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State ex rel. Manor Care Inc. v. Ohio Bureau of Workers' Compensation

Court of Appeals of Ohio, Tenth District

June 27, 2019

State ex rel. Manor Care, Inc., Relator,
v.
Ohio Bureau of Workers' Compensation et al., Respondents.

          IN MANDAMUS ON OBJECTIONS TO THE MAGISTRATE'S DECISION

         On brief:

          Kegler, Brown, Hill Ritter Co., LPA, David M. McCarty, Randall W. Mikes, and Katja E. Garvey, for relator.

          Dave Yost, Attorney General, and Sherry M. Phillips, for respondent Ohio Bureau of Workers' Compensation.

          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.

         {¶ 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 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 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 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.

         APPENDIX

         Rendered on September 20, 2018

         MAGISTRATE' S DECISION

          KENNETH W. MACKE MAGISTRATE

         {¶ 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.

         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 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 ...

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