The opinion
[Cite as State ex rel. Accurate Inventory & Calculating Servs. v. Buehrer, 2016-Ohio-7004.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
State of Ohio ex rel. :
Accurate Inventory & Calculating
Services, Inc., :
Relator, :
v. : No. 14AP-1008
Stephen Buehrer, Administrator/ : (REGULAR CALENDAR)
CEO, the Ohio Bureau of
Workers' Compensation, :
Respondent. :
D E C I S I O N
Rendered on September 27, 2016
Garvin & Hickey, LLC, Preston J. Garvin, Daniel M. Hall,
and Sandee E. Reim, for relator.
Michael DeWine, Attorney General, and John Smart, for
respondent.
IN MANDAMUS
ON OBJECTIONS TO THE MAGISTRATE'S DECISION
KLATT, J.
{¶ 1} Relator, Accurate Inventory & Calculating Services, Inc., commenced this
original action in mandamus seeking an order compelling respondent, the administrator
of the Ohio Bureau of Worker's Compensation ("bureau"), to vacate the May 6, 2014 order
of the administrator's designee denying relator's protest of the bureau's audit of the
period July 1, 2012 to June 30, 2013, in which the bureau activated operational manual
No. 14AP-1008 2
8725 and removed manuals 8720 and 8810 from the policy, and to enter an order that
grants relator's protest.
{¶ 2} Pursuant to Civ.R. 53(C) and Loc.R. 13(M) of the Tenth District Court of
Appeals, we referred this matter to a magistrate who issued a decision, including findings
of fact and conclusions of law, which is appended hereto. The magistrate found that
under the circumstances presented, Ohio Adm.Code 4123-17-08(B) prohibits relator from
being assigned one basic classification (manual 8725) and one standard exception
classification (manual 8810) as sought by relator. Therefore, the magistrate has
recommended that we deny relator's request for a writ of mandamus.
{¶ 3} Relator has filed objections to the magistrate's decision. In its first
objection, relator argues that the magistrate erred when he found that relator must meet
all three of the conditions set forth in Ohio Adm.Code 4123-17-08(D)(3)(a) through
(D)(3)(c). We disagree.
{¶ 4} First, by its express terms, Ohio Adm.Code 4123-17-08(D) requires that for
more than one basic classification to be assigned to an insured, the insured must meet all
three conditions set forth in Ohio Adm.Code 4123-17-08(D)(3)(a) through (D)(3)(c). To
the extent that the state insurance fund manual conflicts with the language of Ohio
Adm.Code 4123-17-08(D)(3), the code provision is controlling.
{¶ 5} Second, as noted by the magistrate, relator's argument is a red herring
because relator does not actually seek the application of more than one basic
classification. Rather, relator seeks to be assigned one basic classification (manual 8725)
and one standard exception classification (manual 8810). As noted by the magistrate,
Ohio Adm.Code 4123-17-08(B) prohibits the assignment of standard exception manual
8810 to relator because basic classification manual 8725 expressly includes clerical office
employees.
{¶ 6} For these reasons, we overrule relator's first objection.
{¶ 7} In its second objection, relator argues the magistrate erred when he failed to
address two additional arguments advanced by relator: (1) the administrator's designee
erred when he suggested that if relator divested itself of its Ohio inventory business, or
established the Ohio inventory workers as a separate and distinct corporation, it is likely
that relator would qualify for manual 8810; and (2) that Ohio Adm.Code 4123-17-08(D)
No. 14AP-1008 3
violates equal protection by limiting the types of employers or operations that are
permitted to report employees under more than one manual classification without
justification. However, relator makes no attempt to explain why either of these
arguments have merit. Nor does relator cite any statutory or case authority supporting
these arguments.
{¶ 8} Although we agree that the magistrate did not expressly address these
arguments, the arguments lack merit on their face and do not support the grant of a writ
of mandamus. Therefore, we overrule relator's second objection.
{¶ 9} Following an independent review of this matter, we find that the magistrate
has properly determined the facts and applied the appropriate law. Therefore, we adopt
the magistrate's decision as our own, including the findings of fact and conclusions of law
contained therein. In accordance with the magistrate's decision, we deny relator's request
for a writ of mandamus.
Objections overruled; writ of mandamus denied.
TYACK and SADLER, JJ., concur.
