tort
recovery. Claimants who try their tort claims are permitted to rebut this presumption,
while claimants who settle their tort claims are not. Such disparate treatment of
claimants who settle their tort claims is irrational and arbitrary because, as
demonstrated in Part II above, there are situations where claimants' tort recovery is
necessarily limited to amounts that if retained along with workers' compensation
cannot possibly result in a double recovery.

Contrary to respondent's assertions, these claimants are not free to make the
decision to proceed to trial or to settle. Their only freedom is to choose the
mechanism by which to forfeit their rights to property and remedy. And in those
situations where claimants are forced to settle for amounts that are insufficient to
satisfy more than the subrogee's claim, as happened in Ross, supra, their only
freedom is to have their tort recovery obliterated.

Respondent further argues that "R.C. 4123.931 is a rational response to a
legitimate state concern to minimize the loss to the workers' compensation fund
caused by the wrongful actions of a third-party tortfeasor." However, this concern
justifies the statute only so far as the statute operates to assess the subrogee's loss
against the tortfeasor. But when the statute operates irrespectively of whether a
double recovery has occurred, it can no longer be said that the fund is being
replenished at the tortfeasor's expense. The state's interest in conserving the fund
can no more justify the denial of a claimant's nonduplicative tort recovery than it can
serve as a viable basis for denying workers' compensation benefits to those entitled to
it. See State ex rel. Nyitray v. Indus. Comm. (1983), 2 Ohio St.3d 173, 177, 2 OBR
715, 718-719, 443 N.E.2d 962, 966.
Finally,
several
amici in support of respondent argue that distinguishing
between settlements and trial "is also rational because settling parties will rarely, if
23

SUPREME COURT OF OHIO
ever, allocate a settlement to lost wages, medical expenses and pain and suffering."
The corollary to this argument is that the distinction may be a rational method to
preclude collusive settlements. However, there is no purpose to allocating damages
in the absence of a double recovery and, in these situations, it is difficult to conceive
how collusion could occur, unless the tortfeasor's financial and insurance coverage
decisions were somehow made in collaboration with the claimant.

Accordingly, we answer the fifth certified question in the affirmative and
hold that R.C. 4123.931 violates the Equal Protection Clause of Section 2, Article I of
the Ohio Constitution to the extent that it distinguishes between claimants who try
their tort claims and claimants who settle their tort claims.
V
Section 15, Article II--One Subject

The sixth certified question is whether R.C. 4123.931 violates Section 15,
Article II of the Ohio Constitution. Specifically, petitioners claim that R.C. 4123.931
violates Section 15(D), Article II, which provides that "[n]o bill shall contain more
than one subject."

1995 Am.Sub.H.B. No. 278, which enacted R.C. 4123.93 and 4123.931,
comes nowhere close to violating the one-subject rule. In addition to enacting these
new sections, Am.Sub.H.B. No. 278 amended four sections of R.C. Chapters 4121
and 4123 and made appropriations for the bureau for the biennium beginning July 1,
1995, and ending June 30, 1997. 146 Ohio Laws, Part II, 3581. The bill contains one
subject, and only one subject--workers' compensation. There is no disunity of
subject matter.

Accordingly, we answer the sixth certified question in the negative and hold
that R.C. 4123.931, or more appropriately, Am.Sub.H.B. No. 278, does not violate
Section 15(D), Article II of the Ohio Constitution.
VI
Civ.R. 49(C)--Special Verdict
24

January Term, 2001

The seventh certified question is whether R.C. 4123.931 is contrary to Civ.R.
49(C) and, therefore, invalid and unenforceable.

In an effort to provide the claimant with the means to rebut the presumption
that the entire amount of any third-party award or judgment represents workers'
compensation, R.C. 4123.931(D) allows the use of "a special verdict or jury
interrogatories" to segregate different types of damages. However, Civ.R. 49(C)
provides, to the contrary, that "[s]pecial verdicts shall not be used." Thus, to this
extent R.C. 4123.931 is contrary to Civ.R. 49(C) and the latter must control. See
Rockey v. 84 Lumber Co. (1993), 66 Ohio St.3d 221, 611 N.E.2d 789, paragraph two
of the syllabus.

