Case Title: State ex rel. Dillard Dept. Stores v. Ryan

Citation: 2009-Ohio-2683

Docket Number: 20072225

State: ohio

Court: Ohio Supreme Court

Date: 2009-06-16T00:00:00Z

Document:
[Cite as State ex rel. Dillard Dept. Stores v. Ryan, 122 Ohio St.3d 241, 2009-Ohio-2683.] 
 
THE STATE EX REL. DILLARD DEPARTMENT STORES, APPELLANT, v. RYAN, 
ADMR., APPELLEE, ET AL. 
[Cite as State ex rel. Dillard Dept. Stores v. Ryan,  
122 Ohio St.3d 241, 2009-Ohio-2683.] 
Workers’ compensation — A second voluntary dismissal under Civ.R. 41(A)(1)(a) 
by an employee-claimant filed after the parties had agreed to settle a 
claim in an employer-initiated workers’ compensation appeal pursuant to 
R.C. 4123.512 is not a final judicial determination that payments made to 
the employee should not have been made, when the court of common pleas 
has not entered judgment to that effect. 
(No. 2007-2225 — Submitted April 8, 2009 — Decided June 16, 2009.) 
APPEAL from the Court of Appeals for Franklin County,  
No. 06AP-726, 173 Ohio App.3d 339, 2007-Ohio-5556. 
–––––––––––––––––– 
SYLLABUS OF THE COURT 
A second voluntary dismissal under Civ.R. 41(A)(1)(a) by an employee-claimant 
filed after the parties had agreed to settle a claim in an employer-initiated 
workers’ compensation appeal pursuant to R.C. 4123.512 is not a final 
judicial determination that payments made to the employee should not 
have been made, when the court of common pleas has not entered 
judgment to that effect. 
–––––––––––––––––– 
MOYER, C.J. 
I 
{¶ 1} A self-insured employer can generally obtain reimbursement for 
workers’ compensation payments made to an employee when those payments are 
subsequently found to have been unwarranted through administrative or judicial 
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2 
proceedings.  R.C. 4123.512(H).  Here we are presented with the issue of whether 
reimbursement is required by statute following a second voluntary dismissal by 
the employee, implicating the double-dismissal rule in Civ.R. 41(A)(1).  We hold 
that reimbursement is not required when the action is dismissed pursuant to a 
settlement agreement between the employer and employee, even if both the 
agreement and the dismissal purport to determine that the employee was not 
permitted to participate in workers’ compensation. 
II 
{¶ 2} Pamela Scott was injured in 1999 while working for appellant, 
Dillard Department Stores, a self-insured employer.  Her claim for workers’ 
compensation was certified by Dillard.  Scott later sought an additional allowance 
for an “L4-5 Disc Bulge,” which Dillard challenged.  A district hearing officer 
from the Industrial Commission additionally allowed the disc condition, and 
Dillard appealed.  A staff hearing officer upheld the decision and the Industrial 
Commission refused further appeal. 
{¶ 3} Dillard then appealed to the Trumbull County Court of Common 
Pleas, pursuant to R.C. 4123.512.  Scott filed her complaint with the court as 
required by the statute.  She later voluntarily dismissed the complaint under 
Civ.R. 41(A)(1)(a) but refiled it within the time permitted by the saving statute, 
R.C. 2305.19.  Before the trial court could hear the appeal, Scott and Dillard 
agreed to settle Scott’s entire workers’ compensation claim.  According to the 
agreement, Dillard would pay Scott $15,000 in exchange for a release of all 
claims arising from her injuries.  The agreement also provided that the appeal in 
the trial court would “be dismissed with prejudice with the following order:  
Pamela S. Scott is not entitled to participate in The Ohio Workers’ Compensation 
Fund for the alleged condition of L4-L5 disc bulge at the plaintiff’s costs.” 
{¶ 4} Dillard submitted the settlement agreement to the Industrial 
Commission for approval pursuant to R.C. 4123.65.  As the statute stipulates, 
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3 
because the commission did not issue an order disapproving the settlement within 
30 days, it was automatically approved.  R.C. 4123.65(D).  Scott dismissed her 
complaint in the trial court for a second time under Civ.R. 41(A)(1)(a), this time 
with prejudice. 
{¶ 5} Dillard then applied for reimbursement from the state surplus fund 
for the compensation it had paid to Scott related to the L4-L5 disc bulge.  After 
