State ex rel. Ohio Dept. of Health v. Sowald - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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OPINIONS OF THE SUPREME COURT OF OHIO
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The State ex rel. Ohio Department of Health, Appellant, v.
Sowald et al., Appellees.
[Cite as State ex rel. Ohio Dept. of Health v. Sowald
(1992), Ohio St.3d .]
Courts -- Judgments -- R.C. 2323.51 refers to trial court
judgments in civil actions, not to appellate judgments --
R.C. 2323.51 does not contemplate awarding attorney fees
for defending appeals of civil actions -- R.C. 119.092,
applied.
(No. 90-2071 -- Submitted October 13, 1992 -- Decided
December 14, 1992.)
Appeal from the Court of Appeals for Franklin County, No.
88AP-1171.
The Ohio Department of Health ("ODH"), appellant, appeals
the denial of a writ in mandamus that would compel Heather G.
Sowald, appellee, an impartial hearing officer, to vacate her
award of attorney fees to Albert's Nursing and Residential
Facility, Inc. ("Albert's"), intervenor-appellee.
Albert's operates an intermediate care facility for
mentally retarded persons under a license with the state of
Ohio. The license is reviewable by ODH.
In December 1986 and March 1987, ODH conducted an annual
certification survey of Albert's and detected forty individual
Medicaid deficiencies. On May 28, 1987, Ronald F. Fletcher,
M.D., Director of ODH, sent a notice to Albert's advising it of
his proposal to decertify Albert's. He also advised Albert's
that it could request an informal reconsideration conference.
He further informed Albert's that ODH would afford Albert's a
formal hearing if Albert's did not request a conference or if
the informal process did not result in a renewal of Albert's
certificate. Finally, he informed Albert's that the
decertification would become final only after the formal
hearing and his issuance of an adjudication order.
Albert's applied for the informal reconsideration. An
informal hearing was held on August 11, 1987, by impartial
hearing examiner Ronald B. Noga. Noga issued a decision on
October 14, 1987, in which he found that twenty-six of the
original forty deficiencies had been corrected, nine of the

deficiencies were being corrected, and five had not been
corrected. He further found that the five uncorrected
deficiencies did not jeopardize the residents' health and
safety but did affect their active treatment, and that the
correction of these deficiencies was necessary for
recertification. Accordingly, he recommended that the director
decertify the facility.
On October 26, 1987, the director notified Albert's of his
agreement with Noga's recommendation. The director advised
Albert's that ODH would conduct an evidentiary hearing, if
timely requested, before issuing an adjudication order.
Albert's applied for a formal evidentiary hearing. On
January 13-15, 19-20, 25-26, and February 8-9, 1988, Sowald
conducted the evidentiary hearing. In the meantime, on
December 14, 1987, ODH conducted a resurvey and cited eight
deficiencies. Sowald considered only these citations in her
decision.
Sowald issued a decision on March 29, 1988. In it, she
found that Albert's had come into substantial compliance with
the certification provisions and recommended renewal of the
certificate. She found that the two deficiencies that remained
uncorrected did not jeopardize the patients' health or safety
or seriously limit the facility's capacity to give adequate
care.
On April 18, 1988, the director issued an adjudication
order approving Sowald's recommendation. Therefore, he renewed
Albert's certification, commencing January 13, 1988 and
expiring August 31, 1988.
On May 17, 1988, Albert's applied for attorney fees of
$30,923.75 under R.C. 119.092. Albert's claimed that ODH was
not substantially justified in initiating the matter.
On October 31, 1988, Sowald granted the motion in part.
She divided the matter into two adjudications: the informal
phase and the formal phase. She concluded that ODH was
substantially justified in pursuing the case in the first
phase, which ended after the December 1987 resurvey. However,
she decided that the findings of the surveyors in the December
1987 and January 1988 resurveys, which ODH had also conducted,
were not substantial enough to justify the decision to go
forward with the evidentiary hearing, which she declared to be
the second phase. Thus, Sowald ruled that Albert's was
entitled to attorney fees. However, she found that Albert's
lawyers billed excessively for unreasonably protracted
cross-examination and excessive witness preparation.
Accordingly, she awarded Albert's only $17,500.
Since R.C. 119.092 did not then provide ODH an appeal of
this order, it filed a complaint for a writ of mandamus in the
Court of Appeals for Franklin County.1 It asked the court to
order Sowald to vacate her award of attorney fees and to comply
with R.C. 119.092 by denying the motion for attorney fees.
Albert's was allowed to intervene as a respondent, and it
moved, under R.C. 2323.51, for additional attorney fees for
having to respond to the mandamus complaint.
The court of appeals' referee essentially agreed with
Sowald's decision to divide the case into two phases. She
determined that the matter was "initiated" with the December
1987 and January 1988 resurveys. She concluded that Sowald had