However, this certainly does not render the entire statute invalid and
unenforceable, nor does it cause the provision of R.C. 4123.931(D) for classifying
damages to become inoperative. The provision can still operate without the use of a
special verdict, since it also provides for the use of special interrogatories.

Accordingly, we answer the seventh certified issue in the negative and hold
that while R.C. 4123.931 is contrary to Civ.R. 49(C) to the extent that it provides for
the use of a special verdict, no part of the statute is thereby rendered invalid or
unenforceable.
VII
R.C. 4123.80--Waiver of Compensation

The eighth and final certified question is whether R.C. 4123.931 constitutes
an invalid waiver of an injured employee's right to receive and retain workers'
compensation benefits in violation of R.C. 4123.80.

R.C. 4123.80 provides that "[n]o agreement by an employee to waive his
rights to compensation under this chapter is valid." Petitioners argue that R.C.
4123.931 forces the employee who pursues a third-party claim to pay back his or her
workers' compensation benefits and, therefore, constitutes an invalid waiver under
R.C. 4123.80.
25

SUPREME COURT OF OHIO

This is the same argument that was used in an attempt to invalidate the very
concept of a workers' compensation subrogation statute under Sections 28 and 35,
Article II of the Ohio Constitution, and it fails once again for the same reasons. In no
event does R.C. 4123.931 ever cause the claimant to end up with less than the full
amount of workers' compensation benefits to which he or she is entitled under R.C.
Chapter 4123. The statute may be construed as imposing an obligation upon an
injured employee to waive his or her right to tort compensation, but it never causes
the injured employee to relinquish any right to workers' compensation.

Accordingly, we answer the eighth certified question in the negative and hold
that R.C. 4123.931 does not constitute an invalid waiver of an injured employee's
right to receive and retain workers' compensation benefits in violation of R.C.
4123.80.
VIII
Conclusion

We hold that R.C. 4123.931 does not violate Sections 15, 28, or 35, Article II
of the Ohio Constitution, is not rendered invalid by Civ.R. 49(C), and does not
constitute an invalid waiver under R.C. 4123.80. We hold, however, that R.C.
4123.931 does violate Sections 2, 16, and 19, Article I of the Ohio Constitution. In
so holding, we do not accept the proposition that a workers' compensation
subrogation statute is per se unconstitutional, and nothing in this opinion shall be
construed to prevent the General Assembly from ever enacting such a statute. We
hold only that R.C. 4123.931, in its present form, is unconstitutional.

Accordingly, we advise the federal court that R.C. 4123.931 is
unconstitutional under Ohio law.
Judgment accordingly.

DOUGLAS, F.E. SWEENEY and PFEIFER, JJ., concur.

MOYER, C.J., COOK and LUNDBERG STRATTON, JJ., dissent.
__________________

MOYER, C.J., dissenting.
26

January Term, 2001

"The courts must declare the sense of the law; and if they should be disposed
to exercise will instead of judgment, the consequence would equally be the
substitution of their pleasure to that of the legislative body." The Federalist No. 78
(Alexander Hamilton) (Clinton Rossiter Ed. 1961) 468-469.

The principle that courts are not the creators of public policy and should not
decide cases based on disagreement with a legislature has guided courts since the
creation of the American judicial system.

This court has adhered to the view. See State ex rel. Bowman v. Allen Cty.
Bd. of Commrs. (1931), 124 Ohio St. 174, 196, 177 N.E. 271, 278; State ex rel.
Bishop v. Mt. Orab Village School Dist. Bd. of Edn. (1942), 139 Ohio St. 427, 438,
22 O.O. 494, 498, 40 N.E.2d 913, 919; State v. Warner (1990), 55 Ohio St.3d 31, 43,
564 N.E.2d 18, 30-31; Cent. Motors Corp. v. Pepper Pike (1995), 73 Ohio St.3d 581,
584, 653 N.E.2d 639, 642-643; Desenco, Inc. v. Akron (1999), 84 Ohio St.3d 535,
538, 706 N.E.2d 323, 328.

