Case Title: State ex rel. Saunders v. Indus. Comm.

Citation: 2004-Ohio-339

Docket Number: 20030629

State: ohio

Court: Ohio Supreme Court

Date: 2004-02-11T00:00:00Z

Document:
[Cite as State ex rel. Saunders v. Indus. Comm., 101 Ohio St.3d 125, 2004-Ohio-339.] 
 
 
THE STATE EX REL. SAUNDERS v. INDUSTRIALCOMMISSION OF OHIO ET AL. 
[Cite as State ex rel. Saunders v. Indus. Comm., 101 Ohio St.3d 125, 2004-
Ohio-339.] 
Workers’ compensation — Industrial Commission Policy Memo E7 exempt from 
R.C. Chapter 119’s procedure for the adoption, amendment, or 
rescission of rules — Claimant’s application for determination of 
percentage of permanent partial disability denied when claimant fails to 
submit evidence that attributed a percentage of disability exclusively to 
claimant’s allowed injury. 
(No. 2003-0629 – Submitted November 3, 2003 – Decided February 11, 2004.) 
IN MANDAMUS. 
____________ 
 
Per Curiam. 
{¶1} 
The workers’ compensation claim of relator-claimant, William 
Saunders, was originally allowed for a sprained right shoulder.  He later sought 
additional allowance of two other shoulder conditions.  That request eventually 
resulted in a lawsuit in the Lucas County Common Pleas Court. 
{¶2} 
While that litigation was pending, respondent Industrial 
Commission of Ohio considered claimant’s application for determination of 
percentage of permanent partial disability (“PPD”).  All three medical reports 
before the commission evaluated claimant’s as yet nonallowed conditions and his 
allowed injury but did not attribute a separate disability percentage to claimant’s 
allowed injury.  Claimant’s application was denied: 
{¶3} 
“[T]he conditions of right shoulder impingement and 
aggravation of pre-existing osteoarthritis right shoulder are pending 
allowance in Common Pleas Court.  Therefore, pursuant to Industrial 
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Commission Policy Memo E.7 no permanent partial impairment 
percentage may be currently awarded for those conditions. 
{¶4} 
“The Staff Hearing Officer further finds insufficient break-
down of the medical impairments to ascertain what percentage of 
impairment is related to the right shoulder/arm strain/sprain. 
{¶5} 
“Therefore, no percentage is awarded at this time.” 
{¶6} 
Claimant’s petition in mandamus is now before this court, asking 
us to find that Memo E7 is invalid and to issue a writ of mandamus ordering the 
commission to vacate the above order. 
{¶7} 
R.C. 4121.31 requires the commission to adopt rules concerning 
procedures for decision making: 
{¶8} 
“(A) The administrator of workers’ compensation and the 
industrial commission jointly shall adopt rules covering the following 
general topics with respect to this chapter and Chapter 4123 of the Revised 
Code: 
{¶9} 
“(1) Rules that set forth any general policy and the 
principal operating procedures of the bureau of workers’ compensation or 
commission, including but not limited to: 
{¶10} “* * * ‘(b) Procedures for decision-making[.]’ ” 
{¶11} R.C. 4121.32 requires the commission to supplement its rules with 
an operating manual: 
{¶12} “(A) The rules covering operating procedure and criteria 
for decision-making that the administrator of workers’ compensation and 
the industrial commission are required to adopt pursuant to section 
4121.31 of the Revised Code shall be supplemented with operating 
manuals setting forth the procedural steps in detail for performing each of 
the assigned tasks of each section of the bureau of workers’ compensation 
and commission. * * *  
January Term, 2004 
3 
{¶13} “* * * 
{¶14} “(C) The bureau and commission jointly shall develop, 
adopt, and use a policy manual setting forth the guidelines and bases for 
decision-making for any decision which is the responsibility of the bureau, 
district hearing officers, staff hearing officers, or the commission.  
Guidelines shall be set forth in the policy manual by the bureau and 
