State ex rel. Manor Care, Inc. v. Bureau of Workers' Comp., 2019-1046

• Court: United States State Supreme Court of Ohio
• Writing for the Court: French, J.
• Citation: 168 N.E.3d 434,163 Ohio St.3d 87
• Parties: The STATE EX REL. MANOR CARE, INC., Appellant, v. BUREAU OF WORKERS' COMPENSATION et al., Appellees.
• Docket Number: No. 2019-1046,2019-1046
• Decision Date: 25 November 2020

163 Ohio St.3d 87
168 N.E.3d 434

The STATE EX REL. MANOR CARE, INC., Appellant,
v.
BUREAU OF WORKERS' COMPENSATION et al., Appellees.

No. 2019-1046

Supreme Court of Ohio.

Submitted August 4, 2020
Decided November 25, 2020

Kegler, Brown, Hill & Ritter, Co., L.P.A., David M. McCarty, Randall W. Mikes, and Jane K. Gleaves, Columbus, for appellant.

Dave Yost, Attorney General, and Douglas R. Unver, Assistant Attorney General, for appellee Bureau of Workers' Compensation.

Garvin & Hickey, L.L.C., Preston J. Garvin, and Michael J. Hickey, Columbus, urging reversal for amici curiae Ohio Chamber of Commerce and Ohio Self-Insurers Association.

French, J.

163 Ohio St.3d 87

{¶ 1} Appellant, Manor Care, Inc., a self-insured employer, made lump-sum payments under protest to two injured workers, in order to correct its long-term underpayment of their permanent-total-disability ("PTD") compensation. Manor Care then asked appellee Bureau of Workers' Compensation for reimbursement from the Disabled Workers' Relief Fund ("relief fund"), arguing that Manor Care's underpayment of PTD compensation should be offset by the bureau's corresponding overpayment of relief-fund benefits to the same employees, for which Manor Care had reimbursed the bureau as part of its annual assessments. The bureau denied the request. Manor Care sought a writ of mandamus ordering the bureau to reimburse it for the lump-sum PTD-compensation payments; the Tenth District denied the writ. Manor Care appealed and moved for oral argument. We affirm the Tenth District's judgment and deny the motion for oral argument.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Work Injuries and Benefit Awards

{¶ 2} After sustaining injuries while working for Manor Care, appellees Mozell Kelly and Katalin Palotay were each awarded PTD compensation in the mid-1990s. Self-insured employers like Manor Care pay PTD compensation directly to injured workers. R.C. 4123.46(B).

163 Ohio St.3d 88

{¶ 3} Kelly and Palotay were also awarded relief-fund benefits. The General Assembly created the relief fund in 1953 to supplement the monthly income of workers whose PTD-compensation rates, combined with the rates of any Social Security disability compensation, fall below the minimum set forth in R.C. 4123.413 (adjusted annually for inflation). State ex rel. Martin v. Connor , 9 Ohio St.3d 213, 459 N.E.2d 889 (1984) ; see also R.C. 4123.412 ; R.C. 4123.413. The relief fund is held by the treasurer of state and is separate from the state workers' compensation fund. R.C. 4123.412. The bureau pays benefits from the relief fund directly to all injured workers who participate in that fund, regardless of their employer's status as a self-insured or state-fund employer. R.C. 4123.412 ; R.C. 4123.411(C). How an employer contributes to the relief fund, however, does depend on its status: state-fund employers pay an annual assessment on their gross payroll, while the bureau bills

168 N.E.3d 436

each self-insured employer semiannually for all relief-fund payments made to that employer's relief-fund participants, dollar-for-dollar. R.C. 4123.411(B) and (C).

{¶ 4} Accordingly, Kelly and Palotay received PTD compensation directly from Manor Care, but they received relief-fund payments from the bureau. Manor Care then paid to the bureau, as part of its assessments, amounts equal to the relief-fund benefits Kelly and Palotay received. Each year, the bureau sent Kelly and Palotay, as well as Manor Care, an order setting forth the relief-fund benefits to which the participants were entitled, based on their PTD-compensation and Social Security disability-compensation rates. The orders stated that the injured worker or the employer could appeal within 14 days. Manor Care did not appeal any of the orders regarding Kelly or Palotay.

B. 2014 Audit

{¶ 5} In 2014, the bureau's Self-Insured Department conducted a compliance audit of Manor Care's PTD-compensation claims, and it determined that Manor Care had been underpaying Kelly's and Palotay's PTD compensation from the outset, because their initial PTD-compensation rates had been set too low. As a corollary, the bureau had, from the outset, been overpaying Kelly's and Palotay's relief-fund benefits. Manor Care asserts that the PTD-compensation underpayment equaled the relief-fund-benefit overpayment.

{¶ 6} The record does not demonstrate whether the Industrial Commission or Manor Care established Kelly's and Palotay's initial, incorrect PTD-compensation rates. The scant evidence on that question is conflicting: though the commission's 2015 Procedural Guide for Self-Insured Claims Administration states, "The [Industrial Commission] calculates the PTD declared rate in PTD claims determined prior to April 19, 1999," the commission's mid-1990s' orders awarding compensation to Kelly and Palotay do not set forth the rates.

163 Ohio St.3d 89

{¶ 7} In September 2014, the bureau notified Manor Care, by e-mail, of the PTD-compensation underpayments. Separately, it issued orders notifying Kelly and Palotay of the relief-fund-benefit overpayments and stating that the overpaid amounts would be recouped by withholding future cost-of-living increases from Kelly's and Palotay's relief-fund payments from the date the overpayment was determined.

{¶ 8} In January 2015, the bureau stated that it would revoke Manor Care's self-insured status unless Manor Care made lump-sum payments to Kelly and Palotay to make up for its underpayment of their PTD compensation. In support of its position, the bureau cited Ohio Adm.Code 4123-19-03(K)(7), which provides that to maintain the privilege of self-insurance, an employer must "pay all compensation as required by the workers' compensation laws of the state of Ohio." Manor Care made the lump-sum payments to Kelly and Palotay under protest, asserting that its reimbursement of the bureau for the overpaid relief-fund benefits offset its underpayment of PTD compensation.

C. Postaudit Administrative Proceedings

{¶ 9} Manor Care asked the commission to exercise continuing jurisdiction and determine its obligations. The commission held a hearing, at which Manor Care asked it to vacate the orders declaring the relief-fund-benefit overpayments, find Manor Care not liable for the PTD-compensation underpayments, and order the...