Title: State ex rel. Extendicare Health Servs., Inc. v. Ryan

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
State ex rel. Extendicare Health Servs., Inc. v. Ryan, Slip Opinion No. 2010-Ohio-2452.] 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2010-OHIO-2452 
THE STATE EX REL. EXTENDICARE HEALTH SERVICES, INC. v. RYAN, ADMR. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as State ex rel. Extendicare Health Servs., Inc. v. Ryan, Slip 
Opinion No. 2010-Ohio-2452.] 
Workers’ compensation — R.C. 4123.512(H) — Limited writ of mandamus 
granted — Employer entitled to reimbursement for medical-bill payments 
for disallowed conditions that it paid before it opted out of the 
reimbursement program. 
(No. 2009-0922 — Submitted March 30, 2010 — Decided June 8, 2010.) 
IN MANDAMUS. 
__________________ 
Per Curiam. 
{¶ 1} Relator, Extendicare Health Services, Inc., is a self-insured 
employer.  At issue is its request for reimbursement from the state surplus fund 
for compensation and medical benefits paid to or on behalf of Kimberly Owings 
from April 1, 2004, through June 30, 2007.  Respondent, Marsha Ryan, the 
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administrator of the Bureau of Workers’ Compensation, denied that request, and 
Extendicare has responded with this original action in mandamus. 
{¶ 2} Owings’s 2002 workers’ compensation claim was originally 
allowed for “sprain right shoulder; right rotator cuff syndrome; right shoulder 
bicipital tendonitis.” Extendicare began paying temporary total disability 
compensation shortly after the claim was allowed, but moved to terminate that 
compensation in August 2003, claiming that Owings had reached maximum 
medical improvement (“MMI”). The Industrial Commission of Ohio found that 
Owings had not attained MMI and denied the motion. 
{¶ 3} In February 2004, Extendicare filed another motion to terminate 
temporary total disability compensation, again alleging that Owings had reached 
MMI. Shortly thereafter, Owings asked the commission to additionally allow 
three conditions: “impingement of the right shoulder, fraying of the right labrum, 
and aggravation of pre-existing arthritis right shoulder.” 
{¶ 4} On April 1, 2004, a district hearing officer granted Owings’s 
motion and denied Extendicare’s. On July 20, 2004, a staff hearing officer 
affirmed, and in continuing temporary total disability compensation, found that 
“[t]he injured worker has not reached [MMI] because of the newly allowed 
conditions in this order and cannot physically return to her former position of 
employment.” Further appeal was refused. 
{¶ 5} Extendicare filed its notice of appeal to the Franklin County 
Common Pleas Court on October 7, 2004. On November 5, 2004, Owings filed 
her required R.C. 4123.512(D) complaint, alleging a right to participate in the 
workers’ compensation system for the three contested conditions. She dismissed 
that complaint on October 12, 2005. She refiled her complaint on September 25, 
2006, but dismissed it again on October 1, 2007. This second voluntary dismissal 
prompted Extendicare’s motion for judgment as a matter of law.  The court 
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granted Extendicare’s motion and on May 22, 2008, issued a judgment entry that 
specifically denied Owings’s right to participate for the three disputed conditions. 
{¶ 6} During the nearly four years of litigation, Extendicare, pursuant to 
R.C. 4123.512 (H), continued to pay temporary total disability compensation and 
medical expenses as ordered by the commission or bureau.  During this litigation, 
Extendicare also, on July 1, 2007, exercised its statutory right under that section 
to opt out of the surplus-fund reimbursement program. After the litigation ended 
in Extendicare’s favor, it sought surplus-fund reimbursement from April 1, 2004 
(the date of the order by the district hearing officer allowing additional conditions 
and continuing temporary total disability compensation) to June 30, 2007 
(Extendicare’s last day in the reimbursement program). 
{¶ 7} The bureau’s self-insured department denied all reimbursement 
because Extendicare had opted out of the reimbursement program. The self-
insured review panel, on appeal, affirmed that reasoning and added: 
{¶ 8} “[T]he judgment entry establishes that Ms. Owings’ claim is 
disallowed for the three additional allowances that were disputed in this claim.  
