American Interstate Insurance v. G & H Service Center, Inc.

112 Ohio St. 3d 521
CourtOhio Supreme Court
DecidedFebruary 28, 2007
DocketNo. 2006-0051
StatusPublished
Cited by10 cases

This text of 112 Ohio St. 3d 521 (American Interstate Insurance v. G & H Service Center, Inc.) is published on Counsel Stack Legal Research, covering Ohio Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Interstate Insurance v. G & H Service Center, Inc., 112 Ohio St. 3d 521 (Ohio 2007).

Opinion

Lanzinger, J.

{¶ 1} This case is a certified conflict that raises the issue of choice of law in an action for subrogation brought by a workers’ compensation insurer against an employee and a third-party tortfeasor.

Case Procedure

{¶ 2} Appellant Claude Britton III was struck and injured in Ohio by a truck owned by appellant G & H Service Center, Inc. (“G & H”). Britton was a Louisiana resident and filed for workers’ compensation benefits in Louisiana because he was injured in the course of employment with Ray Reich Trucking (“Ray Reich”), a Louisiana company. Britton was awarded benefits for his injuries in accordance with Louisiana’s workers’ compensation statutes. Another Louisiana company, appellee American Interstate Insurance Company (“American Interstate”), insured Ray Reich for workers’ compensation benefits.

{¶ 3} Britton and his wife filed a personal injury claim in Ohio against G & H for injuries he received in the accident. American Interstate also filed a complaint in Ohio, asserting its right of subrogation pursuant to Louisiana law, to recover for expenses it incurred in paying Britton’s workers’ compensation [522]*522benefits. The two cases were consolidated but were voluntarily dismissed without prejudice.

{¶ 4} American Interstate refiled its complaint in Ohio for subrogation against G & H and Britton. Britton answered, challenging the insurance company’s subrogation rights and asserting his own personal injury cross-claim against G & H.

{¶ 5} G & H and Britton filed motions for summary judgment, challenging American Interstate’s subrogation claim. The trial court granted both motions, concluding that Louisiana’s subrogation statutes were similar to an Ohio subrogation statute, former R.C. 4123.931, that had been declared unconstitutional by this court in Holeton v. Crouse Cartage Co. (2001), 92 Ohio St.3d 115, 748 N.E.2d 1111. American Interstate appealed to the Third District Court of Appeals, which reversed the trial court’s holding. The Third District held that Louisiana law rather than Ohio law applied, and because subrogation was lawful in Louisiana, the trial court had erred in granting summary judgment.

{¶ 6} In reaching its decision, the Third District applied Section 185 of the Restatement of the Law 2d, Conflict of Laws (1971) (“Restatement”), which governs choice of law regarding workers’ compensation subrogation issues. We found that a conflict existed between the Third District’s decision and the decision of the First District in Beer v. Cincinnati Machines, Inc., 159 Ohio App.3d 715, 2005-0hio-901, 825 N.E.2d 221, which held that the choice of law in a similar workers’ compensation subrogation action was determined by which state had a more significant relationship to the lawsuit. In Beer, the First District applied the same reasoning found in Sections 145 and 146 of the Restatement, sections dealing with conflict-of-law issues for general tort liability and personal injury torts respectively. We certified a conflict regarding the following question: “Where a conflicts of law issue exists in a workers’ compensation subrogation claim, should sections 146 and 145, or section 185 of the Restatement of the Law of Conflicts govern?” Am. Interstate Ins. Co. v. G & H Serv. Ctr., Inc., 108 Ohio St.3d 1470, 2006-Ohio-665, 842 N.E.2d 1050.

Restatement Section 185 or Sections 145 and 146

{¶ 7} This court adopted the Restatement to govern choice-of-law analysis in Morgan v. Biro Mfg. Co., Inc. (1984), 15 Ohio St.3d 339, 341-342, 15 OBR 463, 474 N.E.2d 286. We must now determine whether Sections 145 and 146 or Section 185 of the Restatement applies to determine which state law controls American Interstate’s complaint for subrogation.

{¶ 8} The Morgan court adopted the Restatement in its entirety. Id. However, because Morgan concerned a personal injury tort, we applied only Sections 145 and 146 of the Restatement, which relate exclusively to tort law. See [523]*523Morgan, 15 Ohio St.3d at 342, 15 OBR 463, 474 N.E.2d 286. Both sections establish a “significant relationship” test to determine which state’s law applies to a tort action in a choice-of-law situation. Section 146 of the Restatement relates specifically to personal injury torts and establishes a presumption that the law of the state where an injury occurred determines the rights of the parties. This presumption can be rebutted if another state is found to have a more significant relationship to the occurrence and the parties under the principles stated in Section 6 of the Restatement. Section 145 addresses conflicts in tort actions generally and lists several factors for the court to consider when deciding which state law applies to a case.

{¶ 9} By comparison, Section 185 of the Restatement determines which state’s law controls in a third-party tort action after an employee has received workers’ compensation. That section provides: “The local law of the state under whose workmen’s compensation statute an employee has received an award for an injury determines what interest the person who paid the award has in any recovery for tort or wrongful death that the employee may obtain against a third person on account of the same injury.” In such cases, the Restatement has eliminated the need to weigh states’ interests in having their laws applied and has determined that when it comes to workers’ compensation claims, the laws of the state in which the compensation was paid will always apply.

{¶ 10} We determine that with respect to a claim for subrogation brought by a workers’ compensation insurer, Section 185 of the Restatement applies, and the laws of the state in which the workers’ compensation benefits were paid are controlling. This holding is consistent with precedent that recognizes that workers’ compensation statutes represent “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.” Holeton, 92 Ohio St.3d at 119, 748 N.E.2d 1111. Because they are a bargain codified in state law to ensure that both employers and employees receive the benefit of their bargain, the laws of the state in which compensation is paid must apply.

{¶ 11} Britton received his workers’ compensation award in Louisiana, pursuant to Louisiana law. Section 185 of the Restatement therefore dictates that Louisiana law applies to the workers’ compensation insurer’s subrogation claim. Britton is a citizen of Louisiana, and his employer, Ray Reich, is a Louisiana corporation that was insured pursuant to Louisiana law by American Interstate, another Louisiana corporation. To apply Louisiana law in this case is consistent with the underlying goal of ensuring that all parties receive the benefit of their social bargain.

{¶ 12} That Section 185 of the Restatement requires application of Louisiana law to the workers’ compensation insurer’s subrogation claim does not mean that [524]*524Louisiana law applies to all issues in the case, however.

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Cite This Page — Counsel Stack

Bluebook (online)
112 Ohio St. 3d 521, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-interstate-insurance-v-g-h-service-center-inc-ohio-2007.