not abused her discretion in finding that ODH was not
substantially justified in initiating the matter in
controversy. She also concluded that mandamus was not a civil
action and, consequently, R.C. 2323.51 did not apply to
mandamus cases. Accordingly, the referee recommended denial of
the writ and denial of the motion for attorney fees.
The court of appeals adopted the report and recommendation
of the referee. The court stated:
"Where the statutory and regulatory scheme contemplate[s]
an ongoing process whereby a licensee is permitted, and
apparently expected, to continue to make corrections and to
upgrade the facility during a certification renewal process,
and it is apparent the issues and evidence to be presented at
an adjudication hearing may well be considerably different from
those at the outset of the administrative process, it is the
decision to go forward with an adjudication hearing which must
be substantially justified, even though such decision occurs
late in the administrative process. * * *"
The court concluded that ODH was not substantially
justified in proceeding with the adjudication hearing and
denied the writ. It also found that Albert's could not receive
attorney fees because ODH's conduct in bringing the mandamus
action was not frivolous.
ODH appealed this judgment to this court. Albert's did
not appeal the decision denying the motion for attorney fees,
but filed a motion with this court for attorney fees in
defending the appeal.
The cause is now before this court upon an appeal as of
right.

Lee I. Fisher, Attorney General, and Lawrence D. Pratt,
Assistant Attorney General, for appellant.
Lee I. Fisher, Attorney General, and Barbara A. Serve,
Assistant Attorney General, for appellee Sowald.
Roth & Rolf Co., L.P.A., Sheila P. Cooley and Ruthanne
Murray, for appellee Albert's Nursing and Residential Facility,
Inc.

Per Curiam.
A. Attorney Fees Under R.C. 119.092
R.C. 119.092 provides in part:
"(B)(1) Except as provided in divisions (B)(2) and (F) of
this section, if an agency conducts an adjudication hearing
under this chapter, the prevailing eligible party is entitled,
upon filing a motion in accordance with this division, to
compensation for fees incurred by that party in connection with
the hearing. * * *
"(2) Upon the filing of a motion under this section, the
request for the award shall be reviewed by the referee or
examiner who conducted the adjudication hearing or, if none, by
the agency involved. In the review, the referee, examiner, or
agency shall determine whether the fees incurred by the
prevailing eligible party exceeded one hundred dollars, whether
the position of the agency in initiating the matter in
controversy was substantially justified, whether special
circumstances make an award unjust, and whether the prevailing
eligible party engaged in conduct during the course of the

hearing that unduly and unreasonably protracted the final
resolution of the matter in controversy. * * *" (Emphasis
added.)
ODH argues that the matter in controversy was not
inititaed by the December 1987 resurvey, but by either the May
28, 1987 notice of opportunity for informal or formal hearing,
or the October 26, 1987 notice of opportunity for hearing.
Furthermore, it argues that it had a reasonable basis in law
and fact to initiate the adjudication and that Sowald abused
her discretion by finding that it was not substantially
justified.
Sowald, on the other hand, argues that, in evolving cases
such as this one, initiating the matter in controversy can
occur when the agency decides to proceed with the formal
evidentiary hearing after the facility has been given a chance
to correct the deficiencies. Albert's maintains that the final
decision to go forward with the evidentiary hearing, in the
combined federal and state regulatory scheme establishing an
ongoing certification renewal process, is the act of initiating
the matter in controversy.
According to Webster's Third New International Dictionary
(1986) 1164, "initiate" means:
"1a. To begin or set going: make a beginning of: perform
or facilitate the first actions, steps, or stages of * * *."
Black's Law Dictionary (6 Ed. 1990) 784, defines
"initiate" as:
"Commence; start; originate; introduce; inchoate. * * *"
Thus, "initiate" means to commence an action, not continue
a proceeding that has already begun, as found by the court of
appeals. Moreover, Black's Law Dictionary, supra, at 978,
defines "matter in controversy" as "[s]ubject of litigation;
matter on which action is brought and issue is joined and in
relation to which, if issue be one of fact, testimony is taken.
* * *" The first rule of statutory interpretation is to give
effect to the plain meaning of the words employed in the
statute. State ex rel. Foster v. Evatt (1944), 144 Ohio St.
65, 104-105, 29 O.O. 4, 20, 56 N.E.2d 265, 282; R.C. 1.42.
Consequently, the matter in controversy, the decertification of
Albert's, commenced when ODH first took action to decertify
Albert's.
The process could have begun with the May 28, 1987 letter,
in which the director first notified Albert's of deficiencies
and advised it of formal and informal procedures, or the
October 26, 1987 letter, in which the director notified
Albert's of his decision, after the informal review, to
decertify Albert's and of its right to a formal evidentiary
hearing. In this case, the latter is the point at which ODH
initiated the matter in controversy.
No adjudication order, which is the determination by the
highest agency authority on the rights, duties, privileges,
benefits or relationships of a specified person, is valid
unless the agency affords the individual an opportunity for a
hearing. R.C. 119.06; R.C. 119.01(D). R.C. 119.07 prescribes
the manner in which hearings are afforded. This process begins
with the issuance of a notice informing the individual of his
right to a hearing. Consequently, the notice that leads
directly to decertification after the opportunity for a formal

