[Cite as State ex rel. Aaron's, Inc. v. Ohio Bur. of Workers' Comp., 2014-Ohio-3425.]

                                  IN THE COURT OF APPEALS OF OHIO

                                   TENTH APPELLATE DISTRICT

State of Ohio ex rel. Aaron's, Inc.,                    :

                 Relator,                               :

v.                                                      :                         No. 13AP-170

Ohio Bureau of Workers' Compensation,                   :                   (REGULAR CALENDAR)

                 Respondent.                            :


                                            D E C I S I O N

                                      Rendered on August 7, 2014


                 Fisher & Phillips LLP, Daniel P. O'Brien and Mark E.
                 Snyder, for relator.

                 Michael DeWine, Attorney General, and Cheryl J. Nester, for
                 respondent Bureau of Workers' Compensation.


                                   IN MANDAMUS
                     ON OBJECTION TO THE MAGISTRATE'S DECISION

DORRIAN, J.
        {¶ 1} In this original action, relator, Aaron's, Inc., requests a writ of mandamus
ordering respondent, Bureau of Workers' Compensation ("bureau"), to vacate the order of
the administrator's designee applying retroactively its reclassification of certain
employees and back-billing Aaron's for the maximum two years permitted under Ohio
Adm.Code 4123-17-17(C). Relator requests that the writ order the bureau to prospectively
apply the reclassifications.
        {¶ 2} This action comes to the court as a result of the granting of a limited writ
and a remand to the bureau by the Supreme Court of Ohio to explain why the bureau
denied relator's request that the reclassification be applied prospectively only. State ex
rel. Aaron Rents, Inc. v. Ohio Bur. of Workers' Comp., 129 Ohio St.3d 130, 2011-Ohio-
No. 13AP-170                                                                                 2


3140. The administrator's designee held a hearing and again denied relator's request that
the reclassification be applied prospectively only. The administrator's designee did so on
the basis of the magnitude of misreporting and the scope of the reporting discrepancies.
Relator filed the present original action in response to the same.
       {¶ 3} Pursuant to Civ.R. 53(D) and Loc.R. 13(M) of the Tenth District Court of
Appeals, this matter was referred to a magistrate who issued a decision, including findings
of fact and conclusions of law, which is appended hereto. The magistrate found that the
magnitude of the misclassification of employees was a sufficient basis for the
administrator's designee to deny the request that the misclassification be applied
prospectively only. Thus, the magistrate determined that the administrator's designee did
not abuse its discretion granted to him under Ohio Adm.Code 4123-17-17(C). Further, the
magistrate observed that relator cited to no case or authority that holds that retroactive
billing can only be premised upon the intentional wrongdoing of the employer and that
State ex. rel Roberds, Inc. v. Conrad, 86 Ohio St.3d 221 (1999), strongly suggested
otherwise. Therefore, the magistrate recommended that this court deny the requested
writ of mandamus.
       {¶ 4} Relator has filed the following objection to the magistrate's decision:
               The Magistrate's conclusion that the magnitude of misclassi-
               fication was a sufficient basis to support application of the
               maximum twenty-four month retroactive back-billing period
               is not supported by the record. In fact, the record evidence
               reflects that the [bureau's] own internal policy is to "go
               prospective on an audit" unless there is some intentional
               wrong-doing or disregard on the part of the employer.

       {¶ 5} With regard to the argument that it was an abuse of discretion to conclude
that the magnitude of misclassification was sufficient basis to support application of the
retroactive back-billing, this is not a new argument and is essentially a reiteration of the
same argument previously made to and addressed by the magistrate. For the reasons
stated in the magistrate's decision, we do not find merit to relator's objection.
       {¶ 6} With regard to the argument that a writ is warranted on the basis of an
internal policy of the bureau, we reject this argument as said internal policy did not create
a clear legal duty, nor a clear legal right, as required in order to issue a writ of mandamus.
No. 13AP-170                                                                               3


       {¶ 7} In its objection, relator points to the testimony of the bureau's regional
supervisor of underwriting and premium audit that "it is normal policy to apply
reclassifications prospectively, unless there is some fault on the part of the employer."
(Objection, 6.)   It further points to an e-mail by the bureau's director of employer
management services to the bureau's director of employer compliance, stating that " '[t]he
only exception I think there would be to prospective is a very obvious case of disregard to
previous audit instructions.' " (Objection, 7.) Relator argues there was no previous audit
or communication putting it on notice of any issues with payroll reporting.
       {¶ 8} In State ex rel Bledsoe v. Marion Steel Co., 10th Dist. No. 02AP-193, 2002-
Ohio-6835, this court denied a petition by a claimant for a writ of mandamus to vacate an
order denying permanent total disability compensation. The claimant had argued that the
Industrial Commission of Ohio ("commission") had a clear legal duty, and, therefore, he
had a clear legal right to the compensation, pursuant to an internal commission
memorandum. The internal memorandum addressed conflict of interest and, according
to the claimant, would have required rejection of a psychological examination conducted
by a physician who was the business associate of the employer's expert. Noting the three
criteria which must be met in order to issue a writ of mandamus, we rejected the
magistrate's conclusion that the internal memorandum gave relator a clear legal right or
that it imposed upon the commission any clear legal duty.
       {¶ 9} Likewise, here, we note the three criteria which must be met in order to
issue a writ of mandamus: (1) that relator has a clear legal right to the relief requested;
(2) that the respondent has a clear legal duty to grant the relief requested; and (3) that he
or she has no adequate remedy at law by which to vindicate the claimed right. State ex
rel. Hattie v Goldhardt, 69 Ohio St.3d 123, 125 (1994), citing State ex. rel. Berger v.
McMonagle, 6 Ohio St.3d 28, 29 (1983). We reject relator's argument that the internal
policy to "go prospective on an audit" establishes a clear legal duty on the part of the
bureau, or a clear legal right on the part of the relator, to apply the reclassification
prospectively.
       {¶ 10} Upon review of the magistrate's decision, an independent review of the
record, and due consideration of relator's objection, we find the magistrate has properly
determined the pertinent facts and concluded a writ is not warranted. We, therefore,
No. 13AP-170                                                                             4


overrule relator's objection to the magistrate's decision. We adopt the findings of fact of
the magistrate, as no objection was raised regarding same, and adopt and modify the
magistrate's conclusions of law consistent with this decision. Accordingly, the requested
writ of mandamus is hereby denied.
                                                        Objection overruled; writ denied.
                      KLATT and LUPER SCHUSTER, JJ., concur.
                              ____________________
No. 13AP-170                                                                                5


                                       APPENDIX

                          IN THE COURT OF APPEALS OF OHIO

                               TENTH APPELLATE DISTRICT

State of Ohio ex rel. Aaron's, Inc.,          :

               Relator,                       :

v.                                            :                     No. 13AP-170

Ohio Bureau of Workers' Compensation,         :                (REGULAR CALENDAR)

               Respondent.                    :




                           MAGISTRATE'S DECISION

                                 Rendered on March 12, 2014



               Fisher & Phillips LLP, Daniel P. O'Brien and Mark E.
               Snyder, for relator.

               Michael DeWine, Attorney General, and Cheryl J. Nester, for
               respondent Bureau of Workers' Compensation.