The majority's determination that R.C. 4123.931 violates Sections 2, 16, and
19, Article I, appears to derive from its disagreement with the substance of the
legislation. The reasons stated for declaring the statute unconstitutional are generally
policy arguments, not principles of constitutional law. The majority disregards the
principle so cogently stated by Justice Harlan Stone in his dissent in United States v.
Butler. He cautioned that "the only check upon our own exercise of power is our
own sense of self-restraint. For the removal of unwise laws from the statute books
appeal lies, not to the courts, but to the ballot and to the processes of democratic
government." United States v. Butler (1936), 297 U.S. 1, 79, 56 S.Ct. 312, 325, 80
L.Ed. 477, 495.

As I wrote in DeRolph II, "constitutional history, precedent, and logic warrant
the conclusion that [these types of] qualitative judgments should be committed to the
will of the people as expressed in the election of representatives to the General
Assembly." DeRolph v. State (2000), 89 Ohio St.3d 1, 48, 728 N.E.2d 993, 1029
(Moyer, C.J., dissenting).
27

SUPREME COURT OF OHIO

Our role here is to determine whether R.C. 4123.931 violates the Ohio
Constitution, not to determine whether R.C. 4123.931 represents the policy decision
that we would have chosen were we legislators.
I. Sections 16 and 19, Article I, Ohio Constitution

The majority holds that because R.C. 4123.931 "operates to take more of the
claimant's tort recovery than is duplicative of the statutory subrogee's workers'
compensation expenditures," it is impermissibly "unreasonable, oppressive upon the
claimant, partial, and unrelated to its own purpose." Specifically, the majority holds
that R.C. 4123.931 "creates the conditions under which a prohibited taking may
occur" when R.C. 4123.931(A) gives the statutory subrogee the right of subrogation
with respect to "estimated future values of compensation and medical benefits." I
disagree.

The majority argues that the employee is unconstitutionally required to
reimburse the Bureau of Workers' Compensation or the self-insured employer for
future benefits that the employee may never receive. For instance, an injured
employee may die before benefits equaling the subrogation amount have been
received. It is also suggested that the surviving spouse may remarry, at which point
he or she is entitled to a lump-sum payment representing two additional years of
benefits, but, under workers' compensation law, is not entitled to further benefits.
R.C. 4123.59(B). Because of this potential inequity, the majority holds that because
the General Assembly did not include an offset or credit against future payments in
the subrogation scheme, R.C. 4123.931 unconstitutionally represents a taking and
denial of a remedy in violation of Sections 16 and 19, Article I.

It is true that an employee may die before benefits equaling the subrogation
amount have been received. However, it is also true that an employee may live far
beyond his or her life expectancy as determined by the court in estimating those
future benefits. The estimated future values are the amount of compensation and
medical benefits reasonably projected to be paid in the claim by the subrogee as a
result of the actions of the tortfeasor. The court in determining these values hears
28

January Term, 2001
evidence from both the claimant and the subrogee, and may reject the subrogee's
projections if it finds them not well supported.

This method of calculation of estimated future values is similar to the concept
of future damages in a typical personal injury claim. Courts routinely estimate the
value of future payments in these cases, aided by expert testimony, mortality tables,
and formulas for reducing future payments to present value. Ohio Jury Instructions
currently provides for estimating future values regarding earnings, 1 Ohio Jury
Instructions (1996), Section 23.20, present value of future damage, 1 Ohio Jury
Instructions (1996), Section 23.77, and damages relating to permit injury and death, 1
Ohio Jury Instructions (1996), Sections 23.90 through 23.91. In addition, jurors are
provided with mortality tables to determine "the probable normal length of life of the
decedent." 1 Ohio Jury Instructions (1996), Section 23.76. Jurors are empowered to
make these types of determinations in numerous situations.

The future values of workers' compensation benefits can be calculated with
more certainty than the typical personal injury claim, since an injured employee's rate
of compensation is computed according to a statutorily set scheme. R.C. 4123.61.
Therefore, like the tort verdict, the subrogation amount for future benefits is based on
reasonable assumptions that, although inherently uncertain, provide for a final
resolution.

