State ex rel. Granville Volunteer Fire Dept., Inc. v. Indus. Comm. - 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. Granville Volunteer Fire Department,
Inc., Appellee, v. Industrial Commission of Ohio et al.,
Appellants.
[Cite as State ex rel. Granville Volunteer Fire Dept.,
Inc. v. Indus. Comm. (1992), Ohio St.3d .]
Volunteer fire departments -- Workers' compensation premium
payments -- Overpayment of premium due to classification
in violation of R.C. 505.41 -- Reimbursement limited to
prior two years' payments -- Ohio Adm. Code 4121-7-17(C)
-- Determining date from which two-year retroactive
reimbursement limitation should run.
(No. 91-981 -- Submitted June 2, 1992 -- Decided September
2, 1992.)
Appeal from the Court of Appeals for Franklin County, No.
90AP-494.
In 1955, appellee, Granville Volunteer Fire Department,
Inc. ("GVFD"), filed an "Application for Classification of
Industry and for Premium" with appellant Bureau of Workers'
Compensation ("bureau"). The bureau treated GVFD as a private
employer and assigned a corresponding occupational
classification number from the State Insurance Fund Manual.
GVFD began making premium payments as directed.
Effective January 17, 1977, R.C. 505.41 designated
volunteer firefighters as township, and therefore public,
employees. Appellants never notified GVFD or Granville
Township of this change. GVFD was not reclassified and,
unaware of R.C. 505.41, continued to pay premiums as an
independent, private employer.
In August 1984, Lee Larson, GVFD president, contacted
Senator Eugene Branstool regarding the "high workers'
compensation rates for private volunteer fire departments."
Larson's letter related that:
"Private fire departments are made a separate group for
determining rates, whereas members of municipal and township
fire departments are considered to be municipal employees. The
effect this has is that the rate for private fire departments
is 18% at present, whereas the rate for township or municipal
departments is between 3% and 4%. This is having an incredible
effect on our budget; we have three full-time employees, and

this rate * * * now costs us several thousand dollars a year
more than it would if we were treated the same as municipal
departments. This is not because of excessive claims on our
part; over the past five years our claims have totalled $806.
* * *"
Larson proposed three possible solutions: (1) become a
township fire department, (2) classify salaried employees as
township employees, or (3) include "private departments with
municipalities for rate determining purposes." Larson favored
the third alternative, rejecting the first two on the advice of
township trustees and the county prosecutor.
On August 30, 1984, Senator Branstool forwarded Larson's
letter to the bureau. Approximately two weeks later, the
bureau responded that having "reviewed Mr. Larson's letter and
possible [proposed] solutions * * * especially his third
alternative * * *, [b]y law the bureau is mandated to maintain
two (2) separate funds for rate making and payment of claims,
the private [employer] fund * * * and the public [employer]
fund * * * and the experience of these two funds cannot be
combined for rate making; therefore, an employer paying
premiums into one fund cannot be rated with any other employer
in the other fund."
On February 27, 1987, GVFD relayed to the bureau its
belief that its classification violated R.C. 505.41. The
bureau agreed and instructed GVFD to request coverage
cancellation retroactive to December 31, 1986 and inform the
Granville Township clerk that the township would now be
responsible for GVFD's workers' compensation coverage. The
bureau said nothing about amounts previously paid by GVFD.
GVFD again requested reimbursement of overpaid funds and
the bureau refused. GVFD objected and requested a hearing.
After hearing, appellant Industrial Commission of Ohio's
adjudicatory committee denied reimbursement. GVFD
unsuccessfully appealed to the commission.
GVFD filed a complaint in mandamus in the Court of Appeals
for Franklin County, challenging appellants' refusal to issue a
refund. The appellate court held that Ohio Adm.Code
4121-7-17(C) entitled GVFD to reimbursement. Finding that Ohio
Adm.Code 4121-7-17(C) prohibited reimbursement in excess of two
years prior to the date that the error was brought to
appellants' attention, the court ordered reimbursement
retroactive from August 30, 1984, the date that Larson's letter
was forwarded to the bureau.
This cause is now before this court upon an appeal as of
right.

Thompson, Meier & Dersom and Thomas D. Thompson, for
appellee.
Lee I. Fisher, Attorney General, and Jetta Mencer, for
appellants.

