State ex rel. Perez v. Indus. Comm. (Slip Opinion) , 147 Ohio St. 3d 383 ( 2016 )

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as State
ex rel. Perez v. Indus. Comm., Slip Opinion No. 2016-Ohio-5084.]
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SLIP OPINION NO. 2016-OHIO-5084
THE STATE EX REL. PEREZ, APPELLEE AND CROSS-APPELLANT, v. INDUSTRIAL
COMMISSION OF OHIO, APPELLANT AND CROSS-APPELLEE, ET AL.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as State ex rel. Perez v. Indus. Comm., Slip Opinion No.
2016-Ohio-5084.]
Workers’ compensation—Temporary total disability—Fraud—Commission did not
abuse discretion in finding that claimant had been overpaid compensation
while operating his auto-repair business or in finding that claimant
fraudulently misrepresented that he was not working during period at
issue—Court of appeals’ judgment affirmed in part and reversed in part.
(No. 2015-0532—Submitted April 5, 2016—Decided July 26, 2016.)
APPEAL and CROSS-APPEAL from the Court of Appeals for Franklin County,
No. 14AP-394, 2015-Ohio-588.
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SUPREME COURT OF OHIO
Per Curiam.
{¶ 1} We must determine whether evidence supports the findings of
appellant and cross-appellee, Industrial Commission of Ohio, that appellee and
cross-appellant, Manuel A. Perez, was overpaid temporary-total-disability
compensation from September 14, 2007, through October 3, 2011, and that he
committed fraud in applying for it. The commission found that Perez continued to
operate his auto-repair business during that time and fraudulently misrepresented
to the commission that he had not worked since 2003.
{¶ 2} The court of appeals affirmed the commission’s finding of an
overpayment but concluded that the evidence did not support the commission’s
finding of fraud. The court issued a writ of mandamus solely to compel the
commission to vacate its finding of fraud.
{¶ 3} For the reasons that follow, we affirm the court of appeals’ judgment
to the extent that it affirmed the commission’s finding of an overpayment of
temporary-total-disability compensation, but we reverse the court’s issuance of a
writ of mandamus to compel the commission to vacate its finding of fraud.
{¶ 4} Perez was injured while working in the construction industry on
December 30, 2002. He filed a claim for workers’ compensation benefits, which
was allowed for the following conditions: neck sprain, lumbar sprain, thoracic
sprain, bulging disc and protruding discs, cervical spondylosis, major depression,
and cognitive disorder. The commission awarded Perez temporary-total-disability
compensation on several occasions. This appeal involves the order for disability
payments beginning July 28, 2007, based on his psychological conditions only.
{¶ 5} Prior to his injury in 2002, Perez owned and was operating an auto-
repair business known as Manuel A. Perez Enterprises, Inc. The business was
located in the first-floor garage of a two-story building. Perez lived on the second
floor.
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{¶ 6} On March 18, 2011, the Bureau of Workers’ Compensation received
information that Perez was operating his auto-repair business while receiving
temporary-total-disability benefits. The Special Investigations Unit (“SIU”) of the
bureau began investigating and obtained surveillance evidence of Perez working,
but it closed the investigation in January 2012, based on a lack of evidence that
Perez was being paid for his work.
{¶ 7} In November 2012, the SIU received a new tip from an anonymous
source that Perez had been working while he received disability benefits.
According to the SIU, the source provided customer names and information. The
bureau reopened its investigation. Based on the new investigation, the bureau filed
a motion alleging that Perez continued to operate his auto-repair business while
receiving temporary-total-disability benefits and that he purposely concealed his
activities in order to continue to receive benefits for which he would not otherwise
be entitled. The bureau asked the commission to declare an overpayment in
temporary-total-disability benefits from September 14, 2007, through October 3,
2011, and to make a finding of fraud.
{¶ 8} The commission concluded that Perez was overpaid temporary-total-
disability compensation and had committed fraud in applying for it. The
commission determined that the business was more than a passive investment and
that Perez had more than just minimal involvement, based on the following
evidence:
An investigation into the activities at the garage was
conducted by the Bureau of Workers’ Compensation Special
Investigations Unit, including surveillance with a video from
06/03/2011 through 07/16/2011. The Injured Worker was observed
performing auto repair work including working on a tractor and
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helping with repair work on an engine block. He was also observed
meeting customers and discussing auto issues with them.
There are statements from various customers on file stating
they dealt exclusively with the Injured Worker when doing business
at his shop. They never actually saw him physically work on their
cars, but he performed activities such as scheduling when to bring
the car into the shop, diagnosing their car problem, and receiving
payment when picking up the car. There is also a statement from
Scott McNabb, Manager of Advanced Auto Parts stating the Injured
Worker would order and pick-up parts. Also, on file are records
supporting numerous purchases from Advanced Auto Parts and
credit card records for auto parts purchased.
