[Cite as State ex rel. Accurate Inventory & Calculating Servs. v. Buehrer, 2016-Ohio-7004.]

                              IN THE COURT OF APPEALS OF OHIO

                                   TENTH APPELLATE DISTRICT


State of Ohio ex rel.                                   :
Accurate Inventory & Calculating
Services, Inc.,                                         :

                 Relator,                               :

v.                                                      :                         No. 14AP-1008

Stephen Buehrer, Administrator/                         :                   (REGULAR CALENDAR)
CEO, the Ohio Bureau of
Workers' Compensation,                                  :

                 Respondent.                            :




                                            D E C I S I O N

                                   Rendered on September 27, 2016


                 Garvin & Hickey, LLC, Preston J. Garvin, Daniel M. Hall,
                 and Sandee E. Reim, for relator.

                 Michael DeWine, Attorney General, and John Smart, for
                 respondent.


                                   IN MANDAMUS
                    ON OBJECTIONS TO THE MAGISTRATE'S DECISION

KLATT, J.
        {¶ 1} Relator, Accurate Inventory & Calculating Services, Inc., commenced this
original action in mandamus seeking an order compelling respondent, the administrator
of the Ohio Bureau of Worker's Compensation ("bureau"), to vacate the May 6, 2014 order
of the administrator's designee denying relator's protest of the bureau's audit of the
period July 1, 2012 to June 30, 2013, in which the bureau activated operational manual
No. 14AP-1008                                                                            2

8725 and removed manuals 8720 and 8810 from the policy, and to enter an order that
grants relator's protest.
       {¶ 2} Pursuant to Civ.R. 53(C) and Loc.R. 13(M) of the Tenth District Court of
Appeals, we referred this matter to a magistrate who issued a decision, including findings
of fact and conclusions of law, which is appended hereto. The magistrate found that
under the circumstances presented, Ohio Adm.Code 4123-17-08(B) prohibits relator from
being assigned one basic classification (manual 8725) and one standard exception
classification (manual 8810) as sought by relator.         Therefore, the magistrate has
recommended that we deny relator's request for a writ of mandamus.
       {¶ 3} Relator has filed objections to the magistrate's decision.        In its first
objection, relator argues that the magistrate erred when he found that relator must meet
all three of the conditions set forth in Ohio Adm.Code 4123-17-08(D)(3)(a) through
(D)(3)(c). We disagree.
       {¶ 4} First, by its express terms, Ohio Adm.Code 4123-17-08(D) requires that for
more than one basic classification to be assigned to an insured, the insured must meet all
three conditions set forth in Ohio Adm.Code 4123-17-08(D)(3)(a) through (D)(3)(c). To
the extent that the state insurance fund manual conflicts with the language of Ohio
Adm.Code 4123-17-08(D)(3), the code provision is controlling.
       {¶ 5} Second, as noted by the magistrate, relator's argument is a red herring
because relator does not actually seek the application of more than one basic
classification. Rather, relator seeks to be assigned one basic classification (manual 8725)
and one standard exception classification (manual 8810). As noted by the magistrate,
Ohio Adm.Code 4123-17-08(B) prohibits the assignment of standard exception manual
8810 to relator because basic classification manual 8725 expressly includes clerical office
employees.
       {¶ 6} For these reasons, we overrule relator's first objection.
       {¶ 7} In its second objection, relator argues the magistrate erred when he failed to
address two additional arguments advanced by relator: (1) the administrator's designee
erred when he suggested that if relator divested itself of its Ohio inventory business, or
established the Ohio inventory workers as a separate and distinct corporation, it is likely
that relator would qualify for manual 8810; and (2) that Ohio Adm.Code 4123-17-08(D)
No. 14AP-1008                                                                            3

violates equal protection by limiting the types of employers or operations that are
permitted to report employees under more than one manual classification without
justification.   However, relator makes no attempt to explain why either of these
arguments have merit. Nor does relator cite any statutory or case authority supporting
these arguments.
       {¶ 8} Although we agree that the magistrate did not expressly address these
arguments, the arguments lack merit on their face and do not support the grant of a writ
of mandamus. Therefore, we overrule relator's second objection.
       {¶ 9} Following an independent review of this matter, we find that the magistrate
has properly determined the facts and applied the appropriate law. Therefore, we adopt
the magistrate's decision as our own, including the findings of fact and conclusions of law
contained therein. In accordance with the magistrate's decision, we deny relator's request
for a writ of mandamus.
                                         Objections overruled; writ of mandamus denied.

