State ex rel. Ohio-Kentucky-Indiana Regional Council of Govts. v. Ohio Bur. of Workers' Comp.

[Cite as State ex rel. Ohio-Kentucky-Indiana Regional Council of Govts. v. Ohio Bur. of Workers' Comp., 2021-

Ohio-2001.]

IN THE COURT OF APPEALS OF OHIO

TENTH APPELLATE DISTRICT

State ex rel. Ohio-Kentucky-Indiana :

Regional Council of Governments,

:

Relator,

: No. 20AP-56

v.

: (REGULAR CALENDAR)

Ohio Bureau of Workers' Compensation,

:

Respondent.

:

D E C I S I O N

Rendered on June 15, 2021

On brief: Taft Stettinius & Hollister LLP, Samuel M. Duran,

and Maria C. Castro, for relator.

On brief: Dave Yost, Attorney General, and John R. Smart,

for respondent.

IN MANDAMUS

ON OBJECTIONS TO THE MAGISTRATE'S DECISION

SADLER, J.

{¶ 1} Relator, Ohio-Kentucky-Indiana Regional Council of Governments ("OKI"),

brings this original action seeking a writ of mandamus ordering respondent, Ohio Bureau

of Workers' Compensation ("BWC"), to change relator's recently assigned manual

classification for purposes of determining risk and workers' compensation premium rates

and reassign the more favorable manual classifications previously in effect. Relator asserts

that the new manual classification does not fit relator's business activities, was arbitrarily

and capriciously assigned, and was not adequately explained or supported by reasoning in

the relevant orders.

No. 20AP-56 2

I. FACTS AND PROCEDURAL HISTORY

{¶ 2} This matter was referred to a magistrate pursuant to Civ.R. 53 and Loc.R.

13(M) of the Tenth District Court of Appeals. The magistrate issued the appended decision,

including findings of fact and conclusions of law, and recommended this court grant

relator's request for a writ of mandamus. The magistrate determined BWC abused its

discretion by reclassifying OKI as a "[p]ublic employer[], taxing district[]," under R.C.

4123.01(B)(1)(a) and Ohio Adm.Code 4123-17-019(B), and assigning OKI to the "special

public authority" classification under BWC Manual code 9443. The magistrate concluded

that relator fit the definition of a "public service corporation" under R.C. 4123.01(B)(1)(b)

and, therefore, should have retained National Council on Compensation Insurance

("NCCI") Manual codes 8742 (Salespersons or Collectors-Outside) and 8810 (Clerical

Office Employees) for purposes of relator's risk assessment and premium rates.

Accordingly, the magistrate recommended that we issue a writ of mandamus ordering BWC

to vacate its order reclassifying OKI and restore the NCCI Manual classifications previously

in effect.

II. OBJECTIONS

{¶ 3} Respondent sets forth the following objections:

1. The magistrate erred by finding the OKI is a "public service

corporation" and a private employer.

2. The magistrate erred in finding the BWC abused its

discretion in finding OKI is a public employer

appropriately reclassified to Manual 9443.

III. LEGAL ANALYSIS

{¶ 4} In OKI's first objection, OKI argues that the magistrate erred by finding OKI

is a "public service corporation" and, therefore, a private employer under R.C.

4123.01(B)(1)(b). We find this objection largely dispositive of this matter given the fact that

an employer must be classified either as a "private employer" under R.C. 4123.01(B)(1)(b)

or a "public employer" under R.C. 4123.01(B)(1)(a).

{¶ 5} Pursuant to R.C. 4123.01(H), "[p]rivate employer" means an employer as

defined in division (B)(1)(b) of this section. A private employer is defined in R.C.

4123.01(B)(1)(b) as follows:

Every person, firm, professional employer organization,

alternate employer organization, and private corporation,

No. 20AP-56 3

including any public service corporation, that (i) has in

service one or more employees or shared employees regularly

in the same business or in or about the same establishment

under any contract of hire, express or implied, oral or written,

or (ii) is bound by any such contract of hire or by any other

written contract, to pay into the insurance fund the premiums

provided by this chapter.

(Emphasis added.)

{¶ 6} Here, the dispositive issue in this case is not whether BWC mischaracterized

the particular operations performed by employees of OKI in assigning a manual code but

whether OKI is a public employer or a private employer. BWC contends that the magistrate

erred in concluding that OKI was a "public service corporation." We agree.