                                       IN MANDAMUS


       {¶ 11} In a prior original action, the relator, Aaron Rents, Inc., n.k.a. Aaron's, Inc.
("Aaron's" or "relator") unsuccessfully challenged in this court a decision of the Ohio
Bureau of Workers' Compensation ("bureau") that reclassified its product technicians for
purposes of premium calculation and applied the reclassification retrospectively under
the 24-month provision of Ohio Adm.Code 4123-17-17(C). On appeal as of right, the
Supreme Court of Ohio held that the bureau erred in failing to explain why it denied
No. 13AP-170                                                                             6


relator's request that the reclassification be applied prospectively only. The Supreme
Court reversed the judgment of this court and granted a limited writ.
       {¶ 12} On remand, the administrator's designee conducted a hearing on
January 17, 2012 and thereafter issued a decision that denies relator's request that the
reclassification be applied prospectively only.
       {¶ 13} In this original action, relator requests a writ of mandamus ordering the
bureau to vacate the order of the administrator's designee and to enter an order that
grants relator's request for prospective-only application of the reclassifications. In the
alternative, relator requests that the writ order the bureau to vacate the January 17, 2012
order of the administrator's designee and to schedule a hearing before the bureau's
adjudicating committee.
Findings of Fact:
       {¶ 14} 1. Aaron's describes the historical development of its business operations in
Ohio and its initial relationship to the bureau:
               Aaron's, Inc. (fka Aaron Rents, Inc., hereafter referred to as
               "Aaron's"), a Georgia corporation, provides retail services
               involving rental and lease ownership of residential and office
               furniture, consumer electronics and home appliances. There
               are three operating divisions of Aaron's: sales and lease
               ownership, corporate furnishings, and manufacturing.
               Aaron's began doing business in Ohio in 1992. Aaron's
               operations in Ohio are within the sales and lease ownership
               division. The company maintains an administrative office in
               Columbus, Ohio. Presently, there are approximately 300
               Aaron's retail stores selling electronics, appliances and
               household furnishings in Ohio.

               When Aaron's came to Ohio in the early 1990's, its business
               consisted primarily of renting furniture. In 2000, the
               business began to evolve into primarily a rent-to-own
               operation.

(Stipulation of Evidence, exhibit Y.)
       {¶ 15} 2. When relator initially applied to the bureau for workers' compensation
coverage as a state-fund employer, relator's entire workforce was assigned manual 8810
with the exception of its product technicians who were assigned manual 8044.
No. 13AP-170                                                                             7


       {¶ 16} 3. Manual 8810 is captioned "Clerical Office Employees NOC [Not-
Otherwise Classified]." Manual 8044 is captioned "Store: Furniture & Drivers."
       {¶ 17} 4. One of the duties of a "product technician" is the delivery of merchandise
to a customer's home or business. Delivery of merchandise involves the driving of a
vehicle.
       {¶ 18} 5. In April 2006, the bureau initiated an audit. However, the individual
auditor assigned to perform the audit did not prepare an audit report until January 2007.
His audit report covered the period July 1, 2004 through December 31, 2006. That audit
report was rejected by the bureau on grounds that it failed the bureau's "quality review
process."
       {¶ 19} 6. In early 2008, the bureau initiated a new audit which covered the period
July 1, 2004 to December 31, 2007. That audit was performed by C. D. Goellnitz, the
bureau's regional auditing supervisor.
       {¶ 20} 7. By letter dated April 16, 2008, relator, through counsel, contested the
audit report.
       {¶ 21} 8. On May 20, 2008, Mr. Goellnitz wrote to the bureau's adjudicating
committee a "Statement of Facts":
                An audit was conducted on subject risk covering the periods
                of July 1, 2004 through December 31, 2007.

                Aaron operates a national chain of retail type stores
                specializing in lease to own sales of household goods,
                electronics and furniture. They have a large number of stores
                in Ohio. In addition to the stores they have a regional
                administrative operation and a regional warehouse in
                Columbus.

                The risk was initially assigned manuals 8044 Furniture and
                manual 8810 clerical. The assignment of 8044 was initially
                correct since the risk operation was predominately furniture
                but over time had developed more into electronics sales.
                Therefore manual 8044 which include drivers were replaced
                with manual 8017 Store Retail and 7380 Drivers. Manual
                7380 covers delivery of merchandise and needs by rule to be
                separately rated from the store operation manual 8017.
No. 13AP-170                                                                         8


               The business has also expanded doing some service work on
               the electronic items and manual 9519 Household appliance
               service and repairs were added to cover this type of work
               since it needed to be separately rated with 8017 per NCCI
               classification rules. Manual 8742 Salespersons were added to
               cover traveling executives as well as internal audit.

               The risk based on the manuals they were originally assigned
               was not reporting correctly. They had placed into manual
               8044 its Production Techs, Warehouse, long haul drivers,
               warehouse manager and service techs. Under 8810 it had
               placed all other employees including the store managers, the
               store sales staff as well as all the regional staff.

               The result of distributing the labor force into the proper
               classification resulted in a significant billing which the
               employer is protesting.

      {¶ 22} 9. On September 24, 2008, relator's protest was heard by the bureau's
three-member adjudicating committee. Thereafter, by unanimous vote, the adjud-icating
committee issued an order denying relator's protest and retrospectively applying the
reclassifications for the 24-month back period provided by Ohio Adm.Code 4123-17-17(C).
      {¶ 23} The adjudicating committee order explained:
               The facts of this case are as follows: The Bureau
               audited the employer for the period from July 1, 2004
               through December 31, 2007. The auditor transferred payroll
               from NCCI manual code 8810 to Code 8017. Further drivers
               were moved from manual 8044 to manual 7380. The audit
               also added manual codes 8742 and 9519.

               The employer objected to the audit findings and requested a
               hearing before the Adjudicating Committee.

               ***

               At the hearing the employer representative gave a brief
               history of the employer's business. Originally, the nature of
               the operation provided equipment and furniture for rent to
               rent customers. Around 1998, the employer's operation
               changed to a rent to own business and established retail
               outlets or store fronts for direct business with customers in
               several locations throughout Ohio and nationwide. The
               employer is a Georgia corporation which reports having
No. 13AP-170                                                                    9


               yearly audits from their insurance company in other
               jurisdictions. In April 2006, the Bureau contacted employer
               for an audit; however, the Bureau failed to timely complete
               the audit. It was not until March 2008, that a second audit
               was completed and the audit findings provided to the
               employer. The employer has two objections to the audit.
               First, the employer objects to the assignment of manual
               7380 and contends the employees assigned to this manual
               would be better placed under manual 8017. Manual 7380 is
               an NOC (not otherwise classified) classification and manual
               8017 are more specific to the operation of the business. The
               employer representative conveyed that Travelers Insurance
               Company, which provides coverage for this employer in
               other jurisdictions and also utilizes NCCI, has classified the
               same drivers under manual 8017. The second objection to
               the audit involves the employer position that the audit
               findings should be prospective only from the date of the
               second completed audit of March 2008. Under OAC 4123-17-
               17(C) the Bureau may go back 24 months immediately prior
               to the current payroll period. The rule states the 24 [months]
               is calculated [from] the date the employer puts BWC on
               notice of errors or that BWC provides written notice to the
               employer of the bureaus intent to inspect examine or audit
               the employer's records. The employer representative
               contends the Bureau cannot go back 24 months from the
               date of the initial audit since it was never finalized. The
               employer representative argued the $2 million audit findings
               would unjustly enrich the Bureau and that the loss runs show
               the Bureau has already made an underwriting profit from
               this employer. The employer representative further noted the
               employer was reporting using the manuals assigned by the
               Bureau and payroll reports do not provide an opportunity to
               change the manual classifications assigned to the policy. The
               employer representative also argued that with the Bureau
               going back to 2004, yet never having conveyed the audit
               findings in 2006, the employer lost the opportunity to
               pursue other alternatives (e.g. self insurance, retrospective
               rating) which would have resulted in less liability. The delay
               in processing the initial audit in 2006 has harmed the
               employer.