Per Curiam. GVFD was misclassified from January 17, 1977
through December 31, 1986, resulting in overpaid premiums. At
issue is the period, if any, over which GVFD is entitled to
reimbursement. For the reasons to follow, we affirm the
judgment below.
Ohio Adm.Code 4121-7-17(C) states:

"* * * The Commission and Bureau shall also have the right
to make adjustments as to * * * premium rates and/or amount of
premium. No adjustments, however, shall be made in an
employer's account which result in reducing the amount of
premium below the amount of contributions made by the employer
to the fund for the periods involved, except in reference to
adjustments for the semi-annual and/or adjustment periods
ending within twenty-four months immediately prior to the
beginning of the current payroll reporting period, when such
errors affecting the reports and the premium are brought to the
attention of the Commission and Bureau by an employer through
written application for adjustment or found by the Commission
and Bureau."
Ohio Adm.Code 4121-7-28 also provides:
"(A) Whenever the bureau of workers' compensation or the
industrial commission detects an inaccuracy in the recording or
processing of * * * [a] premium, such discrepancy shall be
corrected. * * *
"(B) The time limit for correction(s) under this rule is
as provided by rules 4121-7-17 and 4121-7-27 of the
Administrative Code * * *."
GVFD challenges the applicability of Ohio Adm.Code
4121-7-17(C) ("Section C"), arguing that Section (C) governs
only those employers who were "legally obligated" to contribute
to the State Insurance Fund. GVFD claims that under R.C.
505.41 it never had such an obligation and, therefore, Section
(C) does not control. Ohio Adm.Code 4121-7-17(C), however,
contains no such qualification. It refers flatly to
"employer," a term which includes GVFD.
Having found that Ohio Adm.Code 4121-7-17(C) applies, we
also find that Section (C) reimbursement is discretionary.
Ohio Adm.Code 4121-7-17(C) states that appellants "shall have
the right" to make changes. (Emphasis added.)
In Zupp v. Youngstown Fire Dept. (1988), 37 Ohio St.3d
202, 525 N.E.2d 9, we interpreted a provision in R.C.
4123.59(B), which states:
"* * * when any claimant is receiving total disability
compensation at the time of death the wholly dependent person
shall be eligible for the maximum compensation provided for in
this section." Id. at 202, 525 N.E.2d at 10.
Zupp's widow-claimant focused exclusively on the word
"shall" and asserted a mandatory right to maximum
compensation. We disagreed, holding that claimant could not
ignore the phrase "be eligible for" which qualified "shall."
Focusing on the term "eligible," we determined no connotation
of mandatory entitlement existed.
The same logic applies here. By giving appellants the
right to make an adjustment, the Ohio Administrative Code also
gave appellants the concomitant right not to make an
adjustment. GVFD asserts that even if the adjustment is
discretionary, appellants abused that discretion in denying
reimbursement here. Appellants defend their decision, arguing
that it was GVFD's action, not appellants', that caused the
misclassification. Appellants' contention fails.
Clearly, GVFD is partially responsible for its situation
and cannot escape culpability by pointing to its lack of
expertise in workers' compensation matters. State ex rel.

Harry Wolsky Stair Builders, Inc. v. Indus. Comm. (1991), 58
Ohio St.3d 222, 569 N.E.2d 900. Appellants, however, ignore
their equal culpability in failing to reclassify GVFD when R.C.
505.41 took effect. While GVFD's request for independent
private coverage in 1955 may have been ill-advised or
incorrect, it does not excuse appellants' disregard of a
statutory mandate imposed later.
We must last determine the date from which Ohio Adm. Code
4121-7-17(C)'s two-year retroactive reimbursement limitation
should run. Appellants advocate February 27, 1987 - - the date
on which GVFD first specified a violation of R.C. 505.41.
Appellants challenge the appellate court's selection of August
30, 1984, the date on which Senator Branstool forwarded
Larson's letter to the bureau. Appellants claim that the
letter did not comply with Ohio Adm. Code 4121-7-27, which
provides that:
"Protest of an employer's experience can be submitted only
in writing. Only the employer or a representative with a
permanent authorization from that employer can file a protest
letter. * * *"
Appellants initially argue that the letter is defective
because Branstool was neither the employer nor its authorized
representative. This claim lacks merit. Senator Branstool
forwarded Larson's letter to the bureau. It is immaterial that
Larson's letter was physically sent by Branstool instead of by
Larson personally.
Appellants also maintain that the 1984 letter did not
allege actual commission error, but simply decried premium
rates that GVFD felt were excessive. We again disagree. While
error was not specifically alleged, the Larson letter contained
sufficient facts to put appellants on notice that there may
have been a problem. First, Larson noted that GVFD was covered
as a private employer. Had appellants been aware of R.C.
505.41, as they apparently were not, an error would have been
immediately apparent. Larson's proposed solutions also
suggested the viability of including GVFD under the public, as
opposed to private, umbrella. Finally, his comparison of GVFD
rates with those of other fire departments again signalled that
something may have been amiss. Read as a whole, we find that
the letter provided sufficient notice of error to appellants.
For these reasons, the appellate court's judgment is
affirmed.
Judgment affirmed.
Moyer, C.J., Sweeney, Holmes, Douglas, Wright, H. Brown
and Resnick, JJ., concur.