No. 14AP-1008 4
APPENDIX
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
State of Ohio ex rel. :
Accurate Inventory & Calculating
Services, Inc., :
Relator, :
v. : No. 14AP-1008
Stephen Buehrer, Administrator/ : (REGULAR CALENDAR)
CEO, the Ohio Bureau of
Workers' Compensation, :
Respondent. :
MAGISTRATE'S DECISION
Rendered on May 26, 2016
Garvin & Hickey, LLC, Preston J. Garvin, Daniel M. Hall,
and Sandee E. Reim, for relator.
Michael DeWine, Attorney General, and John Smart, for
respondent Industrial Commission of Ohio.
IN MANDAMUS
{¶ 10} In this original action, relator, Accurate Inventory & Calculating Services,
Inc. ("Accurate Inventory"), requests a writ of mandamus ordering respondent, the
Administrator of the Ohio Bureau of Workers' Compensation ("administrator" or
"bureau"), to vacate the May 6, 2014 order of the administrator's designee that denied
relator's protest of the bureau's audit of the period July 1, 2012 to June 30, 2013 in which
the bureau activated operational manual 8725 and removed manuals 8720 and 8810 from
the policy, and to enter an order that grants relator's protest.
No. 14AP-1008 5
Findings of Fact:
{¶ 11} 1. Relator provides physical inventory audits for gas stations and
convenience stores. It currently employs 31 people in Ohio. Fourteen of those are clerical
support staff and seventeen are auditors who work at gas stations and convenience stores
in Ohio.
{¶ 12} 2. Accurate Inventory employs approximately 186 auditors in 34 states and
the District of Columbia. There are no additional support staff employees in other states.
The headquarters of Accurate Inventory is located in Columbus, Ohio. Thus, the support
staff provide support to relator's auditors nationwide.
{¶ 13} 3. In late October 2013, the bureau's underwriting department completed
an audit of relator for the period July 1, 2012 to June 30, 2013.
{¶ 14} 4. By letter dated November 27, 2013, the bureau's director of underwriting
informed relator that manual 8725 was being activated effective July 1, 2013 and that
relator was to no longer report payroll under manuals 8720 and 8810. 5. Prior to
1993, the bureau used its own system to categorize operations. In 1993, the Ohio
Legislature required the bureau to replace this system with the classifications used by the
National Council on Compensation Insurance ("NCCI"). See R.C. 4123.29(A)(1).
{¶ 15} 6. Prior to the bureau's audit, relator had for many years reported its
payroll under manuals 8720 and 8810.
{¶ 16} 7. The NCCI phraseology for manual 8720 is "INSPECTION OF RISKS
FOR INSURANCE OR VALUATION PURPOSES NOC."
{¶ 17} 8. The NCCI manual phraseology for manual 8810 is "CLERICAL OFFICE
EMPLOYEES NOC."
{¶ 18} 9. The NCCI activated manual 8725, effective July 1, 2010. The
NCCI phraseology is "INVENTORY COUNTERS─TRAVELING─INCLUDING
SALESPERSONS & CLERICAL."
{¶ 19} 10. By letter dated December 6, 2013, the bureau's underwriting
department notified relator that the audit findings have been affirmed and that relator
could appeal to the adjudicating committee under R.C. 4123.291.
{¶ 20} 11. On December 13, 2013, on a form provided by the bureau (Legal-15)
relator filed an "Application for Adjudication Hearing."
No. 14AP-1008 6
{¶ 21} 12. On December 23, 2013, the secretary of the adjudicating committee
issued a document captioned "STATEMENT OF PROTEST." The document states:
Background Facts and Issues Presented: The Bureau
audited the employer, for the period from July 1, 2012 to
June 30, 2013. The auditor found that the employer should
have reported certain employees under its operational
manual 8725. Instead, the employer had reported the payroll
to 8810 (Clerical Office).
The employer protested the finding and requested a hearing
before the Adjudicating Committee.
{¶ 22} 13. On January 8, 2014, the bureau's three-member adjudicating
committee ("AC") heard relator's protest. The hearing was not recorded. Thereafter, the
AC issued an order denying the protest. The AC order explains:
Background Facts and Issues Presented: The bureau
audited the employer for the period from July 1, 2012 to
June 30, 2013. Prior to the audit, the employer had
operational manual 8720 and manual 8810 for clerical
employees. The audit activated operational manual 8725 and
removed 8720 and 8810 from the policy because manual
8725 include[d] clerical office employees. The employer
protested the finding and requested a hearing before the
Adjudicating Committee.
***
Employer's Position: The employer provides physical
inventory audits for gas stations and convenience stores.