               The Bureau representative stated the employer was
               originally assigned manual 8044 and 8810. Audit findings
               indicated the employer sells and rent[s] furniture and other
               household items. The employer changed the operation of
               their business from selling mostly furniture to mostly
No. 13AP-170                                                                         10


               electronics therefore manual 8017 [was] assigned. There is a
               regional headquarters in Columbus. There are drivers who
               deliver and set up the equipment for the business as well as
               drivers that are also service techs for the equipment. Manual
               8017 [does] not include drivers and therefore the driver
               classification was assigned. Significant payroll was moved
               from manual 8810 to manual 8017. Under the direction of
               NCCI and Ohio law, the drivers need to be placed under
               manual 7380. As to the audit findings being attributed back
               to July 1, 2004, the Bureau gave notice to the employer in
               2006 of the need for an audit. The Bureau historically goes
               back two years from the date of notice of the audit to
               determine the two year period.

               Given the information provided at the hearing, the
               Adjudicating Committee upholds the assignment of manual
               8017 and manual 7380 to the policy. The NCCI Scopes
               Manual is clear that drivers are reportable to manual 7380
               and that other operational employees are reportable to the
               store class of manual 8017. The employer's operations are
               best described by these classifications. The Bureau must
               report as classified under the Scopes Manual. The Bureau is
               bound by not only the NCCI Scopes Manual, but also Ohio
               law. The manner in which a private insurance carrier in a
               jurisdiction other than Ohio classifies drivers is not a
               consideration for this Committee. Therefore, the assigned
               manual classifications are affirmed. Regarding the back
               billing period of the audit, the Committee finds in light of the
               delay of processing the audit findings and the lack of proof
               that the Bureau ever provided written notice of the initial
               April 2006 audit or findings, the Bureau shall only make the
               audit findings limited to the payroll periods from January 1,
               2006 through December 31, 2007.

(Emphasis sic.)
       {¶ 24} 10. Relator administratively appealed the September 24, 2008 order of the
adjudicating committee to the administrator's designee pursuant to R.C. 4123.291.
       {¶ 25} 11. Following a February 10, 2009 hearing, the administrator's designee
issued an order affirming the findings and decision of the adjudicating committee.
       {¶ 26} 12. On March 6, 2009, relator filed in this court a mandamus action that
was assigned case No. 09AP-232. On September 29, 2009, this magistrate issued his
magistrate's decision.
No. 13AP-170                                                                           11


      {¶ 27} 13. On January 26, 2010, this court issued its decision. This court adopted
this magistrate's findings of fact but not his conclusions of law. This court denied the
request for a writ of mandamus. State ex rel. Aaron Rents, Inc. v. Ohio Bur. of Workers'
Comp., 10th Dist. No. 09AP-232, 2010-Ohio-218.
      {¶ 28} 14. Relator appealed as of right the judgment of this court to the Supreme
Court of Ohio.
      {¶ 29} 15. On July 5, 2011, the Supreme Court issued its decision. The court
reversed the judgment of this court and granted a limited writ of mandamus. State ex rel.
Aaron Rents, Inc. v. Ohio Bur. of Workers' Comp., 129 Ohio St.3d 130, 2011-Ohio-3140.
The court explains:
               Under Ohio Adm.Code 4123-17-17(C), the bureau can make
               adjustments to an employer's account either prospectively or
               retroactively. State ex rel. Granville Volunteer Fire Dept.,
               Inc. v. Indus. Comm. (1992), 64 Ohio St.3d 518, 520-521, 597
               N.E.2d 127. ARI objects to retroactive reclassification and
               argues, among other things, that its ability to challenge the
               bureau's decision has been compromised because the order
               does not explain why retroactive rather than prospective
               reclassification was favored. We agree.

               We "generally defer[ ] to the [bureau's] expertise in premium
               matters," but we will intercede when an occupational
               classification has been made in an arbitrary, capricious, or
               discriminatory manner. State ex rel. Progressive Sweeping
               Contractors, Inc. v. Ohio Bur. of Workers' Comp. (1994), 68
               Ohio St.3d 393, 396, 627 N.E.2d 550. The agency's expertise,
               moreover, "does not supersede the duty this court has
               imposed upon the Industrial Commission and the bureau to
               adequately explain their decisions." State ex rel. Craftsmen
               Basement Finishing Sys., Inc. v. Ryan, 121 Ohio St.3d 492,
               2009-Ohio-1676, 905 N.E.2d 639, ¶ 15. An order must
               "inform the parties and potentially a reviewing court of the
               basis of the [agency's] decision." State ex rel. Yellow Freight
               Sys., Inc. v. Indus. Comm. (1994), 71 Ohio St.3d 139, 142,
               642 N.E.2d 378.

               ARI contends that without an explanation why its request for
               prospective application was denied, it cannot know whether
               the imposition was arbitrary, capricious, or, in this case,
               punitive. ARI fears that the bureau retroactively reclassified
               its employees as punishment for what the bureau believed
No. 13AP-170                                                                             12


                 was ARI's deliberate misclassification of its workers. ARI
                 asserts that if that is the case, it deserves to know so that it
                 can prove that the misclassification was unintentional and
                 consistent with what it believed the bureau desired initially.

                 ARI's points are valid. There is no way to know why the
                 bureau exercised its reclassification discretion as it did.
                 Further explanation as to why the bureau reached its
                 decision is necessary before we can determine whether an
                 abuse of discretion occurred.

                 The judgment of the court of appeals is reversed, and a
                 limited writ is granted ordering the bureau to vacate its
                 order, further consider the matter, and issue an amended
                 order including an explanation for its decision.

Id. at ¶ 9-13.
       {¶ 30} 16. Relator filed in the Supreme Court of Ohio a request for clarification
arguing that the court should clarify whether the adjudicating committee should hold a
hearing prior to a hearing by the administrator's designee. In response, the bureau filed a
memorandum opposing the motion for clarification. On September 21, 2011, without
explanation, the Supreme Court denied relator's motion to clarify. State ex rel. Aaron
Rents, Inc. v. Ohio Bur. of Workers' Comp., 129 Ohio St.3d 1473, 2011-Ohio-4751.
       {¶ 31} 17. On November 29, 2011, the bureau issued notice that the matter was
scheduled for a hearing on January 17, 2012 before the administrator's designee.
       {¶ 32} 18. Prior to the January 17, 2012 hearing, relator, through counsel,
submitted a position statement. In its position statement, relator argued that the hearing
should be held before the adjudicating committee, not before the administrator's
designee. Relator also argued that the back-billing or retroactive application of the
reclassifications is inequitable.
       {¶ 33} 19. On January 17, 2012, the administrator's designee heard the matter
before him on the limited writ and remand from the Supreme Court. The hearing was
recorded and transcribed for the record.
       {¶ 34} 20. At the hearing, relator's counsel called James W. Roberts, Jr., to testify
on behalf of Aaron's. Mr. Roberts has been with Aaron's since 1990. His current position
is director of financial projects. In 2006, he was the corporate operations controller.
No. 13AP-170                                                                       13


While Aaron's risk management department had the final responsibility for workers'
compensation matters, Roberts assisted in the creation of the report that risk
management used to complete the semi-annual report to the bureau.
        {¶ 35} In states other than Ohio, Aaron's was insured with "Travelers" for its
workers' compensation coverage. West Virginia also had its own state system, as does
Ohio.
        {¶ 36} 21. Roberts testified as follows:
               Q. But my question is: Did you only produce information for
               Ohio or did you produce it for all states in which Aaron's
               operated?

