State ex rel. Pepsi-Cola Bottling v. Morse

[This opinion has been published in Ohio Official Reports at 72 Ohio St.3d 210.]

THE STATE EX REL. PEPSI-COLA BOTTLING COMPANY, APPELLANT, v. MORSE

ET AL., APPELLEES.

[Cite as State ex rel. Pepsi-Cola Bottling v. Morse, 1995-Ohio-82.]

Workers' compensation—Industrial Commission abuses its discretion in awarding

wage-loss compensation, when.

(No. 93-2350—Submitted February 21, 1995—Decided May 17, 1995.)

APPEAL from the Court of Appeals for Franklin County, No. 92AP-1506.

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{¶ 1} Appellee-claimant, Richard J. Morse, injured his shoulder and upper

back on July 31, 1987 while in the course of and arising from his employment with

appellant, Pepsi-Cola Bottling Company, his self-insured employer. On June 14,

1989, a district hearing officer for appellee Industrial Commission of Ohio allowed

Morse's workers' compensation claim, stating:

"Temporary Total [disability compensation] from 12-1-87 through 6-13-89,

less Temporary Total [disability compensation] previously paid over the same

period in [claim No.] 930436-22[.]

"Compensation awarded based on the medical reports of Doctor Yurich

[sic].

“District Hearing Officer finds that the claimant cannot return to former

position of employment and the employer has no work available within his

restrictions, claimant has reached maximum medical improvement.

"It is therefore ordered that claimant be paid wage loss under [R.C.]

4123.56[B] * * * from 6-14-89 forward at the rate of two-thirds of his full weekly

wage. Claimant to register with the Bureau of Employment Services and notify

self-insured employer when he returns to work."

{¶ 2} No appeal was taken.

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{¶ 3} On January 15, 1990, Pepsi moved the commission to re-examine

claimant's eligibility for wage-loss compensation. At the June 18, 1990 hearing on

Pepsi's motion, Pepsi tendered a "Foreign Corporation Application for License"

that had been filed with the Secretary of State. The application showed that on

February 6, 1990, a Delaware corporation, "The Steelman Corp. dba Al Ganim

Lounge," had applied for a permanent license to do business in Ohio, i.e.,"to sell

and serve liquor, beverages and food to the public." The application contains the

signature of a Richard Morse, an officer of the corporation. Also submitted was

the Secretary of State's certification of the issuance of a license to "Al Ganim

Lounge" on February 20, 1990.

{¶ 4} On July 16, 1990, claimant notified Pepsi that he had begun working

at Al Ganim's Lounge on July 8, 1990 at $150 per week. On July 17, 1990, the

district hearing officer issued his order following the June 1990 hearing:

"The District Hearing Officer grants the employer's motion to the following

extent: employer has provided evidence that claimant experienced a change in his

employment status as of 2/6/90. Employer alleges claimant now owns the Al

Ganiun [sic] Lounge. The District Hearing Officer thus orders the issue of further

wage loss beyond 2/6/90 held in abeyance until claimant provides evidence of his

current weekly earnings or lack thereof. Once said evidence is on file refer to

District Hearing Officer docket on issue of further wage loss entitlement."

{¶ 5} There was no appeal.

{¶ 6} On October 23, 1990, claimant moved:

"[T]hat this claim be set for hearing as soon as possible on the issue of wage

loss. This claim has been held in abeyance since June 18, 1990 for the District

Hearing Officer's order attached hereto. Pursuant to that order, I would ask that

this be set on the DHO docket on the issue of further wage loss entitlement."

{¶ 7} Accompanying his motion was a C94-A sworn wage statement that

read:

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January Term, 1995

"Pursuant to District Hearing Officer's order of June, 1989, I have registered

with the Ohio Bureau of Employment Services and have been actively seeking

work since that date. On July 5, 1990, I became employed at Al Ganim's Lounge in

Lakewood, Ohio. I have been hired at the rate of $150.00 as a bartender. My

previous average weekly wage while employed by Pepsi Cola Bottlers of Ohio was

$576.84. I respectfully request that I be found to be suffering a wage loss in the

amount of $426.84."