However, the claim remains allowed for a number of other conditions * * *.  
Moreover, [temporary total disability compensation] was being paid for these 
conditions at the time the disputed conditions were first added to the claim. 
{¶ 9} “* * *[T]he employer has not established that the reimbursement 
request relates solely to the disallowed conditions, and not to the other conditions 
that remain allowed in the claim.” 
{¶ 10} This order was affirmed by the administrator’s designee, and 
Extendicare has now filed a complaint in mandamus in this court. 
{¶ 11} For obvious reasons, an administrative order that an employer pay 
compensation or medical expenses is not stayed by the employer’s challenge to 
that order.  R.C. 4123.512(H).  An employer that ultimately prevails in a “final 
administrative or judicial action” that “determine[s] that payments of 
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compensation or benefits, or both, made to or on behalf of a claimant should not 
have been made,” may, however, be entitled to reimbursement for those 
payments.  Id. For a self-insured employer such as Extendicare, reimbursement is 
generally a dollar-for-dollar recoupment from the workers’ compensation surplus 
fund. State ex rel. Sysco Food Servs.of Cleveland, Inc. v. Indus. Comm. (2000), 89 
Ohio St.3d 612, 734 N.E.2d 361. 
{¶ 12} The surplus fund was created pursuant to R.C. 4123.34(B) to, 
among other things, help maintain the solvency of the larger state insurance fund. 
Self-insured employers are required to contribute to the surplus fund. R.C. 
4123.34(B) and 4123.35(J) and Ohio Adm.Code 4123-17-32. For many years, a 
self-insured employer’s mandatory contribution was directed several ways, 
including a portion for disallowed-claim-or-condition reimbursement. Ohio 
Adm.Code 4123-17-32(D), (E), and (F). In 2006, R.C. 4123.512(H) was amended 
to permit self-insured employers to opt out of this reimbursement program: “On 
and after the effective date of the employer’s election, * * * the employer shall 
receive no money or credits from the surplus fund on account of those payments 
and shall not be required to pay any amounts into the surplus fund on account of 
this section.” 
{¶ 13} Extendicare withdrew from the program effective July 1, 2007. 
Extendicare acknowledges that it cannot be reimbursed for any payments that it 
made on Owings’s claim after it opted out. It asserts, however, that it has a right 
to recover compensation and benefits paid before that time, while it was still 
contributing to the program. 
{¶ 14} The bureau disagrees.  It concedes that the common pleas 
judgment entry constitutes a final judicial determination that compensation and 
benefits related to the three disputed conditions should not have been made. The 
bureau, however, stresses that the judgment entry was issued and Extendicare’s 
application for reimbursement was filed after Extendicare had opted out.  The 
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bureau maintains that regardless of the dates of Extendicare’s payments to and on 
behalf of Owings, a self-insured employer can receive no money from the surplus 
fund after it has opted out. It alternatively proposes that the temporary total 
disability compensation that Extendicare paid to Owings during the common 
pleas litigation was not related to the three disallowed conditions, but was instead 
related to the claim’s originally allowed conditions, which were unaffected by the 
common pleas court’s decision. 
{¶ 15} We have been asked to resolve two issues: (1) Does Extendicare’s 
opt-out preclude all reimbursement? and (2) If not, what portion of Extendicare’s 
expenditures are recoupable? 
{¶ 16} Extendicare relies heavily on State ex rel. First Natl. 
Supermarkets, Inc. v. Indus. Comm. (1996), 74 Ohio St.3d 673, 660 N.E.2d 1205.  
At issue were the handicap reimbursement provisions of R.C. 4123.343.  The 
handicap reimbursement program encourages the hiring of employees with 
disabilities by reimbursing employers for all or part of certain types of 
compensation if the worker is later injured on the job. This program, like the 
reimbursement program currently at issue, was partially funded by mandatory 
contributions from self-insured employers. 
