Court Opinion

ID: 2692002
Source: CourtListenerOpinion
Date Created: 2014-08-01 21:15:35.684612+00
Date Added: 2024-06-11T09:58:49.831539
License: Public Domain

[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.
                                   ––––––––––––––––––
                                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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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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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

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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

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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.
                           ______________________

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