Automation Tool & Die, Inc. v. Ohio Bur. of Workers' Comp.

[Cite as Automation Tool & Die, Inc. v. Ohio Bur. of Workers' Comp., 2016-Ohio-4882.]

IN THE COURT OF APPEALS OF OHIO

TENTH APPELLATE DISTRICT

Automation Tool & Die, Inc., :

Plaintiff-Appellant, :

No. 15AP-631

v. : (Ct. of Cl. No. 2014-00983)

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

Defendant-Appellee. :

D E C I S I O N

Rendered on July 7, 2016

On brief: LoPresti, Marcovy & Marotta, LLP, Thomas P.

Marotta, and Michael S. Lewis, for appellant. Argued:

Michael S. Lewis.

On brief: Michael DeWine, Attorney General, Peter

DeMarco, and Lindsey Grant, for appellee. Argued: Peter

DeMarco.

APPEAL from the Court of Claims of Ohio

BRUNNER, J.

{¶ 1} Plaintiff-appellant, Automation Tool & Die, Inc. ("ATD"), appeals a decision

of the Court of Claims of Ohio granting defendant-appellee's, Ohio Bureau of Workers'

Compensation ("BWC"), motion to dismiss ATD's amended complaint pursuant to Civ.R.

12(B)(6). ATD seeks to reverse that decision and have this Court remand the matter for

further proceedings.

{¶ 2} BWC filed a cross assignment of error on the Court of Claims's failure to

dismiss ATD's claims based on BWC's statute of limitations.

{¶ 3} An order granting a Civ.R. 12(B)(6) motion to dismiss is subject to de novo

review. Perrysburg Twp. v. Rossford, 103 Ohio St.3d 79, 81, 2004-Ohio-4362, ¶ 5;

Cincinnati v. Beretta U.S.A. Corp., 95 Ohio St.3d 416, 418, 2002-Ohio-2480, ¶ 5. In

2

No. 15AP-631

reviewing whether to grant a motion to dismiss, a court must take all the factual

allegations of the complaint as true and draw all reasonable inferences in favor of the

nonmoving party. Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190, 192 (1988).

Additionally, before the motion can be granted, it must appear beyond doubt that plaintiff

can prove no set of facts in support of his claim that would entitle him to relief. Beretta

U.S.A. Corp. at ¶ 5, citing O'Brien v. Univ. Community Tenants Union, Inc., 42 Ohio

St.2d 242 (1975), syllabus.

{¶ 4} For the reasons set forth below, we affirm the decision of the Court of

Claims.

I. FACTS AND PROCEDURAL HISTORY

{¶ 5} ATD seeks money damages against BWC based on alleged breach of

statutory and fiduciary duties in connection with the claims of an ATD employee, who

ATD believed was defrauding the workers' compensation system. In September 2008,

ATD employee, William Browning, Jr., filed a claim with BWC for a workplace back

injury. BWC allowed his claim for a lumbar sprain. On January 29, 2009, Browning's

treating physician declined Browning's request to renew his prescription for narcotic

medications, and Browning terminated his relationship with that physician. In July

2009, Browning requested additional allowances for back conditions, which BWC

allowed. ATD asserts that Browning sought narcotics from a number of Ohio physicians,

alleging that "during the period of 2009 to 2012, Browning obtained approximately

14,000 doses of narcotic pain medications at the cost of approximately $30,000.00, as

well as other benefits and compensation, which were paid for by BWC through his claim

against ATD." ( Feb. 2, 2015 ATD's First Am. Petition for Declaratory Jgmt. at 2. )

{¶ 6} In the fall of 2011, ATD learned that Browning was working on a

construction project while claiming to be disabled from work due to the alleged 2008

workplace injury. ATD hired an investigator, who obtained video of Browning working on

a residential renovation. ATD turned the results of its investigation over to BWC's Special

Investigation Unit. BWC then investigated Browning's claims and declared an

overpayment of improperly received temporary total benefits, but BWC did not seek a

finding of fraud against Browning before the Industrial Commission of Ohio ("ICO").