{¶ 8} A transcribed hearing before a district hearing officer occurred on

January 7, 1991. Claimant's father, Richard C. Morse, testified that he was the sole

shareholder of the Steelman Corporation. He identified his signature as the one on

the incorporation documents submitted by Pepsi and testified that he alone owned

the bar.

{¶ 9} Claimant's father testified that he paid claimant $150 a week to "ru[n]

the bar for me." He stated that claimant set his own hours and came in "[w]henever

he wants to work." Claimant corroborated this testimony, indicating that he indeed

made $150 a week and generally worked approximately three hours a day, seven

days a week. Claimant also submitted a W-2 form for 1990 that showed $3,900 in

earnings from the bar.

{¶ 10} Pepsi, in addition to other evidence, offered the purported November

8, 1990 office notes of Dr. Robert S.Yurick, claimant's attending physician. The

notes were unsigned, but contained the typed initials "RSY: jd" in the lower right

corner. These notes indicated:

"November 8, 1990—Office:

"Dick was seen back at the office today. Apparently had been doing quite

well until five to six days before being seen in the office when, driving a truck, was

struck broadside and knocked onto the left side of the vehicle and struck his

operated, left shoulder. * * * [H]e has had soreness about the shoulder which he

did not have prior to. He had been back into basketball and using the arm without

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symptoms although he would occasionally have some crepitus, but no pain or

disability until the accident."

{¶ 11} Following the hearing on January 7, 1991, the district hearing officer

ruled:

"District Hearing Officer grants claimant's motion, filed 10-23-90, to the

following extent: claimant is not the owner of the Al Ganim Lounge. The business

is owned by the Steelman Corporation, an entity wholly owned by claimant's father,

James [sic] C. Morse. Claimant began working for the Al Ganim Lounge, as a

bartender, on 7-5-90. Claimant is paid $150.00 per week by Al Ganim Lounge/The

Steelman Corporation. Wage loss compensation is to continue, from 2-78-90 [sic],

per proof of earnings submitted."

{¶ 12} The order was administratively affirmed.

{¶ 13} Pepsi filed a complaint in mandamus in the Court of Appeals for

Franklin County, alleging that the commission had abused its discretion in

awarding wage-loss compensation. The appellate court denied the writ.

{¶ 14} This cause is now before this court upon an appeal as of right.

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Duvin, Cahn, Barnard & Messerman and Jane P. Wilson, for appellant.

Sammon & Bolmeyer Co., L.P.A., and Albert Sammon, for appellee Morse.

Betty D. Montgomery, Attorney General, and Charles Zamora, Assistant

Attorney General, for appellee Industrial Commission.

Thompson, Hine & Flory, Janis B. Rosenthal and Timothy E. Cowans,

urging reversal for amicus curiae, Ohio Council of Retail Merchants.

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January Term, 1995

Per Curiam.

{¶ 15} Both procedural and substantive challenges have been made to the

commission's order. Sustaining these objections in part, we reverse the appellate

court's judgment.

I

{¶ 16} Questioning Pepsi's ability to maintain this cause of action, claimant

points out that Pepsi did not appeal the June 14, 1989 order that first awarded wage-

loss compensation. Advancing a theory that combines elements of res judicata with

failure to exhaust administrative remedies, claimant contends that appellant's cause

of action is barred.

{¶ 17} Underlying claimant's argument is the belief that once eligibility for

compensation has been established, that eligibility is forever immune from further

challenge. This reasoning, however, ignores the limited application of res judicata

to workers' compensation cases:

"'It is almost too obvious for comment that res judicata does not apply if

the issue is claimant's physical condition or degree of disability at two entirely

different times * * *. A moment's reflection would reveal that otherwise there

would be no such thing as reopening for a change in condition. The same would

be true of any situation in which the facts were altered by a change in the time frame

* * *.'" State ex rel. B.O.C. Group v. Indus. Comm. (1991), 58 Ohio St.3d 199,

201, 569 N.E.2d 496, quoting 3 Larson, Workers' Compensation Law (1989),

Section 79.72(f).

