[Cite as State ex rel. K&D Group, Inc. v. Buehrer, 135 Ohio St.3d 257, 2013-Ohio-734.] 

THE STATE EX REL. K&D GROUP, INC., APPELLANT, v. BUEHRER, ADMR.,

APPELLEE. 

[Cite as State ex rel. K&D Group, Inc. v. Buehrer, 135 Ohio St.3d 257, 

2013-Ohio-734.] 

Workers’ compensation—Successor in interest—Experience rating. 

(No. 2011-1918—Submitted January 8, 2013—Decided March 6, 2013.) 

APPEAL from the Court of Appeals for Franklin County, 

No. 10AP-608, 2011-Ohio-5051. 

__________________

Per Curiam. 

{¶ 1} Appellant, K&D Group, Inc., filed a complaint in mandamus in the 

Franklin County Court of Appeals alleging that the Bureau of Workers’ 

Compensation abused its discretion when it transferred part of the experience 

rating of Mid-America Management Corporation (“Mid-America”) to K&D 

Group, Inc., as successor in interest. 

{¶ 2} For the reasons that follow, we hold that K&D Group, Inc., was 

not a successor in interest for purposes of workers’ compensation law. Thus, the 

bureau abused its discretion when it transferred part of Mid-America’s experience 

rating to K&D Group, Inc. We reverse the judgment of the court of appeals and 

issue a writ of mandamus. 

Facts 

{¶ 3} In 2004, K&D Enterprises, Inc., contracted with Fame-Midamco 

Company, L.L.C., through K&D Enterprises’s manager, Mid-America, to 

purchase an apartment complex known as the Euclid-Richmond Gardens. Prior to 

the closing, K&D Enterprises created a new company, Euclid-Richmond Gardens, 

Ltd., and assigned its rights under the purchase agreement to that new company. 

{¶ 4} Euclid-Richmond Gardens, Ltd., hired appellant, K&D Group, Inc. 

(“K&D Group”), a property-management company, to manage the apartments, 
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which were renamed Parkside Garden Apartments. K&D Group hired some 

former employees of Mid-America and assumed the day-to-day operations of the 

complex. 

{¶ 5} The bureau conducted an audit of K&D Group in 2009 and 

determined that it was the successor in interest to the business operations of MidAmerica. This determination authorized the bureau to base K&D Group’s 

experience rating in part on Mid-America’s past experience, which included a 

large workers’ compensation claim. 

{¶ 6} K&D Group filed a protest, arguing that it was not a successor in 

interest to Mid-America, because it had not been involved in the purchase of the 

apartment complex and it did not acquire anything in the transaction. Following a 

hearing, the bureau’s adjudicating committee denied the protest. The committee 

concluded that the bureau had correctly transferred the predecessor’s experience 

to K&D Group as the successor in interest: “The day to day operations of the 

apartment complex remained the same after the purchase. The K&D Group 

assumed the prior leases, retained some of the former employees and operated 

under the same manual numbers.”1

 K&D Group’s administrative appeal was 

denied. 

{¶ 7} K&D Group filed a mandamus action in the court of appeals. A 

magistrate concluded that the bureau had not abused its discretion. The court of 

appeals adopted the magistrate’s decision and denied the writ. 

{¶ 8} This cause is now before this court on an appeal as of right. 

Legal Analysis 

{¶ 9} When determining what an employer’s premium should be, the 

bureau follows the fundamental concept that rates are determined by “projecting 

the experience of the past into the future.” Fulton, Ohio Workers’ Compensation 

 

1. The term “manual number” refers to the bureau’s classification of an employer’s business 

according to its degree of hazardousness. Ohio Adm.Code 4123-17-08. 
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Law, Section 14.4, at 567 (3d Ed.2008). The bureau groups employers with 

similar operations into classifications based on the risk exposures common to 

those employers. Each classification is assigned a number known as the “manual 

number.” Generally, it is the employer’s business that is classified, not the 

separate occupations within the business. See Ohio Adm.Code 4123-17-08. The 

bureau also relies on experience rating. 

[E]xperience rating [is] a concept used to determine whether a 

particular employer should be assigned premium rates higher than 

or less than the “basic rate” that is assigned to employers within 

the same classification. In experience rating, the employer’s past 

claims history, or experience, is consulted to compute a rate that 

produces premiums sufficient to pay future claims. 

State ex rel. Crosset Co., Inc. v. Conrad, 87 Ohio St.3d 467, 473, 721 N.E.2d 986 

(2000). 

{¶ 10} The bureau transferred part of Mid-America’s experience rating to 

K&D Group pursuant to its authority under R.C. 4123.32(C) and Ohio Adm.Code 

4123-17-02. R.C. 4123.32(C) authorizes the bureau to adopt rules concerning 

premiums in order to safeguard the State Insurance Fund. The bureau 

administrator may make rules to cover 

the rates to be applied where one employer takes over the 

occupation or industry of another * * *, and the administrator may 

require that if any employer transfers a business in whole or in part 

* * *, the successor in interest shall assume, in proportion to the 

extent of the transfer, * * * the employer’s account. 
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(Emphases added.) 

