State Ex Rel. Dillard Department Stores, Inc. v. Ryan

Tyack, Judge. ¶ 1 Dillard Department Stores, Inc. (“Dillard”), filed this action in mandamus seeking a writ to compel the Ohio Bureau of Workers’ Compensation (“BWC”) to vacate its order that denied Dillard reimbursement from the surplus fund of money Dillard paid to settle a workers’ compensation claim involving Pamela S. Scott. ¶ 2 In accord with Loc.R. 12, the case was referred to a magistrate to conduct appropriate proceedings. The parties stipulated to the pertinent evi *341 dence and filed briefs. The magistrate then issued a magistrate’s decision that contains detailed findings of fact and conclusions of law (attached as Appendix A). The magistrate’s decision includes a recommendation that we deny the request for a writ of mandamus. ¶ 3 Dillard has filed objections to the magistrate’s decision. Counsel for the BWC has filed a memorandum in response. The case is now before the court for review. ¶ 4 Scott was injured in 1999 while working for Dillard, a self-insured employer. Dillard certified her claim for “lumbosacral strain/sprain.” When Scott sought recognition of the additional condition of “L4-5 disc bulge,” Dillard resisted. A district hearing officer (“DHO”) entered an order granting the additional condition. After an appeal, a staff hearing officer (“SHO”) also entered an order granting the additional condition. Dillard’s further appeal to the Industrial Commission of Ohio (“commission”) was refused. ¶ 5 Dillard next filed an appeal to the Trumbull County Court of Common Pleas under R.C. 4123.512. Counsel for Scott dismissed that appeal and refiled the appeal within the allotted time. Before the appeal could be heard, Scott and Dillard reached a settlement, pursuant to which Dillard paid Scott $15,000 to resolve all workers’ compensation claims flowing from her 1999 injuries. Because the settlement included all the 1999 injuries, the appeal to the Trumbull County Court of Common Pleas was dismissed. ¶ 6 Dillard, through its third-party administrator, then applied for reimbursement of compensation and medical benefits it had paid for the L4-5 disc bulge. Dillard argued that despite the fact it had lost before a DHO, an SHO, and the commission on the issue of recognition of the L4-5 disc bulge, Dillard had been a prevailing party because the Trumbull County Court of Common Pleas had not rendered a judgment on behalf of Scott. ¶ 7 The BWC, the Self-Insured Review Panel, and the administrator of the BWC all rejected the application for reimbursement. Hence, this action in mandamus was initiated. The magistrate who handled this case has carefully and accurately addressed the pertinent facts and applicable law. Stating the central issue succinctly, a self-insured employer who pays a significant sum of money to settle a workers’ compensation claim is not a prevailing party such that the employer can obtain reimbursement from the surplus fund for the money used to settle the claim. This is especially true when the employer has lost at all levels of the commission. ¶ 8 Dillard, in essence, bought the dismissal of the appeal to common pleas court as a part of the settlement. Dillard did not prevail in any intelligible sense of the word “prevail.” Because Dillard did not prevail, it cannot and should not *342 be paid from the surplus fund. For this reason, we reject Dillard’s assertion that application of State ex rel. Sysco Food Serv. of Cleveland, Inc. v. Indus. Comm. (2000), 89 Ohio St.3d 612, 734 N.E.2d 361, entitles Dillards to reimbursement. In Sysco, the Supreme Court of Ohio held that in derogation of the specific language of R.C. 4123.512(H), a self-insured employer is entitled to reimbursement from the surplus fund when “in a final administrative or judicial action, it is determined that payments of compensation or benefits, or both, made to or on behalf of a claimant should not have been made.” Id. at 615, 734 N.E.2d 361, citing R.C. 4123.512(H). Sysco carves out a judicial exception on constitutional grounds to the legislature’s comprehensive workers’ compensation scheme for Ohio — an exception that we believe should not be lightly extended to cover the facts in the case before us. ¶ 9 Our ruling is not governed by the practical consequence of accepting Dillard’s point of view. However, we cannot blind ourselves to the chaos that would result were we to adopt Dillard’s position. Self-insured employers would be encouraged to pursue administrative appeals with no semblance of merit, followed by an appeal to common pleas court. Before the trial in common pleas court, the self-insured employer would be able to settle the claim and then turn to the surplus fund for reimbursement of the settlement costs, plus attorney fees, arguing that it had prevailed. The BWC, which had no input to the settlement, would be expected to repay the self-insured employer from the surplus fund. Needless to say, the surplus fund would not long survive, and employers who had actually been defrauded would have no fund to reimburse them. ¶ 10 We overrule the objections to the magistrate’s decision. We adopt the findings of fact and conclusions of law contained in the magistrate’s decision. We deny the request for a writ of mandamus. Writ denied. Deshler, J., concurs. French, J., dissents. Deshler, J., retired, of the Tenth Appellate District, assigned to active duty under the authority of Section 6(C), Article IV, Ohio Constitution.