                               TYACK and SADLER, JJ., concur.
No. 14AP-1008                                                                             4

                                        APPENDIX

                          IN THE COURT OF APPEALS OF OHIO

                              TENTH APPELLATE DISTRICT

State of Ohio ex rel.                          :
Accurate Inventory & Calculating
Services, Inc.,                                :

              Relator,                         :

v.                                             :                      No. 14AP-1008

Stephen Buehrer, Administrator/                :                   (REGULAR CALENDAR)
CEO, the Ohio Bureau of
Workers' Compensation,                         :

              Respondent.                      :



                          MAGISTRATE'S DECISION

                                 Rendered on May 26, 2016


              Garvin & Hickey, LLC, Preston J. Garvin, Daniel M. Hall,
              and Sandee E. Reim, for relator.

              Michael DeWine, Attorney General, and John Smart, for
              respondent Industrial Commission of Ohio.


                                      IN MANDAMUS

       {¶ 10} In this original action, relator, Accurate Inventory & Calculating Services,
Inc. ("Accurate Inventory"), requests a writ of mandamus ordering respondent, the
Administrator of the Ohio Bureau of Workers' Compensation ("administrator" or
"bureau"), to vacate the May 6, 2014 order of the administrator's designee that denied
relator's protest of the bureau's audit of the period July 1, 2012 to June 30, 2013 in which
the bureau activated operational manual 8725 and removed manuals 8720 and 8810 from
the policy, and to enter an order that grants relator's protest.
No. 14AP-1008                                                                             5

Findings of Fact:
       {¶ 11} 1. Relator provides physical inventory audits for gas stations and
convenience stores. It currently employs 31 people in Ohio. Fourteen of those are clerical
support staff and seventeen are auditors who work at gas stations and convenience stores
in Ohio.
       {¶ 12} 2. Accurate Inventory employs approximately 186 auditors in 34 states and
the District of Columbia. There are no additional support staff employees in other states.
The headquarters of Accurate Inventory is located in Columbus, Ohio. Thus, the support
staff provide support to relator's auditors nationwide.
       {¶ 13} 3. In late October 2013, the bureau's underwriting department completed
an audit of relator for the period July 1, 2012 to June 30, 2013.
       {¶ 14} 4. By letter dated November 27, 2013, the bureau's director of underwriting
informed relator that manual 8725 was being activated effective July 1, 2013 and that
relator was to no longer report payroll under manuals 8720 and 8810.         5. Prior    to
1993, the bureau used its own system to categorize operations.         In 1993, the Ohio
Legislature required the bureau to replace this system with the classifications used by the
National Council on Compensation Insurance ("NCCI"). See R.C. 4123.29(A)(1).
       {¶ 15} 6. Prior to the bureau's audit, relator had for many years reported its
payroll under manuals 8720 and 8810.
       {¶ 16} 7. The NCCI phraseology for manual 8720 is "INSPECTION OF RISKS
FOR INSURANCE OR VALUATION PURPOSES NOC."
       {¶ 17} 8. The NCCI manual phraseology for manual 8810 is "CLERICAL OFFICE
EMPLOYEES NOC."
       {¶ 18} 9. The NCCI activated manual 8725, effective July 1, 2010.                The
NCCI phraseology       is     "INVENTORY          COUNTERS─TRAVELING─INCLUDING
SALESPERSONS & CLERICAL."
       {¶ 19} 10. By letter dated December 6, 2013, the bureau's underwriting
department notified relator that the audit findings have been affirmed and that relator
could appeal to the adjudicating committee under R.C. 4123.291.
       {¶ 20} 11. On December 13, 2013, on a form provided by the bureau (Legal-15)
relator filed an "Application for Adjudication Hearing."
No. 14AP-1008                                                                        6

      {¶ 21} 12. On December 23, 2013, the secretary of the adjudicating committee
issued a document captioned "STATEMENT OF PROTEST." The document states:
             Background Facts and Issues Presented: The Bureau
             audited the employer, for the period from July 1, 2012 to
             June 30, 2013. The auditor found that the employer should
             have reported certain employees under its operational
             manual 8725. Instead, the employer had reported the payroll
             to 8810 (Clerical Office).

             The employer protested the finding and requested a hearing
             before the Adjudicating Committee.

      {¶ 22} 13. On January 8, 2014, the bureau's three-member adjudicating
committee ("AC") heard relator's protest. The hearing was not recorded. Thereafter, the
AC issued an order denying the protest. The AC order explains:
             Background Facts and Issues Presented: The bureau
             audited the employer for the period from July 1, 2012 to
             June 30, 2013. Prior to the audit, the employer had
             operational manual 8720 and manual 8810 for clerical
             employees. The audit activated operational manual 8725 and
             removed 8720 and 8810 from the policy because manual
             8725 include[d] clerical office employees. The employer
             protested the finding and requested a hearing before the
             Adjudicating Committee.