There are 31 employees in Ohio with 14 being support staff
workers that work in an office environment. The company
operates in 55 markets around the country and in 35 states.
The degree of hazard faced by the office workers are much
lower than the hazard faced by the field staff. The clerical
office employees have never suffered a worker's
compensation claim injury. Moving the clerical staff payroll
to the operational manual creates a 1,849% increase in
premiums.
Bureau's Position: The employer was assigned basic
manual 8725, which includes clerical work. Manual 8810
was removed from the policy because the 8810 employees
are specifically included within the phraseology of the basic
classification. NCCI Scopes considers manual 8725 a
No. 14AP-1008 7
composite manual classification. Code 8810 is only applied
to clerical office employees provided they are not otherwise
classified in the basic manual.
Findings of Fact and Conclusion of Law:
In order to make a decision on the classification issue, a brief
history of the setting of manual classifications must be
discussed. Prior to 1993, the bureau used its own system to
categorize operations. In 1993, the legislature required the
bureau to replace this system with the classifications used by
the National Council on Compensation Insurance ("NCCI").
See RC 4123.29 (A)(1); Am.Sub.H.B. No. 107, 145 Ohio Laws,
Part II, 3113. Under RC 4123.29(A)(1), "...subject to the
approval of the bureau of workers' compensation board of
directors," the duties of the Administrator include
[c]lassify[ing] occupations or industries with respect to their
degree of hazard and determin[ing] the risks of the different
classes according to the categories the national council on
compensation insurance establishes that are applicable to
employers in this state[.]"
Ohio Adm.Code 4123-17-08(D), in implementing the NCCI
classifications, states, "The purpose of the classification
procedure is to assign the one basic classification that best
describes the business of the employer within a state. Subject
to certain exceptions described in this rule, each
classification includes all the various types of labor found in
a business." Per 4123-17-08, "[t]he purpose of the
classification system is to group employers with similar
operations into classifications so that [t]he assigned
classification reflects the exposures common to those
employers [and] [t]he rate charged reflects the exposure to
loss common to those employers." Additionally, "[s]ubject to
certain exceptions, it is the business of the employer within a
state that is classified, not separate employments,
occupations or operations within the business." Ohio
Adm.Code 4123-17-08 (A)(1) & (2).
The NCCI manual description for 8810 states the manual is
to be used unless the clerical employees are specifically
included in the phraseology of a basic classification:
PHRASEOLOGY CLERICAL OFFICE EMPLOYEES NOC
Description:
No. 14AP-1008 8
Code 8810 is applied to clerical office employees provided
they are not otherwise classified in the Basic Manual. * * *
Code 8810 employees are common to so many businesses
that they are considered to be Standard Exceptions unless
they are specifically included within the phraseology of a
basic classification. * * *
Prior to the audit, the policy had manual 8720 for its
operational manual which does not include clerical
employees within the phraseology of the classification.
Therefore, manual 8810, a standard exception manual, was
appropriate to use when 8720 was the operational manual.
Ohio Adm.Code 4123-17-08(B)(2)(a) provides manual 8810
is assigned when "the basic classification(s) wording
applicable to the business does not include clerical office,
drafting or telecommuting employees..."
NCCI activated manual 8725 for use effective July 1, 2010
which includes clerical in its phraseology:
"PHRASEOLOGY INVENTORY COUNTERS-
TRAVELING-INCLUDING SALESPERSONS & CLERICAL."
Ohio Adm.Code 4123-17-08(C)(2)(d) also instructs how
clerical employees are treated when the phraseology has
"Includes" or "&."
If the classification wording uses the terms "includes" or "&,"
the operation or employees cited after those terms must not
be assigned to a separate classification. This applies even
though the operation or employees may be described by
another classification or are at a separate location.
Examples of classification that include the terms "includes"
or "&":
***
(iii) Code 8832 (physician & clerical); all clerical employees
must be included in this classification.
The NCCI classifications are used in 38 states so manual
classification 8725 would be assigned in one of these 38
states. There is no dispute that manual 8725 best describes
the business of the employer.
No. 14AP-1008 9
The payroll history for this employer's policy reflects that the
rate in the first half of 2013 for manual 8810 was 0.002426
and the rate for manual 8725 was 0.047197. The bulk of the
employer's payroll had been reported to manual 8810 so the
change in manual classification did cause a large increase in
premiums. This Committee, however, has no discretion to
deviate from the classes established by NCCI or manipulate
established rates. In workers' compensation systems, each
classification determines its own rate. Generally, the total
losses of each classification, when compared to the total
payroll of the classification, produce the rate of contribution
from the employers within that classification. Over time the
loss experience in manual 8725 may lower which in turn
would lower the rate for the manual.