The majority contends that this final resolution is neither final nor enough to
justify the constitutional infirmities of R.C. 4123.931. This argument misses the
point. The fact that the subrogee continues to administer benefits does not, as the
majority finds, make the goal of a final resolution invalid. While the subrogee may
eventually pay out greater or fewer benefits to the claimant than the court determined
was reasonable at the time of the lawsuit, the procedure of a one-time payment to the
subrogee is reasonable. The Constitution does not demand a method of calculation
that results in a perfect and exact determination, only a reasonable one. The credit
system is also a reasonable method. However, we are not empowered to choose
between reasonable methods. Our authority extends only to determining whether the
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SUPREME COURT OF OHIO
method chosen by the General Assembly is clearly unconstitutional. Desenco, Inc. v.
Akron, 84 Ohio St.3d at 538, 706 N.E.2d at 328. This is a reasonable method of
calculation and not clearly unconstitutional beyond a reasonable doubt. Therefore, I
would hold that R.C. 4123.931 does not violate Sections 16 or 19, Article I of the
Ohio Constitution.
II. Section 2, Article I, Ohio Constitution

The majority holds that R.C. 4213.931(D) violates Section 2, Article I of the
Ohio Constitution because although claimants who opt for trial can request jury
interrogatories, claimants who opt for settlement " `have no comparable method or
opportunity to shield a portion of their damages from the subrogee,' " quoting the
petitioners' brief. My disagreement with this holding is analogous to my concerns
raised regarding the court's role in determining the constitutionality of a statute and
relates to the same fundamental difference between my view of that role and the view
of the majority. Again, I disagree.

Injured employees are not a suspect class. State v. Williams (2000), 88 Ohio
St.3d 513, 530, 728 N.E.2d 342, 359. Nor does R.C. 4123.931 implicate a
fundamental constitutional right. Id. Accordingly, we evaluate R.C. 4123.931 using
a rational-basis analysis. Id.

As stated previously, the workers' compensation scheme relies on
compulsory contributions by employers to a statewide fund. Injured employees and
their beneficiaries are paid workers' compensation benefits from this fund. Prior to
adoption of R.C. 4123.931, employees injured by the wrongful actions of a third-
party tortfeasor could recover damages from third-party tortfeasors and receive
compensation benefits from the Workers' Compensation Fund. R.C. 4123.931 was
enacted to preserve the Workers' Compensation Fund. A rational-basis analysis
requires us to uphold this remedy "unless it constitutes a plain affront to a specific
provision of the Constitution." Am. Assn. of Univ. Professors, Cent. State Univ.
Chapter v. Cent. State Univ. (1999), 87 Ohio St.3d 55, 61, 717 N.E.2d 286, 292.
30

January Term, 2001
Accordingly, we must analyze the Holetons' equal protection arguments to determine
whether R.C. 4123.931 constitutes such an affront to Section 2, Article I.

R.C. 4123.931 affects no fundamental right of an employee. If an employee
is dissatisfied with settlement policies, the employee may proceed with a jury trial.
R.C. 4123.931 does not force employees to litigate. Instead, like all claimants,
injured employees are free to decide whether to proceed to trial or to settle. Each
process has its own advantages and disadvantages, and the employee must decide
whether to submit his or her claim to a trial that would determine the portion of the
award that should be shielded from subrogation, or to settle with the tortfeasor, taking
into consideration that the settlement amount will be subject to subrogation.

Without the restriction regarding settlement awards in R.C. 4123.931(D),
employees could accept a lower settlement amount from the tortfeasor, in exchange
for an agreement stating that the entire amount was not subject to subrogation. In
according only those employees who choose a trial the right to ask the jury to
determine what portion of the award should be shielded, the General Assembly could
have rationally conceived that this was a method to preclude collusive settlements.
Although the majority argues that it is difficult to anticipate how these would occur,
the situation is no more hypothetical than the many hypothetical situations the
majority claims could result in subrogation without double recovery.