               A. We produce it for all states.

               Q. So you had a database that you ran through payroll?

               A. Correct.

               Q. And you would extract that information?

               A. Based on what was requested from the vendor.

               Q. When you reported to the Travelers, how did they get the
               information? How did they use the information?

               A. The Travelers would come once a year, they would send an
               auditor out. And we would get a combination of our
               quarterly filing reports and they had specific reports that
               they would like us to pull from the system. We would then
               reconcile it. It would go look at the -- then go and classify
               each of the various codes as to what he thought was the
               correct code, then they would produce an audit report.

               Q. Do you have other monopolistic jurisdictions that you've
               dealt with other than the Travelers?

               A. Just the West Virginia.

               Q. How did West Virginia work?

               A. West Virginia, they -- they came and did an annual audit.
               We gave them the reports that they requested and, you know,
               it was just a very -- it was similar to the Travelers in that it
No. 13AP-170                                                                      14


               was an annual audit procedure and they reviewed
               everything.

               Q. When was the first time you started handling anything
               from the Ohio Bureau and for Aaron's?

               A. When I was the division controller starting in 1998, I
               think it was just outlined, we had two different -- two
               different divisions within our company, we had the rent-to-
               own corporate furnishings and we had the Aaron's sales and
               lease ownership.

               We had the one store in Ohio, and I was responsible for
               filling out the information for that store starting in 1998. The
               division controller for the sales and lease division would fill
               out the information for the other part and then it was
               submitted to the risk management department, which would
               then fill out the form and send it in.

               Q. When did you become responsible for all of Ohio?

               A. In 2002 when I was changed from division controller to
               corporate operations controller.

               Q. And what would you do to fill out the Ohio report at that
               point?

               A. We would -- we would run a report from at that time the
               ADP system and then reconcile it to the unemployment
               reports that were filed with the state.

               Q. And how did you --

               A. And then we would put the information in the form and
               give it to risk management.

               Q. Put in in the Bureau's reporting form?

               A. Correct.

               Q. The semiannual payroll report?

               A. The six months, yes.

               Q. Okay. And how did you make a determination as to who
               belonged in what category?
No. 13AP-170                                                                      15



               A. Mainly by looking at what my predecessors did and just
               listed those codes on there, so it seemed pretty much self-
               explanatory that drivers go in this code and the store people
               go in this code.

               Q. So in other words, the 8044, which was one of your
               preliminary classifications you put the drivers in?

               A. Correct.

               Q. And then the 8810, which is the store people, you put all
               of the store people in?

               A. Correct.

               Q. When was the first time that you heard from -- well, I
               won't rehash that.

               You heard from the Bureau in 2006?

               A. Correct.

               Q. What did they -- what kind of contact did you have at that
               point?

               A. The -- I guess she was the audit coordinator. She asked --
               she said we were going to have an audit and asked for lots of
               different reports and so forth. I -- everything she asked for, I
               produced and sent to her.

               Q. Did you get any feedback from that?

               A. She said there was -- she was going to -- she was going to
               -- as you mentioned, wanted someone to contact at the store
               to talk -- so for an auditor to talk to, I never talked to an
               auditor. But after that I never heard anything. So I made it to
               point to call back and see if there's anything with this audit,
               and she said everything was good, everything was -- no
               problems.

               Q. So she told you there was no problems in 2006? When's
               the next time you heard from someone?

               A. January 24th, 2008.
No. 13AP-170                                                                     16


               Q. And that was who?

               A. Michael Lintner.

               Q. And -- and he told you what?

               A. He said that there's some issues related to the audit that
               they did in 2006 and we needed to discuss them and go over
               some of these -- the coding of some of these positions.

               Q. Okay. So they -- in -- from 1998 you started working with
               the Ohio Bureau of Workers' Compensation, you sent them
               information based upon how you broke the codes down.
               2006 there was the audit, you didn't hear anything about it
               other than it was okay?

               A. Yes.

               Q. And there was no problems with it?

               2008 Mr. Lintner calls you, I believe Mr. Goellnitz called you
               slightly -- a week later?

               A. Yes. It was -- I guess he -- Lintner sent an e-mail that was
               now assigned to Mr. Goellnitz and he made contact with me
               on 1/30/2008.

               Q. And then the -- then what happened after that?

               A. Well, as we were getting things together for that audit, it
               was on February 8th, 2008 that we got the e-mails with the
               link to the news story saying that we were cheating the
               system and all this sort of stuff, and that's when we -- we
               were like, well, this doesn't make sense with what you're
               trying to ask for, what's all this about? And we went from
               there.

               Q. Was there anything about the Ohio information that
               caught your eye relative to payroll to losses during the course
               of this that would have been a red flag to say, boy, we might
               not be reporting correctly?

               A. Well, since I was very familiar -- I work every year with
               the Travelers. With Ohio, all we did was fill out the
               semiannual form. So when you did it, it had the rate factors
               to calculate it out, so you obviously saw what the six-month
No. 13AP-170                                                                           17


               premium was. So, I mean, I did discuss with the -- James
               Cates, the vice president of risk management, you know, is
               this, you know, in line with what we're -- we're doing?
               Because as over payroll, as part of that job was, I could see
               who was on Workers' Comp. status within the company. And
               I -- I mean, I didn't see any volume there at all for these
               premiums we were paying. And so I thought, you know,
               compared to what we were paying, we didn't have any
               claims, so it just seemed like a strange situation.

               Q. So you thought you were overpaying?

               A. Correct.

               Q. And did you talk to Mr. Cates about that?

               A. He did -- since he is the expert in insurance and risk
               management, he said, well, we could go self-insure. It was
               something he was going to look into. I mean, he said there
               was more administrative cost to it, he might have to get some
               additional resources internally, and that he was going to look
               into it. It was just one of those things, what's best, to pay the
               premium for Ohio or to get the administrative work done
               internally?

(Tr. 31-38.)
       {¶ 37} 22. Following Roberts' testimony, relator's counsel brought to the attention
of the administrator's designee three internal e-mails between bureau employees that
indicate the bureau's unwritten policy or practice regarding prospective versus
retrospective application of audit findings. The e-mails were obtained by relator through
a public records request.
       {¶ 38} The first of the e-mails is from Joy Bush to Michael Glass and Michael
Lintner sent April 23, 2008. Joy Bush was the bureau's executive director of employer
management services. In that e-mail, Joy Bush states:
               The only exception I think there would be to prospective is a
               very obvious case of disregard to previous audit instructions.

       {¶ 39} The second of the e-mails is from Michael Glass to Goellnitz sent September
18, 2009 at 12:57 p.m.:
No. 13AP-170                                                                       18


               Normally we would go prospective on an audit if we felt the
               employer didn't know or couldn't have known proper
               reporting requirements or BWC failed to assign the code to
               their policy, etc. We must have felt that Aaron Rents knew
               how to report correctly and had the code. This can
               sometimes be established through a previous audit or some
               other documented communication with the employer. Do
               you recall this one?