Another factor that affects premiums is the experience
modifier. An employer who has a better than average loss
experience receives a credit against the basic rate for its
classification, and conversely, an employer who has a bad
loss experience is penalized and has to pay a rate higher than
the basic rate. The employer was debit rated at 1.37 in the
first half of 2013 so the higher premiums are also
attributable to the employer's above average loss experience.
Conclusion
The Adjudicating Committee DENIES the employer's
protest. The employer was properly assigned manual
classification 8725 which includes clerical office workers
within the classification. Therefore, as discussed above,
manual 8810 cannot be assigned as a separate classification.
(Emphasis sic.)
{¶ 23} 14. Relator administratively appealed the AC order to the administrator's
designee pursuant to R.C. 4123.291.
{¶ 24} 15. On May 6, 2014, Barrett Crook, the Vice President of Accurate
Inventory, executed an affidavit which relator submitted to the administrator's designee.
The Crook affidavit avers:
[Two] Accurate Inventory is a company that specializes in
providing physical inventory audits at convenience stores.
Accurate Inventory has approximately 200 employees and
we perform these services in 34 states and the District of
Columbia.
No. 14AP-1008 10
[Three] Accurate Inventory is headquartered in Columbus,
Ohio. We have a support staff of approximately 14 people
who provide clerical and office support for the approximately
186 employees who perform services in the 34 different
states and the District of Columbia. The office and clerical
employees work at our corporate offices * * *. These 14
employees account for approximately 70% of our Ohio
payroll.
[Four] Of the 186 employees who are in the field performing
inventory work, only 14 perform that work in the state of
Ohio. They account for approximately 30% of our Ohio
payroll. If we cease performing inventory work in Ohio, we
would still need our office and clerical employees to provide
support for the 172 employees in the other 33 states and the
District of Columbia. A small percentage of our inventory
work is performed in the state of Ohio. We have received
advice that, for workers' compensation purposes, we should
divest ourselves of our Ohio inventory operations. If we were
to do so, our Ohio office and clerical personnel would
continue to function to support the other employees.
{¶ 25} 16. Also on May 6, 2014, L. Jeffrey Kemo, executed an affidavit which
relator submitted to the administrator's designee. The Kemo affidavit avers:
[One] I am the Senior Account Representative of
Compensation Solutions, Inc. Prior to joining Compensation
Solutions, Inc. I was the Chief Underwriter in the state
funded department at Frank Gates Service Company for 26
years. Prior to my service at Frank Gates Service Company I
was employed by the Ohio Bureau of Workers'
Compensation as a Deputy Underwriter. I have counseled
employers on manual classification and rates. I am familiar
with the NCCI classifications, having worked with them since
they were adopted by the Ohio Bureau of Workers'
Compensation.
[Two] I have reviewed the facts of Accurate Inventory and
Calculating Service, Inc. This company is not a client of
Compensation Solutions, Inc. I have been asked to review
the facts and give my opinion on the proper manual
classifications for the company's operations.
[Three] The facts presented in the Accurate Inventory
company situation are very unusual.
No. 14AP-1008 11
[Four] The NCCI manual classifications provide that the
employer's primary business operations should be assigned
the manual classification. Support staff such as office and
clerical are generally considered incidental payroll to support
the overall operation. Therefore, the incidental payroll is
included in the primary classification. However, the code
provides for exceptions as set forth at 4123-17-08 (D) (3).
[Five] Accurate Inventory is unusual in that its primary
operation in Ohio is office and clerical. This is due to the fact
that the office and clerical employees provide support to
employees in 34 markets outside of Ohio.
[Six] It is my opinion that Accurate Inventory meets the
criteria for an exception under OAC 4123-17-08 (D) (3) (c) (i)
(a) (b) (c). Accurate Inventory conducts more than one
operation in Ohio. The rule provides that to qualify for a
separate classification, the insured's additional operation
must (a) be able to exist as a separate business if the
insured's principal business in the state ceased to exist.
Clearly the clerical operations would continue existing in
Ohio even if the inventory business ceased to exist in Ohio.