evidentiary hearing is afforded initiates the matter in
controversy.
In the instant case, the decision to proceed with the
hearing after the resurveys in December 1987 and January 1988,
the point of initiation found by the court of appeals, was, as
that court described, a continuation of the process, not its
initiation. We conclude that the October 26 letter initiated
the matter in controversy because it notified Albert's of the
decertification and delivered the notice that led directly to
the formal evidentiary hearing. Since appellees concede,
Sowald explicitly and Albert's implicitly, that ODH's position
was substantially justified when it issued the October 26
letter, Sowald had a clear legal duty to deny the request for
attorney fees. Consequently, we reverse the court of appeals'
judgment and issue the writ.
B. Attorney Fees Under R.C. 2323.51
R.C. 2323.51 states in part:
"(B)(1) Subject to divisions (B)(2) and (3), (C), and (D)
of this section, at any time prior to the commencement of the
trial in a civil action or within twenty-one days after the
entry of judgment in a civil action, the court may award
reasonable attorney's fees to any party to that action
adversely affected by frivolous conduct. The award may be
assessed as provided in division (B)(4) of this section."
Albert's does not contend that it should have been awarded
fees for answering the mandamus action at the court of appeals;
it did not appeal that court's judgment. It claims,
nevertheless, that we may award it attorney fees for defending
this appeal if it applies for fees within twenty-one days of
our entry of judgment on the appeal.
"An action in mandamus is a civil action." State ex rel.
Wilson v. Preston (1962), 173 Ohio St. 203, 19 O.O.2d 11, 181
N.E.2d 31, paragraph one of the syllabus. Civ.R. 54(A) defines
"judgment" as including "a decree and any order from which an
appeal lies * * *." Civ.R. 58(A) states:
"Subject to the provisions of Rule 54(B), upon a general
verdict of a jury, or upon the determination of a periodic
payment plan, upon a decision announced, the court shall
promptly cause the judgment to be prepared and, the court
having signed it, the clerk shall thereupon enter it upon the
journal. A judgment is effective only when entered by the
clerk upon the journal."
R.C. 2323.51(B) provides that a court in a civil action
may, at any time prior to trial or within twenty-one days after
entry of judgment, award attorney fees to any party adversely
affected by frivolous conduct.
Under Civ.R. 54(A), a "judgment" is an order from which an
appeal can be taken, and, under Civ.R. 58(A), "entry of
judgment" occurs after the verdict or decision in a civil
action. Thus, the statute refers to trial court judgments in
civil actions, not to appellate judgments. Accordingly, R.C.
2323.51 does not contemplate awarding attorney fees for
defending appeals of civil actions.
Consequently, we reverse the judgment of the court of
appeals and grant the writ of mandamus ordering Sowald to
vacate her order granting Albert's request for attorney fees.
We also deny Albert's motion for attorney fees under R.C.

2323.51.
Judgment reversed
and writ granted;
motion for attorney
fees denied.
Moyer, C.J., Sweeney, Holmes, Wright, H. Brown and
Resnick, JJ., concur.
Douglas, J., concurs in judgment only.

FOOTNOTES
1. R.C. 119.092(C) has since been amended to allow state
agencies to appeal awards of attorney fees. Am.Sub.H.B. No.
615, 143 Ohio Laws, Part IV, 6067, 6070.