receiving the application for reimbursement, the Bureau of Workers’ 
Compensation (“BWC”) filed a motion for relief from the judgment and for 
substitution of parties with the trial court, arguing that the appeal should be 
reinstated and the BWC substituted for Scott as plaintiff so that it could protect 
the interests of the state surplus fund. 
{¶ 6} Before the trial court issued a decision on the BWC’s motion, the 
BWC denied Dillard’s application for reimbursement administratively.  Dillard 
subsequently brought the instant action, a complaint for writ of mandamus filed in 
the Tenth District Court of Appeals, seeking a writ to compel the BWC to vacate 
its order denying reimbursement and grant reimbursement to Dillard.  Dillard 
argued that Scott’s dismissal of the appeal was a final judicial determination that 
the payments it had made to Scott for the L4-L5 disc bulge should not have been 
made and that pursuant to R.C. 4123.512 and this court’s decision in State ex rel. 
Sysco Food Serv. of Cleveland, Inc. v. Indus. Comm. (2000), 89 Ohio St.3d 612, 
734 N.E.2d 361, it was entitled to reimbursement. 
{¶ 7} The court of appeals denied the writ.  State ex rel. Dillard Dept. 
Stores, Inc. v. Ryan, 173 Ohio App.3d 339, 2007-Ohio-5556, 878 N.E.2d 668, ¶ 
10.  It held that “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.”  Id. at ¶ 7.  The court 
argued that “Sysco [89 Ohio St.3d 612, 734 N.E.2d 361] carves out a judicial 
exception on constitutional grounds to the legislature’s comprehensive workers’ 
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compensation scheme for Ohio—an exception that we believe should not be 
lightly extended to cover the facts in the case before us.”  Dillard at ¶ 8.  The 
court also took note of the practical consequences that would follow if Dillard 
were reimbursed from the surplus fund.  Id. at ¶ 9.  Employers would be 
encouraged to pursue meritless appeals, agree to a settlement, and then seek 
reimbursement, which would quickly deplete the surplus fund.  Id. 
{¶ 8} Before the decision of the Tenth District Court of Appeals denying 
Dillard’s claim was issued, Dillard filed a motion for judgment with the trial 
court, asking the court to issue an order that Scott was no longer entitled to 
participate in the workers’ compensation fund for her L4-L5 disc bulge.  Scott v. 
Dillard Dept. Stores, Inc. (Jan. 2, 2008), Trumbull C.P. No. 2002 CV 02440, 2008 
WL 6463130.  The trial court issued a decision on both Dillard’s motion for 
judgment and the BWC’s previously filed motion for relief from the judgment and 
for substitution of parties.  Id.  The court denied both motions, finding that the 
action had been settled and dismissed by the parties and that there was no 
judgment to vacate.  Id. 
{¶ 9} Dillard filed an appeal as of right with this court from the Tenth 
District’s decision denying its complaint for a writ of mandamus. 
III 
{¶ 10} R.C. 4123.512(H) provides: “If, 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, the amount thereof shall 
be charged to the surplus fund * * *.”  The right to surplus-fund reimbursement 
for self-insuring employers was upheld in Sysco, 89 Ohio St.3d at 614-616, 734 
N.E.2d 361. 
{¶ 11} Dillard is now seeking reimbursement from the state surplus fund 
for compensation it had paid to Scott for her L4-L5 disc bulge prior to reaching a 
settlement agreement on her entire workers’ compensation claim.  Dillard argues 
January Term, 2009 
5 
that it is entitled to reimbursement because Scott’s second voluntary dismissal of 
her complaint, pursuant to the settlement, amounted to an adjudication on the 
merits that she was not entitled to compensation.  We disagree. 
{¶ 12} To be eligible for surplus-fund reimbursement, an employer must 
have obtained a final judicial determination that compensation should not have 
been paid.  R.C. 4123.512(H).  There has been no such determination in this case. 
{¶ 13} Dillard is correct that Scott’s second voluntary dismissal of her 
complaint under Civ.R. 41(A)(1)(a) amounts to an “adjudication upon the merits.”  
Civ.R. 41(A)(1).  This is known as the “double-dismissal rule.”  Olynyk v. Scoles, 
114 Ohio St.3d 56, 2007-Ohio-2878, 868 N.E.2d 254, ¶ 8.  The second dismissal 
