State ex rel. Occidental Chem. Corp. v. Ohio Bur. of Workers' Comp. - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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[Cite as State ex rel. Occidental Chem. Corp. v. Ohio Bur. of Workers' Comp, 91
Ohio St.3d 249, 2001-Ohio-29.]

THE STATE EX REL. OCCIDENTAL CHEMICAL CORPORATION, APPELLANT, v.
BUREAU OF WORKERS' COMPENSATION ET AL., APPELLEES.
[Cite as State ex rel. Occidental Chem. Corp. v. Ohio Bur. of Workers' Comp.
(2001), 91 Ohio St.3d 249.]
Workers' compensation -- Employer's switch from self-insured status to state
insurance fund status -- Employer's insured status at time of employee's
injury or injurious exposure controls which fund is responsible for the
claim.
(No. 99-686 -- Submitted January 9, 2001 -- Decided April 11, 2001.)
APPEAL from the Court of Appeals for Franklin County, No. 98AP-505.
__________________

Per Curiam. Diamond Shamrock Corporation ("Diamond") went through
significant corporate changes in the 1980s. Two are relevant here: (1) the
convoluted merger of Diamond's chemical division into Occidental Chemical
Corporation ("Occidental") and (2) a change in workers' compensation insurance
status.

In 1983, Diamond changed its corporate structure. A holding company of
the same name was formed. Nonchemical operations were transferred to newly
created subsidiaries of the new Diamond. The chemical component of old
Diamond became a subsidiary of the new Diamond and changed its name to
Diamond Shamrock Chemicals Company ("Shamrock Chemicals").

This corporate reorganization presumably prompted a change in the
workers' compensation insurance status of the former chemical division. Old
Diamond had been self-insured. On July 1, 1984, it canceled its self-insured
status, and Shamrock Chemicals, as a result, became a state insurance fund
employer. This is significant because in 1986, new Diamond sold Shamrock

SUPREME COURT OF OHIO
Chemicals' outstanding stock to a company owned by Occidental Petroleum
Corporation. Shamrock Chemicals was again renamed, and on November 30,
1987, was merged into Occidental Chemical Corporation, appellant herein. As
part of the merger, Shamrock Chemicals dropped its separate state fund risk
number and moved under Occidental's state fund risk.

In 1992, Lewis Tobul, who worked for Diamond from 1941 through 1976,
died. His widow alleged that his death was due to chemical exposure at a
Diamond plant in Painesville. The Industrial Commission of Ohio awarded death
benefits against "Diamond Shamrock Chemical Company C/O Occidental
Chemical Corporation." No payments, however, were forthcoming.

While the widow waited, both Occidental and a corporate successor of
Diamond, Maxus Energy Corporation, clashed with appellee Bureau of Workers'
Compensation--and each other--over responsibility for claims arising while
Diamond was self-insured, including Tobul's claim. Occidental argued that
because Shamrock Chemicals was insured by the state fund when Occidental
bought it, the state fund was the responsible payor. The bureau, however, ruled
that companies that changed from self-insured to state fund status retained direct
financial responsibility for all claims arising while the company was self-
insured--responsibility did not pass to the state fund. Therefore, because (1) the
chemical manufacturing portion of Diamond was self-insured during Tobul's
injurious chemical exposure, and (2) Occidental was the successor-by-merger of
that operation, Occidental, not the state fund, was liable for payment.

The Self-Insured Review Panel of the bureau stressed:

"Both parties [Occidental and Maxus] have expressed their concerns of
potentially being assessed self-insured liabilities when they are not self-insured
employers. This Panel is in no way attempting to transfer the self-insured status
of Diamond Shamrock Corporation to either of these employers. Instead, this
panel is attempting to ascertain which party is responsible for the self-insured
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January Term, 2001
liabilities. Self-insured liabilities, like other corporate liabilities, pass to the
successor corporations along with the assets.

"After a review of the statement of facts and testimony elicited at the
conference, the Panel finds that Occidental Chemical Co. is the employer
responsible for those claims attributable to Diamond Shamrock Chemicals
Company. Stated simply: the Panel finds that Occidental Chemical Co. is a
successor employer to Diamond Shamrock and is therefore responsible for its
self-insuring workers' compensation obligations." (Emphasis sic.)

Occidental filed a complaint in mandamus in the Court of Appeals for
Franklin County, alleging that the bureau had abused its discretion in determining
that Occidental was responsible for Lewis Tobul's claim. The court of appeals
disagreed and denied the writ. This cause is now before this court upon an appeal
as of right.

Occidental does not dispute the principle that the responsibilities of the
merged corporation are assumed by the surviving entity. See R.C. 1701.82(A)(4);
ASA Architects, Inc. v. Schlegel (1996), 75 Ohio St.3d 666, 665 N.E.2d 1083. It
instead disputes the determination that liability for decedent's claim ever fell
within Shamrock Chemicals' self-insured risk.

Occidental argues that because decedent died after Shamrock Chemicals
had converted to state fund insurance, expenses related to his death were not
Shamrock Chemicals' and, hence, not Occidental's after merger. Occidental
claims that any statutory or regulatory authority for a contrary finding was not
enacted or adopted until after the two companies merged.

While Occidental's statutory argument is true, State ex rel. Marion Power
Shovel Co. v. Indus. Comm. (1950), 153 Ohio St. 451, 41 O.O. 438, 92 N.E.2d 14,
substantially preceded the merger and supports the bureau's assessment of
liability. That case was precipitated by a situation that is not uncommon to
workers' compensation administration--an employer's switch from state fund to
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self-insured status or vice versa. Marion Power Shovel entailed the latter and
touched upon a question obvious to the situation--when an employer changes
insured status, from what fund do claims that arose before the change continue to
be paid? Marion Power Shovel ruled that the employer's insured status at the
time of injury or injurious exposure controlled. Thus, because the claimant in that
case was exposed while the employer was self-insured, the company retained
direct responsibility for that claim and could not pass it off to the state insurance
fund.

Accordingly, the judgment of the court of appeals is affirmed.
Judgment affirmed.

MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, PFEIFER, COOK and
LUNDBERG STRATTON, JJ., CONCUR.
__________________

Schottenstein, Zox & Dunn, L.P.A., William J. Barath and Robert D.
Weisman, for appellant.

Betty D. Montgomery, Attorney General, and Gerald H. Waterman,
Assistant Attorney General, for appellees.
__________________
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