Ohio Hosp. Assn. v. Ohio Bur. of Workers' Comp., 2007 Ohio 1499 (Ohio App. 3/30/2007)
| Decision Date | 30 March 2007 |
| Docket Number | No. 06AP-471.,06AP-471. |
| Citation | 2007 Ohio 1499 |
| Parties | Ohio Hospital Association et al., Plaintiffs-Appellees, v. The Ohio Bureau of Workers' Compensation et al., Defendants-Appellants. |
| Court | Ohio Court of Appeals |
APPEAL from the Franklin County Court of Common Pleas, C.P.C. No. 05CVH09-10738.
Shumaker, Loop & Kendrick, LLP, David W. Wicklund, James H. O'Doherty, and Michael A. Snyder, for appellees.
Jim Petro, Attorney General, and Elise Porter, for appellants. Hunter, Carnahan, Shoub & Byard, Michael J. Hunter, and
Robert M. Cody, for amicus curiae SEIU District 1199, The Health Care and Social Service Union, SEIU.
{¶1} The Ohio Bureau of Workers' Compensation and its Administrator, William E. Mabe (collectively referred to as "the bureau"), defendants-appellants, appeal from the judgment of the Franklin County Court of Common Pleas, in which the court issued a declaratory judgment in favor of the Ohio Hospital Association (individually "OHA") and Genesis HealthCare System (individually "Genesis"), plaintiffs-appellees (collectively "appellees"), and granted the motion for permanent injunction filed by appellees. Service Employees International Union District 1199, the Heath Care and Social Service Union, SEIU, has filed a brief of amicus curiae urging reversal of the trial court's decision.
{¶2} The bureau's Health Partnership Program ("HPP" or "program") reimburses healthcare providers for treatment of injured workers. Participation in the HPP by the healthcare providers is voluntary and established by contracts between the providers and the bureau. The OHA is a non-profit association that represents various Ohio hospitals and healthcare systems that are members of the HPP. Genesis is a non-profit corporation that operates several healthcare operations and is a member of the OHA.
{¶3} After various discussions with the providers, the bureau decided to institute a new fee plan ("plan") that decreased the reimbursement rates for HPP providers. The bureau gave providers official notification of the changes on September 1, 2005, and the changes were published in a provider bulletin and then incorporated into the Provider Billing and Reimbursement Manual ("provider manual"), both of which were distributed to the providers. The new plan was to be effective October 1, 2005.
{¶4} One day before the plan was to go into effect, on September 30, 2005, appellees filed a declaratory judgment action against the bureau, alleging that, in order to change the reimbursement rates, the bureau must promulgate a "rule" under R.C. 119, not merely implement the changes through the publication of provider bulletins and provider manuals. Appellees also requested injunctive relief to enjoin the bureau from reimbursing the providers at the reduced reimbursement rates.
{¶5} On December 8, 2005, the trial court issued a decision as to the request for declaratory judgment, finding that the bureau's fee plan must be promulgated as a rule pursuant to R.C. 119. On February 22, 2006, appellees filed a motion for permanent injunction. On May 8, 2006, the trial court issued a decision granting appellees' motion for a permanent injunction. The trial court journalized the decisions on May 16, 2006. The bureau appeals the judgment of the trial court, asserting the following three assignments of error:
Assignment of Error 1:
The Court below erred in granting declaratory and injunctive relief because under the doctrine of laches, OHA has sat on its rights too long to assert them now.
Assignment of Error 2: The Court below erred in granting declaratory relief because the Bureau is not required to promulgate a rule under Revised Code Chapter 119 every time it establishes or changes a provider reimbursement rate.
Assignment of Error 3:
The Court below erred in granting a permanent injunction because the Bureau's reimbursement rate causes no irreparable harm to OHA, and there is an adequate remedy.
{¶6} In its first assignment of error, the bureau argues that the trial court erred in granting declaratory and injunctive relief because, under the doctrine of laches, OHA has "sat" on its rights too long to assert them. Laches is an omission to assert a right for an unreasonable and unexplained length of time, under circumstances prejudicial to the adverse party. Baughman v. State Farm Mut. Auto. Ins. Co., 160 Ohio App.3d 642, 2005-Ohio-1948, at ¶10. To succeed utilizing the doctrine of laches, one must establish: (1) an unreasonable delay or lapse of time in asserting a right; (2) the absence of an excuse for such delay; (3) knowledge, actual or constructive, of the injury or wrong; and (4) prejudice to the other party. State ex rel. Cater v. N. Olmsted (1994), 69 Ohio St.3d 315, 325. Accordingly, a delay in asserting a right does not of itself constitute laches. Smith v. Smith (1959), 168 Ohio St. 447, at paragraph three of the syllabus. Instead, the proponent must demonstrate that he or she has been materially prejudiced by the unreasonable and unexplained delay of the person asserting the claim. Connin v. Bailey (1984), 15 Ohio St.3d 34, 35-36.