commission to the extent of their respective jurisdictions for deciding at 
least the following specific matters: 
{¶15} “* * * 
{¶16} “(8) Determining the percentage of permanent partial 
disability * * *.” 
{¶17} Consistent with these directives, the commission developed a 
Hearing-Officer Manual.  It included Memo E7, the subject of this litigation, 
which states: 
{¶18} “The Industrial Commission shall not process a C-92 
Application [for determination of percentage of PPD] during the pendency 
of the original allowance in Court under O.R.C. 4123.512.  If a question of 
an additional allowance is in Court, there is jurisdiction to hear a C-92 as 
it relates to the original conditions allowed in the claim that are not being 
contested in Court.” 
{¶19} Memo E7 is based on two things.  First is the established case law 
that nonallowed conditions can never factor into a compensation award. State ex 
rel. Waddle v. Indus. Comm. (1993), 67 Ohio St.3d 452, 619 N.E.2d 1018.  
Second is R.C. 4123.512, which states: 
{¶20} “(H) An appeal from an order issued under division (E) of 
section 4123.511 of the Revised Code or any action filed in court in a case 
in which an award of compensation has been made shall not stay the 
payment of compensation under the award or payment of compensation 
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for subsequent periods of total disability during the pendency of the 
appeal.”  (Emphasis added.) 
{¶21} Because the word “disability” is modified by the word “total,” we 
read the statute as authorizing the commission to stay the payment of partial 
disability compensation during pending litigation. 
{¶22} The claimant at bar seeks PPD compensation.  The three medical 
reports before the commission evaluated claimant’s as yet nonallowed conditions 
together with his allowed injury, and did not designate the percentage of disability 
related to claimant’s allowed injury alone.  This, in and of itself, supported the 
commission’s denial of compensation under Waddle.  The staff hearing officer’s 
order, however, also relied on Memo E7 and, in so doing, generated this 
controversy. 
{¶23} Claimant attacks Memo E7, asserting that it was not promulgated 
in accordance with R.C. Chapter 119 and is therefore invalid.  The commission 
and respondent employer, Johnson Controls, Inc., argue that Memo E7 falls 
outside R.C. Chapter 119’s purview.  We agree with respondents. 
{¶24} R.C. Chapter 119 establishes the procedure for the adoption, 
amendment, or rescission of rules.  The procedure is intended to permit “a full and 
fair analysis of the impact and validity of a proposed rule,” Condee v. Lindley 
(1984), 12 Ohio St.3d 90, 93, 12 OBR 79, 465 N.E.2d 450, by “ ‘provid[ing] an 
opportunity for opponents of a proposed regulation to express their views as to the 
wisdom of the proposal and to present evidence with respect to its illegality.’ ”  
Northeast Ohio Regional Sewer Dist. v. Shank (1991), 58 Ohio St.3d 16, 24, 567 
N.E.2d 993, quoting Ohio Grape Growers, Vintners & Bottlers Assn. v. Bd. of 
Liquor Control (1961), 115 Ohio App. 243, 245, 20 O.O.2d 320, 184 N.E.2d 767. 
{¶25} R.C. Chapter 119 governs “rules,” which are statutorily defined as 
“any rule, regulation, or standard, having a general and uniform operation, 
adopted, promulgated, and enforced by any agency under the authority of the laws 
January Term, 2004 
5 
governing such agency, and includes any appendix to a rule.”  R.C. 119.01(C).  It 
does not, however, include “any internal management rule of an agency unless the 
internal management rule affects private rights.”  Id. 
{¶26} Over the years, we have reiterated that what an agency labels a 
document is not conclusive.  “It is the effect of the [document], not how the 
[agency] chooses to characterize it, that is important.”  Ohio Nurses Assn., Inc. v. 
Ohio State Bd. of Nursing Edn. & Nurse Registration (1989), 44 Ohio St.3d 73, 
76, 540 N.E.2d 1354. 
{¶27} The pivotal issue in determining the effect of a document is 