             ***

             Employer's Position: The employer provides physical
             inventory audits for gas stations and convenience stores.
             There are 31 employees in Ohio with 14 being support staff
             workers that work in an office environment. The company
             operates in 55 markets around the country and in 35 states.
             The degree of hazard faced by the office workers are much
             lower than the hazard faced by the field staff. The clerical
             office employees have never suffered a worker's
             compensation claim injury. Moving the clerical staff payroll
             to the operational manual creates a 1,849% increase in
             premiums.

             Bureau's Position: The employer was assigned basic
             manual 8725, which includes clerical work. Manual 8810
             was removed from the policy because the 8810 employees
             are specifically included within the phraseology of the basic
             classification. NCCI Scopes considers manual 8725 a
No. 14AP-1008                                                                 7

           composite manual classification. Code 8810 is only applied
           to clerical office employees provided they are not otherwise
           classified in the basic manual.

           Findings of Fact and Conclusion of Law:

           In order to make a decision on the classification issue, a brief
           history of the setting of manual classifications must be
           discussed. Prior to 1993, the bureau used its own system to
           categorize operations. In 1993, the legislature required the
           bureau to replace this system with the classifications used by
           the National Council on Compensation Insurance ("NCCI").
           See RC 4123.29 (A)(1); Am.Sub.H.B. No. 107, 145 Ohio Laws,
           Part II, 3113. Under RC 4123.29(A)(1), "...subject to the
           approval of the bureau of workers' compensation board of
           directors," the duties of the Administrator include
           [c]lassify[ing] occupations or industries with respect to their
           degree of hazard and determin[ing] the risks of the different
           classes according to the categories the national council on
           compensation insurance establishes that are applicable to
           employers in this state[.]"

           Ohio Adm.Code 4123-17-08(D), in implementing the NCCI
           classifications, states, "The purpose of the 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." Per 4123-17-08, "[t]he purpose of the
           classification system is to group employers with similar
           operations into classifications so that [t]he assigned
           classification reflects the exposures common to those
           employers [and] [t]he rate charged reflects the exposure to
           loss common to those employers." Additionally, "[s]ubject to
           certain exceptions, it is the business of the employer within a
           state that is classified, not separate employments,
           occupations or operations within the business." Ohio
           Adm.Code 4123-17-08 (A)(1) & (2).

           The NCCI manual description for 8810 states the manual is
           to be used unless the clerical employees are specifically
           included in the phraseology of a basic classification:

           PHRASEOLOGY CLERICAL OFFICE EMPLOYEES NOC
           Description:
No. 14AP-1008                                                                8

           Code 8810 is applied to clerical office employees provided
           they are not otherwise classified in the Basic Manual. * * *
           Code 8810 employees are common to so many businesses
           that they are considered to be Standard Exceptions unless
           they are specifically included within the phraseology of a
           basic classification. * * *

           Prior to the audit, the policy had manual 8720 for its
           operational manual which does not include clerical
           employees within the phraseology of the classification.
           Therefore, manual 8810, a standard exception manual, was
           appropriate to use when 8720 was the operational manual.
           Ohio Adm.Code 4123-17-08(B)(2)(a) provides manual 8810
           is assigned when "the basic classification(s) wording
           applicable to the business does not include clerical office,
           drafting or telecommuting employees..."

           NCCI activated manual 8725 for use effective July 1, 2010
           which includes clerical in its phraseology:

           "PHRASEOLOGY       INVENTORY       COUNTERS-
           TRAVELING-INCLUDING SALESPERSONS & CLERICAL."

           Ohio Adm.Code 4123-17-08(C)(2)(d) also instructs how
           clerical employees are treated when the phraseology has
           "Includes" or "&."

           If the classification wording uses the terms "includes" or "&,"
           the operation or employees cited after those terms must not
           be assigned to a separate classification. This applies even
           though the operation or employees may be described by
           another classification or are at a separate location.

           Examples of classification that include the terms "includes"
           or "&":

           ***

           (iii) Code 8832 (physician & clerical); all clerical employees
           must be included in this classification.

           The NCCI classifications are used in 38 states so manual
           classification 8725 would be assigned in one of these 38
           states. There is no dispute that manual 8725 best describes
           the business of the employer.
No. 14AP-1008                                                                          9

             The payroll history for this employer's policy reflects that the
             rate in the first half of 2013 for manual 8810 was 0.002426
             and the rate for manual 8725 was 0.047197. The bulk of the
             employer's payroll had been reported to manual 8810 so the
             change in manual classification did cause a large increase in
             premiums. This Committee, however, has no discretion to
             deviate from the classes established by NCCI or manipulate
             established rates. In workers' compensation systems, each
             classification determines its own rate. Generally, the total
             losses of each classification, when compared to the total
             payroll of the classification, produce the rate of contribution
             from the employers within that classification. Over time the
             loss experience in manual 8725 may lower which in turn
             would lower the rate for the manual.