Even more important, legislation aimed at preventing collusive settlements
that would prevent a statutory subrogee from being reimbursed is a reasonable use of
legislative power, especially when the legislation is aimed at preserving the integrity
of the State Fund for the benefit of all workers' compensation claimants.
Accordingly, I would hold that R.C. 4123.931 does not violate Section 2, Article I of
the Ohio Constitution.
III. Conclusion

For the forgoing reasons, I would answer the certified questions by advising
the United States District Court for the Northern District of Ohio that R.C. 4123.931
does not violate Sections 2, 16, or 19, Article I.
31

SUPREME COURT OF OHIO

COOK and LUNDBERG STRATTON, JJ., concur in the foregoing dissenting
opinion.
__________________

COOK, J., dissenting. Like the Chief Justice, I would answer "no" to each
certified question. And I agree with much of what the Chief Justice expresses in his
dissenting opinion. I write separately to address the majority's unfortunate decision
to declare R.C. 4123.931 unconstitutional on its face for violating the Takings and
Right to Remedy Clauses of the Ohio Constitution.

A party may challenge a statute as unconstitutional either on its face or as
applied to a particular state of facts. Belden v. Union Cent. Life Ins. Co. (1944), 143
Ohio St. 329, 28 O.O. 295, 55 N.E.2d 629, paragraph four of the syllabus. The effect
of a successful challenge will differ depending on whether the court strikes the statute
on its face or as applied. "If a statute is unconstitutional as applied, the State may
continue to enforce the statute in different circumstances where it is not
unconstitutional, but if a statute is unconstitutional on its face, the State may not
enforce the statute under any circumstances." Women's Med. Professional Corp. v.
Voinovich (C.A.6, 1997), 130 F.3d 187, 193. This case necessarily presents a facial
challenge to R.C. 4123.931. Because there has been no verdict or settlement to which
the statute has been applied, this case presents no set of facts upon which we can base
an as-applied constitutional analysis. See State v. Beckley (1983), 5 Ohio St.3d 4, 6-
7, 5 OBR 66, 68-69, 448 N.E.2d 1147, 1148-1149 (constitutional challenge had to be
a facial one when there was no "presently existing state of facts to which to apply the
challenged statutes").

The majority fails to appreciate the distinction between facial and as-applied
constitutional challenges. Because the majority deems R.C. 4123.931 unpalatable
when applied to various factual scenarios not presented in this case, the majority
declares the statute unconstitutional on its face. As noted above, this decision
precludes future application of the statute under any circumstances. But the
majority's approach fails to acknowledge important precepts that are supposed to
32

January Term, 2001
guide an analysis of facial challenges. "A facial challenge to a legislative Act is, of
course, the most difficult challenge to mount successfully, since the challenger must
establish that no set of circumstances exists under which the Act would be valid. The
fact that [a statute] might operate unconstitutionally under some conceivable set of
circumstances is insufficient to render it wholly invalid * * *." United States v.
Salerno (1987), 481 U.S. 739, 745, 107 S.Ct. 2095, 2100, 95 L.Ed.2d 697, 707; see,
also, Emerson Elec. Co. v. Tracy (2000), 90 Ohio St.3d 157, 162, 735 N.E.2d 445,
449-450 (Cook, J., dissenting). By ignoring this principle, the majority loses sight of
"the strong presumption in favor of the constitutionality of legislation and the judicial
obligation which exists to support the enactment of a lawmaking body if this can be
done." Beckley, 5 Ohio St.3d at 7, 5 OBR at 69, 448 N.E.2d at 1149. Today's
decision thus stands for the bizarre (and unsupportable) proposition that a court may
declare a statute unconstitutional on its face simply because it may be applied
unconstitutionally in some situations, under a set of facts not at bar.

The majority goes to great lengths in defending its mode of analyzing the
constitutionality of R.C. 4123.931 under the Takings and Right to Remedy Clauses.
For example, the majority claims that it "would be more than a bit anomalous to now
limit our consideration of R.C. 4123.931's constitutionality to the present certified
facts" in light of the respondent's representations to this court that numerous pending
cases may be resolved by our decision in this one. The majority also contends that
the factual scenarios it considers in this case are "familiar and repeated circumstances
that necessarily arise" from R.C. 4123.931's "interplay" with the common law. But
these arguments are unresponsive to the mistake that the majority actually makes in
its constitutional analysis.