       {¶ 40} The third of the e-mails is Goellnitz's response to the Glass e-mail. On
September 18, 2009, at 1:42 p.m., Goellnitz states:
               Michael: I think what you need to look at is the original
               reporting. Picking a period in question say either the 1st half
               or second half of 2007. The employer reported in each period
               1.7 million in 8044 and 5.5 million in 8810. If you look at the
               found 8742 (360K) and 8810 (40K) and say that is the
               payroll that we could see as being administrative and maybe
               they could call as 8810, that still leaves over 5 million dollars
               of operational payroll was misreported to the clerical
               manual. I think the driving factor for going retroactive is the
               margin of the error between operational workers and clerical
               workers. The feeling was that they should know the
               difference between an office and a store worker.

               Following that logic if you want to have an argument for a
               long stretch to make a deal—could we say we give him one
               manual for operational people and one for clerical, based on
               what we think they should have known.

               Now if the case was that the employer had divided his
               operational people and clerical people correctly—then I
               could see an argument to add a delivery classification or a
               repair manual on a prospective basis. The same way I could
               see making a change to make a traveling executive
               prospective if they were placed into a clerical classification.

               If you recall this account was originally assigned 8044 which
               includes drivers and we have moved to 8017 where the
               delivery is separate rated. The percentage of a sales between
               8017 items and 8044 items was very close and I think
               without digging it flip flopped from year to year. I believe it
               was decided to use 8017 because that was the manual that he
               seemed to be using more on a national basis.
No. 13AP-170                                                                             19


               You are also correct that we have applied classifications on a
               prospective basis if the employer had the wrong manual
               assigned to them, but I think we also look to see that the
               employers placement were reasonable. In this case from
               what I recall based on the percentages for Ohio I would think
               that it could be argued that 8044 and 8810 were the right
               manuals for this employer at least at the start of the audit.

      {¶ 41} 20. At the January 17, 2012 hearing, relator's counsel argued:

               And there is, in essence, an issue of fault associated with
               back billing. And the Roberds decision makes that relatively
               clear. Our arguments all along have been in this situation,
               the Bureau of Workers' Compensation assigned
               classifications in 1992. Didn't call my client, didn't write my
               client, didn't talk to my client, never sent an auditor out. And
               they had no idea how Ohio operated relative to the rest of the
               world. It's a monopolistic jurisdiction. West Virginia came
               down and audited every year.

               But they had two classifications, the payroll report says you
               will -- you will not write anything else on this, and they
               continued to report what they thought was correct. In fact,
               when this came to Mr. Roberts' attention as he testified, he
               thought they were over paying, because he looked at the
               losses relative to the premiums and it just didn't make sense
               to him at that point in time.

               Now, if you -- if you go back and you take a look at the two-
               year back billing, one of the things that the BWC has argued
               is that we have no legal right for prospective funding. I don't
               dispute that. It's not a right, it's not a matter that as a matter
               of case law or the Administrative Code or the Revised Code
               that we have a right to prospective billing. We've never
               argued that.

(Tr. 39-40.)
      {¶ 42} 23. At the January 17, 2012 hearing, Mr. Goellnitz was called to testify:
               So when you're looking at these questions, you've got to look
               at more than just saying, well, was the Bureau at fault that
               the employer didn't have the classification? I've sat here and
               listened to this today and the whole issue is, you know, we're
               talking a good-sized company. I don't know if they had
               representation, I didn't go back and look, by a third-party
No. 13AP-170                                                                       20


               administrator, but there is -- you can always pick up the
               telephone and contact the Bureau to ask questions.

               You know, we've had multiple groups of people available that
               if an employer feels they are misclassified or, you know, are
               -- within various programs, the drug free, the premium
               discount programs that are available to people, and we do
               have Bureau people available to answer questions about our
               various functions. So just saying, you know, well, the Bureau
               never bothered to contact me, well, if there's a question or a
               problem, if I'm an employer and I think I'm over paying, I'm
               sure going to pick up the phone and probably try to find out
               if I am or I'm not. And that's not what happened here. This
               audit was generated by the Bureau. I think it was just routine
               when it started.

               When you're looking at an employer's reason to make
               something prospective or not, you've also got to look at the
               manuals that are on the employer's payroll report, and he's
               got an obligation to fairly represent his payroll system based
               on the classifications that are assigned on that report.
               Meaning, basically in our case scenario here, we had 8044,
               which is a store-type classification, and we have an 8810
               classification that is for clerical office.

               Now, logically in fairness would require that you would be
               able to place your payroll between an operational function,
               which would be stores, deliveries, and other people that do
               have direct employer contact with those that are sitting in an
               office environment.

               The classification system that is in use is NCCI. That is the
               same classification system that is used by Travelers. So when
               you look at this account, your major driving area with this is
               the fact that the employer has misreported payroll into the
               clerical classification, and that is really the driving factor on
               why he had such a large billing. And that is probably the
               most important point of the reason why this audit would be
               billed retroactive than it would be the other way of then
               making it prospective.

               ***

               I said -- Mr. O'Brien brought up this e-mail between Michael
               Glass and others. Yeah, if the employer would have fairly
               represented or fairly distributed the payroll between
No. 13AP-170                                                                        21


               operational and clerical, it is my opinion that we would have
               made this audit finding prospective. But when you have
               millions and millions of dollars of payroll that has been
               reported to a clerical classification and its operational
               people, that kind of limits what we have to do here.

               There's a large amount of debt caused by the fact that the
               employer has not fairly reported its payroll system to the
               State of Ohio. We make audits prospective if, for example, we
               have one mercantile classification and maybe it should be
               under another. But the placements between the office and
               the mercantile or between operational and nonoperational
               employees was fairly represented.

               The same thing is true as if an employer was misclassified
               and he leaves off -- only reports one quarter of payroll, for
               example, leaves off these -- leaves off the other one,
               probably, you know, not done deliberately, we cannot make
               that type of audit prospective. We're going to have to bill
               them and collect off of a reasonable amount of premium
               based on what he should have reported to us based on the
               manuals assigned.

               It's really -- when you look at this thing, it's the degree of the
               errors they made in the placement that really is the driving
               factor. And the change over between whether you want to
               argue the operational reclassification is really a secondary
               argument in this particular case.

               ***

               I also want to, you know, go to the handouts. I have to show
               the comparison here of the way the employer reported to us
               and also to give you an idea of the degree of error that I'm
               talking about. And there's basically 10 pages here. I'm not
               going to go through each of the 10 pages in great detail, but I
               think it gives -- supports our position about the type of error
               and how great this error was.

               On the first page, what I have here is a comparison of how
               the employer reported to Travelers, which is their outside --
               their outside insured and to the BWC. Now, when you look at
               this, you'll see the department codes, those are the codes that
               are applicable to the state of Ohio, and you'll see that what
               I've done is I've either marked them as operational, which
               would be store-type people, or not operational, which would
No. 13AP-170                                                                       22


               be our administrative grouping, the clerical and the sales
               group.

               If you look at this, you will see that the employer, you know,
               feeling also that if you consider that, you know, they
               operated in 48 states I believe we were told, that their stores
               in each state would be similar in how they would function,
               because the job descriptions are pretty much standard, you
               know, by, you know -- they're standard as far as didn't
               matter what state you were in, the duties would be pretty
               much the same. You can see how far off the difference is
               between what they gave Travelers as far as operational
               people versus what they gave Ohio. And it's very significant.
               You can see that it is a significant difference.

               ***

               Okay. I now want to reference the second page, which I guess
               you can call item B. It's titled Aaron Rents error factor in
               reporting. Okay? You can see what we've done in this case,
               what I've done here is I've taken the found payroll in the
               audit versus what the employer reported in the year 2007,
               okay?