[Seven] The second provision of the rule provides that the
operations must be physically separate. In the Accurate
Inventory situation the inventory work is done at the
customer's place of business, namely convenience stores. The
office and clerical employees are not physically connected to
the inventory operations. The office work is performed at a
separate location.
[Eight] The last provision states that there must be separate
payroll records. That is clearly the case here. It is my
understanding that Accurate Inventory has been keeping
separate payroll records for the office and clerical for many
years.
[Nine] Therefore, based on the foregoing it is my opinion
that Accurate Inventory meets the criteria for separate
manual classifications.
{¶ 26} 17. On May 6, 2014, the administrator's designee heard relator's appeal
from the AC order. The hearing was not recorded. Thereafter, the administrator's
designee issued a six-page order that denies relator's appeal, but modifies the decision of
the AC.
No. 14AP-1008 12
{¶ 27} 18. The May 6, 2014 order of the administrator's designee, states:
This case involves a relatively simple issue, whether Accurate
Inventory is entitled to use multiple manuals for its
employees to more precisely categorize their risk, or whether
Accurate Inventory must use a composite manual at the
same manual rate that includes all of its Ohio employees,
even if those employees are subject to different risks.
The manual classifications in question are manuals 8720,
8810, and 8725. As indicated in the Adjudicating Committee
order, Accurate Inventory originally reported its employees
under manuals 8720 and 8810. In 2010, the NCCI and the
Bureau adopted a new manual, 8725, that better describes
the nature of Accurate Inventory's business. Manual 8725
specifically includes clerical employees of the business in the
manual:
8725
PHRASEOLOGY: INVENTORY COUNTERS -
TRAVELING - INCLUDING SALESPERSONS & CLERICAL
Description:
Code 8725 is applicable to inventory-counting firms that are
hired by others to provide a count or value of inventory for
single or multiple locations of a client. The information can
be gathered manually with pen and paper, voice recorder, or
specialized handheld computers that are usually attached to
a belt loop and rest on the thigh of a user for easy data entry.
Counts can be completed during business hours or while
locations are closed. Businesses using inventory-counting
services can range from gasoline stations with a small
amount of retail items, to wholesale and department stores
of various sizes, to warehouse distributors. These counts can
be on a one-time basis or on a regular basis for quarterly
review or year-end count and valuation of inventory. ...
(emphasis added)
Note that the basic description of manual 8725 includes
clerical employees: "Phraseology: inventory counters-
traveling - including salespersons & clerical" (emphasis
added). An employer may not use manual 8810 if it is
included in the basic description of the employer's business:
8810
No. 14AP-1008 13
PHRASEOLOGY: CLERICAL OFFICE EMPLOYEES NOC
Description:
Code 8810 is applied to clerical office employees provided
they are not otherwise classified in the Basic Manual.
Clerical employees who perform telecommuting activities
may qualify for Code 8871—Clerical Telecommuter
Employees. Refer to Code 8871's scope for conditions under
which a telecommuting employee's pay should be assigned to
this code.
Code 8810 employees are common to so many businesses
that they are considered to be Standard Exceptions unless
they are specifically included within the phraseology of a
basic classification. … (emphasis added).
Accurate Inventory testified that it is in the business of
conducting convenience store inventories for contract
clients. Accurate Inventory has approximately 200
employees in 34 states, including Ohio (May 6, 2014,
Affidavit of Barrett Crook, Vice President of Accurate
Inventory, at ¶ 2). Accurate Inventory has its headquarters in
Columbus, Ohio, and has about 14 clerical support staff in
Columbus, and also approximately 14 Ohio Inventory
workers. The 14 clerical staff workers account for
approximately 70% of the Ohio payroll (see Crook Affidavit,
¶ 3). Accurate Inventory testified that even if they did no
inventory work in Ohio, they would still have and need the
support staff to provide support for the inventory workers in
the other states where they do business (see Crook Affidavit,
¶ 4).
Accurate Inventory submitted the May 6, 2014, Affidavit of
L. Jeffrey Kemo, asserting that Accurate Inventory qualified
to use manual 8810 as a standard exception. Accurate
Inventory states that it is operating two separate businesses
in Ohio; one that does inventory calculating and another that
does the corporate office support for the overall business
operations in multiple states. Kemo's Affidavit states that
Accurate Inventory qualifies for a standard exception under
rule 4123-17-08(D)(3)(c)(i)(a) to (D)(3)(c)(i)(c). Kemo states
that Accurate Inventory's clerical services would still be able
to exist, to support the operations in other states, if they
were to eliminate the inventory counters in Ohio. Kemo also
states that there is a separation of businesses and that the
No. 14AP-1008 14
fact that the office employees operate in the office and the
inventory counters operate on location meets the separation
required by the rule (see Kemo Affidavit, ¶ 6 and ¶ 7).
