State ex rel. Manor Care, Inc. v. Bur. of Workers' Comp. ( 2019 )

[Cite as State ex rel. Manor Care, Inc. v. Bur. of Workers' Comp., 2019-Ohio-2578.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
State ex rel. Manor Care, Inc., :
Relator, :
No. 17AP-864
v. :
(REGULAR CALENDAR)
Ohio Bureau of Workers' :
Compensation et al.,
:
Respondents.
:
D E C I S I O N
Rendered on June 27, 2019
On brief: Kegler, Brown, Hill + Ritter Co., LPA, David M.
McCarty, Randall W. Mikes, and Katja E. Garvey, for relator.
On brief: Dave Yost, Attorney General, and Sherry M.
Phillips, for respondent Ohio Bureau of Workers'
Compensation.
IN MANDAMUS
ON OBJECTIONS TO THE MAGISTRATE'S DECISION
DORRIAN, J.
{¶ 1} Relator, Manor Care, Inc., filed this original action requesting a writ of
mandamus ordering respondent, Ohio Bureau of Workers' Compensation ("BWC"), to
reimburse or credit relator for disabled workers' relief fund ("DWRF") payments made by
relator.
{¶ 2} Pursuant to Civ.R. 53 and Loc.R. 13(M) of the Tenth District Court of Appeals,
this matter was referred to a magistrate who issued a decision, including findings of fact
and conclusions of law, which is appended hereto. The magistrate recommends this court
deny the request for a writ of mandamus.
No. 17AP-864 2
{¶ 3} Relator has filed the following two objections to the magistrate's decision:
I. THE MAGISTRATE'S FINDINGS OF FACT CONTAIN A
GLARING OMISSION WHICH TAINTS SUBSEQUENT
ANALYSIS.
II. MANOR CARE HAS A CLEAR LEGAL RIGHT TO THE
REQUESTED RELIEF IN MANDAMUS.
{¶ 4} As explained in the magistrate's decision, relator is a self-insured employer.
Two of relator's former employees suffered injuries in the course of their employment and
were ultimately awarded permanent total disability ("PTD") compensation. The orders
granting PTD compensation in each case did not set the rate of compensation to be paid to
each employee. Ultimately, because both former employees' PTD compensation rate was
lower than the relevant statutory threshold amount, they received DWRF payments from
BWC and relator reimbursed BWC for those DWRF payments. In 2014, BWC determined
that both former employees had been overpaid DWRF benefits because they were
underpaid PTD compensation. In 2015, BWC ordered relator to compensate the two former
employees in the amount of the underpaid PTD compensation. Relator ultimately paid this
compensation to both former employees under protest. Relator requested reimbursement
or a credit from BWC for the amount of overpaid DWRF compensation. BWC's Self-Insured
Review Panel ("SIRP") denied that request, holding that an underpayment of PTD
compensation may not be offset against an overpayment of DWRF benefits paid and
accepted in good faith. Relator filed an administrative appeal of the SIRP order and an
administrator's designee for BWC issued a decision upholding the SIRP order. Relator then
filed the present mandamus action.
{¶ 5} The magistrate concluded the administrator's designee did not abuse her
discretion in determining that relator should not receive reimbursement or a credit from
BWC for the DWRF payments made to the former employees. The magistrate found that
the SIRP and the administrator's designee did not abuse their discretion in placing some
degree of fault on relator for the underpaid PTD compensation.
{¶ 6} Relator argues in its first objection that the magistrate failed to refer to
evidence in the record suggesting that the Industrial Commission of Ohio ("commission"),
rather than relator, set the PTD compensation rate to be paid to the two former employees.
Relator asserts this omission taints the magistrate's analysis of the decisions by SIRP and
No. 17AP-864 3
the administrator's designee placing some of the fault for the underpayment of PTD
compensation on relator. Relator further argues in its second objection that it has a clear
legal right to the requested writ because it was not at fault for the underpayment of PTD
compensation to the two former employees.
{¶ 7} We acknowledge the record contains a copy of BWC's Procedural Guide for
Self-Insured Claims Administration, which indicates the commission calculates the PTD
compensation rate in claims determined prior to April 19, 1999. Although this suggests
relator may not have been responsible for setting the PTD compensation rate paid to each
of the former employees, as noted in the decision of the administrator's designee, relator
had access to the wage information used to set the PTD compensation rates.
{¶ 8} The Supreme Court of Ohio has held that BWC's ability to recoup excess
DWRF payments from an injured worker when those payments were made under a mistake
of fact depends on the circumstances. State ex rel. Martin v. Connor, 9 Ohio St.3d 213, 214
(1984). In Martin, the injured worker received PTD compensation and federal Social
Security Disability Benefits. When his social security benefits were reduced, the worker
became eligible for DWRF payments. After receiving DWRF payments for approximately
five years, the worker's social security benefits were increased and he was given a lump sum
payment that was determined to have been improperly withheld. BWC then sought to
recover overpayment of DWRF benefits, asserting that if the lump sum social security
benefits had been properly issued when he was entitled to them, he would have received
less DWRF benefits. BWC ultimately discontinued the worker's DWRF benefits and
reduced his PTD award to compensate for the alleged DWRF overpayment. Id. at 213. The
worker filed a mandamus action and the Supreme Court granted the requested writ of
mandamus, ordering BWC to continue full payment of PTD compensation and DWRF
benefits. The court found that because all parties believed the worker was entitled to DWRF
benefits at the time they were paid, BWC abused its discretion by trying to recover those
payments. Id. at 214 ("While [BWC] has the authority to recoup overpayments, that
authority is not unlimited. This court has reasoned that such authority does not extend to
payments made and accepted in the good faith belief that they were due.").