               And basically what I'm showing here is that the employer
               presented in their reporting that approximately 76 percent of
               their payroll structure was clerical in nature. Whereas in
               reality if you look in the "found" column, the actual amount
               of clerical, and I included also in this the outside sales people
               which includes the traveling auditors and other
               administrative, non-operational employees, is in reality 6
               percent.

               And I don't care how you want to look at the numbers. You
               can look at it and you can see that they represented their
               clerical system in a little over $11 million in payroll when in
               reality was just a little over 816,000. That is what I refer to
               something as being a major error or major problem as far as
               reporting and is the grounds for saying, hey, look, you know,
               you just can't turn your back on this and say, hey, Mr.
               Employer, it's fine for you to, you know, miss -- to have
               misstated that amount of money and the Bureau not go back
               and try to recover the premium that should have been paid.

               ***
No. 13AP-170                                                                        23


               Page 8 is basically to give an indication of how the employer
               reported under Travelers. And the point I want to make on
               this is that if you look at the Ohio reporting where you have a
               76 percent of the payroll structure being placed under
               clerical classification, if you look at any of the numbers,
               whether you want to start with Alabama, which is the first
               one, or you go down to something like Louisiana or -- or
               North Carolina, which are some of the bigger states.

               ***

               All right. All I'm trying to point out here is look at the
               difference between the percentage that they put into
               nonclerical classifications, which we would say is 8742, 8803
               or 8810 versus what they're giving Ohio. Example in
               Alabama you have $100,000 in those classifications over $5
               million. You go down to North Carolina, you've got about a
               million against $10 million. So you're talking, you know, less
               than 10 percent in a lot of these cases or less than 1 percent.
               So that just shows you the degree of the placement errors
               that they had. And obviously they're used to working with
               the Travelers system or with NCCI that they would know the
               difference between a store type worker and that of an
               operational employee.

               ***

               And basically what I've tried to do with this presentation
               today is to express the fact that we have an employer who,
               you know, I'm not accusing the employer of -- of anything,
               you know, that they deliberately did something wrong here,
               but when we audit an employer's account, you've got to look
               at the level of the errors that exist. You can't take a blind side
               to say, well, okay, he should have been 8017 rather than
               8044, for that reason we make the whole audit prospective.

               You've got to look at the whole picture here and that's the big
               point I'm making here, you've got to look at the fact that
               there are significant errors in the placements. Should they
               have known better? Well, maybe, maybe not. I mean, the
               issue for why they should know better is they have standard
               job descriptions and it says in them whether or not they have
               store duties or not.

               You also have them using a national system who took the
               same job groupings they gave us and called them operational
No. 13AP-170                                                                         24


               people, yet they wanted to present to Ohio that they were
               strictly clerical at a lower rate. This is basically our point.

(Tr. 58-66, 68-70, 72-73.)
      {¶ 43} 24. Following the January 17, 2012 hearing, the administrator's designee
mailed his decision and final order on August 9, 2012. Relying in large part upon the
testimony of Mr. Goellnitz, the administrator's designee determined that the audit shall
be applied retrospectively under the 24-month provision of Ohio Adm.Code 4123-17-
17(C). The order explains:
               The Administrator's Designee adopts the statement of facts
               contained in the order of the Adjudicating Committee.

               Employer Position:

               The employer stated that in 2008, the Bureau reaudited the
               employer subsequent to the original audit which was not
               processed by the Bureau. The second audit assigned manual
               8017 to the store personnel as well as other findings. The
               Bureau went back more than four years on the audit
               findings. After an Adjudicating Committee hearing, the audit
               was limited to a two year period of time. The Administrator's
               Designee then affirmed the decision. The employer filed a
               mandamus action and won in the Supreme Court. The
               Supreme Court's determination stated that the Bureau must
               explain its decision regarding the retrospective findings of
               the audit.

               The employer also stated the Adjudicating Committee
               hearing was improperly set for hearing before the
               Administrator's Designee. Original jurisdiction rests with the
               Adjudicating Committee not the Administrator's Designee.
               OAC 4123-14-06 states that the Administrator should refer
               matters to the Adjudicating Committee not the
               Administrator's Designee.

               Also, the product technicians were misclassified to manual
               7380. These workers should be assigned to manual 8017.
               The other states in which the employer conducts business its
               technicians are under manual 8017.

               Additionally, the employer objects to the findings being
               applied retroactively. In 2006, the employer contacted the
               auditor and was told there were no problems with its audit.
No. 13AP-170                                                                     25


               The employer assumed that it was reporting properly since it
               was not made aware of the problems of the 2006 [sic] by the
               Bureau. It was not until 2008, that the employer found out
               there was a problem in the 2006 audit. The employer's
               premium payments were well above its claims costs so the
               employer did not believe the workers were improperly
               classified.

               Finally, from 1992 to 2008, the employer was never given
               clear instructions as to how to report to the Bureau. The
               Bureau had a duty to instruct the employer back in 2006.
               That was not done. In a memo from Mr. Goellnitz to Mr.
               Glass, Mr. Goellnitz acknowledged that normally this would
               have been a prospective audit finding. Mr. Snyder was the
               auditor in 2006 and the Bureau made many of his prior
               audits prospective because of problem[s] with his audits.

               Bureau's Position:

               The final order of the Administrator's Designee was the final
               order of the Bureau. It was this order that was appealed to
               court. It was not the Adjudicating Committee order which
               was appealed to court. The Bureau did not need to conduct a
               formal hearing, it could have just explained its original order
               with regards to the prospective findings. The only issued
               [sic] remanded back from the court is the retrospective
               findings of the audit. The manual classification issue is not
               an issue to be decided at the hearing. The Bureau determined
               that the audit findings should be applied retroactively
               because this was a large employer who had third party
               representation. The employer['s] misuse of manual 8810 for
               store personnel was a gross mistake on the part of the
               employer. In cases like that the audit would not be made
               prospectively. The degree of the error was large. If only a
               couple of people were misreported to manual 8810 is a
               different situation than when most of operational payroll was
               placed in manual 8810. The payroll reported by the employer
               to Travelers Insurance was greatly different from than what
               was reported to the Bureau even though both used NCCI
               classifications. The clerical payroll (manual 8810) reported
               by the employer prior to the audit was 76% of payroll but
               after the audit it determined to be 6% of payroll. Manual
               7380 is a standard exception classification. Manual 8017
               does not specifically list drivers in the classification, so by
               NCCI rules the payroll must be reported to manual 7380.
No. 13AP-170                                                                      26


               Decision of the Administrator's Designee:

               Based on the testimony at the hearing and the materials
               submitted with the protest, the Administrator's Designee
               orders that the audit findings of the Bureau be applied
               retroactively. Ohio Administrative Code 4123-17-17 (C) states
               "The bureau shall have the right at all times by its members,
               deputies, referees, traveling auditors, inspectors or assistants
               to inspect, examine or audit any or all books, records,
               papers, documents and payroll of private fund, county, or
               public employer taxing district employers for the purpose of
               verifying the correctness of reports made by employers of
               wage expenditures as required by law and rule 4123-17-14 of
               the Administrative Code. The bureau shall also have the right
               to make adjustments as to classifications, allocation of wage
               expenditures to classifications, amount of wage
               expenditures, premium rates or amount of premium. No
               adjustments, however, shall be made in an employer's
               account which result in reducing any amount of premium
               below the amount of contributions made by the employer to
               the fund for the periods involved, except in reference to
               adjustments for the semi-annual or adjustment periods
               ending within twenty-four months immediately prior to the
               beginning of the current payroll reporting period. Except as
               provided in rule 4123-17-28 of the Administrative Code, no
               adjustments shall be made in an employer's account which
               result in increasing any amount of premium above the
               amount of contributions made by the employer to the fund
               for the periods involved, except in reference to adjustments
               for the semi-annual or adjustment periods ending within
               twenty-four months immediately prior to the beginning of
               the current payroll reporting period. The twenty-four month
               period shall be determined by the date when such errors
               affecting the reports and the premium are brought to the
               attention of the bureau by an employer through written
               application for adjustment or from the date that the bureau
               provides written notice to the employer of the bureau's intent
               to inspect, examine, or audit the employer's records." The
               Administrator's Designee finds that the bureau has properly
               applied that rule and that the Employer misreported payroll
               for a period of at least twenty-four months immediately prior
               to the current payroll period. There was no demonstration
               that the bureau originally misclassified the Employer's
               operations or that the Employer relied on clear instructions
               previously provided to it by the bureau.
No. 13AP-170                                                                     27