{¶ 7} BWC argues that a public service corporation must be a corporation that

either provides utility services directly to the public or provides passenger or freight services

directly to the public. In support of its position, BWC relies on the definition of the term

"public service corporation" in Ballentine's Law Dictionary which defines the term as: "A

quasi-public corporation, operating for the purpose of supplying gas or electricity to users,

carrying passengers or freight, or otherwise as a public utility." Ballentine's Law

Dictionary (3d Ed.2010).1

{¶ 8} We note that Black's Law Dictionary contains a similar definition of "public

service corporation" as follows:

A corporation whose operations serve a need of the general

public, such as public transportation, communications, gas,

water, or electricity. This type of corporation is usu. subject

to extensive governmental regulation.

Black's Law Dictionary 393 (9th Ed.2009).

{¶ 9} There is no evidence in the stipulated record that OKI provides utility services

to the public. Nor is there evidence that OKI provides any services directly to the public.

Rather, OKI provides "services within the OKI Region as applicable law will permit and the

Board of Directors or the Executive Committee require in order to foster and develop better

coordination, protection and satisfaction of the interests and needs of the public governing

1 The October 20, 1987 BWC Audit Report identifies OKI as a "not for profit corporation." (BWC Audit Report

at 4.)

No. 20AP-56 4

bodies within OKI Region." (Emphasis added.) (Am. and Restated Articles of Agreement

at Article II, Section 2.a.)2

{¶ 10} We note that R.C. 2909.04 defines the offense of "[d]isrupting public

services" as follows:

(A) No person, purposely by any means or knowingly by

damaging or tampering with any property, shall do any of the

following:

(1) Interrupt or impair television, radio, telephone, telegraph,

or other mass communications service; police, fire, or other

public service communications; radar, loran, radio, or other

electronic aids to air or marine navigation or

communications; or amateur or citizens band radio

communications being used for public service or emergency

communications;

(2) Interrupt or impair public transportation, including

without limitation school bus transportation, or water supply,

gas, power, or other utility service to the public;

(3) Substantially impair the ability of law enforcement

officers, firefighters, rescue personnel, emergency medical

services personnel, or emergency facility personnel to

respond to an emergency or to protect and preserve any

person or property from serious physical harm.

{¶ 11} While R.C. 2909.04 does not speak directly to the question whether OKI can

be considered a public service corporation for purposes of workers' compensation laws, the

statute is instructive in that it lists the types of services that are considered "public services"

in Ohio. Though the stipulated record shows that OKI provided services to public

governing bodies, there is no indication in the stipulated record and no argument made by

OKI that it provides any of the "public services" identified in R.C. 2909.04. Even though

the political subdivisions that have contracted with OKI certainly provide such services,

OKI does not. Thus, it is not appropriate to classify OKI as a public service corporation

under R.C. 4123.01(B)(1)(b).

{¶ 12} In State ex rel. RMS of Ohio, Inc. v. Ohio Bur. of Workers' Comp., 113 Ohio

St.3d 154, 2007-Ohio-1252, the employer at issue was a business that provided in-home

2In OKI's June 5, 2020 brief, OKI represents that it "provides coordinated planning services to federal, state,

and local governments in connection with addressing regional transportation needs throughout eight counties

across Ohio, Kentucky, and Indiana." (OKI's Brief at 3.)

No. 20AP-56 5

personal-care services to clients who are mentally handicapped or developmentally

disabled. After a BWC audit of the employer's payroll records, BWC reclassified the

employer which resulted in a higher workers' compensation premium. Prior to the audit,

the employer was classified under manual codes covering "Welfare Social Service

Organizations Professional Employees" and "Welfare Social Service Organizations Non-

Professional Employees." Id. at ¶ 2. On finding that the employer was not a welfare or

charitable organization, BWC reclassified the employer and assigned classification codes

pertaining to "Nursing-Home Health, Public and Traveling -- all employees." Id. at ¶ 2.

When BWC denied further review, the employer filed its mandamus action in this court

alleging the reclassification constituted an abuse of discretion by BWC.

{¶ 13} In a hearing before a magistrate, the employer conceded that it did not

provide services to individuals in a group-home setting and that it was not a charitable or

welfare organization, which is what the prior code classifications covered. Though the

employer also acknowledged that its services were rendered at the clients' homes, the

employer argued that the actual duties of its employees were the same and the risks were

similar. This court found that because the services provided by the employer were not

provided to individuals in a group-home setting and the employer was not a charitable or

welfare organization, the prior code classifications were inaccurate. Id. at ¶ 20-22.