             Another factor that affects premiums is the experience
             modifier. An employer who has a better than average loss
             experience receives a credit against the basic rate for its
             classification, and conversely, an employer who has a bad
             loss experience is penalized and has to pay a rate higher than
             the basic rate. The employer was debit rated at 1.37 in the
             first half of 2013 so the higher premiums are also
             attributable to the employer's above average loss experience.

                                       Conclusion

             The Adjudicating Committee DENIES the employer's
             protest. The employer was properly assigned manual
             classification 8725 which includes clerical office workers
             within the classification. Therefore, as discussed above,
             manual 8810 cannot be assigned as a separate classification.

(Emphasis sic.)

      {¶ 23} 14. Relator administratively appealed the AC order to the administrator's
designee pursuant to R.C. 4123.291.
      {¶ 24} 15. On May 6, 2014, Barrett Crook, the Vice President of Accurate
Inventory, executed an affidavit which relator submitted to the administrator's designee.
The Crook affidavit avers:
             [Two] Accurate Inventory is a company that specializes in
             providing physical inventory audits at convenience stores.
             Accurate Inventory has approximately 200 employees and
             we perform these services in 34 states and the District of
             Columbia.
No. 14AP-1008                                                                  10


             [Three] Accurate Inventory is headquartered in Columbus,
             Ohio. We have a support staff of approximately 14 people
             who provide clerical and office support for the approximately
             186 employees who perform services in the 34 different
             states and the District of Columbia. The office and clerical
             employees work at our corporate offices * * *. These 14
             employees account for approximately 70% of our Ohio
             payroll.

             [Four] Of the 186 employees who are in the field performing
             inventory work, only 14 perform that work in the state of
             Ohio. They account for approximately 30% of our Ohio
             payroll. If we cease performing inventory work in Ohio, we
             would still need our office and clerical employees to provide
             support for the 172 employees in the other 33 states and the
             District of Columbia. A small percentage of our inventory
             work is performed in the state of Ohio. We have received
             advice that, for workers' compensation purposes, we should
             divest ourselves of our Ohio inventory operations. If we were
             to do so, our Ohio office and clerical personnel would
             continue to function to support the other employees.

      {¶ 25} 16. Also on May 6, 2014, L. Jeffrey Kemo, executed an affidavit which
relator submitted to the administrator's designee. The Kemo affidavit avers:
             [One] I am the Senior Account Representative of
             Compensation Solutions, Inc. Prior to joining Compensation
             Solutions, Inc. I was the Chief Underwriter in the state
             funded department at Frank Gates Service Company for 26
             years. Prior to my service at Frank Gates Service Company I
             was employed by the Ohio Bureau of Workers'
             Compensation as a Deputy Underwriter. I have counseled
             employers on manual classification and rates. I am familiar
             with the NCCI classifications, having worked with them since
             they were adopted by the Ohio Bureau of Workers'
             Compensation.

             [Two] I have reviewed the facts of Accurate Inventory and
             Calculating Service, Inc. This company is not a client of
             Compensation Solutions, Inc. I have been asked to review
             the facts and give my opinion on the proper manual
             classifications for the company's operations.

             [Three] The facts presented in the Accurate Inventory
             company situation are very unusual.
No. 14AP-1008                                                                            11

              [Four] The NCCI manual classifications provide that the
              employer's primary business operations should be assigned
              the manual classification. Support staff such as office and
              clerical are generally considered incidental payroll to support
              the overall operation. Therefore, the incidental payroll is
              included in the primary classification. However, the code
              provides for exceptions as set forth at 4123-17-08 (D) (3).

              [Five] Accurate Inventory is unusual in that its primary
              operation in Ohio is office and clerical. This is due to the fact
              that the office and clerical employees provide support to
              employees in 34 markets outside of Ohio.

              [Six] It is my opinion that Accurate Inventory meets the
              criteria for an exception under OAC 4123-17-08 (D) (3) (c) (i)
              (a) (b) (c). Accurate Inventory conducts more than one
              operation in Ohio. The rule provides that to qualify for a
              separate classification, the insured's additional operation
              must (a) be able to exist as a separate business if the
              insured's principal business in the state ceased to exist.
              Clearly the clerical operations would continue existing in
              Ohio even if the inventory business ceased to exist in Ohio.