{¶ 9} Similarly, this court held that an employer failed to demonstrate a clear legal
right to reimbursement or a clear legal duty on BWC to pay reimbursement for DWRF
No. 17AP-864 4
benefits that were improperly paid to an injured worker who was not eligible for those
benefits. State ex rel. Lutheran Hosp. v. Buehrer, 10th Dist. No. 13AP-670, 2015-Ohio-380.
In Lutheran Hospital, an injured worker applied for and was awarded PTD compensation.
She was then notified that she would receive DWRF benefits. After a rehearing at the
employer's request, the worker's application for PTD compensation was denied. Despite the
ultimate denial of PTD compensation, the worker received DWRF benefits for nearly 20
years before BWC notified her the benefits would be terminated. Throughout the period
when the worker received DWRF benefits, BWC billed the self-insured employer for those
payments. Id. at ¶ 4. The employer then sought reimbursement from BWC for the DWRF
payments made to the injured worker. Id. at ¶ 27. BWC denied the request for
reimbursement and the employer sought a writ of mandamus from this court. Id. at ¶ 32-
33. We adopted the magistrate's decision recommending that the writ be denied because
both BWC and the employer operated under a mutual mistake of fact during the period
when BWC was paying DWRF benefits to the injured worker and the employer was
reimbursing BWC for those payments, and because the self-insured employer was in the
best position to correct that mistake. Id. at ¶ 52, 59. In overruling the employer's objections
to the magistrate's decision, this court found that the employer failed to present clear and
convincing evidence that it had a right to reimbursement or that the BWC had a duty to pay
reimbursement. Id. at ¶ 7.
{¶ 10} Assuming for purposes of analysis in the present case that the commission
initially set the PTD compensation rates, it appears that, similar to Lutheran Hospital, both
BWC and relator operated under a mutual mistake of fact during the relevant period
because both believed the PTD compensation and DWRF benefit rates were properly set
and calculated. As in Lutheran Hospital, relator was a self-insured employer and in the best
position to correct that mistake. Thus, consistent with our prior decision in Lutheran
Hospital, we find that relator has failed to demonstrate clear and convincing evidence that
it has a right to reimbursement or that BWC has a duty to pay reimbursement.
{¶ 11} Accordingly, relator's objections to the magistrate's decisions lack merit and
are overruled.
{¶ 12} Upon review of the magistrate's decision, an independent review of the
record, and due consideration of relator's objections, we find the magistrate has properly
No. 17AP-864 5
determined the pertinent facts and applied the appropriate law. We therefore overrule
relator's two objections to the magistrate's decision and adopt the magistrate's decision as
our own, including the findings of fact and conclusions of law contained therein.
Accordingly, the requested writ of mandamus is hereby denied.
Objections overruled;
writ of mandamus denied.
BROWN and LUPER SCHUSTER, JJ., concur.
No. 17AP-864 6
APPENDIX
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
The State ex rel. Manor Care, Inc., :
Relator, :
v. : No. 17AP-864
Bureau of Workers' Compensation, et al., : (REGULAR CALENDAR)
Respondents. :
MAGISTRATE'S DECISION
Rendered on September 20, 2018
Kegler, Brown, Hill + Ritter Co, LPA, David M. McCarty,
Randall W. Mikes, and Katja E. Garvey, for relator.
Michael DeWine, Attorney General, and Patsy Thomas, for
respondent Bureau of Workers' Compensation.
IN MANDAMUS
{¶ 13} In this original action, relator, Manor Care, Inc., requests a writ of mandamus
ordering respondent Ohio Bureau of Workers' Compensation ("respondent" or "bureau")
to vacate the April 6, 2016 decision of the administrator's designee that affirms the
September 16, 2015 order of the bureau's Self-Insured Review Panel ("SIRP") that denied
relator's request for reimbursement from the disabled workers' relief fund ("DWRF") for
relator's payments to two injured workers for underpayments of permanent total disability
("PTD") compensation.
No. 17AP-864 7
Findings of Fact:
{¶ 14} 1. Following a February 17, 1994 hearing, two commission staff hearing
officer's ("SHO") awarded PTD compensation to Mozell Kelly in her industrial claim in
which relator is the self-insured employer. The SHO's order does not set the rate of PTD
compensation to be paid to Kelly by relator.
{¶ 15} 2. Following a September 21, 1995 hearing, two SHOs awarded PTD
compensation to Katalin Palotay in her three industrial claims in which relator is the self-
insured employer. The SHO's order does not set the rate of PTD compensation to be paid
to Palotay by the self-insured employer.
{¶ 16} 3. Because their PTD rates were lower than the statutory mandated
minimum rate, Kelly and Palotay received DWRF benefits from the bureau.
{¶ 17} 4. In 2014, the bureau conducted audits of Kelly and Palotay's industrial
claims and particularly the payments of PTD compensation and DWRF benefits they had
received.