Accordingly, we denied the requested writ. In so holding, this court afforded deference to

BWC and found no abuse of discretion. Id.

{¶ 14} Here, OKI claims to be a public service corporation entitled to the rates

assigned to private employers even though OKI does not provide a public service and does

not provide any services directly to the public. Because OKI does not provide a public

service and does not provide any services directly to the public, the magistrate erred in

concluding OKI qualified as a public service corporation under R.C. 4123.01(B)(1)(b). See

RMS of Ohio.

{¶ 15} Accordingly, BWC's first objection is sustained.

{¶ 16} In BWC's second objection, BWC argues the magistrate erred in concluding

BWC abused its discretion in finding OKI was a public employer under manual code 9443.

The magistrate found that "Manual 9443 is not an NCCI classification. Manual 9443

(Special Public Authorities) is a 'state special,' or classification enacted by the state in

No. 20AP-56 6

supplementation or exception to the NCCI manuals." (Mag.' s Decision at ¶ 45.) There is

no objection to this finding.3

{¶ 17} As previously noted, in RMS of Ohio the Supreme Court of Ohio "recognized

the challenges involved in establishing premium rates for workers' compensation coverage

and have repeatedly confirmed the deference due the agency in these matters." Id. at ¶ 6.

The court further stated:

Deference is required "in all but the most extraordinary

circumstances," with judicial intervention warranted only

when the agency has acted in an "arbitrary, capricious or

discriminatory" manner. [State ex rel.] Progressive

Sweeping [Contrs. v. Bur. of Workers' Comp.], 68 Ohio St.3d

[393], 395-396 [1994].

The rate-making process starts with "classif[ying]

occupations or industries with respect to their degree of

hazard." R.C. 4123.29(A)(1). The goal is to "assign the one

basic classification that best describes the business of the

employer within a state." Ohio Adm.Code 4123-17-08(D). It

is an undertaking, however, in which "absolute precision * * *

is often impossible." Progressive Sweeping, 68 Ohio St.3d at

395. Accordingly, we are "reluctant to find an abuse of

discretion merely because the employer's actual risk does not

precisely correspond with the risk classification assigned." Id.

at 396.

Id. at ¶ 6-7.

{¶ 18} In State ex rel. G&S Metal Prods. Co. v. Ryan, 10th Dist. No. 09AP-387,

2010-Ohio-3835, the employer, a metal stamping company, filed a protest when BWC

conducted an audit and concluded that "all of relator's employees at the Cleveland facility

should have been reported under the classification number 3400, entitled 'METAL

STAMPED GOODS MFG. NOC.' " Id. at ¶ 5. Prior to the audit, the employer reported all

the employees at the Cleveland facility under classification number 8018, "STORE:

WHOLESALE NOC." Id. The employer argued it was entitled to a separate classification

for employees at the Cleveland facility who engaged in non-press operations. BWC's

adjudicating committee denied the employer's appeal on concluding the non-press

3Manual code 9443 provides in relevant part as follows: "State Special: applies in OH PHRASEOLOGY:

SPECIAL PUBLIC AUTHORITIES, EXCLUDING TRANSIT AUTHORITIES: ALL EMPLOYEES &

CLERICAL, CLERICAL TELECOMMUTER, SALESPERSONS, DRIVERS." (June 20, 2019 Final Order at 2.)

See also Ohio Adm.Code 4123-17-34, Appendix A.

No. 20AP-56 7

operations carried on at the facility were merely incidental to the metal stamping operation

and could not exist as a business separate from the metal stamping operation.

{¶ 19} The employer filed a mandamus action arguing BWC abused its discretion by

ordering reclassification. The magistrate found BWC did not abuse its discretion when it

concluded the non-press operations could not exist as a separate business for classification

purposes. In adopting the magistrate's decision, we made the following observation about

the employer's argument for reclassification:

This argument goes not to the presence or absence of evidence

to support BWC's conclusion that the non-press operations

could not exist as a separate business, but rather to the

conclusion itself. In other words, the cited evidence could as

easily have been used to reach the conclusion that those

operations could exist as a separate business as it was to reach

the conclusion that the operations could not exist as a separate

business. We cannot say that BWC abused its discretion when

it chose between the two competing inferences and concluded

that the non-press operations could not exist as a separate

business.

Id. at ¶ 15.

{¶ 20} G&S Metal Prods. Co. stands for the proposition that where BWC chooses

among competing inferences supported by the evidence in reaching a conclusion as to the

proper manual code applicable to the employer, this court will generally defer to BWC.