{¶ 17} Self-insured First National Supermarkets, Inc., hired a disabled 
person who was later industrially injured.  First National applied for handicap 
reimbursement and was granted a 70 percent reimbursement.  Three years later, 
the statute was amended to permit, as here, a self-insured employer to opt out of 
the program.  First National remained in the program for the next three and a half 
years, before opting out as of January 1, 1990. 
{¶ 18} First National later sought reimbursement for temporary total 
disability compensation paid from March 31, 1989, through December 7, 1990.  
The commission denied its application, and First National commenced a 
mandamus action in the court of appeals.  That court held that First National 
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could not be reimbursed for temporary total disability compensation paid after it 
opted out but that it could recover compensation paid before the opt-out: 
{¶ 19} “We acknowledge that the commission informed self-insured 
employers who opted out that the employers needed to file applications for 
reimbursement prior to the opt-out date or lose the right to reimbursement.  
However, we are unwilling to make a company’s right to reimbursement 
contingent solely on the date the paperwork is received by the commission.”  
State ex rel. First Natl. Supermarkets, Inc. v. Indus. Comm. (May 19, 1994), 10th 
Dist. No. 93APD08-1203. 
{¶ 20} We affirmed that judgment, stressing that First National was 
“seek[ing] reimbursement for outlays made before opt-out – when the employer 
was still actively participating in the handicap reimbursement program.” 
(Emphasis sic.) First Natl., 74 Ohio St.3d at 674. 
{¶ 21} Extendicare asserts that First Natl. is directly on point.  The bureau 
tries to distinguish the case by alleging that because First National was granted 
handicap reimbursement before opting out, it had a vested right to reimbursement 
before the opt-out.  The bureau proposes that Extendicare’s right to 
reimbursement did not vest until the common pleas court denied the additional 
conditions, which happened after the opt-out. 
{¶ 22} The bureau reads too much into First Natl.  The opinion said 
nothing about vested rights.  It instead linked First National’s eligibility for 
reimbursement solely to whether or not First National was contributing to the 
fund over the period for which reimbursement was sought. 
{¶ 23} The bureau’s position is problematic from a practical standpoint as 
well.  The reason that the judgment entry did not issue before Extendicare opted 
out is because Owings prolonged the litigation – and with it her receipt of 
temporary total disability compensation and medical bill payments – by twice 
filing and twice dismissing her complaint.  Extendicare appealed the additional 
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allowance to the common pleas court on October 7, 2004 – nearly three years 
before its eventual opt-out.  Owings, as required by R.C. 4123.512(D), filed her 
complaint on November 5, 2004, but then dismissed it on October 12, 2005.  She 
refiled the complaint on September 25, 2006, and Extendicare timely replied.  
Owings dismissed her second complaint on October 1, 2007, which prompted 
Extendicare’s motion for judgment as a matter of law.  By the time of Owings’s 
second dismissal, however, Extendicare had already opted out. 
{¶ 24} This sequence of events secured Owings almost four additional 
years of temporary total disability compensation and medical-bill payments.  
Given that the delay in resolution was largely attributable to Owings, we are not 
convinced that Extendicare should be denied reimbursement of pre-opt-out 
expenses as a matter of law because Extendicare did not apply sooner or because 
its right, according to the bureau, did not “vest” sooner. 
{¶ 25} Extendicare also points to the language of the statute itself: 
{¶ 26} “On and after the effective date of the employer’s election [to opt 
out of the reimbursement program], the self-insuring employer shall pay directly 
to an employee or to an employee’s dependents compensation and benefits under 
this section * * * and the employer shall receive no money or credits from the 
surplus fund on account of those payments and shall not be required to pay any 
amounts into the surplus fund on account of this section.  The election made 
under this division is irrevocable.” (Emphasis added.) R.C. 4123.512(H). 