{¶ 18} 5. On September 25, 2014, the bureau mailed an order regarding Palotay's
industrial claim. The order found that Palotay had been overpaid $32,627.36 in DWRF
benefits because of an underpayment of PTD compensation. The order further explained:
"DWRF overpayments are recouped by withholding the cost of living amounts from the
date the overpayment is determined."
{¶ 19} 6. On September 30, 2014, the bureau mailed an order regarding Kelly's
industrial claim. The order found that Kelly had been overpaid $46,535.58 in DWRF
benefits because of an underpayment of PTD compensation. The order further explained:
"DWRF overpayments are recouped by withholding the cost of living amounts from the
date the overpayment is determined."
{¶ 20} 7. On January 28, 2015, relator filed a motion in Kelly's claim, stating:
Now comes the employer and hereby requests that the
Industrial Commission exercise its continuing jurisdiction to
determine what obligation, if any, Manor Care has to pay
allegedly underpaid permanent total disability compensation
benefits to the claimant. The BWC has not issued a formal
order or formal audit findings demanding that Manor Care
make such payment. Documentation, to be submitted, will
establish that the claimant received all the compensation to
which she was entitled and the Bureau already has been fully
No. 17AP-864 8
reimbursed for all payment of DWRF benefits it has paid. The
Commission should exercise its continuing jurisdiction to find
that neither the BWC nor the claimant are entitled to any
additional compensation/benefits.
A similar motion was filed in Palotay's claims.
{¶ 21} 8. Following an April 30, 2015 hearing, an SHO issued an order in Kelly's
industrial claim. The SHO's order of April 30, 2015 rules on relator's January 28, 2015
motion, and states:
The Staff Hearing Officer finds that the Bureau of Workers'
Compensation order of 09/30/2014 was the result of a
mistake of fact and law, in that 1) there is no evidence that
demonstrates that the Self-Insuring Employer's prior
payment of permanent total disability compensation was at a
rate calculated by the Self-Insuring Employer herein and not
at a rate determined and ordered by the Industrial
Commission (see, the Bureau of Workers' Compensation's
Procedural Guide for Self-Insured Claims Administration)
and 2) a mistake of fact is evident in that the Bureau of
Workers' Compensation order presumes that the Self-
Insuring Employer herein independently elected to pay
permanent total disability compensation at a rate now
determined to be incorrect.
The Staff Hearing Officer grants the Employer's C-86 Motion
request for the exercise of continuing jurisdiction to the
following extent. The Bureau of Workers' Compensation order
of 09/30/2014 is vacated.
The Staff Hearing Officer has no authority to order that the
Bureau of Workers' Compensation reimburse the Self-
Insuring Employer for the lump sum amount of permanent
total disability compensation it has paid relative to the Bureau
of Workers' Compensation's 09/30/2014 order.
A similar order was issued in Palotay's claims.
{¶ 22} 9. On June 22, 2015, relator moved for commission reconsideration of the
SHO's order of April 30, 2015.
{¶ 23} 10. By letter dated June 26, 2015, relator withdrew its June 22, 2015 motion
for reconsideration.
{¶ 24} 11. On July 8, 2015, the three-member commission mailed an order
dismissing, at relator's request, the motion for reconsideration.
No. 17AP-864 9
{¶ 25} 12. Earlier, by letter dated January 22, 2015, David Sievert, Supervisor,
External Auditing of the bureau's self-insured department informed relator:
This notice is in follow up to our conversation on January 15,
2015, during which we discussed the underpayment of
Permanent Total Disability (PTD) benefits for several claims
that were identified during a compliance audit by the Self-
Insured Department. As was indicated at that time, it is the
position of the Self-Insured Department that the full
underpayment of PTD benefits related to claims 946901-22,
L21469-22, 926966-22 (Katalin Palotay) must be paid by
Friday January 23, 2015.
Confirmation of these payments must also be provided to the
BWC Self-Insured Department by January 30, 2013 [sic].
Failure to comply [with] this requirement could impact the
privilege of Manor Care, Inc.'s self-insured status. If it is
determined that the PTD underpayments have not been
addressed, as requested, the Self-Insured Department will
make a referral to the Self-Insured Review Panel for non-
renewal of the self-insured policy and to the Self Insured
Employer's Evaluation Board for further consideration of this
matter.
{¶ 26} 13. By letter dated January 23, 2015, relator appealed from the decision of
the bureau's self-insured department.
{¶ 27} 14. By letter dated January 28, 2015, Paul Flowers, director of the bureau's
self-insured department, informed relator:
I regret to inform you that the Ohio Bureau of Workers'
Compensation (BWC) cannot renew your self-insurance
policy, effective March 1, 2015, as the minimum criteria
established in the self-insuring rules have not been met.
The employer is in violation of Ohio Administrative Code
4123-19-03(K)(7), for failure to pay all compensation as
required of a self-insuring employer by the workers'
compensation laws. In September 2014, the BWC Self-
Insured Department performed an audit on the Permanent
Total Disability (PTD) claims of the employer as permitted by
Ohio Administrative Code 4123-19-10(A)(1). The findings of
the audit revealed that the employer had underpaid PTD
benefits for several claims associated with injured workers
Katalin Palotay (claims 946901-22, L21469-22, 926966-22)
and Mozel Kelly (claim 952061-22). The finding of this
No. 17AP-864 10
underpayment of PTD benefits was based on Ohio Revised
Code 4123.58(B).