ATD pursued the matter before ICO, which issued a finding of fraud against Browning

3

No. 15AP-631

and denied his original claim and additional allowances on the basis of fraud. Browning

did not appeal ICO's order.

{¶ 7} On December 18, 2014, ATD filed its initial petition for declaratory

judgment and complaint for equitable relief against BWC in the Court of Claims. On

January 20, 2015, BWC moved to dismiss ATD's complaint pursuant to Civ.R. 12(B)(6)

for the reason that the claims arose from BWC's performance of a public duty under R.C.

Chapter 2743.

{¶ 8} On February 2, 2015, ATD filed an amended petition and complaint for the

following claims: (1) Petitioning for Declaratory Judgment pursuant to R.C. 2721.01, et

seq., (2) Breach of Statutory and Regulatory Duties, and (3) Unjust Enrichment;

Restitution. ATD alleges that BWC is ATD's insurer and owes ATD "a fiduciary duty to act

in good faith in investigating and administering claims." (Id. at 4.) ATD claims that BWC

breached its duty by failing to adequately investigate Browning's original and subsequent

claims pursuant to R.C. 4121.13. ATD further alleges that BWC has a "special

relationship" with ATD pursuant to R.C. 2743.02, and so has waived immunity as to ATD

with respect to BWC's duty to investigate pursuant to R.C. 4121.13. (Id. at 5.)

{¶ 9} ATD asserts that BWC investigated Browning's activities only after receiving

the results of ATD's investigation. ATD claims that BWC "heedlessly and willfully"

neglected its statutory duties, thus breaching its duty to ATD, which directly and

proximately caused ATD to incur damages, including the costs and expenses of

investigating and defending Browning's claim. (Id.)

{¶ 10} Finally, ATD alleges that BWC was unjustly enriched because its failure to

perform its statutory duties "compelled" ATD to investigate Browning's claims for both

ATD's own protection and "for the protection of the public from such fraudulent conduct."

(Id. at 6.) ATD seeks equitable relief in the form of "restitution for all costs and expenses

incurred in the conduct on the investigation of Browning's fraudulent conduct." (Id.)

{¶ 11} On March 2, 2015, BWC filed its motion to dismiss ATD's amended

complaint pursuant to Civ.R. 12(B)(6), asserting that ATD's claims arise from BWC's

performance of a public duty, and the complaint fails to set forth a claim under R.C.

2743.02(A)(3)(b), which waives sovereign immunity in certain circumstances. BWC also

argues that the applicable statute of limitations bars ATD's recovery, because the alleged

4

No. 15AP-631

cause of action accrued more than two years before ATD filed its lawsuit. On March 16,

2015, ATD filed a memorandum in opposition to the motion to dismiss its amended

complaint.

{¶ 12} On May 29, 2015, the Court of Claims granted BWC's Civ.R. 12(B)(6)

motion to dismiss, finding that ATD's amended complaint failed to state a claim for relief.

The Court of Claims's entry of dismissal did not address BWC's statute of limitations

argument.

II. ASSIGNMENTS OF ERROR

{¶ 13} ATD's appeal from the Court of Claims's May 29, 2015 entry granting BWC's

motion to dismiss, and includes just one assignment of error for this court's review:

The court of claims erred, as a matter of law, by dismissing

automation's claims for breach of statutory and fiduciary

duties.

{¶ 14} Additionally, BWC raises a cross-assignment of error from the May 29, 2015

dismissal entry:

The court of claims erred when it failed to find that

automation's claims are barred by the applicable statute of

limitations.

