State ex rel. Johnston v. OHIO BUR. OF WORKERS'COMP.

Decision Date15 August 2001
Docket NumberNo. 99-2122.,99-2122.
Citation751 NE 2d 974,92 Ohio St.3d 463
CourtOhio Supreme Court

Koltak & Gibson, L.L.P., Ronald J. Koltak and Peter J. Gibson, for appellant.

Betty D. Montgomery, Attorney General, and Craigg E. Gould, Assistant Attorney General, for appellees.


On April 30, 1992, James Johnston, now deceased, received an injury in the course of, and arising out of, his employment with Trans-Fleet Enterprises, Inc., a State Fund employer. His workers' compensation claim was allowed for "sprain lumbar; lumbar disc displacement with myelopathy at L3-4 left & L5-S1 right." James received temporary total disability compensation from May 16, 1992 to November 29, 1994, and began receiving wage-loss compensation on September 7, 1996, at an average rate of approximately $395 per week.

On May 21, 1997, an "Application for Approval of Settlement Agreement," signed by James and his employer, was filed with the Ohio Bureau of Workers' Compensation ("bureau"), requesting that the bureau approve a final settlement of the entire claim in the lump-sum amount of $90,000. On January 18, 1998, while the application for settlement was still pending, James died of a myocardial infarction unrelated to his employment.

On January 21, 1998, James's daughter, Pam Falkner, notified the bureau of her father's death. Two days later, on January 23, 1998, the bureau notified James's counsel that it would approve a settlement in the amount of $50,000. In deciding on this amount, the bureau considered the value of prospective wage-loss benefits, an eventual permanent partial disability award, and the potential for permanent total disability compensation. On January 26, 1998, James's counsel, acting on the instructions of James's widow, appellant Judy Johnston, accepted the approved amount.

On January 27, 1998, the bureau notified James's counsel as follows:

"The application is denied—All parties do not agree with the settlement terms.

"Settlement application is abated by [injured worker's] death on 1-18-98."

On March 19, 1998, appellant filed a "First Report of an Injury, Occupational Disease or Death," requesting, "pursuant to R.C. 4123.60 * * *[,] payment of the settlement award that had been offered on January 23, 1998." By an order mailed July 11, 1998, a Staff Hearing Officer determined that the settlement "application was abated by claimant's death" and denied appellant's request.

On September 28, 1998, appellant filed a complaint in mandamus in the Court of Appeals for Franklin County seeking a writ directing appellees, James Conrad, Administrator of the bureau, and the Industrial Commission of Ohio ("commission"), to find that the settlement application was not abated by the death of James Johnston and to order that the claim be settled for the approved amount of $50,000. The court of appeals denied the writ, finding that "at the time of the decedent's death, which preceded any form of approval by the BWC, any and all action relating to claimant's settlement application abated under Ohio Adm.Code 4123-5-21(A)." In reaching its conclusion, the court of appeals was compelled to write:

"We additionally note that the present case does raise serious concerns regarding the advantage that accrues to the BWC [Bureau of Workers' Compensation] through sluggish processing of settlement applications, since sufficient delay could well lead to a significant number of claims abating due to the death of the claimant, with a corresponding decrease in settlement expenditures to the workers' compensation system. * * * Such a delay, in the present case, appears to have worked exactly the type of inequitable result contemplated in [State ex rel. Nossal v. Terex Div. of I.B.H. (1999), 86 Ohio St.3d 175, 712 N.E.2d 747]. Nonetheless, we find that no other statutory basis exists upon which to impose a time constraint upon the BWC for the processing of settlement applications [and that] we are without authority to amend any pertinent statute or administrative regulation in order to address what is an unequitable result."

Judge Tyack, dissenting, opined that "we need to engraft an exception onto the legal provisions which call for abatement of a workers' compensation claim. The exception I propose would nullify the abatement requirement in those circumstances where the BWC and/or the Industrial Commission fail to process an agreed application for settlement within a reasonable time frame. Our failure to engraft the exception here rewards the BWC for being inept at best and punishes the innocent family of a person who was seriously injured on the job."

The cause is now before this court pursuant to an appeal as of right.