The majority's error is not the consideration of additional situations; indeed,
when entertaining a facial challenge, the court necessarily considers how the statute
may apply to a variety of circumstances. Rather, the majority's mistake comes in
considering too few additional situations before declaring the statute facially
unconstitutional. Before we may strike the statute as facially unconstitutional, and
33

SUPREME COURT OF OHIO
therefore invalid in toto, we must do more than simply find that the statute operates
unconstitutionally in some situations. See Village of Hoffman Estates v. Flipside,
Hoffman Estates, Inc. (1982), 455 U.S. 489, 494-497, 102 S.Ct. 1186, 1191-1193, 71
L.Ed.2d 362, 369-370. Finding a law facially unconstitutional requires us "to hold
that under no reasonable set of circumstances" could the statute operate
constitutionally. (Emphasis added.) Beckley, 5 Ohio St.3d at 7, 5 OBR at 69, 448
N.E.2d at 1149; see, also, Salerno, 481 U.S. at 745, 107 S.Ct. at 2100, 95 L.Ed.2d at
707. The majority's analysis falls far short of this exhaustive standard. Instead of
striking R.C. 4123.931 because it violates the Right to Remedy and Takings Clauses
in virtually all of its applications, the majority has instead voided the statute simply
because it deems the law invalid under the limited circumstances it has chosen to
address.

The majority also justifies its departure from the proper mode of
constitutional analysis by painting a misleading picture about how this court manages
its docket. The majority notes that this court has allowed discretionary appeals in
Yoh v. Schlachter (Mar. 17, 2000), Williams App. No. WM-99-008, unreported, 2000
WL 281748, and In re Estate of Stewart (June 28, 2000), Lorain App. No.
99CA007422, unreported, 2000 WL 840512. See (2000), 89 Ohio St.3d 1490, 734
N.E.2d 377, and (2000), 90 Ohio St.3d 1471, 738 N.E.2d 383. In both of these cases,
this court sua sponte ordered the briefing schedules stayed and the causes "held" for
the decision in this case. According to the majority, this means that these cases "are
poised to be decided" summarily "upon the authority" of this case. Thus, the
majority concludes that a decision upholding the facial constitutionality of R.C.
4123.931 could result in this court "uphold[ing] the constitutionality of the statute as
applied in situations that we declined to consider." But this explanation is just plain
wrong, for it is based on an inaccurate depiction of how other cases currently pending
before this court would be affected in the event that we upheld the facial validity of
R.C. 4123.931 in this case.
34

January Term, 2001

This court does not summarily decide all held causes when we have decided
the case for which those causes are held. The disposition of a given case may not
warrant summary disposition of causes held for it, particularly if the held causes
present unique issues that are not addressed in the lead case. For example, this court
ordered briefing in at least two recent cases that were originally held for dispositions
in other cases. Compare State v. Eppinger (2000), 89 Ohio St.3d 1447, 731 N.E.2d
1136, and Paton v. Paton (2000), 89 Ohio St.3d 1436, 730 N.E.2d 990 (lifting stays
on briefing), with State v. Eppinger (1999), 86 Ohio St.3d 1465, 715 N.E.2d 568, and
Paton v. Paton (1999), 86 Ohio St.3d 1465, 715 N.E.2d 568 (holding causes for
decisions in cases already pending before this court). In Eppinger and Paton, this
court examined each case and found it inappropriate to decide them summarily,
despite the fact that we had originally held them for other cases pending here.
Similarly, if Yoh and Stewart present issues not adequately addressed by the decision
in this case, this court would lift the stay on briefing and hear the cases on the merits.
Thus, if the majority had (correctly) upheld the facial constitutionality of R.C.
4123.931, it would be inappropriate for this court to summarily decide Yoh and
Stewart if those cases challenge the constitutionality of the statute as applied to the
facts of those cases. We would instead order briefing on the merits and the parties
would have the opportunity to focus their arguments on the as-applied challenges
without having to address the facial challenges we have already decided here.