Here, as was the case in G&S Metal Prods. Co., OKI's primary argument is not that the

particular duties of OKI's employees are better described in manual codes 8742 and 8810,

rather than manual code 9443, but that those duties were performed for a private employer

rather than a pubic employer.4 In this particular instance, BWC was tasked with setting the

rates for an employer who identifies itself as a "public body" and has many attributes of a

public employer but also retains certain characteristics of a private employer. BWC chose

to treat OKI as a public employer and assign the appropriate manual code that pertains to

a public employer in OKI's business. We generally defer to BWC's choice among the

competing inference supported by the evidence. Id.

{¶ 21} Moreover, in the context of reclassification, the Supreme Court has imposed

on BWC the obligation to adequately explain their decisions. State ex rel. Aaron Rents, Inc.

4"Simply, Manual 9443 is not the best manual classification code to describe OKI's business because Manual

9443 is reserved for public employers and OKI is a private employer." (OKI's Reply Brief at 9.)

No. 20AP-56 8

v. Ohio Bur. of Workers' Comp., 129 Ohio St.3d 130, 2011-Ohio-3140, ¶ 10, quoting State

ex rel. Craftsmen Basement Finishing Sys. v. Ryan, 121 Ohio St.3d 492, 2009-Ohio-1676,

¶ 15. Accordingly, "[a]n order must 'inform the parties and potentially a reviewing court of

the basis of the [agency's] decision.' " Aaron Rents at ¶ 10, quoting State ex rel. Yellow

Freight Sys., Inc. v. Indus. Comm., 71 Ohio St.3d 139, 142 (1994).

{¶ 22} Here, BWC explained its decision to reclassify OKI as follows:

[I]t is BWC's practice to designate an entity a "special district"

where two or more taxing districts or political subdivisions

unite to provide a public service. The Adjudicating Committee

set forth indicia common to entities considered to be "special

districts," citing to Mandelker & Netsch, State and Local

Government in a Federal System (1977). Those criteria are

whether the entity: (1) is organized to perform one or more

services or functions; (2) is governed by a board of directors

that possesses administrative independence from other units

of local government; (3) has independent financial and

revenue powers similar to those of other local government

units; (4) is a separate corporate entity created by state-

enabling legislation; and (5) has perpetual existence. Id.

In addition to the criteria above, BWC considers other factors

to determine whether an employer should be classified as a

"special public authority" under manual code 9443.

Specifically, the Adjudicating Committee analyzed the

"special district" factors, in conjunction with R.C. 167.01

(OKI's enabling statute), and reviewed OKI's bylaws to

conclude OKI was appropriately reclassified under 9443.

(BWC Final Order at 4.)

{¶ 23} In our view, BWC adequately explained the reason for reclassifying OKI as a

special public authority and assigning manual code 9443. OKI nevertheless contends that

it cannot be properly classified under the "[p]ublic employers, taxing districts"

classification without having any taxing authority. We disagree.

{¶ 24} Under R.C. 4123.01(J), "[p]ublic employer" means an employer as defined in

division (B)(1)(a) of this section. A public employer is defined in R.C. 4123.01 as follows:

"Employer" means:

(a) The state, including state hospitals, each county, municipal

corporation, township, school district, and hospital owned by a

political subdivision or subdivisions other than the state.

No. 20AP-56 9

{¶ 25} Ohio Adm.Code 4123-17-01 amplifies R.C. 4123.01(B)(1)(a) by identifying

two distinct types of public employers: "[p]ublic employers, taxing districts" and "[p]ublic

employers, state of Ohio, its agencies and instrumentalities." Ohio Adm.Code 4123-17-

01(B) and (C). The term "[p]ublic employers, taxing districts" is not defined in Ohio

Adm.Code 4123-17-01 or elsewhere in the relevant code provisions. There is no argument

in this case that BWC exceeded its statutory authority by enacting Ohio Adm.Code 4123-

17-01. Rather, OKI's argument is that it does not fit the category "[p]ublic employers, taxing

districts" in Ohio Adm.Code 4123-17-01(B) because OKI does not have independent taxing

authority. We disagree.