              [Seven] The second provision of the rule provides that the
              operations must be physically separate. In the Accurate
              Inventory situation the inventory work is done at the
              customer's place of business, namely convenience stores. The
              office and clerical employees are not physically connected to
              the inventory operations. The office work is performed at a
              separate location.

              [Eight] The last provision states that there must be separate
              payroll records. That is clearly the case here. It is my
              understanding that Accurate Inventory has been keeping
              separate payroll records for the office and clerical for many
              years.

              [Nine] Therefore, based on the foregoing it is my opinion
              that Accurate Inventory meets the criteria for separate
              manual classifications.

       {¶ 26} 17. On May 6, 2014, the administrator's designee heard relator's appeal
from the AC order.     The hearing was not recorded.        Thereafter, the administrator's
designee issued a six-page order that denies relator's appeal, but modifies the decision of
the AC.
No. 14AP-1008                                                                    12

     {¶ 27} 18. The May 6, 2014 order of the administrator's designee, states:
           This case involves a relatively simple issue, whether Accurate
           Inventory is entitled to use multiple manuals for its
           employees to more precisely categorize their risk, or whether
           Accurate Inventory must use a composite manual at the
           same manual rate that includes all of its Ohio employees,
           even if those employees are subject to different risks.

           The manual classifications in question are manuals 8720,
           8810, and 8725. As indicated in the Adjudicating Committee
           order, Accurate Inventory originally reported its employees
           under manuals 8720 and 8810. In 2010, the NCCI and the
           Bureau adopted a new manual, 8725, that better describes
           the nature of Accurate Inventory's business. Manual 8725
           specifically includes clerical employees of the business in the
           manual:

           8725

           PHRASEOLOGY:       INVENTORY    COUNTERS     -
           TRAVELING - INCLUDING SALESPERSONS & CLERICAL

           Description:

           Code 8725 is applicable to inventory-counting firms that are
           hired by others to provide a count or value of inventory for
           single or multiple locations of a client. The information can
           be gathered manually with pen and paper, voice recorder, or
           specialized handheld computers that are usually attached to
           a belt loop and rest on the thigh of a user for easy data entry.
           Counts can be completed during business hours or while
           locations are closed. Businesses using inventory-counting
           services can range from gasoline stations with a small
           amount of retail items, to wholesale and department stores
           of various sizes, to warehouse distributors. These counts can
           be on a one-time basis or on a regular basis for quarterly
           review or year-end count and valuation of inventory. ...
           (emphasis added)

           Note that the basic description of manual 8725 includes
           clerical employees: "Phraseology: inventory counters-
           traveling - including salespersons & clerical" (emphasis
           added). An employer may not use manual 8810 if it is
           included in the basic description of the employer's business:

           8810
No. 14AP-1008                                                                13


           PHRASEOLOGY: CLERICAL OFFICE EMPLOYEES NOC

           Description:

           Code 8810 is applied to clerical office employees provided
           they are not otherwise classified in the Basic Manual.
           Clerical employees who perform telecommuting activities
           may qualify for Code 8871—Clerical Telecommuter
           Employees. Refer to Code 8871's scope for conditions under
           which a telecommuting employee's pay should be assigned to
           this code.

           Code 8810 employees are common to so many businesses
           that they are considered to be Standard Exceptions unless
           they are specifically included within the phraseology of a
           basic classification. … (emphasis added).

           Accurate Inventory testified that it is in the business of
           conducting convenience store inventories for contract
           clients. Accurate Inventory has approximately 200
           employees in 34 states, including Ohio (May 6, 2014,
           Affidavit of Barrett Crook, Vice President of Accurate
           Inventory, at ¶ 2). Accurate Inventory has its headquarters in
           Columbus, Ohio, and has about 14 clerical support staff in
           Columbus, and also approximately 14 Ohio Inventory
           workers. The 14 clerical staff workers account for
           approximately 70% of the Ohio payroll (see Crook Affidavit,
           ¶ 3). Accurate Inventory testified that even if they did no
           inventory work in Ohio, they would still have and need the
           support staff to provide support for the inventory workers in
           the other states where they do business (see Crook Affidavit,
           ¶ 4).