The question presented for our determination is whether appellees abused their discretion in finding that the settlement application filed on May 21, 1997, was abated by the death of James Johnston on January 18, 1998. Specifically, we are asked to decide (1) whether Ohio Adm.Code 4123-5-21(A) applies to joint applications for approval of a State Fund settlement filed pursuant to R.C. 4123.65 and (2) whether the bureau's eight-month delay in processing decedent's settlement application warrants a dispensation of the rule that a claim abates if the injured employee dies before a formal administrative award is made.

Applicability of Ohio Adm.Code 4123-5-21(A) to Claims for Settlement

Appellant's first argument is that the abatement rule set forth in Ohio Adm.Code 4123-5-21(A) is limited to applications "filed by the claimant," and thus by definition "cannot apply to joint matters pending before either the Bureau or the Commission at the time of a claimant's death." Appellant contends that ever since the enactment of Am.Sub.H.B. No. 107, effective October 20, 1993 (145 Ohio Laws, Part II, 2990, 3173), R.C. 4123.65 has required employers and employees to file joint applications for settlement with the bureau, and that since the procedure for settling workers' compensation claims is governed solely by statute, abatement is inapplicable to settlement applications filed after October 20, 1993. In addition, appellant relies on Commission Policy Memo No. 0.7 and Estate of Orecny v. Ford Motor Co. (1996), 109 Ohio App.3d 462, 467, 672 N.E.2d 679, 682, for the proposition that the abatement regulation does not apply to the amended statute.

While these arguments present some initial interpretive appeal, our review of the legal history concerning the settlement and abatement of workers' compensation claims leads us to reject appellant's assessment of the current interplay between R.C. 4123.65 and Ohio Adm.Code 4123-5-21(A).

Agreements for final settlement of a workers' compensation claim were recognized as valid and enforceable even before express statutory authority therefor was provided in the Workers' Compensation Act. "The right to settle a claim * * * after it has accrued is incidental to and necessarily included in the right of the claimant to assert his claim * * *. Especially have such settlements been regarded as valid when approved by the Industrial Commission." State ex rel. Weinberger v. Indus. Comm. (1941), 139 Ohio St. 92, 96-97, 22 O.O. 59, 61, 38 N.E.2d 399, 401-402.

Likewise, the rule that unaccrued workers' compensation payments abate upon the death of the claimant predates any regulatory provision to this effect and reflects the basic principle that, unlike tort recovery, the right to receive future workers' compensation benefits is not inheritable. Thus, in Ballard v. Ohio Edison Co. (1938), 134 Ohio St. 104, 11 O.O. 541, 16 N.E.2d 203, at the syllabus, we held:

"When the dependent of a deceased employee enters into a contract of settlement under the supervision and approval of the Industrial Commission of Ohio, the administrator of the dependent is not entitled to recover from a self-insuring employer any installment of compensation that is unaccrued at the time of the dependent's death."

The General Assembly amended the Act in 1951 to provide expressly for the final settlement of a workers' compensation claim. 124 Ohio Laws 806, 823. That provision became R.C. 4123.65 when the Ohio Revised Code was enacted, effective October 1, 1953. Former R.C. 4123.65, as effective October 1, 1953, provided:

"Before any final settlement agreement is approved by the industrial commission, application therefor shall be made to the commission. Such application shall be signed by the claimant and shall clearly set forth the circumstances by reason of which the proposed settlement is deemed desirable and the nature of the controversy. Notice of the hearing of such application shall be given to the employee and his representative and the employer and his representative. Such application shall be heard by the members of the industrial commission or a majority thereof sitting en banc. No member may delegate his authority to hear and determine the matters raised by such application." (Emphasis added.)

The bureau promulgated Ohio Adm.Code 4123-5-21 in 1978, which provides:

"(A) When a claimant dies, action on any application filed by the claimant, and pending before the bureau or the industrial commission at the time of his death, is abated by claimant's death." (Emphasis added.)

In cases involving the application of Ohio Adm.Code 4123-5-21(A) to lump-sum settlements under former R.C. 4123.65, the entire lump sum was considered to accrue on the date the commission approved the settlement agreement. The injured worker's right to receive the entire lump-sum amount was held to be inheritable on this date, but not before. Thus, Ohio Adm.Code 4123-5-21(A) was held applicable to abate even a joint application filed under former R.C. 4123.65 where the claimant died prior to a ruling on the application by the commission, but held inapplicable where death occurred after the...

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