{¶ 28} 15. By letter dated February 4, 2015, relator's counsel informed Director
Flowers:
As you know, we represent the self-insured employer, Manor
Care, in connection with its workers' compensation program.
Manor Care hereby appeals your January 28, 2015 letter
denying renewal of the company's self-insurance policy
effective March 1, 2015. Manor Care denies that it is in
violation of Ohio Administrative Code §4123-19-03(K)(7).
Manor Care further denies that it has underpaid any benefits
to which the referenced claimants (Katalin Palotay and Mozell
Kelly) were entitled and/or that the Bureau was not properly
and fully reimbursed for any payments so made. Please be
advised that, under protest and with full reservation of rights,
Manor Care has processed the disputed amounts for payment,
and we expect that the checks will be mailed to the claimants
by the end of this week. Proof of payment will be provided.
{¶ 29} 16. By letter dated February 6, 2015, relator's counsel informed Kelly:
Our firm represents your former employer, Manor Care.
Enclosed is 1 check totaling $47,058.40. This represents the
amount the Bureau of Workers' Compensation (BWC) has
directed Manor Care to pay you. BWC conducted an audit in
September 2014 and determined that your Permanent Total
Disability (PTD) rate should have been set higher. Manor Care
is paying this amount under protest and believes you have
received the correct total amount of weekly compensation at
all times since you were declared permanently and totally
disabled in 1995. Due to an apparent bookkeeping error, you
previously received too little PTD compensation but, at the
same time, you received too much Disabled Workers' Relief
Fund (DWRF) compensation. The amount of underpaid PTD
compensation exactly equals the amount of overpaid DWRF
compensation. Despite the fact that the total amount due has
been paid, the BWC has commanded Manor Care to send you
this check.
{¶ 30} 17. Also by letter dated February 6, 2015, relator's counsel informed Palotay:
Our firm represents your former employer, Manor Care.
Enclosed are 3 checks totaling $36,872.74. This represents
the amount the Bureau of Workers' Compensation (BWC) has
directed Manor Care to pay you. BWC conducted an audit in
No. 17AP-864 11
September 2014 and determined that your Permanent Total
Disability (PTD) rate should have been set higher. Manor Care
is paying this amount under protest and believes you have
received the correct total amount of weekly compensation at
all times since you were declared permanently and totally
disabled in 1993. Due to an apparent bookkeeping error, you
previously received too little PTD compensation but, at the
same time, you received too much Disabled Workers' Relief
Fund (DWRF) compensation. The amount of underpaid PTD
compensation exactly equals the amount of overpaid DWRF
compensation. Despite the fact that the total amount due has
been paid, the BWC has commanded Manor Care to send you
these checks.
{¶ 31} 18. Following a September 16, 2015 conference (or hearing) a three-member
SIRP panel mailed an order on January 15, 2016, stating:
The issue presented concerned the employer's appeal of the
denial of its request for reimbursement or a credit from BWC
for amounts paid in claims for two injured workers.
Specifically, the employer is requesting $78,897.34 for
underpaid permanent total disability ("PTD") compensation
in claims for Katolin [sic] Palotay (926966-22, 946901-22,
L21469-22) and for Mozell Kelly (942061-22).
The statement of facts prepared by the Self-Insured
Department states that in August of 2014, during a BWC audit
of the employer's self-insured claim files, it was determined
that PTD compensation was underpaid in the four claims
referenced above from approximately 1992 to the time of the
audit. The employer corrected the PTD rates going forward,
but refused to pay underpaid PTD compensation, arguing that
Disabled Workers' Relief Fund ("DWRF") benefits were
overpaid over the same time period, and should be offset
against the underpaid PTD. The Self-Insured Department
required the self-insuring employer to pay underpaid PTD
compensation directly to the injured workers. In the
meantime, BWC issued DWRF overpayment orders in the
four claims, as DWRF was paid based on incorrect PTD rates
reported to BWC by the self-insuring employer. The DWRF
overpayment orders were subsequently vacated by a staff
hearing officer ("SHO") of the Industrial Commission ("IC").
The employer initially appealed the SHO orders, and then
withdrew the appeals. The employer has requested
reimbursement or a credit from BWC in the amount of the
underpaid PTD compensation, which were both denied by the
Self-Insured Department, resulting in this appeal.
No. 17AP-864 12
At the conference, the employer's representatives
acknowledged that the PTD compensation had been
underpaid for years, but argued that the injured workers
received DWRF benefits over this timeframe, and therefore
received everything to which they were entitled. The
representatives stated that the employer reimbursed BWC for
all DWRF benefits paid in the claims, and that the overpaid
DWRF benefits should be offset against the underpaid PTD
compensation. The representatives further argued that the
Self-Insured Department should not have required the
employer to pay the underpaid PTD compensation directly to
the injured workers. The employer regarded this as an
accounting ledger issue, where perhaps the wrong amounts
were paid for PTD and DWRF, in that too little PTD was paid,
and too much DWRF was paid, but the injured workers
suffered "no harm, no foul." The employer also expressed its
willingness to pay self-insured assessments on the underpaid
PTD compensation. The Panel was advised that since the Self-
Insured Department required the employer to pay the
underpaid PTD compensation, the injured workers are not
overpaid, and BWC should either reimburse the employer for
the underpaid PTD compensation, or make the employer
whole by granting it a credit.