The Bureau representative stated that the Bureau assigned
manual 8725 after an audit. The Bureau's representative
believes that the exception to the rule does not apply, since
the clerical duties could not exist without the existence of the
inventory counters. Therefore, the business cannot be
considered to be two separate operations.
Rule 4123-17-08, "Classifications according to national
council on compensation insurance," provides the basic
Bureau rules for determining an employer's manual
classifications, and contains the language referenced in the
Kemo Affidavit in support of Accurate Inventory's quest to
retain manual 8810. Paragraph (D) of the rule provides:
(D) Classification procedures.
The purpose of the classification procedure is to assign the
one basic classification that best describes the business of the
employer within a state. Subject to certain exceptions
described in this rule, each classification includes all the
various types of labor found in a business.
It is the business that is classified, not the individual
employments, occupations or operations within the business.
Certain exceptions apply and are noted below...
(3) Assignment of more than one basic classification.
More than one basic classification may be assigned to an
insured who meets conditions set forth in paragraphs
(D)(3)(a) to (D)(3)(c) of this rule. Operation means activities,
enterprises, processes, secondary businesses or
undertakings.
(a) The insured's principal business is described by a basic
classification that requires certain operations or employees
to be separately rated.
(b) The insured conducts one or more of the following
operations:
(i) Construction or erection.
No. 14AP-1008 15
(ii) Farming.
(iii) Employee leasing, labor contracting, temporary labor
services.
(iv) Mercantile business.
(c) The insured conducts more than one operation in a state.
(i) For purposes of this rule, an insured is conducting more
than one operation in a state if portions of the insured's
operations in that state are not encompassed by the
classification applicable to the insured's principal business.
To qualify for a separate classification, the insured's
additional operation must:
(a) Be able to exist as a separate business if the insured's
principal business in the state ceased to exist.
(b) Be located in a separate building, or on a separate floor in
the same building, or on the same floor physically separated
from the principal business by structural partitions.
Employees engaged in the principal business must be
protected from the operating hazards of the separate
additional operations.
(c) Maintain proper payroll records. Refer to paragraph
(F)(2) of this rule on maintenance of proper payroll records.
Note that the rule requires that the employer must meet all
three of the "conditions set forth in paragraphs (D)(3)(a) to
(D)(3)(c)" of the rule. Even if the Administrator's Designee
agrees that Accurate Inventory satisfies the criteria of rule
4123-17-08(D)(3)(c)(i)(a) to (D)(3)(c)(i)(c) as asserted in the
Kemo Affidavit, Accurate Inventory must also meet the
criteria of rule 4123-17-08(D)(3)(a) and (D)(3)(b). Simply
stated, the rule only applies to the businesses mentioned in
paragraph (D)(3)(b): construction or erection; farming;
employee leasing, labor contracting, temporary labor
services; or mercantile businesses. Unfortunately, Accurate
Inventory does not satisfy this rule requirement. Therefore,
the Administrator's Designee cannot apply this rule to
Accurate Inventory in this case.
The Administrator's Designee is sympathetic to the situation
that Accurate Inventory faces in this case. As discussed at the
hearing, if Accurate Inventory were to divest its Ohio
No. 14AP-1008 16
inventory business, or perhaps establish the Ohio inventory
workers as a separate and distinct corporation, it is likely
that the Accurate Inventory's clerical employees at its Ohio
headquarters would qualify for manual 8810. Of course, it is
up to Accurate Inventory to determine its best course of
action with respect to its business organization based upon
this order.
(Emphasis sic.)
Therefore, the Administrator's Designee DENIES the
employer's appeal but MODIFIES the decision of the
Adjudicating Committee. The Administrator's Designee finds
that, as presently organized, Accurate Inventory does not
qualify for manual 8810. However, the Administrator's
Designee orders that the audit findings be made prospective
only from July 1, 2014, in order to permit Accurate Inventory
the opportunity to determine whether it wishes to reorganize
its business based upon this order.
{¶ 28} 19. On December 8, 2014, relator, Accurate Inventory & Calculating
Services, Inc., filed this mandamus action.
Conclusions of Law:
{¶ 29} It is the magistrate's decision that this court deny relator's request for a writ
of mandamus, as more fully explained below.