{¶ 26} Ohio Adm.Code 4123-17-34, entitled "[p]ublic employer taxing districts

contribution to the state insurance fund," provides as follows:

The administrator hereby sets base rates and expected loss

rates to be effective January 1, 2019 applicable to the payroll

reporting period January 1, 2019 through December 31, 2019

for public employer taxing districts as indicated in the

appendix to this rule.5

{¶ 27} Appendices A and B to Ohio Adm.Code 4123-17-34 identify numerous

governmental and quasi-governmental employers that are considered by BWC as "[p]ublic

employers, taxing districts" under Ohio Adm.Code 4123-17-01(B) for purposes of

establishing workers' compensation premium rates. In addition to traditional public

employers such as counties, cities, townships, and villages, Ohio Adm.Code 4123-17-34

identifies public libraries, special public universities, and public hospitals as "public

employer, taxing districts," even though such public bodies do not have independent taxing

authority. "Special public authorities" are also identified as "[p]ublic employers, taxing

districts" in the appendices. The question raised in this mandamus action is whether it is

reasonable for BWC to interpret Ohio Adm.Code 4123-17-01 in this manner. We believe

that it is.

{¶ 28} "[A]n administrative rule that is issued pursuant to statutory authority has

the force of law unless it is unreasonable or conflicts with a statute covering the same

subject matter." State ex rel. Celebrezze v. Natl. Lime & Stone Co., 68 Ohio St.3d 377, 382

(1994), citing Youngstown Sheet & Tube Co. v. Lindley, 38 Ohio St.3d 232, 234 (1988).

5 Ohio Adm.Code 4123-17-34 has been periodically amended to reflect the current applicable year, but the

remaining provision and the appendices have remained the same during the relevant time period.

No. 20AP-56 10

This principle of deference is applied to rules adopted by BWC. State ex rel. HGC Ents. v.

Buehrer, 10th Dist. No. 12AP-482, 2013-Ohio-2108, ¶ 55, citing Northwestern Ohio Bldg.

& Constr. Trades Council v. Conrad, 92 Ohio St.3d 282 (2001); State ex rel. McLean v.

Indus. Comm., 25 Ohio St.3d 90 (1986). The Supreme Court has also recognized "the long-

accepted principle that considerable deference should be accorded to an agency's

interpretation of rules the agency is required to administer." Natl. Lime & Stone Co. at 382,

citing State ex rel. Brown v. Dayton Malleable, Inc., 1 Ohio St.3d 151, 155 (1982), citing

Jones Metal Prods. Co. v. Walker, 29 Ohio St.2d 173, 181 (1972). In the context of workers'

compensation premiums, the Supreme Court has repeatedly acknowledged the difficulty of

setting workers' compensation rates and has deferred to BWC's determination in these

matters unless the agency has acted in an arbitrary, capricious, or discriminatory manner.

HGC Ents. at ¶ 55, citing State ex rel. Cafaro Mgt. Co. v. Kielmeyer, 113 Ohio St.3d 1, 2007-

Ohio-968.

{¶ 29} Here, the stipulated record shows that multiple public governing bodies

within several contiguous states entered into an agreement to create OKI as a regional

council pursuant to R.C. 167. OKI represents multiple public governing authorities,

including counties, townships, and other public bodies, all of which are taxing districts.

OKI identifies itself as a "public body" in its Restated Amended Articles of Agreement, and

it is governed and controlled by the elected officials and employees of the various public

governing bodies who created it. OKI was created to act as an area-wide agency for the

purpose of performing collectively that which each of the public governing bodies was

authorized to perform on its own. See R.C. 167.03; Shaker Heights ex rel. Cannon v.

DeFranco, 8th Dist. No. 98063, 2012-Ohio-3965. Though OKI does not have independent

taxing authority, OKI's operations are funded by state and federal government grants.

{¶ 30} As previously noted, the purpose of the classification system is to group

employers with similar business within this state into classifications that reflect the

exposures common to those employers. We do not find BWC acted unreasonably when it

adopted manual code 9443, "special public authorities," as a manual code pertaining to

"[p]ublic employers, taxing districts." Nor do we believe, on this record, that BWC abused

No. 20AP-56 11

its discretion when it assigned OKI to a manual code representing a group of public

employers that conduct similar business in this state.6

{¶ 31} The Supreme Court has cautioned that "[t]he bureau should not be permitted

under the guise of administrative convenience to shoehorn an employer into a classification

which does not remotely reflect the actual risk encountered." State ex rel. Progressive

