[Cite as State ex rel. Sugardale Foods, Inc. v. Indus. Comm., 90 Ohio St.3d 383, 

2000-Ohio-185.] 

THE STATE EX REL. SUGARDALE FOODS, INC., APPELLANT, v. INDUSTRIAL 

COMMISSION OF OHIO ET AL., APPELLEES. 

[Cite as State ex rel. Sugardale Foods, Inc. v. Indus. Comm. (2000), 90 Ohio St.3d 

383.] 

Workers’ compensation — Mandamus sought by self-insured employer to vacate 

order of Industrial Commission authorizing claimant’s spinal surgery 

and to compel the commission to deny the authorization — Denial of writ 

affirmed. 

(No. 99-600 — Submitted September 12, 2000 — Decided December 20, 2000.) 

APPEAL from the Court of Appeals for Franklin County, No. 98AP-239. 

 Appellant, Sugardale Foods, Inc. (“Sugardale”), seeks a writ of mandamus 

to vacate the order of appellee Industrial Commission of Ohio authorizing 

appellee Clyde E. Sheets’s spinal surgery and to compel the commission to deny 

this authorization. The Franklin County Court of Appeals denied the writ, finding 

that the commission’s order was not an abuse of discretion. The court held that 

since the evidence of record established the reasonableness and necessity of 

Sheets’s surgery, the commission was not constrained by the general policy of the 

Bureau of Workers’ Compensation (“BWC”) against authorizing payment for it. 

Sugardale appeals as of right. 

 Sheets was injured in 1983 while working for Sugardale, a self-insured 

employer under the workers’ compensation system. His claim was allowed for 

several conditions, including “herniated disc L4-5, L5-S1; degenerated discs at 

L4-5, L5-S1.” Sheets later endured at least one surgical procedure and much 

physical therapy. By 1992, his orthopedist, Leonard G. Knell, M.D., 

recommended that Sheets’s “L4-5 and L5-S1 levels be fused with the addition of 
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Steffee plates and possibly interbody fusions” because of his “persistent 

symptoms.” Sheets had the Steffee plating surgery in 1994. 

 Steffee plating is used in conjunction with so-called pedicle screws as a 

construct for segmental spine fixation. As of 1994, this procedure had not been 

approved by the FDA and was generally considered too experimental by the BWC 

to qualify as a covered expense under its policy for medical claims against the 

State Insurance Fund. As a result, the BWC typically refused to authorize this 

procedure when requested for employees covered by the State Fund. But at least 

one such worker received the authorization. On May 16, 1990, Alan L. Wagner’s 

request for Steffee plating surgery was approved through BWC peer review. 

 Sugardale refused to pay for Sheets’s surgery on the ground that selfinsured employers could not be required to pay for procedures that the BWC 

would not have charged against the State Fund. Sheets moved for commission 

review, and the commission granted authorization for his Steffee plating surgery, 

but without responding to Sugardale’s argument that R.C. 4121.31(C), now 

4121.31(A)(3), required the commission to process medical claims against State 

Fund and self-insured employers uniformly. Sugardale complained about this 

oversight in a 1995 mandamus action, and the court of appeals agreed that the 

commission should have determined the effect of the policy Sugardale identified. 

The court therefore issued a limited writ to return the cause to the commission for 

further review. 

 Pursuant to the court of appeals’ order, the commission conducted another 

review and again ordered Sugardale to pay for Sheets’s surgery. The commission 

determined that while the BWC later abandoned its policy of denying claims 

against the State Fund for Steffee plating surgeries, this policy had still been in 

place at the time of Sheets’s 1994 operation. But the commission did not consider 

this policy absolutely controlling. It explained: 
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 “The Industrial Commission agrees with the employer that it is obligated 

by statute to establish consistent policies and operating procedures, and that all 

claims be processed in a uniform and timely manner. 

 “It is the finding of the Industrial Commission, however, that consistency 

in the processing of claims does not require uniformity in its decisions. Even in 

situations where the issues are identical (i.e., multiple requests for payment of 

surgical procedures requiring the use of Steffee plating), each claimant’s request 

requires an independent evaluation of the medical evidence on file by the 

adjudicator. It is within the discretion of the adjudicator to grant or deny issues 

based upon the facts and evidence presented at hearing. A policy which is 

adopted by both the Bureau of Workers’ Compensation and the Industrial 

Commission merely ensures that the initial review of an issue will be processed 

consistently by the agencies throughout the state. It does not require that 

subsequent adjudication of that issue be bound by a medical guideline.” 

(Emphasis sic.) 

 The commission went on to observe that all the medical evidence 

supported Sheets’s request for Steffee plating surgery, and it specifically quoted 

Dr. Knell’s report and recommendation. But in further justifying its conclusion, 

the commission wrote, “On 5-16-90, the claimant’s request for surgery was 

submitted to a peer review for consideration and was ultimately granted.” 