{¶7} Here, the bureau maintains that appellees have known, at least since the HPP program was implemented in 1997, that the bureau makes changes to the reimbursement rates by means of the provider manual and bulletins without promulgating a rule under R.C. 119, and they waited too long to raise the issue in the current action. However, we find laches does not preclude the present action. Before the equitable doctrine of laches may apply, it must be pled as an affirmative defense pursuant to Civ.R. 8(C). Civ.R. 8(C) requires a party to assert affirmative defenses in the first responsive pleading or amendment thereof. Thus, "[i]n civil cases, laches is an affirmative defense that a defendant must raise in his answer, or it is deemed waived." State v. Barnes (Dec. 30, 1999), Clermont App. No. CA99-06-057, citing Civ.R. 8(C). See, also, Mossa v. W. Credit Union, Inc. (1992), 84 Ohio App.3d 177, 180-181 (); Jazwa v. Alesci (Sept. 12, 1996), Cuyahoga App. No. 69857 (). In this case, appellees sought declaratory judgment and a permanent injunction in their original complaint, and the bureau failed to assert the equitable doctrine of laches as an affirmative defense in its October 20, 2005 answer to these claims or in a later amendment. Therefore, the bureau waived the defense of laches. Further, although the bureau did eventually assert laches in its memorandum in opposition to the motion for permanent injunction, filed March 21, 2006, such was insufficient to raise the matter, given a request for permanent injunction was pled in the original complaint, and the bureau failed to raise laches in its responsive answer to that claim. Therefore, the bureau waived laches as a defense and cannot raise it on appeal. The bureau's first assignment of error is overruled.
{¶8} The bureau argues in its second assignment of error that the trial court erred in granting declaratory judgment. Specifically, the bureau asserts it is not required to promulgate a rule under R.C. 119 every time it establishes or changes a provider reimbursement rate. In determining whether a party is entitled to declaratory relief, it must be demonstrated that: (1) a real controversy exists between the parties; (2) the controversy is justiciable in character; and (3) the situation requires speedy relief to preserve the rights of the parties. Burger Brewing Co. v. Liquor Control Comm. (1973), 34 Ohio St.2d 93, 97; see, also, Buckeye Quality Care Centers, Inc. v. Fletcher (1988), 48 Ohio App.3d 150, 154. In other words, it must be demonstrated that there is a controversy " 'between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.' " Peltz v. South Euclid (1967), 11 Ohio St.2d 128, 131, quoting Evers v. Dwyer (1958), 358 U.S. 202, 203, 79 S.Ct. 178. When the declaratory judgment action involves little or no disagreement with regard to the facts, the trial court's determination on questions of law are reviewed by this court de novo. Brown v. Scioto Cty. Bd. of Commrs. (1993), 87 Ohio App.3d 704, 711. A de novo analysis requires an independent review of the trial court's decision without any deference to the trial court's determination. Id.
{¶9} At issue in the present matter is whether the bureau was required to promulgate a rule under R.C. 119 to establish or change the reimbursement rates for provider hospitals. R.C. 119.02 provides:
Every agency authorized by law to adopt, amend, or rescind rules shall comply with the procedure prescribed in sections 119.01 to 119.13, inclusive, of the Revised Code, for the adoption, amendment, or rescission of rules. Unless otherwise specifically provided by law, the failure of any agency to comply with such procedure shall invalidate any rule or amendment adopted, or the rescission of any rule.
{¶10} R.C. 4121.441 requires the bureau to adopt "rules" under R.C. 119 in undertaking certain actions pursuant to its administration of the HPP. Specifically, R.C. 4121.441(A)(8) provides, in pertinent part:
(A) The administrator of workers' compensation, with the advice and consent of the workers' compensation oversight commission, shall adopt rules under Chapter 119. of the Revised Code for the health care partnership program administered by the bureau of workers' compensation to provide medical, surgical, nursing, drug, hospital, and rehabilitation services and supplies to an employee for an injury or occupational disease that is compensable under this chapter or Chapter 4123., 4127., or 4131. of the Revised Code.
The rules shall include,...
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