               Moreover, the Administrator's Designee is persuaded by the
               testimony of the Bureau auditor and the arguments by the
               Bureau Counsel, Mr. Hartranft. The Bureau's auditor, Mr.
               Goellnitz, testified that when the employer was audited in
               2008, BWC discovered that the employer had been
               improperly reporting operational employees as clerical
               employees. Mr. Goellnitz explained that this mis-
               classification resulted in the employer paying substantially
               less in premiums than it should have. He also testified about
               the magnitude of this misreporting. In 2007, the employer
               reported that approximately seventy-six percent of its payroll
               was clerical in nature and twenty-four percent worked in an
               operational capacity. In fact, the audit revealed that only six
               percent of the employer's payroll was clerical in nature and
               the remaining ninety-four percent should have been reported
               as operational.

               Alarmingly, the audit revealed that the employer was
               reporting a very different distribution of employees to
               insurers in other states, even though both the Bureau and the
               outside insurers use the same classification system. One
               would expect that the same job classification should be
               reported to both the Bureau and to the outside insurers as
               part of the operational manual. In fact, a comparison of
               employee classifications in the other 48 states in which the
               employer operated showed that they [sic] way the employer
               reported its Ohio payroll was completely out of line with the
               rest of its operations. In Ohio, the employer reported 76
               percent of its pay as clerical. In other states the percentage
               was 10% or less. Mr. Goellnitz concluded that because of the
               scope of the reporting discrepancies, and the fact that the
               inaccurate reporting resulted in a large underpayment of
               premiums, it would have been inappropriate to allow the
               employer to benefit from its inaccurate reporting of payroll.
               Accordingly, the Bureau exercised the discretion granted
               under O.A.C. 4123-17-17(C) and applied the reclassification
               retroactively.

               Additionally, this hearing dated January 17, 2012, was not a
               de novo hearing given the decision of the Supreme Court of
               Ohio and was, therefore, properly before the Administrator's
               Designee. The Administrator's Designee did issue an order in
               this matter. The Designee's order not only adopted the
               Adjudicating Committee's statement of facts, but also
               affirmed "the Adjudicating Committee's findings, decision,
               and rationale set forth in the order."
No. 13AP-170                                                                              28


       {¶ 44} 25. On March 1, 2013, relator, Aaron's, Inc., filed this mandamus action.
Conclusions of Law:
       {¶ 45} The January 17, 2012 order of the administrator's designee relies in large
part upon the testimony of auditor Goellnitz in denying Aaron's request for prospective
application only of the audit findings. Pointing to the "magnitude of [the] misreporting"
and the "scope of the reporting discrepancies" that resulted "in a large underpayment of
premiums," the administrator's designee found it "inappropriate to allow the employer to
benefit from its inaccurate reporting of payroll." On that basis, as more fully explained in
his order, the administrator's designee exercised his discretion under Ohio Adm.Code
4123-17-17(C) to apply the reclassifications retrospectively.
       {¶ 46} The main issue is whether the administrator's designee abused the
discretion granted to him under Ohio Adm.Code 4123-17-17(C) to apply the
reclassifications retrospectively.
       {¶ 47} Ohio Adm.Code 4123-17-17(C) currently provides:
               The bureau shall have the right at all times by its members,
               deputies, referees, traveling auditors, inspectors or assistants
               to inspect, examine or audit any or all books, records,
               papers, documents and payroll of private fund, county, or
               public employer taxing district employers for the purpose of
               verifying the correctness of reports made by employers of
               wage expenditures as required by law and rule 4123-17-14 of
               the Administrative Code. The bureau shall also have the right
               to make adjustments as to classifications, allocation of wage
               expenditures to classifications, amount of wage
               expenditures, premium rates or amount of premium. No
               adjustments, however, shall be made in an employer's
               account which result in reducing any amount of premium
               below the amount of contributions made by the employer to
               the fund for the periods involved, except in reference to
               adjustments for the semi-annual or adjustment periods
               ending within twenty-four months immediately prior to the
               beginning of the current payroll reporting period. Except as
               provided in rule 4123-17-28 of the Administrative Code, no
               adjustments shall be made in an employer's account which
               result in increasing any amount of premium above the
               amount of contributions made by the employer to the fund
               for the periods involved, except in reference to adjustments
               for the semi-annual or adjustment periods ending within
               twenty-four months immediately prior to the beginning of
No. 13AP-170                                                                            29


               the current payroll reporting period. The twenty-four month
               period shall be determined by the date when such errors
               affecting the reports and the premium are brought to the
               attention of the bureau by an employer through written
               application for adjustment or from the date that the bureau
               provides written notice to the employer of the bureau's intent
               to inspect, examine, or audit the employer's records.

       {¶ 48} Analysis begins with the observation that the January 17, 2012 order of the
administrator's designee does not find that Aaron's intentionally misreported its payroll.
In fact, Goellnitz was careful not to allege intentional misreporting, as he stated at the
hearing: "Should they have known better? Well, maybe, maybe not." (Tr. 73.)
       {¶ 49} That is not to say that intentional misreporting was never suggested. The
administrator's designee, like any fact-finder in any administrative, civil or criminal
proceeding, may draw reasonable inferences and rely upon his own common sense in
evaluating the evidence. See State ex rel. Supreme Bumpers, Inc. v. Indus. Comm., 98
Ohio St.3d 134, 2002-Ohio-7089.        The administrator's designee chose not to draw
inferences from the testimony or other evidence of record that might arguably support a
finding of intentional wrongdoing. Clearly, the decision of the administrator is not based
upon a finding of intentional misreporting. Rather, his decision to apply the
reclassifications retrospectively is based upon the "magnitude" of the error.
       {¶ 50} The analysis of the order of the administrator's designee is important
because relator seems to suggest here that the bureau cannot apply the reclassification
retrospectively because any allegation of impropriety was held to be "unfounded"
following an investigation by the bureau's special investigation department. In a report of
investigation dated December 30, 2008, the special agents of the bureau concluded "there
is currently no evidence to support that Aaron Rents had knowledge of or intentionally
misreported payroll." Consequently, the report indicates that the investigation is closed
and that the allegations are "unfounded."
       {¶ 51} Also, as Aaron's points out here, an October 28, 2008 entry on the Bureau's
Fraud Management System states:
               On October 28, 2008, [special agent] Mergen reviewed the
               case on Aaron Rents and recommends the case be closed
               unfounded for EOM October 2008.
No. 13AP-170                                                                             30



               The case was initiated through an allegation which alleged
               Aaron Rents was improperly reporting a substantial amount
               of its payroll incorrectly as clerical.