Sweeping Contrs., Inc. v. Bur. of Workers' Comp., 68 Ohio St.3d 393, 396 (1994). In this

instance, rather than classifying OKI as a "private corporation" or a "public service

corporation," classifications which are not appropriate, BWC created a classification

designed to capture Ohio employers, such as OKI, that do not fit neatly within the existing

classifications and have many of the characteristics associated with public employers and

special taxing districts. We cannot say BWC acted arbitrarily or unreasonably in adopting

manual code 9443, as a means to adequately reflect the risk associated with the operation

of a special public authority such as OKI. Moreover, having determined that OKI is not a

"public service corporation," as that term is used in R.C. 4123.01(B)(1)(b), we cannot agree

with the magistrate that OKI is a private employer. We also find it difficult to conceive of

OKI as a "private corporation," as that term is used in R.C. 4123.01(B)(1)(b), when OKI's

Restated Amended Articles of Agreement identify OKI as a public body.

{¶ 32} For the foregoing reasons, we sustain BWC's second objection.

IV. CONCLUSION

{¶ 33} On examination of the magistrate's decision, an independent review of the

record pursuant to Civ.R. 53, and consideration of BWC's objections, we find the magistrate

has properly determined the facts but misapplied the applicable law. Accordingly, we

sustain BWC's objections, and we deny the requested a writ of mandamus.

Objections sustained;

writ of mandamus denied.

LUPER SCHUSTER and BEATTY BLUNT, JJ., concur.

_____________

6 We note that OKI's business within this state is similar to that of "special taxing districts," such as joint

hospital districts, park districts, port authorities, or joint economic development districts ("JEDDs"). "[A]

JEDD is a special taxing district, independent of the individual governmental entities that contracted to form

the JEDD." Desenco, Inc. v. Akron, 84 Ohio St.3d 535, 540 (1999). Any one or more counties, municipal

corporations, or townships in the state may adopt a charter form of government, enabling the cities and

townships within that county to form JEDDs. Id. See also R.C. 715.70(A).

No. 20AP-56 12

APPENDIX

IN THE COURT OF APPEALS OF OHIO

TENTH APPELLATE DISTRICT

State ex rel. Ohio-Kentucky-Indiana :

Regional Council of Governments,

:

Relator,

:

v. No. 20AP-56

:

Ohio Bureau of Workers' Compensation, (REGULAR CALENDAR)

:

Respondent.

:

MAGISTRATE'S DECISION

Rendered on December 7, 2020

Taft Stettinius & Hollister LLP, Samuel M. Duran, and

Maria C. Castro, for relator.

Dave Yost, Attorney General, and John R. Smart, for

respondent.

IN MANDAMUS

{¶ 34} Relator, the Ohio-Kentucky-Indiana Regional Council of Governments

("OKI") brings this original action seeking a writ of mandamus ordering respondent, Ohio

Bureau of Workers' Compensation ("BWC" or "bureau"), to change relator's recently-

assigned manual classification for purposes of determining risk and workers' compensation

premium rates, and reassign the more favorable manual classifications previously in effect.

Relator asserts that the new manual classification does not fit relator's employer and

employee activities, was arbitrarily and capriciously assigned, and was not adequately

explained or supported by reasoning in the relevant commission orders.

Findings of Fact:

No. 20AP-56 13

{¶ 35} 1. OKI is a non-profit corporation organized under Chapter 167 of the Ohio

Revised Code, which provides for councils of local governments, business organizations,

and community groups. (Stip. at 72-104.)

{¶ 36} 2. OKI provides planning and coordination services to federal, state, and local

governments for implementation of regional transportation solutions in eight contiguous

counties in its three namesake states.

{¶ 37} 3. OKI's staff generally consists of clerical and administrative staff who

remain in the office, and field representatives who split time between the office and travel

to conduct field work including surveys, supervision of activities of local agencies, and

meetings with stakeholders.

{¶ 38} 4. OKI has through the years operated under various manual classifications

reflecting the two different classes of employees. Manual classifications were reviewed in

1970, 1987, and 1995. In 1995, OKI's administrative and clerical employees were assigned

Ohio Manual 8810-04, and employees with some duties outside the office received Ohio

Manual 8747-07, council or government staff member/office and away from office.

{¶ 39} 5. Beginning in 1996, BWC gradually converted its manual classifications to

a uniform national standard established by the National Council on Compensation

Insurance ("NCCI"). BWC eventually assigned NCCI Manuals 8742 (Salespersons or

Collectors-Outside) and 8810 (Clerical Office Employees) for OKI employees. (Stip. at 67.)

{¶ 40} 6. BWC conducted another audit of OKI's account in 2010, and again

assigned NCCI Manuals 8742 and 8810 to OKI staff.