(Emphasis added.) There is no dispute that Sheets’s claim was never submitted 

for peer review and that only Alan Wagner’s Steffee plating surgery was 

authorized on May 16, 1990. 

 Sugardale then filed this original action in mandamus in the court of 

appeals. The court of appeals’ magistrate agreed that the commission’s policy 

was not absolutely controlling; however, she seized on the commission’s 

misstatement about the peer review for Sheets’s claim and found an abuse of 

discretion. The magistrate recommended that the commission be ordered to 
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decide whether Steffee plating was warranted even without Sheets’s claim having 

been subjected to peer review. 

 But after acknowledging the long procedural history of Sheets’s claim, the 

court of appeals rejected the magistrate’s recommendation to grant another 

limited writ. The court agreed that the general policy was not dispositive; 

however, it held that the commission properly ordered Sugardale to pay for 

Sheets’s surgery because (1) the commission had decided in its first order, 

without any peer review, that the medical evidence justified Sheets’s surgery, and 

(2) the court’s earlier writ had not required the commission to revisit the 

evidentiary basis for the Steffee plating authorization. The court of appeals 

therefore denied all relief. 

__________________ 

 Buckingham, Doolittle & Burroughs, LLP, and Eleanor J. Tschugunov, for 

appellant. 

 Betty D. Montgomery, Attorney General, and Gerald H. Waterman, 

Assistant Attorney General, for appellee Industrial Commission. 

 Brian & Brian, Richard F. Brian and Ryan D. Styer, for appellee Sheets. 

__________________ 

 LUNDBERG STRATTON, J. Three issues are presented for our review: (1) 

Does the commission have jurisdiction to adjudicate claims for medical costs? (2) 

Was the commission required to deny Sheets surgical authorization by its thencurrent policy concerning Steffee plating procedures? and (3) Should this cause 

be returned to the commission for further review? For the reasons that follow, we 

hold that (1) the commission is authorized to approve or disapprove of claimants’ 

medical costs, (2) the BWC’s Steffee plating policy was merely a guideline and 

not absolutely binding, and (3) the commission’s order is supported by evidence 

of record and needs no further review. Accordingly, we affirm the judgment of 

the court of appeals and deny the writ of mandamus. 
5 

Jurisdiction 

 Sugardale did not object or appeal when the court of appeals initially 

returned this cause to the commission to review the effect of its policy of refusing 

to authorize Steffee plating; however, it now contends that the commission lacks 

jurisdiction to adjudicate disputes over medical cost authorization. We consider 

this argument because it attacks the commission’s subject matter jurisdiction, and 

subject matter jurisdiction cannot be waived. In re Byard (1996), 74 Ohio St.3d 

294, 296, 658 N.E.2d 735, 737. But we are not persuaded. 

 Based on a variety of statutes, we have consistently held that the BWC and 

the commission share the power to oversee and determine the reasonableness and 

necessity of health care expenditures. State ex rel. Miller v. Indus. Comm. (1994), 

71 Ohio St.3d 229, 231-232, 643 N.E.2d 113, 115; State ex rel. Campbell v. 

Indus. Comm. (1971), 28 Ohio St.2d 154, 57 O.O.2d 397, 277 N.E.2d 219. And 

as the commission points out, its district hearing officers continue to have original 

jurisdiction under R.C. 4121.34(B)(3) in all “contested claims matters” (other 

than those belonging to staff hearing officers) arising under R.C. Chapter 4123, 

which must include claims for medical costs under R.C. 4123.66. 

Correspondingly, R.C. 4123.511(C) specifically requires the commission to refer 

to district hearing officers contested claims against self-insured employers. 

 Sugardale’s claimed authority for challenging the commission’s 

jurisdiction to review medical cost claims is R.C. 4121.121(B)(16)(a) and (17), 

formerly 4121.121(P)(1) and (Q). Section (B)(16)(a) empowers the BWC 

administrator to establish a medical section to help standardize medical fees, 

approve medical procedures, determine eligibility and reasonableness of medical 

costs, and produce guidelines for payment policies that recognize the usual, 

customary, and reasonable methods of payment for covered services. Section 

(B)(17) enables the administrator to appoint panels to review and advise in 
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disputes arising when a health care service has been determined not to be covered 

or to be medically unnecessary. 

 Sugardale claims that these statutes have dispensed with all commission 

review in medical cost claims because, in describing the peer review panels for 

such matters, Ohio Adm.Code 4123-7-27(K) specifies that “[t]he panel may 

conduct an informal hearing, and shall advise the administrator, whose decision 

shall be final.” However, we are not convinced that by authorizing panels to 

assist the administrator, the General Assembly empowered the BWC to pass a 

rule superseding, by a single line, the statutory and common law that has for years 

recognized the commission’s power to review medical cost claims. Instead, we 

consider Sheets’s explanation the more likely representation of legislative 

intent—that Ohio Adm.Code 4123-7-27(K) refers to the administrator’s decision 

being final, but only relative to the peer review panel’s recommendation. 

