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notwithstanding the “considerable deference generally afforded to the commission to set rates * * * [t]his rate-setting expertise * * * cannot supersede a statutory mandate”
Summary of this case from San Allen, Inc. v. BuehrerOpinion
No. 90-1241
Submitted September 10, 1991 —
Decided December 4, 1991.
APPEAL from the Court of Appeals for Franklin County, No. 88AP-447.
The Ohio Workers' Compensation Insurance Fund Manual ("manual") designates the basic rate that an employer must pay, per $100 of payroll, to secure workers' compensation coverage for its employees. The manual contains well over two hundred numerically designated occupational classifications ("manual numbers") with a corresponding basic dollar rate. (See Young, Workmen's Compensation Law of Ohio [2 Ed. 1989 Cum.Supp.] 231, at Section 16.7.) This basic rate applies to all employers within the numerical classification (except as to the nine manual numbers involved in the instant case) and effectively spreads the total loss within the classification among all members.
Relator-appellant, Minutemen, Inc., supplies personnel to various companies for temporary assignments. Traditionally, the basic rates paid by temporary help agencies ("THA's") or labor leasing agencies were based on the manual number of the occupation to which a loaned employee was assigned. Thus, a THA would pay, for a machinist loaned to "Company A," for example, $2.90 per $100 of payroll under corresponding manual number 3632. Company A would pay the same rate for one of its permanent employees performing the same job.
Effective July 1, 1985, the procedure changed. Under Industrial Commission resolution No. R85-5-34, THA's could not use the same manual classification numbers as the employers to which their temporary personnel were assigned. The resolution incorporated 226 previous manual numbers into nine new classifications — applicable only to THA's — that were broadly based on the character of the business to which personnel was supplied — manufacturing, construction, transportation, etc. Employers of permanent employees, however, continued under the approximately 200 previous classifications.
THA rates were drastically affected. New manual number 9633, for example, for July 1987 incorporated 117 occupational classifications into one "manufacturing" classification with a basic rate of $7.62 per $100 payroll. Comparing the new rate with the individual rates of the merged classifications, THA's suffered significant increases in 102 of 117 categories. For example, whereas a THA should have paid $2.90 per $100 payroll for a loaned machinist under manual number 3632, it now paid $7.62 for the same employee, since number 3632 was incorporated into number 9633. Moreover, a company to which a THA loaned labor still paid the lower rate for its own employees. Thus, while Company A would pay $2.90 for its own machinist, THA's paid $7.62 for a loaned employee doing identical work for Company A.
Appellant filed a complaint in mandamus in the Court of Appeals for Franklin County, arguing that the new classifications: (1) were not based on the degree of industrial hazard and (2) violated equal protection. Appellant sought to compel the commission to reclassify occupations or industries by degree of hazard and reimbursement of all allegedly overpaid funds. The court of appeals denied the writ on other grounds, finding that appellant had an adequate remedy at law via a declaratory judgment action.
This cause is now before this court upon an appeal as of right.
Gross, Goodman Associates and Sanford Gross, for appellant.
Lee I. Fisher, Attorney General, Michael L. Squillace and Gerald H. Waterman, for appellee.
Three questions are presented: (1) Is declaratory judgment an adequate remedy at law? (2) Do the classifications violate Section 35, Article II, Ohio Constitution and former R.C. 4123.29 by failing to reflect the degree of occupational or industrial hazard? and (3) Do the classifications violate equal protection? For the reasons to follow, we reverse the appellate court's judgment.
The court below mistakenly relied on State, ex rel. Viox Builders, Inc., v. Lancaster (1989), 46 Ohio St.3d 144, 545 N.E.2d 895, in finding a declaratory judgment action to be an adequate remedy at law. While the present case and Viox do share a common issue, the relief sought differs.
In Viox, the employer sought manual reclassification only, making declaratory judgment an appropriate vehicle for relief. Here, appellant seeks reclassification and reimbursement of all funds allegedly overpaid since July 1, 1987, when the new classification rates were first reflected in its premiums.
In State, ex rel. Fenske, v. McGovern (1984), 11 Ohio St.3d 129, 11 OBR 426, 464 N.E.2d 525, at paragraph two of the syllabus, we held:
"The availability of an action for declaratory judgment does not bar the issuance of a writ of mandamus if the relator demonstrates a clear legal right thereto, although the availability of declaratory judgment may be considered by the court as an element in exercising its discretion whether a writ should issue. However, where declaratory judgment would not be a complete remedy unless coupled with ancillary relief in the nature of a mandatory injunction, the availability of declaratory judgment is not an appropriate basis to deny a writ to which the relator is otherwise entitled."
In the case before us, complete relief contemplates a decree to compel reimbursement of allegedly overpaid funds should appellant prevail. Viox is thus distinguishable and does not control. We accordingly find declaratory judgment to be inadequate under these facts, and proceed to the merits of appellant's challenge.
Section 35, Article II, Ohio Constitution authorizes the creation of a board to "classify all occupations, according to their degree of hazard * * *." The provision was implemented in former R.C. 4123.29 (now 4123.29[A]) which orders the commission (now the Administrator of Workers' Compensation and the Workers' Compensation Board) to "classify occupations or industries with respect to their degree of hazard." This directive is reflected in over 200 separate occupational classifications contained in the Ohio Workers' Compensation Insurance Fund Manual, and each classification reflects a distinct degree of occupational hazard. Appellant asserts that the nine new classifications created exclusively for THA's are not based on the degree of hazard.
Appellant's argument is well taken. The commission's incorporation of 226 occupational classifications into nine broad THA categories while at the same time retaining the previous classifications for other employers indicates to us that the consolidated classifications were not based on occupational hazard. The commission does not vigorously dispute this conclusion, arguing instead that the hazard classification requirement may be disregarded in the interest of new classifications that are easier for THA's to understand and the Bureau of Workers' Compensation to administer. We disagree.
Former R.C. 4123.29 imposes a mandatory duty on the commission which " shall classify occupations or industries with respect to their degree of hazard." (Emphasis added.) Alleged administrative inconvenience does not excuse statutory noncompliance.
The commission suggests that temporary help is "historically less skilled and/or trained than * * * permanent employ[ees]." Besides being unsupported by any evidence of record, the point, even if true, is irrelevant. "Occupations or industries" are classified, not workers. Any allegations as to the safety record of a company's employees bears only on the company's merit rate, not its basic rate.
The commission lastly points to the considerable deference generally afforded to the commission to set rates. See, e.g. Viox, supra; State, ex rel. McHugh, v. Indus. Comm. (1942), 140 Ohio St. 143, 23 O.O. 361, 42 N.E.2d 774. This rate-setting expertise, however, cannot supersede a statutory mandate to classify occupations according to hazard.
In light of the foregoing conclusion, we find it unnecessary to address appellant's constitutional argument.
Accordingly, the judgment of the court of appeals is reversed and the writ is allowed.
Judgment reversed and writ allowed.
MOYER, C.J., SWEENEY, HOLMES, DOUGLAS, WRIGHT, H. BROWN and RESNICK, JJ., concur.