is necessarily with prejudice and “res judicata applies if the plaintiff files a third 
complaint asserting the same cause of action.”  Id. at ¶ 10. 
{¶ 14} The problem, however, is that the circumstances here are 
substantially different from those of a typical case involving the double-dismissal 
rule.  This case does not involve a plaintiff repeatedly filing and voluntarily 
dismissing a complaint, thereby prolonging litigation.  Scott instead voluntarily 
dismissed her complaint for the second time only because a settlement had been 
reached.  The double-dismissal rule would prevent her from refiling her 
complaint, as would the release of claims contained in the settlement agreement.  
We also note that R.C. 4123.512(D) has been amended, effective June 30, 2006, 
to prohibit employees from dismissing their complaints without the employer’s 
permission in an employer-initiated appeal, but the amendment does not apply to 
this case. 
{¶ 15} Although Scott’s second dismissal was with prejudice, this does 
not mean there has been a final judicial determination that the payments to Scott 
related to her L4-L5 disc bulge should not have been made.  No court has issued 
any judgment with such a finding.  In fact, the trial court expressly denied 
Dillard’s motion for judgment, which sought a declaration that Scott was not 
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entitled to participate in the workers’ compensation fund for her condition.  Scott 
v. Dillard Dept. Stores, Inc. (Jan. 2, 2008), Trumbull C.P. No. 2002 CV 02440, 
2008 WL 6463130.  The court found that the action had been settled and 
dismissed.  Id. 
{¶ 16} The precedent cited by Dillard to support its argument that a 
second voluntary dismissal amounts to a final judicial determination that benefits 
were improperly paid is easily distinguishable.  Dillard first relies on our holding 
in Kaiser v. Ameritemps, Inc. (1999), 84 Ohio St.3d 411, 704 N.E.2d 1212, 
syllabus, that “[a] workers’ compensation claimant may employ Civ.R. 
41(A)(1)(a) to voluntarily dismiss an appeal to the court of common pleas brought 
by an employer under R.C. 4123.512.”  We also stated, “If an employee does not 
refile his complaint within a year’s time, he can no longer prove his entitlement to 
participate in the workers’ compensation system.”  Id. at 415.  The facts in Kaiser, 
however, were not related to reimbursement from the surplus fund.  Instead, we 
were presented only with the issue of whether an employee can take advantage of 
a Civ.R. 41(A)(1)(a) voluntary dismissal even though the employer is the party 
that brought the appeal.  Id. at 412.  Although the running of the saving statute 
would prevent the employee from refiling the complaint, and thus from proving 
his entitlement to workers’ compensation, that result still does not equate to a 
judicial determination that previous compensation payments should not have been 
made. 
{¶ 17} Dillard also relies on Fowee v. Wesley Hall, Inc., 108 Ohio St.3d 
533, 2006-Ohio-1712, 844 N.E.2d 1193, ¶ 19, in which we held that “in an 
employer-initiated workers’ compensation appeal, after the employee-claimant 
files the petition as required by R.C. 4123.512 and voluntarily dismisses it as 
allowed by Civ.R. 41(A), if the employee-claimant fails to refile within the year 
allowed by the saving statute, R.C. 2305.19, the employer is entitled to judgment 
on its appeal.”  But Fowee only involved the question of whether the saving 
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7 
statute applied to an employee refiling a complaint in an employer-initiated 
appeal.  Id. at ¶ 1.  The court of appeals in Fowee had held that the saving statute 
did not apply and ordered the trial court to proceed on the complaint filed by the 
employee more than a year after voluntarily dismissing the first complaint.  
Fowee v. Wesley Hall, Inc., Hamilton App. No. C-040188, 2004-Ohio-7002, at ¶ 
1, 4, 22.  In reversing the court of appeals and holding that the employer was 
entitled to judgment on its appeal, we did not hold that the employer was entitled 
to a judicial finding that payments made to the employee should not have been 
made.  More important, there was no settlement of the workers’ compensation 
claim as there is here, nor was any consideration given to possible reimbursement 