Ohio Revised Code Section 4123.46(B) requires self-insuring
employers to provide, at a minimum, the same level of
medical care, compensation, and benefits that would be
provided to injured workers employed by a participant in the
state insurance fund. Ohio Revised Code Section 4123.35(G)
permits BWC to audit and monitor self-insured workers'
compensation programs to ensure employers are in full
compliance with all requirements. The statute is
supplemented by Ohio Administrative Code Rules 4123-19-
03(I), 4123-19-08(C), 4123-19-09(C)(2), and 4123-19-10, the
latter of which permits audits to determine if a self-insuring
employer is in full compliance with all requirements,
including the proper payment of compensation or benefits.
The Disabled Workers' Relief Fund was established in 1953 to
provide supplemental benefits to workers who have been
granted PTD awards with low benefit rates. Ohio Revised
Code Section 4123.411(C) provides the following:
For a self-insuring employer, the bureau of workers'
compensation shall pay to employees who are participants
regardless of the date of injury, any amounts due the
participants under section 4123.414 [4123.41.4] of the Revised
No. 17AP-864 13
Code and shall bill the self-insuring employer, semiannually,
for all amounts paid to a participant.
The statute is supplemented by Ohio Administrative Code
Rule 4123-17-29(B)(1), which provides the following:
Each self-insuring employer shall reimburse the bureau
for DWRF payments made in claims in which it is the
employer of record, without regard to the date the
employer was granted the privilege to pay compensation
directly, for all DWRF payments made on or after August 22,
1986. (Emphasis added.)
Prior to 1986, DWRF benefits were funded by employer
payroll assessments charged to both state fund and self-
insuring employers. In 1986, the General Assembly changed
the DWRF funding mechanism for self-insuring employers,
and BWC began billing each self-insuring employer of record
for the full amount of DWRF payments made after August 22,
1986, without regard to the date of injury, in accordance with
the provisions referenced above. The change in the funding
mechanism was upheld by the Ohio Supreme Court in the case
of Wean Inc. v. Industrial Commission of Ohio (1990), 52
Ohio St.3d 266. In that case, the Court stated that "self-
insured employers are currently responsible to reimburse the
bureau for all past, present and future employees who are
eligible for the DWRF." Id. at 269.
BWC's right to be reimbursed by self-insuring employers for
DWRF benefits was also upheld in the case of Goodyear Tire
& Rubber Co. v. Ohio Bureau of Workers' Compensation,
2000 WL 192364 (Ohio App. 10th Dist.), in which the Court
found that a "self-insured employer's obligation for
reimbursement arises at the time disbursements are made,
rather than at the time the workers' right to receive them
accrues under the other pertinent DWRF statutory sections."
Id. at 5. In that case, self-insuring employers challenged
invoices to reimburse BWC for lump sum DWRF benefits paid
to claimants whose DWRF eligibility was not determined until
substantial arrearages had accrued. The court determined
that the obligation for a self-insuring employer to reimburse
BWC for DWRF benefits arises at the time BWC pays the
DWRF benefits, stating this is the "current responsibility"
discussed in the Wean case, which refers to "all current DWRF
outlays by the BWC regardless of the date of injury in relation
to the date the employer became self-insured." Id. at 4.
No. 17AP-864 14
The Panel has now had an opportunity to review all of the
information provided by the employer in support of this
appeal, and notes the following. During a 2014 audit of the
employer's self-insured workers' compensation program, the
BWC auditor determined that the employer had paid PTD
compensation to two injured workers at less than the
statutory rate. Beginning in 1992, Ms. Palotay was paid
$156.15 per week in PTD compensation when the correct rate
was $188.34 per week. Beginning in 1993, Ms. Kelly was paid
$132.81 per week in PTD compensation, when the correct rate
was $175.12 per week. As part of the audit process, the
employer was instructed to pay all underpaid PTD
compensation to the injured workers, and to correct the PTD
rate for future compensation. The underpaid PTD
compensation will be included on the employer's 2015 Report
of Paid Compensation, upon which self-insured assessments
are calculated.
During these timeframes, BWC paid DWRF benefits in good
faith, based on the incorrect PTD rates reported by the self-
insuring employer, and these benefits were accepted in good
faith by the injured workers. After the audit, BWC issued
DWRF overpayment orders in these claims, which were
subsequently vacated by the IC. As a result, the overpaid
DWRF benefits may not be collected from future DWRF cost
of living increases granted to the injured workers. The
employer then requested reimbursement from BWC for the
underpaid PTD compensation that it was required to pay to
the injured workers following the audit.
As discussed above, DWRF provides supplemental benefits to
injured workers with low PTD rates, and it is separate from
the state insurance fund. This employer has been granted the
privilege of operating a self-insured workers' compensation
program, and is therefore required to provide the same level
of PTD compensation that would be paid to an injured worker
employed by a participant in the state insurance fund. These
injured workers were also eligible for DWRF benefits. In
accordance with the statutory scheme, BWC pays these
supplemental DWRF benefits directly to eligible injured
workers, and self-insuring employers are obligated to
reimburse BWC for these amounts. When an audit
determined that the wrong PTD compensation was paid, the
self-insuring employer was required to pay the correct
amount. This part of the risk placed on those granted the
privilege of operating as a self-insuring employer, and the fact
that these mistakes impacted the payment of DWRF benefits
No. 17AP-864 15
does not change the relationship between the employer and
BWC into one where BWC insures the employer against its
own mistakes.