           Accurate Inventory submitted the May 6, 2014, Affidavit of
           L. Jeffrey Kemo, asserting that Accurate Inventory qualified
           to use manual 8810 as a standard exception. Accurate
           Inventory states that it is operating two separate businesses
           in Ohio; one that does inventory calculating and another that
           does the corporate office support for the overall business
           operations in multiple states. Kemo's Affidavit states that
           Accurate Inventory qualifies for a standard exception under
           rule 4123-17-08(D)(3)(c)(i)(a) to (D)(3)(c)(i)(c). Kemo states
           that Accurate Inventory's clerical services would still be able
           to exist, to support the operations in other states, if they
           were to eliminate the inventory counters in Ohio. Kemo also
           states that there is a separation of businesses and that the
No. 14AP-1008                                                                 14

           fact that the office employees operate in the office and the
           inventory counters operate on location meets the separation
           required by the rule (see Kemo Affidavit, ¶ 6 and ¶ 7).

           The Bureau representative stated that the Bureau assigned
           manual 8725 after an audit. The Bureau's representative
           believes that the exception to the rule does not apply, since
           the clerical duties could not exist without the existence of the
           inventory counters. Therefore, the business cannot be
           considered to be two separate operations.

           Rule 4123-17-08, "Classifications according to national
           council on compensation insurance," provides the basic
           Bureau rules for determining an employer's manual
           classifications, and contains the language referenced in the
           Kemo Affidavit in support of Accurate Inventory's quest to
           retain manual 8810. Paragraph (D) of the rule provides:

           (D) Classification procedures.

           The purpose of the 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.

           It is the business that is classified, not the individual
           employments, occupations or operations within the business.

           Certain exceptions apply and are noted below...

           (3) Assignment of more than one basic classification.

           More than one basic classification may be assigned to an
           insured who meets conditions set forth in paragraphs
           (D)(3)(a) to (D)(3)(c) of this rule. Operation means activities,
           enterprises,    processes,      secondary     businesses     or
           undertakings.

           (a) The insured's principal business is described by a basic
           classification that requires certain operations or employees
           to be separately rated.

           (b) The insured conducts one or more of the following
           operations:

           (i) Construction or erection.
No. 14AP-1008                                                                 15


           (ii) Farming.

           (iii) Employee leasing, labor contracting, temporary labor
           services.

           (iv) Mercantile business.

           (c) The insured conducts more than one operation in a state.
           (i) For purposes of this rule, an insured is conducting more
           than one operation in a state if portions of the insured's
           operations in that state are not encompassed by the
           classification applicable to the insured's principal business.
           To qualify for a separate classification, the insured's
           additional operation must:

           (a) Be able to exist as a separate business if the insured's
           principal business in the state ceased to exist.

           (b) Be located in a separate building, or on a separate floor in
           the same building, or on the same floor physically separated
           from the principal business by structural partitions.
           Employees engaged in the principal business must be
           protected from the operating hazards of the separate
           additional operations.

           (c) Maintain proper payroll records. Refer to paragraph
           (F)(2) of this rule on maintenance of proper payroll records.

           Note that the rule requires that the employer must meet all
           three of the "conditions set forth in paragraphs (D)(3)(a) to
           (D)(3)(c)" of the rule. Even if the Administrator's Designee
           agrees that Accurate Inventory satisfies the criteria of rule
           4123-17-08(D)(3)(c)(i)(a) to (D)(3)(c)(i)(c) as asserted in the
           Kemo Affidavit, Accurate Inventory must also meet the
           criteria of rule 4123-17-08(D)(3)(a) and (D)(3)(b). Simply
           stated, the rule only applies to the businesses mentioned in
           paragraph (D)(3)(b): construction or erection; farming;
           employee leasing, labor contracting, temporary labor
           services; or mercantile businesses. Unfortunately, Accurate
           Inventory does not satisfy this rule requirement. Therefore,
           the Administrator's Designee cannot apply this rule to
           Accurate Inventory in this case.

           The Administrator's Designee is sympathetic to the situation
           that Accurate Inventory faces in this case. As discussed at the
           hearing, if Accurate Inventory were to divest its Ohio
No. 14AP-1008                                                                               16

              inventory business, or perhaps establish the Ohio inventory
              workers as a separate and distinct corporation, it is likely
              that the Accurate Inventory's clerical employees at its Ohio
              headquarters would qualify for manual 8810. Of course, it is
              up to Accurate Inventory to determine its best course of
              action with respect to its business organization based upon
              this order.

(Emphasis sic.)
             Therefore, the Administrator's Designee DENIES the
             employer's appeal but MODIFIES the decision of the
             Adjudicating Committee. The Administrator's Designee finds
             that, as presently organized, Accurate Inventory does not
             qualify for manual 8810. However, the Administrator's
             Designee orders that the audit findings be made prospective
             only from July 1, 2014, in order to permit Accurate Inventory
             the opportunity to determine whether it wishes to reorganize
             its business based upon this order.

