[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. 

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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 
January Term, 2009 

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. 

______________________