{¶ 9} Perez filed a complaint for a writ of mandamus, arguing that the
commission abused its discretion. The court of appeals affirmed the commission’s
finding of an overpayment but concluded that there was insufficient evidence of
fraud. The court issued a writ of mandamus to compel the commission to vacate
its finding that Perez committed fraud.
{¶ 10} This matter is before this court on the direct appeal of the
commission and the cross-appeal filed by Perez.
Overpayment of Temporary-Total-Disability Benefits
{¶ 11} Perez contends that there was no evidence supporting the
commission’s finding that he was working while he was receiving temporary-total-
disability compensation from September 14, 2007 to October 3, 2011.
{¶ 12} Work is not defined for workers’ compensation purposes, but it is
generally considered to be labor in exchange for pay. State ex rel. Honda of Am.
Mfg. Co. v. Indus. Comm., 113 Ohio St. 3d 5, 2007-Ohio-969, 862 N.E.2d 478,
¶ 18; State ex rel. Griffith v. Indus. Comm., 109 Ohio St. 3d 479, 2006-Ohio-2992,
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January Term, 2016
849 N.E.2d 28, ¶ 10. We have recognized an exception to this general principle for
“unpaid activities that directly generate income for a separate entity” that, in some
situations, may be considered work for purposes of temporary-total-disability
compensation eligibility. State ex rel. McBee v. Indus. Comm., 132 Ohio St. 3d 209,
2012-Ohio-2678, 970 N.E.2d 937, ¶ 4. In McBee, while the claimant received
temporary-total-disability compensation, he also helped with his wife’s business.
The commission determined that this constituted work, though unpaid, and the
court of appeals affirmed, reasoning that his activities directly generated income
and were consistent and ongoing. Id. at ¶ 7 (noting that McBee did not appeal that
determination to this court).
{¶ 13} Conversely, if the claimant’s activities are minimal and relate only
indirectly to generating income, they may not be considered work that would
disqualify a claimant from receiving temporary-total-disability compensation.
State ex rel. Ford Motor Co. v. Indus. Comm., 98 Ohio St. 3d 20, 2002-Ohio-7038,
780 N.E.2d 1016, ¶ 24. In Ford, the claimant worked for Ford and also had a lawn-
care business. After an injury at work temporarily forced him from his job at Ford,
he began receiving temporary-total-disability compensation. Ford tried to recoup
the compensation paid on the grounds that the claimant still worked at his lawn-
care business.
{¶ 14} The commission denied Ford’s request. We agreed, noting that
following his injury, the claimant hired others to do the physical work for his
business. Thus, his “activities did not, in and of themselves, generate income;
claimant’s activities produced money only secondarily, e.g., claimant signed the
paychecks that kept his employees doing the tasks that generated income.”
(Emphasis sic.) Id. at ¶ 23. The court concluded that his activities with the business
“were truly minimal and only indirectly related to generating income” and therefore
did not constitute work that would preclude payment of temporary-total-disability
compensation. Id. at ¶ 24.
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{¶ 15} Likewise, in Honda, 113 Ohio St. 3d 5, 2007-Ohio-969, 862 N.E.2d
478, the injured worker was receiving temporary-total-disability benefits for an
injury sustained while working at Honda. She also owned a scrapbook store. An
investigator observed the claimant at her store on several occasions answering a
customer’s questions, pointing out displays, and speaking on the telephone as well
as once, using the cash register. The commission denied Honda’s request for a
declaration of overpayment. We agreed, reasoning that the claimant’s mere
presence at the store did not itself disqualify her from receiving temporary-total-
disability compensation and that even if she had engaged in some business
activities, those activities were geared toward promoting goodwill and generated
income only secondarily. Id. at ¶ 28-29.
{¶ 16} Perez argues that, like the claimants in Ford and Honda, his business
activities were unpaid and minimal, that they did not directly produce income for
the business, and that they therefore did not constitute work that would be
inconsistent with receiving temporary-total-disability compensation. According to
Perez, the video surveillance and witness statements did not establish that he was
performing work for a customer or that his activities generated income for the
business, and the mere existence of a commercial account to purchase car parts does
not, by itself, generate business income.
{¶ 17} The commission maintains that Perez was providing customer
service that directly generated business and produced revenue—ordering and
picking up parts, scheduling appointments, talking with customers—activities that
were more than passive. According to the commission, this case is similar to State
ex rel. Meade v. Indus. Comm., 10th Dist. Franklin No. 04AP-1184, 2005-Ohio-
6206, and State ex rel. Cassano v. Indus. Comm., 10th Dist. Franklin No. 03AP-
1227, 2005-Ohio-68, in which the unpaid activities of both claimants generated
income for the business.
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January Term, 2016
{¶ 18} In Meade, the claimant was receiving temporary-total-disability
compensation for an injury that he received while working for Allied Systems, Inc.