of the employer from the surplus fund. 
IV 
{¶ 18} Dillard attempted to create a final judicial determination that the 
compensation payments should not have been made by inserting language into the 
settlement agreement requiring that Scott’s complaint “be dismissed with 
prejudice with the following order:  Pamela S. Scott is not entitled to participate 
in The Ohio Workers’ Compensation Fund for the alleged condition of L4-L5 disc 
bulge at the plaintiff’s costs.”  But as the court of appeals observed, the inclusion 
of this language in the dismissal entry “does not turn that dismissal into 
something it is not.”  State ex rel. Dillard Dept. Stores v. Ryan, 173 Ohio App.3d 
339, 2007-Ohio-5556, 878 N.E.2d 668, ¶ 73.  “[A]lthough courts will place upon 
a contract the construction which the parties to the contract have placed thereon, 
that construction is binding only upon such parties and not upon a third person.”  
Wright Aeronautical Corp. v. Glander (1949), 151 Ohio St. 29, 42, 38 O.O. 510, 
84 N.E.2d 483.  The settlement agreement between Dillard and Scott cannot bind 
the BWC to reimburse Dillard. 
{¶ 19} Dillard points out that the Industrial Commission approved the 
settlement agreement as a matter of law by not objecting to it within the required 
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statutory period of 30 days.  R.C. 4123.65(D).  This period of administrative 
review, however, is “to protect parties against settlements that are ‘clearly unfair’ 
or that constitute ‘gross miscarriage[s] of justice.’ ”  Gibson v. Meadow Gold 
Dairy (2000), 88 Ohio St.3d 201, 202, 724 N.E.2d 787, quoting R.C. 4123.65(D).  
There is, therefore, no statutory obligation to review settlement agreements for 
potential state liability, or specifically for reimbursement from the surplus fund.  
This administrative approval process falls far short of making the BWC part of 
the settlement agreement. 
{¶ 20} The Tenth District was also apt to point out the practical 
implications of allowing an employer to obtain reimbursement in these 
circumstances.  See Dillard, 173 Ohio App.3d 339, 2007-Ohio-5556, 878 N.E.2d 
668, at ¶ 9.  Once the Industrial Commission rules in favor of an employee on a 
compensation claim, the employer is entitled to appeal to the common pleas court.  
R.C. 4123.512.  Employers would be encouraged to pursue even meritless appeals 
if they thought they could then reach a settlement with the employee and 
subsequently obtain reimbursement from the surplus fund for all past 
compensation by simply inserting language into the settlement and dismissal 
stating that the employee is not entitled to participate.  The employee would have 
little reason to contest such language because the settlement would likely also 
include a release of claims.  Although the employer could not obtain 
reimbursement for the settlement itself under R.C. 4123.512(H), it could receive 
reimbursement for compensation already paid.  Such a system would quickly 
deplete the surplus fund, leaving nothing for employers that deserve 
reimbursement. 
V 
{¶ 21} We hereby affirm the court of appeals judgment denying the writ 
of mandamus sought by Dillard.  In the specific circumstances of this case, there 
has been no final judicial or administrative determination, pursuant to R.C. 
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4123.512(H), that payments made to Scott for her claimed L4-L5 disc bulge 
should not have been made.  Dillard is not entitled to reimbursement from the 
workers’ compensation surplus fund.  A second voluntary dismissal under Civ.R. 
41(A)(1)(a) by an employee-claimant filed after the parties had agreed to settle a 
claim in an employer-initiated workers’ compensation appeal pursuant to R.C. 
4123.512 is not a final judicial determination that payments made to the employee 
should not have been made, when the court of common pleas has not entered 
judgment to that effect. 
Judgment affirmed. 
 
PFEIFER, LUNDBERG STRATTON, O’CONNOR, O’DONNELL, LANZINGER, and 
CUPP, JJ., concur. 
__________________ 
Moscarino & Treu, L.L.P., Michael J. Bertsch, and Kathleen E. Gee, for 
appellant. 
Richard Cordray, Attorney General, and Stephen D. Plymale, Assistant 
Attorney General, for appellee. 
______________________