{¶ 11} The rule to determine rates for succeeding employers is Ohio 

Adm.Code 4123-17-02(B)(3), which provides: 

Where a legal entity succeeds in the operation of a portion 

of a business of one or more legal entities having an established 

coverage or having had experience in the most recent experience 

period, the successor’s rate shall be based on the predecessor’s 

experience within the most recent experience period, pertaining to 

the portion of the business acquired by the successor. 

(Emphasis added.) 

{¶ 12} Thus, for the bureau to transfer the experience rating from a 

predecessor employer to a successor employer, there must be a transfer of 

business either in whole or in part and the successor employer must be the 

successor in interest. “[A] successor-in-interest, for workers’ compensation 

purposes, is simply a transferee of a business in whole or in part.” State ex rel. 

Lake Erie Constr. Co. v. Indus. Comm., 62 Ohio St.3d 81, 83-84, 578 N.E.2d 458 

(1991). 

{¶ 13} K&D Group contends that it is not a successor in interest of MidAmerica. First, K&D Group argues that it was not a party to the sale of the 

apartments and it did not acquire any assets as a result of the transaction. But 

neither R.C. 4123.32(C) nor Ohio Adm.Code 4123-17-02(B)(3) requires the 

transfer of assets. The focus of the statute and the rule is the transfer of business 

operations or labor, not the legal concept of corporate succession. R.C. 

4123.32(C) (“where one employer takes over the occupation or industry of 

another” [emphasis added]); Ohio Adm.Code 4123-17-02(B)(3) (“Where a legal 

entity succeeds in the operation of a portion of a business * * *” [emphasis 
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added]). A business operation may be transferred through methods other than a 

purchase. For instance, an employer was considered a successor in interest for 

experience-rating purposes when it leased a nursing-home facility and continued 

the ongoing business of the predecessor employer. State ex rel. Lynnhaven XIV, 

L.L.C. v. Conrad, 10th Dist. No. 02AP-36, 2003-Ohio-825, 2003 WL 462506. 

{¶ 14} Next, K&D Group contends that it cannot be a successor in interest 

to Mid-America, because there was no direct transfer of the business from MidAmerica to K&D Group. K&D Group relies on State ex rel. Valley Roofing, 

L.L.C. v. Ohio Bur. of Workers’ Comp., 122 Ohio St.3d 275, 2009-Ohio-2684, 

910 N.E.2d 1018, in which this court held that an employer is not a successor in 

interest if the business assets of the predecessor entity are purchased from a bank, 

not directly from the predecessor entity. Id. at ¶ 5. 

{¶ 15} In that case, Valley Roofing Company, L.L.C., had purchased the 

assets of Tech Valley Contracting, Inc., from PNC Bank after foreclosure and 

continued the business operation. The bureau transferred Tech Valley’s 

experience rating to Valley Roofing as a successor in interest. But this court held 

that Valley Roofing was not a successor in interest, because Valley Roofing had 

acquired the assets from an intermediary bank. Id. at ¶ 6. “Successor in interest,” 

as defined in Lake Erie, 62 Ohio St.3d 81, 578 N.E.2d 458, “does not apply if the 

business assets of the predecessor entity have been purchased from a bank and not 

directly from that employer. * * * ‘The language of [R.C. 4123.32(C)] clearly 

refers to a voluntary act of the employer and not the involuntary transfer of the 

employer’s business through an intermediary bank.’ ” Valley Roofing at ¶ 5, 

quoting State ex rel. Crosset Co., 87 Ohio St.3d at 471, 721 N.E.2d 986. 

{¶ 16} Here, there is no evidence that Mid-America voluntarily 

transferred the business of managing the apartment complex to K&D Group. The 

bureau emphasized that K&D Group hired some former employees of MidAmerica, assumed management of the leases that the prior apartment-complex 
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owner had with its tenants, and operates under the same workers’ compensation 

manual numbers as Mid-America. But these facts are not sufficient to show that 

Mid-America voluntarily transferred its business operation to K&D Group for 

purposes of workers’ compensation. K&D Group merely contracted with the new 

owner to assume management of the existing apartment complex. Thus, the 

bureau abused its discretion when it treated K&D Group as a successor in interest. 

Conclusion 

{¶ 17} K&D Group has demonstrated that it has a clear legal right to the 

relief requested because it was not a successor in interest to the business 

operations of Mid-America for purposes of workers’ compensation. The bureau 

abused its discretion when it transferred part of Mid-America’s experience rating 

to K&D Group based on R.C. 4123.32(C) and Ohio Adm.Code 4123-17-02. 

Thus, we reverse the judgment of the court of appeals and issue a writ of 

mandamus ordering the bureau to determine K&D Group’s experience rate 

without taking into consideration Mid-America’s experience rate. 

Judgment reversed 

and writ granted. 

O’CONNOR, C.J., and PFEIFER, O’DONNELL, LANZINGER, KENNEDY,

FRENCH, and O’NEILL, JJ., concur. 

__________________ 

Calfee, Halter & Griswold, L.L.P., Thomas I. Michals, and Jeffrey J. 

Lauderdale, for appellant. 

Michael DeWine, Attorney General, and Stephen D. Plymale, Assistant 

Attorney General, for appellee Bureau of Workers’ Compensation. 

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