{¶ 18} Facts were altered by the passage of time in the case at bar. On July

8, 1990, claimant returned to the work force. Because claimant's return, at a

minimum, might affect his rate of wage-loss compensation, the commission

properly reopened the matter of continuing eligibility for wage-loss compensation.

{¶ 19} The commission's intervention effectively split the wage-loss

question into two segments. The first, addressed by the June 14, 1989 order, covers

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claimant's period of unemployment from June 14, 1989 through July 7, 1990. The

second, determined by the January 7, 1991 order, involved claimant's eligibility for

wage-loss compensation while employed from July 8, 1990 forward. Pepsi pursued

its administrative remedies as to the latter period, but not the former.

{¶ 20} Pepsi has, therefore, preserved its right to challenge claimant's wage

loss over the period of employment following July 7, 1990. It cannot, however,

relitigate claimant's entitlement to wage-loss compensation from June 14, 1989

through July 7, 1990. Pepsi attempts to excuse its failure to appeal by arguing that

the lack of "some evidence" of wage loss made the June 14, 1989 order void ab

initio. Pepsi is incorrect. The lack of "some evidence" does not equate to an order

rendered without jurisdiction. Accordingly, Pepsi cannot credibly defend its failure

to appeal the June 14, 1989 order, nor can it allege new and changed circumstances

sufficient to warrant re-examination of the order. Pepsi's alleged proof of claimant's

intent to abandon the labor market existed prior to the initial wage-loss hearing and

does not, therefore, represent a new or changed circumstance.

{¶ 21} Having affirmed Pepsi's right to contest wage-loss entitlement from

July 8, 1990 forward, we turn to the first of Pepsi's two procedural propositions.

Ohio Adm. Code 4121-3-32(D) states:

"[T]he payment of compensation [f]or wage loss pursuant to division (B) of

section 4123.56 of the Revised Code shall commence upon application with a

finding of any of the following* * *[.]" (Emphasis added.)

{¶ 22} The claimant did not file a separate and express request for wage-

loss compensation. The only application of any kind before the district hearing

officer was claimant's original claim application, i.e., his "C-50" application for

payment of compensation and medical expenses. Pepsi argues that the original

application may not be construed as an application for wage-loss compensation

within the purview of Ohio Adm. Code 4121-3-32(D). We disagree.

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January Term, 1995

{¶ 23} Ohio Adm. Code 4121-3-32(D) does not state how an application for

wage-loss compensation must be made. However, the fact that the application at

issue did not expressly request wage-loss compensation is not conclusive of

whether it was indeed such a request. See State ex rel. Gen. Refractories Co. v.

Indus. Comm. (1989), 44 Ohio St.3d 82, 83, 541 N.E.2d 52, 54. Certainly, the more

clearly articulated the request, the better. Under these circumstances, however, we

find that the commission did not abuse its discretion in addressing claimant's wage-

loss eligibility.

{¶ 24} The C-50 form is specifically designed to act as an application for

temporary total disability compensation. Given the statutory interrelationship

between temporary total disability and wage-loss compensation under R.C.

4123.56, the commission did not err in considering claimant's wage-loss eligibility

upon submission of claimant's C-50.

{¶ 25} Pepsi's remaining procedural objection involves the commission's

failure to subpoena payroll and tax records that Pepsi deemed significant. We again

reject Pepsi's argument.

{¶ 26} Under R.C. 4123.08, the commission's subpoena power is

discretionary. For the purposes of establishing the amount of claimant's earnings,

it was within the commission's prerogative to find that the production of payroll

and tax records was superfluous given the evidence that was before it, including

claimant's W-2 form. As will be discussed infra, the commission's determination

of claimant's average weekly wage was supported by "some evidence."

Accordingly, the commission did not abuse its discretion.

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II

{¶ 27} We next turn to the merits of claimant's request for wage-loss

compensation. Former R.C. 4123.56(B) read:

"Where an employee in a claim allowed under this chapter suffers a wage

loss as a result of returning to employment other than his former position of

employment * * *, he shall receive compensation at sixty-six and two-thirds of his

weekly wage loss not to exceed the statewide average weekly wage for a period not

to exceed two hundred weeks."