He also owned a pizza business. The commission declared an overpayment of
compensation because the evidence indicated that Meade “ ‘took an active and
physically demanding part in the business working in the kitchen, conducting
repairs, delivering pizzas and conducting various other work related activities.’ ”
Id. at ¶ 17, quoting the hearing officer’s order. The Tenth District Court of Appeals
upheld the commission’s decision, reasoning that although he was not paid wages,
“there can be no question that [the claimant’s] activities—taking orders, preparing
food, serving customers, working the cash register, and delivering pizzas—
generated income for” his pizza shop. Id. at ¶ 7.
{¶ 19} Likewise, in Cassano, the commission concluded that the claimant
continued to operate his car dealership while receiving temporary-total-disability
compensation. The court of appeals agreed that there was evidence that Cassano
had engaged in work activities that generated income, such as performing
mechanical work on cars and attending auto auctions. Cassano at ¶ 8.
{¶ 20} The commission is the exclusive fact-finder with sole responsibility
to evaluate the weight and credibility of the evidence. State ex rel. Burley v. Coil
Packing, Inc., 31 Ohio St. 3d 18, 20-21, 508 N.E.2d 936 (1987). As a reviewing
court, we generally defer to the commission’s expertise in these matters and do not
substitute our judgment for that of the commission. State ex rel. Pass v. C.S.T.
Extraction Co., 74 Ohio St. 3d 373, 376, 658 N.E.2d 1055 (1996). This court’s role
is limited to determining whether there is some evidence in the record to support
the commission’s stated basis for its decision. Burley at 21.
{¶ 21} Mindful of these principles, we find that the evidence supports the
commission’s decision that Perez, like the claimant in Cassano, was engaged in
more than minimal activities that were income-producing for his auto-repair
business. The bureau received a tip that Perez was working at his business while
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receiving temporary-total-disability compensation. The SIU report, including the
surveillance evidence, documented Perez in the garage area on several occasions
looking under the hood of vehicles, engaging with customers, and performing repair
work.
{¶ 22} The evidence also documented Perez’s answering the telephone,
scheduling repairs, coordinating drop-off and pick-up times, purchasing parts, and
receiving payment from customers. Records established that during the time period
at issue, Perez purchased more than $43,000 in auto parts, an amount that indicates
they were not merely for personal use.
{¶ 23} The commission adequately identified the evidence relied upon and
briefly explained the reasoning for its decision. Consequently, the commission did
not abuse its discretion when it found that Perez had been overpaid temporary-total-
disability compensation for the period of time at issue, and we affirm the judgment
of the court of appeals to the extent that it affirmed that finding.
Fraud
{¶ 24} In its appeal, the commission challenges the court of appeals’ grant
of a writ of mandamus to compel the commission to vacate its finding that Perez
fraudulently received the temporary-total-disability compensation.
{¶ 25} “Fraud requires a knowing misrepresentation of a material fact.”
McBee, 132 Ohio St. 3d 209, 2012-Ohio-2678, 970 N.E.2d 937, at ¶ 8. “[T]o qualify
as a knowing misrepresentation, however, it must be shown that [the claimant] was
aware than his unpaid activities could be considered work.” Id. The commission
points to the multiple C-84 forms requesting temporary-total-disability benefits on
which Perez attested that he had not worked since 2003 and the medical evidence
in the file demonstrating that Perez minimized to physicians his presence at the
garage.
{¶ 26} The commission has substantial leeway in interpreting and drawing
inferences from the evidence in the record. State ex rel. Lawson v. Mondie Forge,
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104 Ohio St. 3d 39, 2004-Ohio-6086, 817 N.E.2d 880, ¶ 34. In doing so in this case,
the commission did not abuse its discretion when it concluded that the evidence
supported a finding of fraud. The evidence demonstrated that Perez not only
represented to the commission on multiple occasions that he was not working, but
also was not forthcoming to physicians about his activities with the auto-repair
business. The multiple occasions on which he reported to examining physicians
that he rarely left his home and spent most of his time watching TV or with his dogs
sufficiently demonstrate that he attempted to conceal the extent of his business
activities.
{¶ 27} Therefore, we conclude that the court of appeals abused its discretion
when it granted a writ of mandamus to compel the commission to vacate its finding
of fraud.
Conclusion
{¶ 28} Based on the foregoing, we affirm the judgment of the court of
appeals as to the finding of an overpayment of temporary-total-disability
compensation for the period September 14, 2007, through October 3, 2011, and we
reverse the court’s judgment issuing a writ of mandamus to compel the commission
to vacate its finding of fraud.
Judgment affirmed in part
and reversed in part.
O’CONNOR, C.J., and O’DONNELL, LANZINGER, KENNEDY, FRENCH, and
O’NEILL, JJ., concur.
PFEIFER, J., dissents and would affirm the judgment of the court of appeals.
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The Bainbridge Firm, L.L.C., and Christopher J. Yeager, for appellee and
cross-appellant.
Michael DeWine, Attorney General, and Cheryl J. Nester, Assistant
Attorney General, for appellant and cross-appellee, Industrial Commission.
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