The Panel therefore finds that the Self-Insured Department
was authorized to conduct its audit of these claims, and was
further authorized to instruct the self-insuring employer to
pay the underpaid PTD compensation, and to correct the PTD
rate for future compensation. A self-insuring employer's
obligation to pay PTD compensation to injured workers is
completely separate from the obligation to reimburse BWC for
DWRF benefits in a claim. An underpayment of PTD
compensation owed to an injured worker may not be offset
against an overpayment in DWRF benefits paid and accepted
in good faith. Further, BWC is under no obligation to insure
the self-insuring employer from the consequences of its own
mistakes. The Panel finds that it was appropriate for the Self-
Insured Department to deny the employer's request for
reimbursement or a credit for underpaid PTD compensation,
and the employer's appeal is denied.
(Emphasis sic.)
{¶ 32} 19. Relator administratively appealed the September 16, 2015 SIRP order to
the administrator's designee.
{¶ 33} 20. Following a hearing, the administrator's designee issued a decision dated
April 6, 2016 that upholds the September 16, 2015 SIRP order. The April 6, 2016 decision
of the administrator's designee states:
Pursuant to Ohio Administrative Code Rule 4123-19-14, the
Administrator's Designee hereby undertakes consideration of
the employer's appeal of the Self-Insured Review Panel order
from January 15, 2016. The issue presented concerns the
employer's request to be reimbursed or to be provided a credit
against future Disabled Workers' Relief Fund ("DWRF")
invoices in the amount of $78,897.34 for underpaid
permanent total disability ("PTD") compensation.
The order of the Self-Insured Review Panel contains a detailed
discussion of the proceedings, which the Administrator's
Designee adopts with additional findings.
In August of 2014, the Self-Insured Department conducted an
audit of the employer's self-insured claim files. During the
audit, it was determined that PTD compensation was
underpaid in claims for Katolin [sic] Palotay (926966-22,
No. 17AP-864 16
946901-22, L21469-22) and for Mozell Kelly (952061-22),
from 1992 to the time of the audit. While the employer
corrected the PTD payment rate going forward, it refused to
pay the underpaid PTD compensation. Instead, the employer
argued that DWRF benefits were overpaid during the same
time period, and those payments should be offset against the
underpaid PTD. The Self-Insured Department required the
employer to pay the underpaid PTD compensation directly to
the injured workers, and the employer did make those
payments.
At the same time, BWC issued DWRF overpayment orders in
the four claims, given that the DWRF payments were based
upon incorrect PTD rates reported to BWC by the self-
insuring employer. These orders were overturned by a Staff
Hearing Officer ("SHO") of the Industrial Commission ("IC"),
by orders dated June 3, 2015. Although the employer initially
appealed these orders, the appeals were later withdrawn. The
employer then requested reimbursement or a credit in the
amount of the underpaid PTD compensation, which was
denied by the Self-Insured Department. This denial resulted
in the appeal to the Self-Insured Review Panel, which also
denied the request.
In its letter dated February 3, 2016, the employer sets forth
three items for consideration. Initially, the employer
comments that while the IC did not have jurisdiction to
compel BWC to reimburse the employer, "certainly the Panel
has such authority." The Panel did not determine in its order
that it had no authority to grant the requested relief. The order
merely states that the denial of relief by the Self-Insured
Department was appropriate.
Secondly, the employer states "the Order at least implies that
Manor Care contest the notion that it must reimburse the
Bureau dollar-for-dollar for DWRF payments and/or that it
never made those reimbursements." While there is a lengthy
discussion of the underpinnings of the DWRF statute and
rule, including case law interpretation, this relates to the
general obligation of all self-insuring employers to reimburse
BWC for DWRF payments. There is no reference in the order,
explicit or implicit, lending itself to the above interpretation
set forth by the employer.
The crux of the appeal is that BWC made "numerous and
repeated mistakes" that led to the employer being harmed,
citing various BWC and IC policies. Initially, there is a general
No. 17AP-864 17
reference to a BWC guide for self-insuring employers, which
states that prior to April 1999, the Industrial Commission
calculated the PTD rate. However, the actual IC orders
granting PTD to these two injured workers do not contain any
PTD rate calculations. There is no actual information in the
evidence presented indicating how the PTD rates were set, or
what entity set those rates.
What is known is that the employer would have had access to
the wage information used to set the PTD compensation.
Although the employer emphasizes that BWC did not audit
the PTD compensation for a number of years, the Panel's
order points out that the DWRF overpayments were "based on
the incorrect PTD rates reported by the self-insuring
employer." When the error was discovered, BWC issued
overpayment orders in these claims so that it could avail itself
of the opportunity to collect the overpayment from future
increases in DWRF benefits. The IC denied the motions, but
the SHO did reiterate in its findings that there was no
evidence as to how the initial PTD rate was set, and that the
employer paid PTD compensation at an incorrect rate.
Additionally, the IC orders of June 3, 2015, also state that
BWC sent annual letters to the employer documenting the
DWRF rate calculation, the rate of payment, and notice of an
opportunity to appeal if the employer disagreed with those
findings. No appeal was ever taken by the employer.