The majority discounts this orderly (and correct) procedure by claiming that a
supposedly "absurd result" would flow from it. The majority states, "Assuming that
a refusal to consider additional factual situations in this case would result in a
decision in favor of constitutionality, that decision would stand only so long as it took
us to reverse it in Yoh and Stewart." But this assertion is woefully wrong and further
illuminates the majority's failure to distinguish between facial and as-applied
constitutional challenges. If a majority of this court had (correctly) decided here that
the statute was not facially unconstitutional, only to decide later that the statute was
unconstitutional as applied to the situations presented in Yoh and Stewart, we would
35

SUPREME COURT OF OHIO
not "reverse" our decision in this case. The statute would merely be unenforceable as
applied to the circumstances presented in those previously held cases; the statute
would remain facially valid, meaning that the law could still be enforced in other
circumstances where its operation would be constitutional. Simply put, a decision
upholding the facial constitutionality of R.C. 4123.931 in this case would not
preclude this court (or any other court for that matter) from finding the statute
unconstitutional as applied to a particular set of facts in a later case.

Finally, the majority contends that the district court, by certifying the
constitutional questions, "is actually asking us to evaluate the constitutionality of
R.C. 4123.931 under the various situations that may arise in this case." The majority
says this is so because the district court is "without any knowledge" of what facts will
arise after trial. But this explanation is curious, given that the certified questions
dealing with constitutionality ask only abstract questions of whether R.C. 4123.931 is
constitutional under various provisions of the Ohio Constitution. How the majority
gleans the district court's desire to have us decide the constitutionality of the statute
"under the various situations that may arise in this case" is anyone's guess. It is more
likely, given the general phrasing of the certified constitutional questions, that the
district court wanted to know whether R.C. 4123.931 is unconstitutional on its face
and therefore incapable of any application to the Holetons' lawsuit. With our answer
to that question, the district court would know whether it had to consider R.C.
4123.931 at all. See Women's Med. Professional Corp., 130 F.3d at 193 (statute
unconstitutional on its face cannot be enforced under any circumstances).

For these reasons, in addition to those stated by the Chief Justice, I dissent. I
would uphold the facial validity of R.C. 4123.931 and advise the district court
accordingly.

LUNDBERG STRATTON, J., concurs in the foregoing dissenting opinion.
__________________

Shumaker, Loop & Kendrick, L.L.P., Jack G. Fynes and Stefanie E. Berk, for
petitioners.
36

January Term, 2001

Betty D. Montgomery, Attorney General, James A. Barnes, G. James Van
Heyde and James M. Evans, Assistant Attorneys General, for respondent C. James
Conrad, Administrator of Workers' Compensation.

Nurenberg, Plevin, Heller & McCarthy Co., L.P.A., Kathleen J. St. John and
David M. Paris, in support of petitioners, for amicus curiae Ohio Academy of Trial
Lawyers.

Manley, Burke & Lipton, Andrew S. Lipton and Steven M. Ingram, in support
of petitioners, for amicus curiae Armco Employees Independent Federation, Inc.

Stewart Jaffy & Associates Co., L.P.A., Stewart R. Jaffy and Marc J. Jaffy, in
support of petitioners, for amicus curiae Ohio AFL-CIO.

Scott, Scriven & Wahoff, L.L.P., Timothy E. Cowans, William J. Wahoff and
Richard Goldberg, in support of respondent, for amicus curiae Ohio Council of
Retail Merchants.

Brickler & Eckler, L.L.P., and Kurtis A. Tunnell, in support of respondent, for
amicus curiae Ohio Manufacturers' Association.

Brickler & Eckler, L.L.P., Thomas R. Sant and Nan M. Still, in support of
respondent, for amici curiae Ohio Chapter of the National Federation of Independent
Business and Ohio Farm Bureau Federation, Inc.

Vorys, Sater, Seymour & Pease, L.L.P., Robert A. Minor and Robin R. Obetz,
in support of respondent, for amici curiae Kokosing Construction Company, Inc., the
Ohio Self-Insurers' Association, and the American Insurance Association.

Garvin & Hickey and Preston J. Garvin, in support of respondent, for amicus
curiae Ohio Chamber of Commerce.

Vozar, Roberts & Matejczyk Co., L.P.A., Thomas J. Vozar, Glenna M.
Roberts and David M. Matejczyk, in support of respondent, for amicus curiae
National Association of Subrogation Professionals.
__________________
37