{¶ 30} Effective July 12, 2012 and currently, Ohio Adm.Code 4123-17-08 is
captioned "Classifications according to national council on compensation insurance."
Thereafter, the code provides:
(A) Classification system.
(1) The purpose of the classification system is to group
employers with similar operations into classifications so
that:
(a) The assigned classification reflects the exposures
common to those employers.
(b) The rate charged reflects the exposure to loss common to
those employers.
(2) Subject to certain exceptions, it is the business of the
employer within a state that is classified, not separate
employments, occupations or operations within the business.
No. 14AP-1008 17
(B) Explanation of classifications.
Classifications are divided into two types - basic
classifications and standard exception classifications.
(1) Basic classifications.
Basic classifications describe the business of an employer.
This term is applied to all classifications listed in this
manual, except for the standard exception classifications.
***
(2) Standard exception classifications.
Standard exception classifications describe occupations that
are common to many businesses. These common
occupations are not included in a basic classification unless
specified in the classification working. The standard
exception classifications are described below.
(a) Clerical office or drafting employees NOC (code 8810);
clerical office or drafting telecommuter employees (code
8871).
The above classifications are assigned when all the following
conditions are met: the basic classification(s) wording
applicable to the business does not include clerical office,
drafting or telecommuting employees; other rules do not
prohibit the assignment of code 8810 or code 8871; and the
employee meets the duties, site and other requirements
listed below.
***
(D) Classification procedures. The purpose of the
classification procedure is to assign the one basic
classification that best describes the business of the
employer within a state. Subject to certain exceptions
described in this rule, each classification includes all the
various types of labor found in a business.
It is the business that is classified, not the individual
employments, occupations or operations within the business.
Certain exceptions apply and are noted below.
***
No. 14AP-1008 18
(3) Assignment of more than one basic classification.
More than one basic classification may be assigned to an
insured who meets conditions set forth in paragraphs
(D)(3)(a) to (D)(3)(c) of this rule. Operation means activities,
enterprises, processes, secondary businesses or
undertakings.
(a) The insured's principal business is described by a basic
classification that requires certain operations or employees
to be separately rated.
(b) The insured conducts one or more of the following
operations:
(i) Construction or erection.
(ii) Farming.
(iii) Employee leasing, labor contracting, temporary labor
services.
(iv) Mercantile business.
(c) The insured conducts more than one operation in a state.
(i) For purposes of this rule, an insured is conducting more
than one operation in a state if portions of the insured's
operations in that state are not encompassed by the
classification applicable to the insured's principal business.
To qualify for a separate classification, the insured's
additional operation must:
(a) Be able to exist as a separate business if the insured's
principal business in the state ceased to exist.
(b) Be located in a separate building, or on a separate floor in
the same building, or on the same floor physically separated
from the principal business by structural partitions.
Employees engaged in the principal business must be
protected from the operating hazards of the separate
additional operations.
(c) Maintain proper payroll records.
Effective July 1, 2003, former Ohio Adm.Code 4123-17-08(D) provided:
No. 14AP-1008 19
(D) Classification procedures.
***
(3) Assignment of more than one basic classification. More
than one basic classification may be assigned to an insured
who meets conditions a, b, or c below. Operation means
activities, enterprises, processes, secondary businesses or
undertakings.
(a) The insured's principal business is described by a basic
classification that requires certain operations or employees
to be separately rated.
(b) The insured conducts one or more of the following
operations:
(i) Construction or erection.
(ii) Farming.
(iii) Employee leasing, labor contracting, temporary labor
services.
(iv) Mercantile business.
(c) The insured conducts more than one operation in a state.
(i) For purposes of this rule, an insured is conducting more
than one operation in a state if portions of the insured's
operations in that state are not encompassed by the
classification applicable to the insured's principal business.
To qualify for a separate classification, the insured's
additional operation must:
(a) Be able to exist as a separate business if the insured's
principal business in the state ceased to exist.
(b) Be located in a separate building, or on a separate floor in
the same building, or on the same floor physically separated
from the principal business by structural partitions.
Employees engaged in the principal business must be
protected from the operating hazards of the separate
additional operations.
(c) Maintain proper payroll records.
No. 14AP-1008 20
{¶ 31} It can be observed that effective July 1, 2003 former Ohio Adm.Code 4123-
17-08(D)(3) provided: "More than one basic classification may be assigned to an insured
who meets conditions a, b, or c below."