whether it enlarges the scope of the rule or statute from which it derives rather 
than simply interprets it. Ohio Nurses;  OPUS III-VII Corp. v. Ohio Bd. of 
Pharmacy (1996), 109 Ohio App.3d 102, 113, 671 N.E.2d 1087.  If the former, it 
must be promulgated pursuant to R.C. Chapter 119.  If the latter, it is exempt from 
those requirements. 
{¶28} In Ohio Nurses, for example, the State Nursing Board issued a 
“position paper” that greatly expanded the authority of licensed practical nurses 
(“LPNs”) to administer intravenous fluids or “IVs.”  Concerned that LPNs would 
encroach upon duties previously reserved for registered nurses, the Ohio Nurses 
Association, Inc., sued. 
{¶29} We found that the position paper was a rule subject to the 
provisions of R.C. Chapter 119 because it expanded the scope of LPN practice 
and regulated those LPNs qualified to start IVs by requiring additional course 
work.  We wrote: 
{¶30} “It is the effect of the position paper, not how the board 
chooses to characterize it, that is important.  Regardless of whether the 
board characterizes its position paper as merely advisory, a clear reading 
thereof reveals that the paper does not purport merely to interpret an extant 
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statute or rule, but rather to establish a new rule, standard or regulation 
regarding LPN practice.”  Id. at 76, 540 N.E.2d 1354. 
{¶31} We concluded: 
{¶32} “By failing to rule-file the instant position paper, the board 
has effectively denied members of the nursing profession, as well as other 
interested members of the public, a full and fair analysis of the impact and 
validity of the new standards of LPN practice set forth therein and its 
effects on the public health and safety.”  (Emphasis added.)  Id. 
{¶33} Documents that explain rather than expand, fall outside 
R.C. Chapter 119.  In Princeton City School Dist. Bd. of Edn. v. Ohio 
State Bd. of Edn. (1994), 96 Ohio App.3d 558, 645 N.E.2d 773, 
controversy arose around the Educational Management Information 
System (“EMIS”), a legislatively created computer network for public 
schools.  R.C. 3301.0714. EMIS collected information about student 
participation, performance, enrollment, and demographics. The statute 
directed the State Board of Education to develop rules for EMIS and to 
develop “guidelines” for the establishment and maintenance of the system. 
{¶34} Several local school districts sued, arguing that the General 
Assembly could not allow an administrative body to create guidelines without 
following the rulemaking process outlined in R.C. Chapter 119. The Court of 
Appeals for Hamilton County disagreed.  After analyzing the substance of the 
guidelines, the court wrote: 
{¶35} “The guidelines * * * are a kind of instruction manual 
showing methods and alternatives to identify, compile, collect and report 
the data.  * * *  Because these guidelines merely control the procedure by 
which the duties in the statute and rule must be performed, they are 
distinct from the rules in cases such as Condee v. Lindley (1984), 12 Ohio 
St.3d 90, 91, 12 OBR 79, 80-81, 465 N.E.2d 450, 452; McLean Trucking 
January Term, 2004 
7 
Co. v. Lindley (1982), 70 Ohio St.2d 106, 113, 24 O.O.3d 187, 191-192, 
435 N.E.2d 414, 419; Ohio Nurses Assn., Inc. v. State Bd. of Nursing Edn. 
& Nurse Registration (1989), 44 Ohio St.3d 73, 76, 540 N.E.2d 1354, 
1356-1357; [and] Ohio Dental Hygienists Assn. v. State Dental Bd. (1986), 
21 Ohio St.3d 21, 25, 21 OBR 282, 285-286, 487 N.E.2d 301, 304.” Id. at 
563-564, 645 N.E.2d 773. 
{¶36} R.C. Chapter 119 was also found to be inapplicable by the Court of 
Appeals for Franklin County in OPUS III-VII Corp., supra, 109 Ohio App.3d 102, 
671 N.E.2d 1087.  Underlying the controversy in that case was Ohio Adm.Code 
4729-9-04, which governs the return of “unopened” medication and its 
redispensing by pharmacies.  The code did not define “unopened,” but OPUS III-