The Panel's order sets out in great detail the responsibilities
of a self-insuring employer with respect to payment of
compensation and benefits, as well as the requirement to
reimburse BWC for DWRF benefits paid. This is also reflected
in the language of the SHO orders dated June 3, 2015, as
follows:
"Payment of permanent total disability, in the case of a Self-
Insured employer, originates with and issues from that Self-
Insured employer. Disable workers' relief fund benefits, not
considered to be 'compensation', are issued by the Bureau of
Workers' Compensation at a rate dependent upon the
permanent total disability compensation rate paid by the Self-
Insuring employer."
DWRF is a separate fund created by statute for a specific
purpose, to provide supplemental benefits to injured workers
with low PTD rates of compensation. The employer's
obligation to reimburse BWC for DWRF benefits is separate
and distinct from its obligation to pay injured workers their
No. 17AP-864 18
awarded compensation. DWRF cannot be used to "offset" an
incorrect payment of PTD, which is the relief requested by the
employer.
In considering this appeal, the Administrator's Designee has
reviewed all of the material filed by the employer, whether or
not they have been specifically referred to in this order.
For these reasons, the Administrator's Designee upholds the
order of the Self-Insured Review Panel. The employer's appeal
is denied.
{¶ 34} 21. On December 7, 2017, relator, Manor Care, Inc., filed this mandamus
action.
Conclusions of Law:
{¶ 35} The main issue is whether the administrator's designee abused her discretion
in determining that relator shall not be reimbursed from the DWRF fund for its February
2015 payments to injured workers Kelly and Palotay for the PTD underpayments.
{¶ 36} Finding no abuse of discretion it is the magistrate's decision that this court
deny relator's request for a writ of mandamus, as more fully explained below.
DWRF – Pertinent Statutes and Case Law
{¶ 37} R.C. 4123.411through 4123.419 sets forth the statutory framework regarding
the DWRF fund.
{¶ 38} R.C. 4123.411(C) sets forth a funding mechanism with respect to self-insured
employers:
For a self-insuring employer, the bureau of workers'
compensation shall pay to employees who are participants
regardless of the date of injury, any amounts due to the
participants under section 4123.414of the Revised Code and
shall bill the self-insuring employer, semiannually, for all
amounts paid to a participant.
{¶ 39} R.C. 4123.412 creates DWRF as a fund separate from the state insurance
fund. Although the state treasurer has custody of the fund, disbursements from the fund
are made by the bureau.
{¶ 40} R.C. 4123.413 defines participant eligibility:
To be eligible to participate in said fund, a participant must be
permanently and totally disabled and be receiving workers'
No. 17AP-864 19
compensation payments, the total of which, when combined
with disability benefits received pursuant to The Social
Security Act is less than three hundred forty-two dollars per
month adjusted annually as provided in division (B) of section
4123.62of the Revised Code.
{¶ 41} R.C. 4123.414establishes the amount of payments to eligible DWRF
participants:
Each person determined eligible, pursuant to section
4123.413of the Revised Code, to participate in the disabled
workers' relief fund is entitled to receive payments, without
application, from the fund of a monthly amount equal to the
lesser of the difference between three hundred forty-two
dollars, adjusted annually pursuant to division (B) of section
4123.62of the Revised Code, and:
(1) The amount he is receiving per month as the disability
monthly benefits award pursuant to The Social Security Act;
or
(2) The amount he is receiving monthly under the workers'
compensation laws for permanent and total disability. * * *
Such payments shall be made monthly during the period in
which such participant is permanently and totally disabled.
{¶ 42} R.C. 4123.416provides in part:
The administrator of workers' compensation shall promptly
require of each employer who has elected to pay
compensation direct under the provisions of section
4123.35of the Revised Code a verified list of the names and
addresses of all persons to whom the employer is paying
workers' compensation on account of permanent and total
disability and the evidence respecting such persons as the
administrator reasonably deems necessary to determine the
eligibility of any such person to participate in the disabled
workers' relief fund.
{¶ 43} Supplementing the statute, Ohio Adm.Code 4123-17-29(B) provides:
(1) Each self-insuring employer shall reimburse the bureau for
DWRF payments made in claims in which it is the employer
of record, without regard to the date the employer was granted
the privilege to pay compensation directly, for all DWRF
payments made on or after August 22, 1986.
No. 17AP-864 20
(2) Self-insuring employers shall be billed on a semi-annual
basis for the DWRF payments made pursuant to this rule.
{¶ 44} In Wean Inc. v. Indus. Comm., 52 Ohio St.3d 266 (1990), the Supreme Court
of Ohio had occasion to summarize the statutory history of DWRF. The court states:
The Disabled Workers' Relief Fund ("DWRF") was created in
1953 by the General Assembly to provide a subsidy to
qualifying recipients of workers' compensation. To qualify, an
employee, pursuant to R.C. 4123.412through 4123.414, must
be permanently and totally disabled as a result of occupational
injury or disease and whose workers' compensation benefits,
when combined with Social Security Act disability payments,
fall below a statutorily mandated amount.
From 1953 to 1959, DWRF generated its funds from the state's
general revenues. In 1959, the General Assembly, pursuant to
R.C. 4123.411, altered the plan of financing the program and
provided for an employer payroll assessment. R.C.
4123.411provided, in its original form, that appellant
Industrial Commission of Ohio ("commission") levy an
assessment against all amenable employers in January of each
year and that the rate was not to exceed three cents per
hundred dollars of payroll. The commission's authority to
maintain and administer the DWRF is derived from Section
35, Article II of the Ohio Constitution.