{¶ 32} It can be observed that, effective July 12, 2012 and currently, Ohio
Adm.Code 4123-17-08(D)(3) provides: "More than one basic classification may be
assigned to an insured who meets conditions set forth in paragraphs (D)(3)(a) to (D)(3)(c)
of this rule."
{¶ 33} It can be further observed that, effective July 12, 2012, former Ohio
Adm.Code 4123-17-08(D)(3)'s reference to "who meets conditions a, b, or c below" was
amended to read "who meets conditions set forth in paragraphs (D)(3)(a) to (D)(3)(c) of
this rule." That is, effective July 12, 2012, the three paragraphs a, b, or c were no longer
referenced in the disjunctive.
{¶ 34} It can be further noted that the parties have supplemented the record with a
copy of the "Ohio BWC State Insurance Fund Manual (July 1, 2012 - June 30, 2013)."
{¶ 35} At page 30 of the State Insurance Fund Manual, the following caption is
noted: "4123-17-08 Classifications according to National Council on Compensation
Insurance eff. 07/01/2003." At page 35 of the State Insurance Fund Manual, which is a
continuation of Ohio Adm.Code 4123-17-08, the following is noted:
D. Classification procedures.
The purpose of the classification procedure is to assign the
one basic classification that best describes the business of the
employer within a state. Subject to certain exceptions
described in this rule, each classification includes all the
various types of labor found in a business.
It is the business that is classified, not the individual
employments, occupations or operations within the business.
Certain exceptions apply and are noted below.
***
[Three] Assignment of more than one basic classification.
More than one basic classification may be assigned to an
insured who meets conditions a, b, or c below.
No. 14AP-1008 21
{¶ 36} It appears to the magistrate that the State Insurance Fund Manual failed to
correct for the July 12, 2012 amendment to former Ohio Adm.Code 4123-17-08(D)(3).
{¶ 37} Thus, to the extent the code provision is applicable to this action, it is clear
that current Ohio Adm.Code 4123-17-08(D)(3) is applicable, not former Ohio Adm.Code
4123-17-08(D)(3).
{¶ 38} Here, relator argues that the administrator's designee improperly
interpreted current Ohio Adm.Code 4123-17-08(D)(3) to read that the conditions set forth
in all three of the paragraphs (D)(3)(a) to (D)(3)(c) must be met in order to obtain
assignment of more than one basic classification. Relator supports its argument by
pointing to the State Insurance Fund Manual that was submitted to this court.
{¶ 39} Clearly, the State Insurance Fund Manual is in conflict with current Ohio
Adm.Code 4123-17-08(D)(3). However, that does not mean, as relator suggests, that the
State Insurance Fund Manual presents the correct version of Ohio Adm.Code 4123-17-
08(D)(3). The conflict between the State Insurance Fund Manual and the Ohio
Administrative Code regarding 4123-17-08(D)(3) must be resolved in favor of the code
provision.
{¶ 40} As respondent points out, Ohio Adm.Code 4123-17-08(D)(3) is not
pertinent here.
{¶ 41} In actuality, relator is not seeking more than one basic classification
pursuant to Ohio Adm.Code 4123-17-08(D). What relator is actually seeking is to keep
the standard exception classification, i.e., manual 8810, while accepting the basic
classification of manual 8725. But, as the AC and the administrator's designee have
adequately explained, relator cannot keep the standard exception classification manual
8810 while accepting manual 8725. To do so would violate Ohio Adm.Code 4123-17-
08(B).
{¶ 42} In short, relator's argument fails to account for Ohio Adm.Code 4123-17-
08(B). Contrary to its suggestion, relator was not asking the bureau to assign more than
one basic classification. Rather, relator was asking that it be assigned one basic
classification (manual 8725) and one standard exception classification, i.e., manual 8810,
but the code forbids use of manual 8810 under the circumstances here.
No. 14AP-1008 22
{¶ 43} Accordingly, for all the above reasons, it is the magistrate's decision that this
court deny relator's request for a writ of mandamus.
/S/ MAGISTRATE
KENNETH W. MACKE
NOTICE TO THE PARTIES
Civ.R. 53(D)(3)(a)(iii) provides that a party shall not assign as
error on appeal the court's adoption of any factual finding or
legal conclusion, whether or not specifically designated as a
finding of fact or conclusion of law under Civ.R.
53(D)(3)(a)(ii), unless the party timely and specifically objects
to that factual finding or legal conclusion as required by Civ.R.
53(D)(3)(b).