{¶ 27} Extendicare focuses on the words “those payments” and insists that 
they can refer only to the payments occurring after the opt-out date – i.e. “those 
paid directly to an employee on or after the effective date of the employer’s 
election.”  Extendicare argues that if the General Assembly had desired to 
foreclose reimbursement for all expenditures both before and after the date of the 
election to opt out, it would have used the words “any payments.” 
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{¶ 28} The bureau does not address this argument.  It instead focuses on 
the statute’s reference to irrevocability and asserts that an employer forever loses 
the right to any reimbursement once it has elected to opt out.  The bureau’s 
interpretation is incorrect.  The reference to irrevocability clearly – and only – 
means that once an employer opts out, it cannot later opt back in. 
{¶ 29} We accordingly find that Extendicare’s opt-out does not 
automatically foreclose it from recouping expenditures made to or on behalf of 
Owings before it opted out of the reimbursement program. But this does not mean 
that all of Extendicare’s pre-opt-out expenditures qualify for reimbursement. Only 
those payments that were attributable to the three disputed — but later disallowed 
— conditions can be reimbursed. 
{¶ 30} Extendicare seeks reimbursement of medical expenses as well as 
temporary total disability compensation. The common pleas court denied 
Owings’s right to participate in the workers’ compensation system for the three 
contested conditions. Thus, payments for medical expenses related to them should 
not have been made.  Extendicare is accordingly entitled to reimbursement for 
medical-bill payments that were related to any of those three conditions that were 
paid before it exercised the right to opt out of the reimbursement program. 
{¶ 31} Extendicare also seeks reimbursement for temporary total 
disability compensation that it paid to Owings between April 1, 2004, and June 
30, 2007, before its opt-out date. Extendicare argues that Owings’s inability to 
work was due to the three disputed conditions and that their later disallowance 
meant that temporary total disability compensation should not have been paid. 
{¶ 32} This argument does not withstand scrutiny.  First, there is no 
evidence that temporary total disability compensation was based on the three 
disallowed conditions.  The C-84 physician reports on which compensation was 
based consistently attributed disability to the conditions allowed in the claim 
initially.  Moreover, temporary total disability compensation was already being 
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paid to Owings when the additional but disputed conditions were first allowed by 
the district hearing officer, so it could not have been based on those conditions. 
{¶ 33} Extendicare persists, claiming that temporary total disability 
compensation was implicitly based on the disputed conditions because Owings’s 
originally allowed conditions had reached MMI and could not support temporary 
total disability compensation.  This argument, however, ignores that the allowed 
conditions were never declared to have reached MMI.  To the contrary, the 
commission denied both of Extendicare’s MMI motions. 
{¶ 34} Extendicare notes that the staff hearing officer’s July 20, 2004 
order indicated that Owings had not reached MMI “because of the newly allowed 
conditions in this order.”  Nevertheless, without a definitive declaration that the 
original conditions had reached MMI, we do not find that this passage is sufficient 
to establish that temporary total disability compensation was based on the 
disputed conditions, particularly given the C-84 evidence of record. 
{¶ 35} In conclusion, Extendicare is entitled to reimbursement for medical 
payments made before the July 1, 2007 opt-out date because they related to 
disallowed conditions. Extendicare is not entitled to reimbursement for temporary 
total disability compensation paid between April 1, 2004, and July 30, 2007, 
because that compensation related to her originally allowed conditions rather than 
the three disallowed conditions. 
{¶ 36} Accordingly, a writ of mandamus is hereby issued that orders the 
bureau to vacate its order and to issue a new order that grants Extendicare 
reimbursement for pre-opt-out medical expenses only. 
Limited writ granted. 
 
PFEIFER, LUNDBERG STRATTON, O’CONNOR, O’DONNELL, LANZINGER, and 
CUPP, JJ., concur. 
 
BROWN, C.J., not participating. 
__________________ 
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Porter, Wright, Morris & Arthur, L.L.P., Darrell R. Shepard and Robert J. 
Stalter, for relator. 
Richard Cordray, Attorney General, and Elise Porter and Gerald H. 
Waterman, Assistant Attorneys General, for respondent. 
______________________