III. DISCUSSION

{¶ 15} ATD raises two issues in its assignment of error. The first issue is the

argument that "[t]he Court of Claims erred, as a matter of law, by applying a heightened

pleading standard to [ATD's] breach of statutory duty claim." (Emphasis omitted.) (ATD's

Brief at 8.) ATD argues that "Ohio is a notice-pleading state and does not require a

plaintiff to plead operative facts with particularity." Beretta U.S.A. Corp. at ¶29. ATD

asserts that its amended complaint complies with the notice pleading standard of Civ.R.

8(A), which requires only "(1) a short and plain statement of the claim showing that the

pleader is entitled to relief, and (2) a demand for judgment for the relief to which he

deems himself entitled." (ATD's Brief at 8.) ATD further asserts that its amended

complaint was sufficient to put BWC on notice that ATD was seeking damages for a

breach of duty arising out of a special relationship regarding Browning's claim. The

second issue argued in conjunction with ATD's sole assignment of error is that the Court

of Claims erred as a matter of law by finding that BWC owed ATD no fiduciary duty.

5

No. 15AP-631

{¶ 16} This Court has conducted a de novo review of the record and concludes that

the Court of Claims appropriately reviewed and decided BWC's motion to dismiss

pursuant to Civ.R. 12(B)(6). The Court of Claims correctly determined that, to sustain its

claim that BWC acted as an insurer and thus owed ATD a fiduciary duty, ATD must satisfy

the three-pronged test set forth in this Court's decision of Cristino v. Admr., Ohio Bur. of

Workers' Comp., 10th Dist. No. 12AP-60, 2012-Ohio-4420. The Court of Claims stated in

relevant part:

With regard to [ATD]'s claim that BWC acts as an insurer and

thus owes [ATD] a fiduciary duty, [ATD] must show: (1) the

existence of a duty arising from a fiduciary relationship; (2)

[BWC's] failure to observe that duty, and (3) an injury

proximately resulting therefrom. Cristino v. Adm'r, Ohio

Bureau of Worker' Comp., 10th Dist. Franklin No. 12AP-60,

2012-Ohio-4420, ¶ 16, see also Wells Fargo Bank, N.A. v.

Sessley, 10th Dist. Franklin No. 09AP-178, 2010-Ohio-2902 ¶

36.

[ATD] argues that its amended complaint states a claim for

breach of fiduciary duty because BWC acted as an insurer with

regard to Browning's claim. However, the Supreme Court of

Ohio has held that the BWC's "sole fiduciary responsibility is

to the State Insurance Fund." State ex rel. Harry Wolsky

Stair Builder, Inc. v. Indust. Comm. of Ohio, 58 Ohio St.3d

222, 224 (1991); see also State ex rel. Weimer v. Indus.

Comm., 62 Ohio St.2d 159 (1980). "Where there is no

fiduciary relationship between the parties, a breach-of-

fiduciary-duty claim necessarily fails. Wells Fargo Bank,

supra, at ¶ 36. Inasmuch as there was no fiduciary

relationship between [ATD] and BWC, [ATD] fails to state a

claim for breach of fiduciary duty as a matter of law.

(May 29, 2015 Entry of Dismissal at 2-3.)

{¶ 17} The record indicates that the only statutory duty BWC is alleged to have

violated is a public duty, but as a matter of law, BWC cannot be held liable for damages

arising from the failure to perform this duty. In reaching its finding, the Court of Claims

relied in part on prior decisions of this Court:

Thus, [BWC]'s duty to investigate fraud or illegalities

pertaining to the workers' compensation system is a public

duty, and "[a]s such, [public duties] do no flow to any private

individual, including the individual being regulated,

6

No. 15AP-631

inspected, licensed or audited, and including any individuals

who would benefit from these governmental functions."

Markowitz v. Dep't of Ins., 144 Ohio App.3d 155, 161 (10th

Dist.2001).

"By statute, the state is generally immune from liability in a

civil action based on the performance or nonperformance of a

'public duty.' " Connor v. Wright State Univ., 10th Dist.