Since 1959, R.C. 4123.411has been amended on numerous
occasions. For instance, in 1975, the statute was amended
increasing the employer payroll assessment from a maximum
of three cents to five cents per one hundred dollars of payroll.
When assessments were found to be insufficient, investment
income from the State Insurance Fund was provided, a
funding procedure approved by this court in Thompson v.
Indus. Comm. (1982), 1 Ohio St. 3d 244, 1 OBR 265, 438 N.E.
2d 1167.
In 1980, the assessment was again increased to a minimum of
five cents but not to exceed ten cents per one hundred dollars
of payroll. This assessment was to be apportioned among four
classes of employers: (1) private fund, (2) counties and taxing
districts, (3) the state, and (4) self-insurers.
In 1986, the General Assembly decided once again to change
the funding plan. Effective August 22, 1986, R.C. 4123.411(A)
No. 17AP-864 21
was amended to remove self-insured employers as one of the
four classes established in 1980. In addition, R.C. 4123.411(C)
provided that self-insured employers shall be liable for the full
amount of DWRF payments to qualified employees
"regardless of the date of injury." The DWRF payment is made
by appellant Ohio Bureau of Workers' Compensation
("bureau") to the qualifying employee, after which the bureau
collects the payment from the self-insured employers.
Id. at 266.
Relator's Argument
{¶ 45} It is undisputed that relator, as a self-insured employer, underpaid PTD
compensation to injured workers Palotay and Kelly beginning with the inception of the PTD
awards in 1994 and 1995 until the 2014 audit disclosed the underpayments. Upon being
informed of the underpayments, relator corrected the PTD compensation going forward,
but refused to correct the PTD compensation for the period prior to that.
{¶ 46} Relator argues that neither the bureau nor the injured workers suffered
damage from the underpayments because the bureau's DWRF payments covered the
underpayments and relator has reimbursed the bureau on receiving the bureau's DWRF
bills. Relator also points out that relator's payments to the injured workers to correct the
PTD underpayments has created a windfall in DWRF benefits to the injured workers.
The Bureau's Argument
{¶ 47} The position of the administrator's designee and SIRP is that, as a self-
insured employer, it is obligated by statute and rule to pay the correct amount of PTD
compensation regardless that the underpayment correction causes a DWRF overpayment.
{¶ 48} In reaching this position, SIRP explained:
A self-insuring employer's obligation to pay PTD
compensation to injured workers is completely separate from
the obligation to reimburse BWC for DWRF benefits in a
claim. An underpayment of PTD compensation owed to an
injured worker may not be offset against an overpayment in
DWRF benefits paid and accepted in good faith. Further, BWC
is under no obligation to insure the self-insuring employer
from the consequences of its own mistakes.
No. 17AP-864 22
Analysis
{¶ 49} Clearly, SIRP's position is premised, at least in part, on a finding that the
underpayment of PTD compensation was the result of relator's "own mistakes." The
administrator's designee concurs in the SIRP finding when she states "[w]hat is known is
that the employer would have had access to the wage information used to set the PTD
compensation." Thus, both SIRP and the administrator designee place some fault on
relator in reaching their decisions to deny relator's appeal.
{¶ 50} Based on the evidence before SIRP and the administrator's designee, this
magistrate cannot find an abuse of discretion with regard to the element of fault relied on
by SIRP and the administrator's designee. See State ex rel. Lutheran Hosp. v. Buehrer,
10th Dist. No. 13AP-670, 2015-Ohio-380.
{¶ 51} "To be entitled to a writ of mandamus, a relator must carry the burden of
establishing that he or she has a clear legal right to the relief sought, that the respondent
has a clear legal duty to perform the requested act, and that the relator has no plain and
adequate remedy in the ordinary course of law." State ex rel. Van Gundy v. Indus. Comm.,
111 Ohio St.3d 395, 2006-Ohio-5854, ¶ 13.
{¶ 52} "[T]he appropriate standard of proof in mandamus cases is proof by clear and
convincing evidence." State ex rel. Doner v. Zody, 130 Ohio St.3d 446, 2011-Ohio-6117,
¶ 55, citing State ex rel. Pressley v. Indus. Comm., 11 Ohio St.2d 141, 161 (1967).
{¶ 53} Moreover, "[i]t is axiomatic that in mandamus proceedings, the creation of
the legal duty that a relator seeks to enforce is the distinct function of the legislative branch
of government, and courts are not authorized to create the legal duty enforceable in
mandamus." State ex rel. Pipoly v. State Teachers Retirement Sys., 95 Ohio St.3d 327,
2002-Ohio-2219, ¶ 18.
{¶ 54} Based on the above analysis, it is the magistrate's decision that this court deny
relator's request for a writ of mandamus.
/S/ MAGISTRATE
KENNETH W. MACKE
No. 17AP-864 23
NOTICE TO THE PARTIES
Civ.R. 53(D)(3)(a)(iii) provides that a party shall not assign as
error on appeal the court's adoption of any factual finding or
legal conclusion, whether or not specifically designated as a
finding of fact or conclusion of law under Civ.R. 53(D)(3)(a)(ii),
unless the party timely and specifically objects to that factual
finding or legal conclusion as required by Civ.R. 53(D)(3)(b).