               Records have been obtained from the private insurance
               carrier and from monopolistic states regarding Aaron Rents'
               workers compensation coverage. The records do indicate
               that Aaron was reporting a significantly higher percentage of
               clerical payroll in Ohio. However, to date there is no
               evidence to support that Aaron Rents knew that they were
               reporting incorrectly to the BWC.

      {¶ 52} While the bureau's investigation cleared Aaron's of the allegations of
intentional wrongdoing, that is not dispositive of this court's review of the order of the
administrator's designee.
      {¶ 53} Relator cites to no case or authority that holds that retrospective billing can
only be premised upon the intentional wrongdoing of the employer, State ex rel. Roberds,
Inc. v. Conrad, 86 Ohio St.3d 221 (1999), strongly suggests otherwise.
      {¶ 54} In Roberds, a bureau audit revealed that the employer, Roberds, Inc., had
misclassified some of its employees and, as a result, underpaid its premiums by over one
million dollars. The main issue in Roberds was over the length of the period over which
recovery was permissible. Roberds, Inc. argued that the bureau was limited to a one-year
recovery period under Ohio Adm.Code 4123-17-28 and that the bureau could not recover
under the 24-month back period under Ohio Adm.Code 4123-17-17(C).
      {¶ 55} In Roberds, the court held that the bureau could recover under Ohio
Adm.Code 4123-17-17(C). Again, there was no direct discussion by the court regarding
intentional wrongdoing. However, the Roberds court did state:
               The employer's submission of premium and payroll data to
               the bureau is essentially on an honor system. Unless an audit
               of the employer's records reveals otherwise, the bureau
               presumes that the employer has correctly reported its
               premiums. In this case, the audit revealed that Roberds had
               misclassified some of its employees.

Id. 222.
No. 13AP-170                                                                             31


          {¶ 56} Thus, in Roberds, that the employer had misclassified some of its employees
was sufficient for the bureau to recover under the 24-month provision of Ohio Adm.Code
4123-17-17(C).       There is nothing in Roberds to indicate that the employer's
misclassification was intentional.
          {¶ 57} Given the above analysis, the issue here becomes whether the magnitude of
Aaron's misclassification is a sufficient basis for the bureau to deny the request that the
misclassification be applied prospectively only. This magistrate can see no reason why
magnitude cannot be a basis for the bureau's decision.
          {¶ 58} Another issue must be addressed. Relator contends that the bureau erred
or abused its discretion by failing on the remand to first schedule a hearing before the
adjudicating committee, rather than the administrator's designee.           The magistrate
disagrees.
          {¶ 59} Analysis begins with a review of the July 5, 2011 judgment entry of the
Supreme Court of Ohio which was filed in this court on July 25, 2011. The judgment entry
states:
                This cause, here on appeal from the Court of Appeals for
                Franklin County, was considered in the manner prescribed
                by law. On consideration thereof, the judgment of the court
                of appeals is reversed, and a limited writ is issued that
                returns this cause to the Ohio Bureau of Workers'
                Compensation for further consideration and for an amended
                order that includes an explanation for its decision, consistent
                with the opinion rendered herein.

                It is further ordered that a mandate be sent to the Court of
                Appeals for Franklin County by certifying a copy of this
                judgment entry and filing it with the Clerk of the Court of
                Appeals for Franklin County.

          {¶ 60} Clearly, the judgment entry does not indicate that the bureau must schedule
a hearing before the adjudicating committee.
          {¶ 61} Ohio Adm.Code 4123-14-06 is a bureau rule captioned "Bureau of workers'
compensation adjudicating committee." Thereunder, the bureau rule provides:
                (A) The administrator of the bureau of workers'
                compensation may delegate the authority granted to the
                administrator under Chapters 4121., 4123., and 4131. of the
No. 13AP-170                                                                           32


               Revised Code and agency 4123 of the Administrative Code
               for determining employer premium, assessment, or penalty
               obligations or liabilities, eligibility for alternative premium
               plans or discount programs, or other employer-related
               disputes or issues as may be authorized under the workers'
               compensation statutes and rules. For this purpose, the
               administrator may appoint an adjudicating committee to
               provide employers with hearings on such matters referred to
               the committee.

               ***

               (E) The committee shall keep a record of its dockets and
               proceedings. The committee's decisions shall be reduced to
               writing and mailed forthwith to all interested parties and
               shall state the evidence upon which the decision was based
               and the reasons for the committee's actions. The decision of
               the committee shall be the decision of the administrator. If
               the employer files a written appeal within thirty days of the
               employer's receipt of the committee's decision, the
               administrator or the administrator's designee shall hear the
               appeal of the decision of the committee, and shall conduct a
               hearing for such purpose.

      {¶ 62} Citing Ohio Adm.Code 4123-14-06(A) and (E), relator points out that the
adjudicating committee hears an employer's protest first. The administrator's designee
will hear an appeal from the adjudicating committee if an appeal is timely filed by the
employer.
      {¶ 63} According to relator, the "plain language" of the bureau rule "proscribes the
order of events, with no exception for cases that are returned from a reviewing court."
(Relator's brief, 21-22.) Thus, based upon the rule's absence of direction for compliance
with a court issued writ, relator concludes that the rule proscribes a hearing before the
adjudicating committee for compliance with the instant writ. Relator's argument lacks
merit. Because the bureau rule does not address compliance with a writ of mandamus, it
cannot be interpreted to require an adjudicating committee hearing as a necessary first
step toward compliance with the writ. In short, relator's reliance upon the bureau rule is
misplaced.
No. 13AP-170                                                                           33


       {¶ 64} Relator's argument continues with its observation that the February 10,
2009 order of the administrator's designee adopted the September 24, 2008 decision of
the adjudicating committee without much explanation and thus, as relator argues, it was
the September 24, 2008 decision of the adjudicating committee that actually provided the
courts with a reviewable order. As relator puts it, "[a]nything of substance upon which
the Supreme Court based its decision to order a limited writ had to be based upon a
review of the Adjudicating Committee order." (Relator's brief, 20.)
       {¶ 65} Even if relator's observation regarding the two prior orders is correct, it
does not follow that compliance with the writ must begin with another hearing before an
adjudicating committee. In fact, the proceedings before the administrator's designee on
January 17, 2012 shows the fallacy of relator's argument. That is, the administrator's
designee took extensive recorded testimony with oral arguments from counsel, and then
issued a lengthy, written decision that is under review here.
       {¶ 66} Relator nonetheless argues:
               Moreover, because that September 24, 2008 Adjudicating
               Committee hearing was not a record hearing, there was no
               official record of the proceedings available to be referenced
               upon which the Administrator's Designee could provide an
               amended order.

(Relator's brief, 20.)
       {¶ 67} The parties were free to present testimony and evidence on January 17,
2012 before the administrator's designee. There was no need for a record hearing before
another adjudicating committee to serve as an evidentiary basis for a presumed appeal to
the administrator's designee.
       {¶ 68} Moreover, as respondent correctly points out here, it was the February 10,
2009 order of the administrator's designee that was the final order that needed
correction. It was the February 10, 2009 order of the administrator's designee that had to
be vacated for compliance with the writ. It is irrelevant that it might be argued that the
adjudicating committee had issued a more comprehensive order than did the
administrator's designee of February 10, 2009.
No. 13AP-170                                                                               34


      {¶ 69} Based upon the above arguments, the magistrate concludes that the bureau
did not err or abuse its discretion in refusing relator's request for an adjudicating
committee hearing for compliance with the writ.
      {¶ 70} 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).
