[Cite as State ex rel. Extendicare Health Servs., Inc. v. Ryan, 126 Ohio St.3d 12, 2010-Ohio-
2452.]




  THE STATE EX REL. EXTENDICARE HEALTH SERVICES, INC. v. RYAN, ADMR.
           [Cite as State ex rel. Extendicare Health Servs., Inc. v. Ryan,
                        126 Ohio St.3d 12, 2010-Ohio-2452.]
Workers’ compensation — R.C. 4123.512(H) — Limited writ of mandamus
        granted — Employer entitled to reimbursement for medical-bill payments
        for disallowed conditions that it paid before it opted out of the
        reimbursement program.
     (No. 2009-0922 — Submitted March 30, 2010 — Decided June 8, 2010.)
                                     IN MANDAMUS.
                                 __________________
        Per Curiam.
        {¶ 1} Relator, Extendicare Health Services, Inc., is a self-insured
employer. At issue is its request for reimbursement from the state surplus fund
for compensation and medical benefits paid to or on behalf of Kimberly Owings
from April 1, 2004, through June 30, 2007. Respondent, Marsha Ryan, the
administrator of the Bureau of Workers’ Compensation, denied that request, and
Extendicare has responded with this original action in mandamus.
        {¶ 2} Owings’s 2002 workers’ compensation claim was originally
allowed for “sprain right shoulder; right rotator cuff syndrome; right shoulder
bicipital tendonitis.” Extendicare began paying temporary total disability
compensation shortly after the claim was allowed, but moved to terminate that
compensation in August 2003, claiming that Owings had reached maximum
medical improvement (“MMI”). The Industrial Commission of Ohio found that
Owings had not attained MMI and denied the motion.
        {¶ 3} In February 2004, Extendicare filed another motion to terminate
temporary total disability compensation, again alleging that Owings had reached
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MMI. Shortly thereafter, Owings asked the commission to additionally allow
three conditions: “impingement of the right shoulder, fraying of the right labrum,
and aggravation of pre-existing arthritis right shoulder.”
       {¶ 4} On April 1, 2004, a district hearing officer granted Owings’s
motion and denied Extendicare’s. On July 20, 2004, a staff hearing officer
affirmed and, in continuing temporary total disability compensation, found that
“[t]he injured worker has not reached [MMI] because of the newly allowed
conditions in this order and cannot physically return to her former position of
employment.” Further appeal was refused.
       {¶ 5} Extendicare filed its notice of appeal to the Franklin County
Common Pleas Court on October 7, 2004. On November 5, 2004, Owings filed
her required R.C. 4123.512(D) complaint, alleging a right to participate in the
workers’ compensation system for the three contested conditions. She dismissed
that complaint on October 12, 2005. She refiled her complaint on September 25,
2006, but dismissed it again on October 1, 2007. This second voluntary dismissal
prompted Extendicare’s motion for judgment as a matter of law. The court
granted Extendicare’s motion and on May 22, 2008, issued a judgment entry that
specifically denied Owings’s right to participate for the three disputed conditions.
       {¶ 6} During the nearly four years of litigation, Extendicare, pursuant to
R.C. 4123.512 (H), continued to pay temporary total disability compensation and
medical expenses as ordered by the commission or bureau. During this litigation,
Extendicare also, on July 1, 2007, exercised its statutory right under that section
to opt out of the surplus-fund reimbursement program. After the litigation ended
in Extendicare’s favor, it sought surplus-fund reimbursement from April 1, 2004
(the date of the order by the district hearing officer allowing additional conditions
and continuing temporary total disability compensation), to June 30, 2007
(Extendicare’s last day in the reimbursement program).




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                               January Term, 2010




       {¶ 7} The bureau’s self-insured department denied all reimbursement
because Extendicare had opted out of the reimbursement program. The self-
insured review panel, on appeal, affirmed that reasoning and added:
       {¶ 8} “[T]he judgment entry establishes that Ms. Owings’ claim is
disallowed for the three additional allowances that were disputed in this claim.
However, the claim remains allowed for a number of other conditions * * *.
Moreover, [temporary total disability compensation] was being paid for these
conditions at the time the disputed conditions were first added to the claim.
       {¶ 9} “* * *[T]he employer has not established that the reimbursement
request relates solely to the disallowed conditions, and not to the other conditions
that remain allowed in the claim.”
       {¶ 10} This order was affirmed by the administrator’s designee, and
Extendicare has now filed a complaint in mandamus in this court.
       {¶ 11} For obvious reasons, an administrative order that an employer pay
compensation or medical expenses is not stayed by the employer’s challenge to
that order. R.C. 4123.512(H). An employer that ultimately prevails in a “final
administrative or judicial action” that “determine[s] that payments of
compensation or benefits, or both, made to or on behalf of a claimant should not
have been made” may, however, be entitled to reimbursement for those payments.
Id. For a self-insured employer such as Extendicare, reimbursement is generally a
dollar-for-dollar recoupment from the workers’ compensation surplus fund. State
ex rel. Sysco Food Servs. of Cleveland, Inc. v. Indus. Comm. (2000), 89 Ohio
St.3d 612, 734 N.E.2d 361.
       {¶ 12} The surplus fund was created pursuant to R.C. 4123.34(B) to,
among other things, help maintain the solvency of the larger state insurance fund.
Self-insured employers are required to contribute to the surplus fund. R.C.
4123.34(B) and 4123.35(J) and Ohio Adm.Code 4123-17-32. For many years, a
self-insured employer’s mandatory contribution was directed several ways,