 Accordingly, we reject Sugardale’s proposition that the commission 

lacked jurisdiction over Sheets’s request for surgical authorization. 

The Commission’s Policy and Order 

 Sugardale also insists that the commission could not authorize a selfinsured employer to pay for Sheets’s procedure in the face of the BWC’s former 

policy to deny State Fund claims for Steffee plating surgery and the uniform 

processing requirements of R.C. 4121.31(A)(3). We disagree. 

 The BWC’s policy of denying authorization for procedures that are 

experimental or not FDA-approved, which generated the policy to deny Steffee 

plating procedures, was implemented pursuant to R.C. 4123.32(D). That statute 

describes such policies as “guidelines” and specifies that they are not 

administrative rules as defined by R.C. 119.01. Thus, the policy of denying 

payment for Steffee plating surgery is not so legally binding that it cannot be set 

aside. Rather, the policy could reasonably be disregarded when medical evidence 

removes the usual justification for rejecting these claims. 
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 Thus, as long as the BWC does not discriminate against self-insured 

employers by always requiring them to pay for surgeries such as the Steffee 

plating procedure, but refusing to authorize such surgeries in State Fund claims, 

the BWC is within its rights to lift its policy whenever it sees fit. And here, there 

is no compelling evidence of discrimination. As the court of appeals’ magistrate 

observed, the BWC’s peer review committee authorized payment of this 

procedure in the case of Alan Wagner’s State Fund claim, and that evidence 

undercuts Sugardale’s conspiracy theory. 

 The question remaining is whether we should give this cause back to the 

commission again to see if the misimpression that Sheets’s claim was subjected to 

peer review made a difference in authorizing his surgery. We agree with the court 

of appeals that further review is unnecessary. 

 The commission may have been mistaken about who received peer review 

approval for a Steffee plating procedure; however, the fact that the approval was 

given to someone is still some evidence of its medical legitimacy, as well as a 

basis for authorizing it, the usual policy notwithstanding. Moreover, the policy of 

denying Steffee plating authorization was abandoned in 1996, shortly after 

Sheets’s surgery, and the commission has already determined that “all medical 

evidence on file supports the claimant’s request for surgery with Steffee plating.” 

Based on this evidence, the conclusion that Sheets’s surgery was reasonable and 

necessary is all but inevitable. We simply cannot countenance adding yet another 

layer of review to stave off this foregone conclusion. 

 The court of appeals’ judgment, therefore, is affirmed. 

Judgment affirmed 

and writ denied. 

 DOUGLAS, RESNICK, F.E. SWEENEY and PFEIFER, JJ., concur. 

 MOYER, C.J., and COOK, J., dissent. 

__________________ 
8 

Cook, J., dissenting. I respectfully dissent from the majority’s holding to 

the extent that it denies a writ of mandamus granting further commission review 

in this case. 

 In complying with the court of appeals’ order to determine the effect of 

the policy to deny authorization for Steffee plating surgery, the commission found 

that the policy was in effect when it approved Sheets’s surgery, but also that the 

policy could be overcome on a case-by-case basis with sufficient medical 

evidence. The commission then seemed to find such evidence in the expert peer 

review opinion it mistakenly ascribed to Sheets’s claim. This is why the court of 

appeals’ magistrate found the commission’s mistake so significant. Apparently, 

the magistrate was concerned that the commission had relied on the peer review 

evidence as necessary to overcome the general rule against authorizing Steffee 

plating procedures. 

 I agree with the magistrate’s assessment of the commission’s order. The 

order suggests that the commission authorized Sheets’s surgery based on an 

erroneous conclusion that the surgery was supported by expert opinion in addition 

to that of Dr. Krell. Thus, at best, the majority’s denial of any relief ignores our 

tradition of returning ambiguous or confusing orders to the commission for 

clarification. State ex rel. Buttolph v. Gen. Motors Corp., Terex Div. (1997), 79 

Ohio St.3d 73, 75, 679 N.E.2d 702, 704. And at worst, the majority opinion runs 

afoul of the fundamental principle that the commission’s orders must be based on 

some evidence with adequate explanation. State ex rel. Noll v. Indus. Comm. 

(1991), 57 Ohio St.3d 203, 567 N.E.2d 245. 

 Accordingly, I would grant a writ of mandamus for the limited purpose of 

ordering the commission to review the effect of considering the wrong peer 

review on its decision to authorize Sheets’s surgery. 

 MOYER, C.J., concurs in the foregoing dissenting opinion.