Title: State ex rel. Cafaro Mgt. Co. v. Kielmeyer

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as State ex rel. Cafaro Mgt. Co. v. Kielmeyer, 113 Ohio St.3d 1, 2007-Ohio-968.] 
 
 
THE STATE EX REL. CAFARO MANAGEMENT COMPANY v. KIELMEYER, DIR. 
[Cite as State ex rel. Cafaro Mgt. Co. v. Kielmeyer,  
113 Ohio St.3d 1, 2007-Ohio-968.] 
Workers’ compensation — Classification of occupations. 
(No. 2005-1992 — Submitted January 9, 2007 — Decided March 21, 2007.) 
IN MANDAMUS. 
__________________ 
Per Curiam. 
{¶ 1} Relator, 
Cafaro 
Management 
Company, 
objects 
to 
the 
reclassification by respondent, Director of Workers’ Compensation, of Cafaro’s 
clerical and security personnel for premium-setting purposes.  For the reasons to 
follow, we uphold the bureau’s decision. 
{¶ 2} Cafaro is a real estate management firm that operates several 
shopping centers.  Its security personnel work exclusively at these malls.  Its 
clerical workers, on the other hand, are divided among several locations, with 
some working at corporate headquarters and others working at offices within the 
malls themselves.  A 1998 premium audit by the bureau determined that Cafaro’s 
clerical staff should remain under occupational classification No. 8810, which 
covered “clerical, office employees NOC [not otherwise classified].”  Cafaro’s 
security staff was kept in classification 7720, “police officers and drivers.” 
{¶ 3} After a new audit in 2004, the bureau reclassified Cafaro’s clerical 
workers under classification 9012, “Building operation by owner, lessee, or real 
estate management firm:  professional employees, property managers and leasing 
agents & clerical, sales persons.”  Security personnel were transferred from 
classification 7720 to 9015, “Buildings—operation by owner or lessee or real 
estate management firm:  all other employees.” 
SUPREME COURT OF OHIO 
2 
{¶ 4} The basic premium rates for these new classifications were higher 
than those used before, prompting Cafaro to appeal.  As to its clerical staff, 
Cafaro argued that only those employees working at the mall offices should fall 
under classification 9012.  Those who work at corporate headquarters – according 
to Cafaro – should remain under classification 8810.  As to its security staff, 
Cafaro asserted that the only security staff explicitly included within 9015 are 
night watchmen and, hence, its security detail should stay in 7720.  It also claimed 
that the phrase “all other employees” in classification 9015 puts its security 
personnel in with other positions where the risk is not equivalent. 
{¶ 5} On April 27, 2004, the bureau’s Adjudicating Committee rejected 
these arguments: 
{¶ 6} “[T]he NCCI classification rule is clear that the one code that best 
describes the employers [sic] operations shall be assigned to the policy.  It is 
apparent that operations of managing malls fall under Manual Nos. 9012 and 
9015.  Manual No. 9012 provides that clerical employees for these types of 
operations are not to be reported to Manual No. 8810.  While the employer has a 
large clerical staff away from the mall at its corporate office, Manual No. 9012 
includes clerical staff wherever situated.  Since the security force is provided only 
for the mall, and is not operated as a separate business providing security services 
for other businesses or the general public, the proper classification for them is 
Manual No. 9015.” 
{¶ 7} On appeal, the bureau administrator’s designee affirmed the 
Adjudicating Committee’s decision, prompting Cafaro’s original petition in 
mandamus to this court. 
{¶ 8} Setting premium rates for workers’ compensation coverage is one 
of the bureau’s most challenging responsibilities.  As early as 1928, we 
acknowledged the difficulty of this task, and we have repeatedly affirmed the 
deference due the agency in these matters.  State ex rel. Reaugh Constr. Co. v. 
January Term, 2007 
3 
Indus. Comm. (1928), 119 Ohio St. 205, 209, 162 N.E. 800; State ex rel. McHugh 
v. Indus. Comm. (1942), 140 Ohio St. 143, 149, 23 O.O. 361, 42 N.E.2d 774;  
State ex rel. Minutemen, Inc. v. Indus. Comm. (1991), 62 Ohio St.3d 158, 161, 
580 N.E.2d 777; State ex rel. Progressive Sweeping Contrs., Inc. v. Ohio Bur. of 
Workers’ Comp. (1994), 68 Ohio St.3d 393, 395, 627 N.E.2d 550.  Deference is 
required “in all but the most extraordinary circumstances,” with judicial 
intervention warranted only when the agency has acted in an “arbitrary, capricious 
or discriminatory manner.”  Id. at 395-396, 627 N.E.2d 550. 
{¶ 9} The rate-making process begins with “[c]lassif[ying] occupations 
or industries with respect to their degree of hazard.”  R.C. 4123.29(A)(1).  
Absolute precision in occupational classification is elusive.  Progressive 
Sweeping, 68 Ohio St.3d at 395, 627 N.E.2d 550.  A single employer may have 
multiple classifications assigned to it, and a single classification may contain 
multiple occupations.  If that were not so, the number of classifications would be 
unmanageable.  Id. 
{¶ 10} For years, the bureau used its own system of about 200 
occupational categories.  In 1993, the General Assembly required the 
administrator to replace these bureau-created classifications with those of the 
National Council on Compensation Insurance (“NCCI”) amid concerns that the 
former were overinclusive and could not be compared with categories in other 
states.  R.C. 4123.29(A)(1); Am.Sub.H.B. No. 107, 145 Ohio Laws, Part II, 3113. 
{¶ 11} Ohio Adm.Code 4123-17-08(D), in implementing the NCCI 
classifications, explains:   
{¶ 12} “The purpose of this classification procedure is to assign the one 
basic classification that best describes the business of the employer within a state.  