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including a portion for disallowed-claim-or-condition reimbursement. Ohio
Adm.Code 4123-17-32(D), (E), and (F). In 2006, R.C. 4123.512(H) was amended
to permit self-insured employers to opt out of this reimbursement program: “On
and after the effective date of the employer’s election, * * * the employer shall
receive no money or credits from the surplus fund on account of those payments
and shall not be required to pay any amounts into the surplus fund on account of
this section.”
        {¶ 13} Extendicare withdrew from the program effective July 1, 2007.
Extendicare acknowledges that it cannot be reimbursed for any payments that it
made on Owings’s claim after it opted out. It asserts, however, that it has a right
to recover compensation and benefits paid before that time, while it was still
contributing to the program.
        {¶ 14} The bureau disagrees.         It concedes that the common pleas
judgment entry constitutes a final judicial determination that compensation and
benefits related to the three disputed conditions should not have been made. The
bureau, however, stresses that the judgment entry was issued, and Extendicare’s
application for reimbursement was filed after Extendicare had opted out. The
bureau maintains that regardless of the dates of Extendicare’s payments to and on
behalf of Owings, a self-insured employer can receive no money from the surplus
fund after it has opted out. It alternatively proposes that the temporary total
disability compensation that Extendicare paid to Owings during the common
pleas litigation was not related to the three disallowed conditions, but was instead
related to the claim’s originally allowed conditions, which were unaffected by the
common pleas court’s decision.
        {¶ 15} We have been asked to resolve two issues: (1) Does Extendicare’s
opt-out preclude all reimbursement? and (2) If not, what portion of Extendicare’s
expenditures are recoupable?




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                               January Term, 2010




       {¶ 16} Extendicare relies heavily on State ex rel. First Natl.
Supermarkets, Inc. v. Indus. Comm. (1996), 74 Ohio St.3d 673, 660 N.E.2d 1205.
At issue were the handicap reimbursement provisions of R.C. 4123.343. The
handicap reimbursement program encourages the hiring of employees with
disabilities by reimbursing employers for all or part of certain types of
compensation if the worker is later injured on the job. This program, like the
reimbursement program currently at issue, was partially funded by mandatory
contributions from self-insured employers.
       {¶ 17} Self-insured First National Supermarkets, Inc., hired a disabled
person who was later industrially injured. First National applied for handicap
reimbursement and was granted a 70 percent reimbursement. Three years later,
the statute was amended to permit, as here, a self-insured employer to opt out of
the program. First National remained in the program for the next three and a half
years, before opting out as of January 1, 1990.
       {¶ 18} First National later sought reimbursement for temporary total
disability compensation paid from March 31, 1989, through December 7, 1990.
The commission denied its application, and First National commenced a
mandamus action in the court of appeals. That court held that First National
could not be reimbursed for temporary total disability compensation paid after it
opted out but that it could recover compensation paid before the opt-out:
       {¶ 19} “We acknowledge that the commission informed self-insured
employers who opted out that the employers needed to file applications for
reimbursement prior to the opt-out date or lose the right to reimbursement.
However, we are unwilling to make a company’s right to reimbursement
contingent solely on the date the paperwork is received by the commission.”
State ex rel. First Natl. Supermarkets, Inc. v. Indus. Comm. (May 19, 1994), 10th
Dist. No. 93APD08-1203, 1994 WL 198795.




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       {¶ 20} We affirmed that judgment, stressing that First National was
“seek[ing] reimbursement for outlays made before opt-out – when the employer
was still actively participating in the handicap reimbursement program.”
(Emphasis sic.) First Natl., 74 Ohio St.3d at 674, 660 N.E.2d 1205.
       {¶ 21} Extendicare asserts that First Natl. is directly on point. The bureau
tries to distinguish the case by alleging that because First National was granted
handicap reimbursement before opting out, it had a vested right to reimbursement
before the opt-out.      The bureau proposes that Extendicare’s right to
reimbursement did not vest until the common pleas court denied the additional
conditions, which happened after the opt-out.
       {¶ 22} The bureau reads too much into First Natl. The opinion said
nothing about vested rights.    It instead linked First National’s eligibility for
reimbursement solely to whether First National was contributing to the fund over
the period for which reimbursement was sought.
       {¶ 23} The bureau’s position is problematic from a practical standpoint as
well. The reason that the judgment entry did not issue before Extendicare opted
out is that Owings prolonged the litigation – and with it her receipt of temporary
total disability compensation and medical-bill payments – by twice filing and
twice dismissing her complaint. Extendicare appealed the additional allowance to
the common pleas court on October 7, 2004 – nearly three years before its
eventual opt-out. Owings, as required by R.C. 4123.512(D), filed her complaint
on November 5, 2004, but then dismissed it on October 12, 2005. She refiled the
complaint on September 25, 2006, and Extendicare timely replied.           Owings
dismissed her second complaint on October 1, 2007, which prompted
Extendicare’s motion for judgment as a matter of law. By the time of Owings’s
second dismissal, however, Extendicare had already opted out.
       {¶ 24} This sequence of events secured Owings almost four additional
years of temporary total disability compensation and medical-bill payments.