{¶ 28} To prevail, a claimant must, therefore, show that he or she has

suffered diminished wages as a result of a medical impairment that is causally

related to the industrial injury. Pepsi disputes the existence of diminished wages

and medical impairment. Pepsi alternatively argues that if one or both do exist, it

is not because of the industrial injury.

{¶ 29} Pepsi's dual allegations intersect on the question of medical

impairment. Claimant's allowed conditions must underlie claimant's inability to

secure comparably paying employment in order for him to be entitled to benefits.

In this case, medical evidence submitted by Pepsi suggests that claimant has no

impairment from the allowed conditions. That same evidence indicates that the

claimant reinjured his shoulder in a nonindustrial auto accident. The commission's

order is impermissibly silent on this issue, necessitating a return for further

consideration.

{¶ 30} Examining claimant's allegation of diminished wages, we find

"some evidence" to support the $150 average weekly wage found by the

commission. Documentary and testimonial evidence established a $150 weekly

income for claimant. The sole evidence submitted by Pepsi was a private

investigator's statement that he overheard claimant tell a bar patron that he

(claimant) owned the lounge. Even if accepted, however, it does not prove that

claimant's weekly wage exceeded $150. Pepsi's criticism of claimant's evidence is,

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therefore, unpersuasive, given the lack of contrary evidence and the commission's

exclusive authority to evaluate evidentiary weight and credibility.

{¶ 31} Assuming arguendo that $150 accurately reflects claimant's weekly

earnings, Pepsi contends that diminution is due to voluntary choice, not an

industrially related medical impairment. Specifically, Pepsi argues that (1) claimant

has deliberately received underinflated wages, and (2) by taking employment at the

tavern as opposed to taking a higher paying job elsewhere, claimant deliberately

and voluntarily kept his wages low. Upon review, we find that Pepsi has raised a

legitimate issue that the commission wrongly failed to explore.

{¶ 32} Following the lead of decisions on temporary total disability and

impaired-earning capacity, State ex rel. The Andersons v. Indus. Comm. (1992), 64

Ohio St.3d 539, 597 N.E.2d 143, implies that voluntary acts that limit earnings can

bar wage-loss compensation. Pepsi points to two acts which it claims establishes

that claimant has deliberately limited his wages.

{¶ 33} The first, and least persuasive, act centers on claimant's ability, as

bar manager, to set wages. Pepsi contends that claimant made less than the part-

time waiters he supervised; therefore, claimant's failure to set his wages above those

he oversaw represented a deliberate limitation of earnings.

{¶ 34} Pepsi's position lacks merit for two reasons. First, without knowing

the bar's financial situation—claimant's father testified that it had not turned a

profit—claimant's ability to pay himself more is mere speculation. Second, if

claimant is making less than his staff, it may stem from hours worked, not hourly

rate. Claimant's waiters, before tips, made approximately $4 to $5/hour. Claimant's

$150 salary divided by twenty-one hours equals approximately $7/hour—a wage

rate higher than that of his staff.

{¶ 35} Pepsi's better argument is one that may ultimately prove inherent

whenever lower-paying alternate employment underlies a request for wage-loss

compensation -- the reason for taking the job. This is particularly relevant where

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the alternate employment is a part-time job, since the combined amount of wages

and compensation could produce close to a full-time weekly income for part-time

work. Wage-loss compensation was not intended to provide a disincentive to

resumption of full-time employment or to subsidize—at the State Insurance Fund's

or self-insured employer's expense—a part-time lifestyle. Conversely, if a part-

time job is the only work available within a claimant's post-injury capabilities, he

or she should not be discouraged from accepting it.

{¶ 36} We find, therefore, that the commission abused its discretion in

failing to discuss this issue in this case - so, too, the question of the medical cause

of claimant's disability.

{¶ 37} Accordingly, the judgment of the court of appeals is reversed, and

the commission is ordered to vacate its order and to reconsider Pepsi's motion in

accordance with this opinion.

Judgment reversed.

MOYER, C.J., WRIGHT, PFEIFER and COOK, JJ., concur.

DOUGLAS, J., dissents.

RESNICK and F.E. SWEENEY, JJ., dissent and would affirm the judgment of

the court of appeals.

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