       {¶ 28} 19. On December 8, 2014, relator, Accurate Inventory & Calculating
Services, Inc., filed this mandamus action.
Conclusions of Law:
       {¶ 29} It is the magistrate's decision that this court deny relator's request for a writ
of mandamus, as more fully explained below.
       {¶ 30} Effective July 12, 2012 and currently, Ohio Adm.Code 4123-17-08 is
captioned "Classifications according to national council on compensation insurance."
              Thereafter, the code provides:
              (A) Classification system.

              (1) The purpose of the classification system is to group
              employers with similar operations into classifications so
              that:

              (a) The assigned classification        reflects   the   exposures
              common to those employers.

              (b) The rate charged reflects the exposure to loss common to
              those employers.

              (2) Subject to certain exceptions, it is the business of the
              employer within a state that is classified, not separate
              employments, occupations or operations within the business.
No. 14AP-1008                                                                17

           (B) Explanation of classifications.

           Classifications are divided into two types -              basic
           classifications and standard exception classifications.

           (1) Basic classifications.

           Basic classifications describe the business of an employer.
           This term is applied to all classifications listed in this
           manual, except for the standard exception classifications.
           ***

           (2) Standard exception classifications.

           Standard exception classifications describe occupations that
           are common to many businesses. These common
           occupations are not included in a basic classification unless
           specified in the classification working. The standard
           exception classifications are described below.

           (a) Clerical office or drafting employees NOC (code 8810);
           clerical office or drafting telecommuter employees (code
           8871).

           The above classifications are assigned when all the following
           conditions are met: the basic classification(s) wording
           applicable to the business does not include clerical office,
           drafting or telecommuting employees; other rules do not
           prohibit the assignment of code 8810 or code 8871; and the
           employee meets the duties, site and other requirements
           listed below.

           ***

           (D) Classification procedures. The purpose of the
           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.

           It is the business that is classified, not the individual
           employments, occupations or operations within the business.
           Certain exceptions apply and are noted below.

           ***
No. 14AP-1008                                                                     18

           (3) Assignment of more than one basic classification.

           More than one basic classification may be assigned to an
           insured who meets conditions set forth in paragraphs
           (D)(3)(a) to (D)(3)(c) of this rule. Operation means activities,
           enterprises,    processes,      secondary     businesses     or
           undertakings.

           (a) The insured's principal business is described by a basic
           classification that requires certain operations or employees
           to be separately rated.

           (b) The insured conducts one or more of the following
           operations:

           (i) Construction or erection.

           (ii) Farming.

           (iii) Employee leasing, labor contracting, temporary labor
           services.

           (iv) Mercantile business.

           (c) The insured conducts more than one operation in a state.

           (i) For purposes of this rule, an insured is conducting more
           than one operation in a state if portions of the insured's
           operations in that state are not encompassed by the
           classification applicable to the insured's principal business.
           To qualify for a separate classification, the insured's
           additional operation must:

           (a) Be able to exist as a separate business if the insured's
           principal business in the state ceased to exist.

           (b) Be located in a separate building, or on a separate floor in
           the same building, or on the same floor physically separated
           from the principal business by structural partitions.
           Employees engaged in the principal business must be
           protected from the operating hazards of the separate
           additional operations.

           (c) Maintain proper payroll records.

           Effective July 1, 2003, former Ohio Adm.Code 4123-17-08(D) provided:
No. 14AP-1008                                                                 19

           (D) Classification procedures.

           ***

           (3) Assignment of more than one basic classification. More
           than one basic classification may be assigned to an insured
           who meets conditions a, b, or c below. Operation means
           activities, enterprises, processes, secondary businesses or
           undertakings.
           (a) The insured's principal business is described by a basic
           classification that requires certain operations or employees
           to be separately rated.

           (b) The insured conducts one or more of the following
           operations:

           (i) Construction or erection.

           (ii) Farming.

           (iii) Employee leasing, labor contracting, temporary labor
           services.

           (iv) Mercantile business.

           (c) The insured conducts more than one operation in a state.

           (i) For purposes of this rule, an insured is conducting more
           than one operation in a state if portions of the insured's
           operations in that state are not encompassed by the
           classification applicable to the insured's principal business.
           To qualify for a separate classification, the insured's
           additional operation must:

           (a) Be able to exist as a separate business if the insured's
           principal business in the state ceased to exist.

           (b) Be located in a separate building, or on a separate floor in
           the same building, or on the same floor physically separated
           from the principal business by structural partitions.
           Employees engaged in the principal business must be
           protected from the operating hazards of the separate
           additional operations.