Franklin No. 13AP-116, 2013-Ohio-5701, ¶ 11. "The immunity

afforded by R.C. 2743.02(A)(3)(a) 'does not apply to any

action of the state under circumstances in which a special

relationship can be established between the state and an

injured party.' R.C. 2743.02(A)(3)(b). * * * Thus, under R.C.

2743.02(A)(3)(b), the state can be held liable for its

performance or non-performance of a public duty, which is

otherwise exempted from the state's waiver of sovereign

immunity, when it stands in a special relationship with the

injured party." Burr v. Ohio State Hwy. Patrol, 10th Dist.

Franklin No. 12AP-26, 2012-Ohio-4906, ¶ 20.

(Entry of Dismissal at 4.)

{¶ 18} A special relationship exists if all five elements as set forth in R.C.

2743.02(A)(3)(b) are present. However, as the Court of Claims observed, under the

"special relationship" exception to the public duty rule, "the assumption of an affirmative

duty on [the State's] part requires that the [State] do more than adhere to its statutory

duty. It must voluntarily assume some additional duty." Commerce & Indus. Ins. Co. v.

Toledo, 45 Ohio St.3d 96, 101 (1989).

{¶ 19} BWC's duty to investigate workers' compensation fraud is a public duty.

The Court of Claims found that ATD did not allege that its relationship with BWC

qualifies as a special relationship:

[ATD] has failed to allege that BWC breached any duty it owed

other than the public duty that the BWC owes to all

employers. Furthermore, [ATD] has not alleged any facts

upon which the court can infer that BWC voluntarily assumed

any additional duties. [ATD] acknowledges that once BWC

was alerted to the potential fraud of Browning, it

"investigate[d] Browning's activities" and "declared an

overpayment of improperly received temporary total

benefits." (Amended Complaint ¶ 12, 14).

Although [ATD] alleges that BWC's failure to recognize and

investigate Browning's fraud before [ATD] alerted BWC to the

7

No. 15AP-631

fraud was a violation of BWC's duty to [ATD], [ATD's]

pleading lacks adequate underlying factual allegations of

promises or actions by BWC to demonstrate that it assumed

affirmative duties beyond those that it owed the public. The

pleading recites the statutory elements of a special

relationship but presents legal conclusions couched as factual

allegations, which need not be presumed true for purposes of

a motion to dismiss. Ford v. Brooks, 10th Dist. Franklin No.

11AP-664, 2012-Ohio-943, ¶ 20. Accordingly, making all

reasonable inferences in favor of [ATD], it appears beyond

doubt that BWC is immune from liability pursuant to R.C.

2743.02(A)(3)(a) and 2743.02(E)(1).

(Entry of Dismissal at 5.)

{¶ 20} Based on our independent review of the record, we agree with the Court of

Claims that the only statutory duty that BWC is alleged to have violated is a public duty

for which BWC cannot be held liable as a matter of law. Additionally, we agree that BWC

has no special relationship with ATD that would create an actionable fiduciary duty to

ATD and, thus, cannot be held liable for a breach of duty that does not exist.

Consequently, ATD's amended complaint fails to allege a claim upon which relief could be

granted, and the Court of Claims correctly dismissed it. Having concluded this, the Court

of Claims had no need to address BWC's statute of limitations argument. Similarly, this

Court need not address BWC's cross assignment of error seeking to address the Court of

Claims's failure to find that ATD's claims are barred by the statute of limitations.

IV. CONCLUSION

{¶ 21} Because this court finds that the Court of Claims did not err, as a matter of

law, by dismissing ATD's claims for breach of statutory and fiduciary duties, ATD's

assignment of error is overruled. Further, because this Court finds that the Court of

Claims, having granted BWC's Civ.R. 12(B)(6) motion, did not err when it also did not

find that ATD's claims are barred by the applicable statute of limitations, BWC's cross-

assignment of error is moot. Therefore, we affirm the judgment of the Court of Claims of

Ohio.

Judgment affirmed.

KLATT and SADLER, JJ., concur.