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Given that the delay in resolution was largely attributable to Owings, we are not
convinced that Extendicare should be denied reimbursement of pre-opt-out
expenses as a matter of law because Extendicare did not apply sooner or because
its right, according to the bureau, did not “vest” sooner.
       {¶ 25} Extendicare also points to the language of the statute itself:
       {¶ 26} “On and after the effective date of the employer’s election [to opt
out of the reimbursement program], the self-insuring employer shall pay directly
to an employee or to an employee’s dependents compensation and benefits under
this section * * * and the employer shall receive no money or credits from the
surplus fund on account of those payments and shall not be required to pay any
amounts into the surplus fund on account of this section. The election made
under this division is irrevocable.” (Emphasis added.) R.C. 4123.512(H).
       {¶ 27} Extendicare focuses on the words “those payments” and insists that
they can refer only to the payments occurring after the opt-out date – i.e. “those
paid directly to an employee on or after the effective date of the employer’s
election.”   Extendicare argues that if the General Assembly had desired to
foreclose reimbursement for all expenditures both before and after the date of the
election to opt out, it would have used the words “any payments.”
       {¶ 28} The bureau does not address this argument. It instead focuses on
the statute’s reference to irrevocability and asserts that an employer forever loses
the right to any reimbursement once it has elected to opt out. The bureau’s
interpretation is incorrect. The reference to irrevocability clearly – and only –
means that once an employer opts out, it cannot later opt back in.
       {¶ 29} We accordingly find that Extendicare’s opt-out does not
automatically foreclose it from recouping expenditures made to or on behalf of
Owings before it opted out of the reimbursement program. But this does not mean
that all of Extendicare’s pre-opt-out expenditures qualify for reimbursement. Only




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those payments that were attributable to the three disputed — but later disallowed
— conditions can be reimbursed.
       {¶ 30} Extendicare seeks reimbursement of medical expenses as well as
temporary total disability compensation. The common pleas court denied
Owings’s right to participate in the workers’ compensation system for the three
contested conditions. Thus, payments for medical expenses related to them should
not have been made. Extendicare is accordingly entitled to reimbursement for
medical-bill payments that were related to any of those three conditions that were
paid before it exercised the right to opt out of the reimbursement program.
       {¶ 31} Extendicare also seeks reimbursement for temporary total
disability compensation that it paid to Owings between April 1, 2004, and June
30, 2007, before its opt-out date. Extendicare argues that Owings’s inability to
work was due to the three disputed conditions and that their later disallowance
meant that temporary total disability compensation should not have been paid.
       {¶ 32} This argument does not withstand scrutiny.          First, there is no
evidence that temporary total disability compensation was based on the three
disallowed conditions. The C-84 physician reports on which compensation was
based consistently attributed disability to the conditions allowed in the claim
initially. Moreover, temporary total disability compensation was already being
paid to Owings when the additional but disputed conditions were first allowed by
the district hearing officer, so it could not have been based on those conditions.
       {¶ 33} Extendicare persists, claiming that temporary total disability
compensation was implicitly based on the disputed conditions because Owings’s
originally allowed conditions had reached MMI and could not support temporary
total disability compensation. This argument, however, ignores that the allowed
conditions were never declared to have reached MMI.            To the contrary, the
commission denied both of Extendicare’s MMI motions.




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        {¶ 34} Extendicare notes that the staff hearing officer’s July 20, 2004
order indicated that Owings had not reached MMI “because of the newly allowed
conditions in this order.” Nevertheless, without a definitive declaration that the
original conditions had reached MMI, we do not find that this passage is sufficient
to establish that temporary total disability compensation was based on the
disputed conditions, particularly given the C-84 evidence of record.
        {¶ 35} In conclusion, Extendicare is entitled to reimbursement for medical
payments made before the July 1, 2007 opt-out date because they related to
disallowed conditions. Extendicare is not entitled to reimbursement for temporary
total disability compensation paid between April 1, 2004, and July 30, 2007,
because that compensation related to her originally allowed conditions rather than
the three disallowed conditions.
        {¶ 36} Accordingly, a writ of mandamus is hereby issued that orders the
bureau to vacate its order and to issue a new order that grants Extendicare
reimbursement for pre-opt-out medical expenses only.
                                                             Limited writ granted.
        PFEIFER, LUNDBERG STRATTON, O’CONNOR, O’DONNELL, LANZINGER, and
CUPP, JJ., concur.
        BROWN, C.J., not participating.
                              __________________
        Porter, Wright, Morris & Arthur, L.L.P., Darrell R. Shepard, and Robert J.
Stalter, for relator.
        Richard Cordray, Attorney General, and Elise Porter and Gerald H.
Waterman, Assistant Attorneys General, for respondent.
                           ______________________




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