           (c) Maintain proper payroll records.
No. 14AP-1008                                                                            20

         {¶ 31} It can be observed that effective July 1, 2003 former Ohio Adm.Code 4123-
17-08(D)(3) provided: "More than one basic classification may be assigned to an insured
who meets conditions a, b, or c below."
         {¶ 32} It can be observed that, effective July 12, 2012 and currently, Ohio
Adm.Code 4123-17-08(D)(3) provides:           "More than one basic classification may be
assigned to an insured who meets conditions set forth in paragraphs (D)(3)(a) to (D)(3)(c)
of this rule."
         {¶ 33} It can be further observed that, effective July 12, 2012, former Ohio
Adm.Code 4123-17-08(D)(3)'s reference to "who meets conditions a, b, or c below" was
amended to read "who meets conditions set forth in paragraphs (D)(3)(a) to (D)(3)(c) of
this rule." That is, effective July 12, 2012, the three paragraphs a, b, or c were no longer
referenced in the disjunctive.
         {¶ 34} It can be further noted that the parties have supplemented the record with a
copy of the "Ohio BWC State Insurance Fund Manual (July 1, 2012 - June 30, 2013)."
         {¶ 35} At page 30 of the State Insurance Fund Manual, the following caption is
noted:     "4123-17-08 Classifications according to National Council on Compensation
Insurance eff. 07/01/2003." At page 35 of the State Insurance Fund Manual, which is a
continuation of Ohio Adm.Code 4123-17-08, the following is noted:
                 D. Classification procedures.

                 The purpose of the 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.
                 It is the business that is classified, not the individual
                 employments, occupations or operations within the business.
                 Certain exceptions apply and are noted below.

                 ***

                 [Three] Assignment of more than one basic classification.

                 More than one basic classification may be assigned to an
                 insured who meets conditions a, b, or c below.
No. 14AP-1008                                                                                21

         {¶ 36} It appears to the magistrate that the State Insurance Fund Manual failed to
correct for the July 12, 2012 amendment to former Ohio Adm.Code 4123-17-08(D)(3).
         {¶ 37} Thus, to the extent the code provision is applicable to this action, it is clear
that current Ohio Adm.Code 4123-17-08(D)(3) is applicable, not former Ohio Adm.Code
4123-17-08(D)(3).
         {¶ 38} Here, relator argues that the administrator's designee improperly
interpreted current Ohio Adm.Code 4123-17-08(D)(3) to read that the conditions set forth
in all three of the paragraphs (D)(3)(a) to (D)(3)(c) must be met in order to obtain
assignment of more than one basic classification. Relator supports its argument by
pointing to the State Insurance Fund Manual that was submitted to this court.
         {¶ 39} Clearly, the State Insurance Fund Manual is in conflict with current Ohio
Adm.Code 4123-17-08(D)(3). However, that does not mean, as relator suggests, that the
State Insurance Fund Manual presents the correct version of Ohio Adm.Code 4123-17-
08(D)(3).     The conflict between the State Insurance Fund Manual and the Ohio
Administrative Code regarding 4123-17-08(D)(3) must be resolved in favor of the code
provision.
         {¶ 40} As respondent points out, Ohio Adm.Code 4123-17-08(D)(3) is not
pertinent here.
         {¶ 41} In actuality, relator is not seeking more than one basic classification
pursuant to Ohio Adm.Code 4123-17-08(D). What relator is actually seeking is to keep
the standard exception classification, i.e., manual 8810, while accepting the basic
classification of manual 8725. But, as the AC and the administrator's designee have
adequately explained, relator cannot keep the standard exception classification manual
8810 while accepting manual 8725. To do so would violate Ohio Adm.Code 4123-17-
08(B).
         {¶ 42} In short, relator's argument fails to account for Ohio Adm.Code 4123-17-
08(B). Contrary to its suggestion, relator was not asking the bureau to assign more than
one basic classification.     Rather, relator was asking that it be assigned one basic
classification (manual 8725) and one standard exception classification, i.e., manual 8810,
but the code forbids use of manual 8810 under the circumstances here.
No. 14AP-1008                                                                              22

      {¶ 43} Accordingly, for all the above reasons, it is the magistrate's decision that this
court deny relator's request for a writ of mandamus.



                                              /S/ MAGISTRATE
                                              KENNETH W. MACKE




                             NOTICE TO THE PARTIES

             Civ.R. 53(D)(3)(a)(iii) provides that a party shall not assign as
             error on appeal the court's adoption of any factual finding or
             legal conclusion, whether or not specifically designated as a
             finding of fact or conclusion of law under Civ.R.
             53(D)(3)(a)(ii), unless the party timely and specifically objects
             to that factual finding or legal conclusion as required by Civ.R.
             53(D)(3)(b).