{¶ 41} 7. After review of OKI's account, on September 11, 2018, BWC informed OKI

that it had incorrectly classified OKI as a private employer instead of a public taxing district.

(Stip. at 116.) BWC assigned Manual 9443 (Special Public Authorities) for all OKI's

employees regardless of duties. (Stip. at 116.) The notice specified that BWC based the

change upon ascertaining that OKI was incorporated under R.C. Chapter 167, and that this

made OKI a "special district" and therefore a "public entity" for workers' compensation

rating. (Stip. at 114.) The change greatly increased OKI's premium rates. (Stip. at 116.)

{¶ 42} 8. OKI sought review of the reclassification by BWC, which again determined

that OKI should be classified as a special public authority and public employer. (Stip. at

118.)

No. 20AP-56 14

{¶ 43} 9. The adjudicating committee reviewed BWC's decision and held a hearing

on March 7, 2019. On March 29, 2019, the adjudicating committee issued an order

upholding the reclassification. (Stip. at 134-39.)

{¶ 44} 10. OKI further appealed the order of the adjudicating committee and a

hearing was held before the administrator's designee on June 20, 2019. (Stip. at 141-49.)

The administrator's designee issued an order on October 29, 2019 upholding the order of

the adjudicating committee. (Stip. at 144-49.)

{¶ 45} 11. Manual 9443 is not an NCCI classification. Manual 9443 (Special Public

Authorities) is a "state special," or classification enacted by the state in supplementation or

exception to the NCCI manuals.

{¶ 46} 12. OKI funds its activities through grants from the U.S. Department of

Transportation, and state and local government funding.

{¶ 47} 13. OKI is governed by a large board of trustees made up of representatives

of the member governments. These meet annually to elect a smaller executive committee.

{¶ 48} 14. The adjudicating committee noted that OKI's amended articles of

agreement, under the heading Powers and Purposes, defined OKI as "a public body"

governed by a board of directors and executive committee made up of member

governments. (Stip. at 138.)

{¶ 49} 15. OKI has no taxing authority.

{¶ 50} 16. OKI's employees are not enrolled in a public employee retirement system.

Discussion and Conclusions of Law:

{¶ 51} To obtain the requested writ of mandamus, OKI must show that it has a clear

legal right to the requested relief, there is a clear legal duty on the part of BWC to provide

the relief, and OKI lacks an adequate remedy in the ordinary course of the law. State ex rel.

Pressley v. Indus. Comm., 11 Ohio St.2d 141, 162-63 (1967). A clear legal right to a writ

exists when the relator shows that BWC has abused its discretion by issuing an order that

is not supported by evidence in the record. State ex rel. Burley v. Coil Packing, Inc., 31 Ohio

St.3d 18, 20 (1987); State ex rel. Elliott v. Indus. Comm., 26 Ohio St.3d 76, 78-79 (1986). "

'Abuse of discretion' " has been defined as an attitude that is unreasonable, arbitrary or

unconscionable. Huffman v. Hair Surgeon, Inc. (1985), 19 Ohio St. 3d 83, 87, 19 OBR 123,

126, 482 N.E. 2d 1248, 1252. It is to be expected that most instances of abuse of discretion

No. 20AP-56 15

will result in decisions that are simply unreasonable, rather than decisions that are

unconscionable or arbitrary. A decision is unreasonable if there is no sound reasoning

process that would support that decision." AAAA Ent. Inc. v. River Place Community

Urban Redevelopment Corp., 50 Ohio St.3d 157, 161 (1990).

{¶ 52} Pursuant to R.C. 4123.29(A)(1), BWC must classify every employer by degree

of hazard and place employers in the appropriate manual classification identifying

employee duties and corresponding risk. See generally, State ex rel. Aaron Rents, Inc. v.

Ohio Bur. of Workers' Comp., 129 Ohio St.3d 130, 2011-Ohio-3140, ¶ 6. As exemplified by

the history of OKI's classification in Ohio, Ohio Adm.Code 4123-17-08 calls for BWC to

apply NCCI manual classifications. Under R.C. 4123.29 and Ohio Adm.Code 4123-17-

08(D), " '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.' " State ex rel. Accurate Inventory & Calculating Servs v. Buehrer, 10th Dist. No.

14AP-1008, 2016-Ohio-7004 (Mag. Decision), quoting Ohio Adm.Code 4123-17-08(D).