Subject to certain exceptions described in this rule, each classification includes all 
the various types of labor found in a business.” 
SUPREME COURT OF OHIO 
4 
{¶ 13} This “basic classification” is one of two types of classifications 
contained in the Administrative Code and entails “all classifications listed in this 
manual, except for the standard exception classifications.”  Ohio Adm.Code 
4123-17-08(B)(1).  The latter classification “describe[s] occupations that are 
common to many businesses.  These common occupations are not included in a 
basic classification unless specified in the classification working [sic, 
‘wording’].”  Ohio Adm.Code 4123-17-08(B)(2). 
{¶ 14} Cafaro first objects to the reclassification of its clerical employees 
from classification 8810 to 9012.  No. 8810 is a standard exception classification 
covering “[c]lerical office employees NOC [not otherwise classified].”  (Emphasis 
added.)  Cafaro’s clericals, however, are otherwise classified.  Classification 9012 
encompasses “[b]uilding operation by owner, lessee, or real estate management 
firm:  professional employees, property managers and leasing agents & clerical, 
salespersons.”  (Emphasis added.)  Cafaro concedes that it is a “real estate 
management firm” engaged in “building operation” – the precise industry 
described by 9012.  Clerical workers are expressly contained within it. 
{¶ 15} Cafaro alleges that classifying its corporate-center clerical 
employees with its mall clerical employees violates the statutory directive to 
classify according to hazard.  Cafaro argues that the latter have a more hazardous 
job because they work at the mall and encounter the general public more.  We 
find this proposition unpersuasive.  Cafaro’s assertion is based solely on its own 
claims history and the fact that more workers’ compensation claims were filed by 
those working at mall offices.  As this court pointed out in Minutemen, however,  
“[a]ny allegations as to the safety record of a company’s employees bears only on 
the company’s merit rate, not its basic rate.”  62 Ohio St.3d at 161, 580 N.E.2d 
777.  Cafaro’s individual experience does not establish that industrywide, the 
hazard to clerical workers in a mall office is substantially greater than the hazard 
to other clerical workers. 
January Term, 2007 
5 
{¶ 16} Cafaro largely repeats the same objections to the bureau’s 
reclassification of its security personnel from Classification 7720 to 9015.  
Classification 7720 covers “[p]olice officers and drivers” as well as “private 
security services, protective or patrol corps, protective agencies, * * * and 
businesses engaged in providing watch guard services for others.”  Among the 
occupations falling thereunder are employees of contracting agencies in bank 
services, including guards, patrols, messengers or armored car crews and drivers.  
Cafaro maintains that its guards do security tasks.  The bureau counters that it is 
Cafaro’s occupation or industry that is classified, which is “real estate 
management” engaged in “building operation.”  Cafaro’s employment of staff 
security personnel does not make Cafaro a private security business, which is 
what Classification 7720 encompasses. 
{¶ 17} Consistent with Ohio Adm.Code 4123-17-08(D)’s directive to 
assign the “one basic classification that best describes the business of the 
employer within a state,” the bureau stresses that Classification 9015 specifically 
applies to “real estate management firms” performing “building operation.”  
(Emphasis added.)  It is the companion provision to classification 9012, discussed 
earlier.  Classification 9012 extends to “professional employees,” including 
“property managers, leasing agents, * * * clerical staff and outside salespersons.”  
Classification 9015 covers “[a]ll other employees” of a real estate management 
organization.  Since security personnel are not included within Classification 
9012, they, by default, fall under 9015. 
{¶ 18} Cafaro’s citation of a single reference to night watchmen in code 
9015’s scope provision is unpersuasive.  The provision’s express reference to “all 
other employees” of a real estate management firm encompasses both day and 
night security staff, regardless of any ancillary discussion of the latter. 
{¶ 19} Cafaro’s final challenge mirrors that raised as to its clerical 
workers.  Classification 9015’s catchall phraseology has resulted in placement of 
SUPREME COURT OF OHIO 
6 
its maintenance and security personnel in the same classification.  Cafaro claims 
that the former are more injury-prone and repeats its allegation that classification 
is not being assigned according to hazard.  Again, however, this claim is based 
solely on Cafaro’s own claims history.  It is not evidence that in the profession as 
a whole, maintenance work is more dangerous than security work. 
{¶ 20} We have stated:  “[Those] expert in this department of 
investigation, whose reports are founded upon experience touching the various 
hazards of industries and occupations, should be given important consideration * 
* * .”  Reaugh Constr., 119 Ohio St. at 209, 162 N.E. 800.  In the case at bar, 
Cafaro has not shown that its occupational reclassifications are arbitrary, 
capricious, or discriminatory, and we must accordingly uphold them. 
{¶ 21} A writ of mandamus is denied. 
Writ denied. 
 
MOYER, C.J., PFEIFER, LUNDBERG STRATTON, O’CONNOR, O’DONNELL, 
LANZINGER and CUPP, JJ., concur. 
__________________ 
Julian Heinrich and David A. Fantauzzi, for relator. 
Marc Dann, Attorney General, and Gerald H. Waterman and Derrick L. 
Knapp, Assistant Attorneys General, for respondent. 
______________________