VII Corporation’s packaging made it impossible to ascertain whether the 
container had been opened.  Consequently, the pharmacy board concluded that 
medication dispensed in OPUS containers could not be returned and redispensed. 
{¶37} OPUS objected, arguing that the board had implicitly added the 
requirement that packaging be “tamper-evident,” and, in so doing, created a new 
rule without complying with R.C. Chapter 119.  The trial court disagreed, as did 
the court of appeals.  The latter cited Ohio Nurses, supra, and observed: 
{¶38} “[T]he board may advise those affected of the meaning that it 
attaches to one of its rules.  However, in so doing, an administrative agency may 
not expand the scope of the rule without complying with the rulemaking 
provisions of R.C. Chapter 119.”  Id., 109 Ohio App.3d at 112, 671 N.E.2d 1087. 
{¶39} It then distinguished the case before it from Ohio Nurses: 
{¶40} “In contrast, the [pharmacy] board’s determination in the 
instant case merely interpreted the language used in an existing rule, but 
did not establish a new rule, standard or regulation.  OPUS argues that the 
board’s determination somehow defines the rule in a manner inconsistent 
with the express language of the rule.  As noted previously, the board is 
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entitled to due deference from the court in its interpretation of the 
technical requirements of the pharmacy profession.  We cannot say that 
the board’s interpretation of the term ‘unopened’ to mean that a 
pharmacist must be able to look at a container and see whether it had been 
opened is inconsistent with the express language of the rule.”  Id. at 113, 
671 N.E.2d 1087. 
{¶41} The court of appeals elaborated on the tenet that agencies should 
be given deference, citing two cases from this court.  First, relying on State ex rel. 
McLean v. Indus. Comm. (1986), 25 Ohio St.3d 90, 25 OBR 141, 495 N.E.2d 370, 
it stated that courts “must give due deference to an administrative interpretation 
formulated by an agency that has accumulated substantial expertise in the 
particular subject area and to which the General Assembly has delegated the 
responsibility of implementing the legislative command.”  OPUS III-VII Corp., 
109 Ohio App.3d at 112-113, 671 N.E.2d 1087.  Equally important, “such 
deference is afforded to an administrative agency’s interpretation of its own rules 
and regulations if such an interpretation is consistent with statutory law and the 
plain language of the rule itself.”  Id. at 113, 671 N.E.2d 1087, citing Jones Metal 
Products Co. v. Walker (1972), 29 Ohio St.2d 173, 181, 58 O.O.2d 393, 281 
N.E.2d 1. 
{¶42} Applying all of these principles in this case, we find that Memo E7 
is an interpretation exempt from R.C. Chapter 119 and not a rule falling 
thereunder.  Unlike the position paper at issue in Ohio Nurses, Memo E7 does not 
expand upon the statute and case law that it is based on.  It instead follows R.C. 
4123.512 and Waddle by (1) directing hearing officers not to include nonallowed 
conditions in a PPD assessment and (2) to, if possible, assess the percentage of 
PPD for the allowed claims.  It is important to remember that it was not Memo E7 
that prevented claimant’s PPD award but claimant’s failure to submit medical 
January Term, 2004 
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evidence that attributed a percentage of disability exclusively to claimant’s 
allowed injury. 
{¶43} For these reasons, we find Memo E7 to be exempt from R.C. 
Chapter 119’s requirements. 
{¶44} A writ of mandamus is accordingly denied. 
Writ denied. 
 
MOYER, C.J., RESNICK, F.E. SWEENEY, PFEIFER, LUNDBERG STRATTON, 
O’CONNOR and O’DONNELL, JJ., concur. 
____________ 
 
Michael D. Dorf, for relator. 
 
Jim Petro, Attorney General, and William J. McDonald, Assistant 
Attorney General, for respondent Industrial Commission. 
 
Bugbee & Conkle, L.L.P., Gregory B. Denny and Mark S. Barnes, for 
respondent Johnson Controls, Inc.