When applying its discretion in classifying employers, "[t]he bureau is afforded 'a wide

range of discretion' in dealing with the 'difficult problem' of occupational classification."

State ex rel. Roberds, Inc. v. Conrad, 86 Ohio St.3d 221-22 (1999), quoting State ex rel.

McHugh v. Indus. Comm., 140 Ohio St. 143, 149 (1942). Courts will therefore generally

defer to the bureau's expertise in premium matters and find an abuse of discretion only

when the classification is "arbitrary, capricious, or discriminatory." State ex rel.

Progressive Sweeping Contrs. v. Bur. of Workers' Comp., 68 Ohio St.3d 393, 396 (1994).

{¶ 53} OKI points out that, pursuant to Ohio Adm.Code 4123-17-01, Ohio recognizes

three types of employers for purposes of workers' compensation classification: (1) private

employers, (2) public employers, taxing districts, and (3) public employers, state of Ohio,

its agencies and instrumentalities. Ohio Adm.Code 4123-17-34 provides that Manual Code

9443 falls under the "public employer taxing district" category. OKI asserts that it is not a

"public employer" as such is defined under the revised code, and therefore cannot fall under

Manual 9443. R.C. 4123.01(B)(1)(a) defines a public employer as "[t]he state, including

state hospitals, each county, municipal corporation, township, school district, and hospital

No. 20AP-56 16

owned by a political subdivision or subdivisions other than the state." R.C. 4123.01(B)(1)(b)

defines private employer as follows:

Every person, firm, professional employer organization, and

private corporation, including any public service corporation,

that (i) has in service one or more employees or shared

employees regularly in the same business or in or about the

same establishment under any contract of hire, express or

implied, oral or written, or (ii) is bound by any such contract

of hire or by any other written contract, to pay into the

insurance fund the premiums provided by this chapter.

{¶ 54} OKI concedes that it provides a public service, but does not concede that this

makes it a public employer, since R.C. 4123.01(B)(1)(a) expressly contemplates that public

service corporations may be private employers. OKI stresses that OKI is not a taxing

district. OKI further points out that R.C. Chapter 167 provides that membership in a

regional council of governments does not constitute holding a public office or constitute

public employment.

{¶ 55} BWC responds that OKI is not assigned Manual 9443 on the basis that it is a

taxing district in itself, but under BWC's practice to designate an entity as a special district

when two or more taxing districts or political subdivisions unite to provide a public service.

{¶ 56} While both parties in this action acknowledge that no manual classification

can perfectly fit all the risk ramifications of employees assigned thereto, OKI does point out

that BWC's reasoning must address the hazard imposed by the occupation when it assigns

a manual classification. State ex rel. Craftsmen Basement Finishing Sys., Inc. v. Ryan, 121

Ohio St.3d 492, 2009-Ohio-1676, ¶ 20-22. The magistrate notes that while the previous

classification of some of OKI's staff "outside salespersons" does not coincide with the fact

that these individuals performed no sales duties, the manual could well have been the best

fit for persons performing occasional consulting and conferencing duties outside the office

setting and, thus, involving some travel. BWC's assertion, therefore, that OKI must prove a

more apt manual than the current 9443 classification is not particularly persuasive,

considering that BWC was satisfied with OKI's previous classification for many years and

that the previous classification does not appear irrational.

{¶ 57} Nonetheless, BWC's reclassification of OKI in this case appears entirely based

upon a reevaluation of OKI as a public employer rather than a private employer. The

No. 20AP-56 17

magistrate concludes that this reclassification was an abuse of discretion because OKI,

despite being publicly funded, does not fit Ohio's statutory definition of a public employer

under R.C. 4123.01(B)(1)(a). In contrast, OKI falls within R.C. 4123.01(B)(1)(b)'s definition

of a private employer "including any public service corporation." While OKI is funded by

taxing districts it is not a taxing district itself, and no definition has been provided, other

than BWC's self-announced custom, for determining that a publicly funded entity receiving

some measure of support through tax revenue is itself a taxing district under Ohio law.

{¶ 58} It is therefore the magistrate's decision that BWC has abused its discretion in

determining that OKI is a public employer. Under statutory definitions, OKI is a private

employer and therefore may not be assigned Manual 9443. The magistrate recommends

that a writ issue ordering BWC to grant a new hearing and assign the appropriate private-

employer manual based upon BWC's assessment of appropriate risk factors and

characteristics of OKI's work force duties.

/S/ MAGISTRATE

MARTIN L. DAVIS

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).