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Court Holds Failure to Name, Serve BWC Administrator in Workers' Compensation Appeal Is Not 'Jurisdictional' Error

Urges Legislature to Review Legal Requirements for Initiating Appeal

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2010-2138.  Spencer v. Freight Handlers, Inc., Slip Opinion No. 2012-Ohio-880.
Miami App. No. 09-CA-44, 2010-Ohio-5288. Judgment of the court of appeals affirmed.
O'Connor, C.J., and Pfeifer, Lundberg Stratton, Lanzinger, Cupp,  and McGee Brown, JJ., concur.
O'Donnell, J., dissents.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2012/2012-Ohio-880.pdf

Video clip View oral argument video of this case.

(March 8, 2012) The Supreme Court of Ohio ruled today that under current state law, when a claimant or employer appeals an order of the Ohio Industrial Commission in a workers’ compensation case to a common pleas court, failure by the appellant to name the administrator of the Bureau of Workers’ Compensation (BWC) as a party and to serve the administrator with a copy of the appeal notice as required by R.C. 4123.512 are not “jurisdictional” defects (i.e., are not errors that deprive the court of subject matter jurisdiction to hear the appeal).

Applying that analysis to a Miami County case, the court held that a notice of appeal filed by workers’ compensation claimant James Spencer was sufficient to invoke the jurisdiction of the court despite Spencer’s failure to initially name the BWC administrator as a party or to serve the administrator with the notice of appeal. 

In a 6-1 decision authored by Justice Judith Ann Lanzinger, the court went on to note that failure to include the BWC administrator as a party in appeal proceedings from the outset can impair the proper functioning of the state’s workers’ compensation system, and urged the General Assembly to review  the current statutory scheme governing workers’ compensation appeals.

The case involved a workers’ compensation claim filed by Spencer alleging that he was entitled to benefits for a shoulder injury he suffered while working for Freight Handlers Inc. (FHI) at a job site in Miami County. His claim was denied by the Industrial Commission in an order dated June 4, 2009.

Pursuant to R.C. 4123.512(A), a provision of Ohio’s workers’ compensation law that allows a claimant or employer to appeal an order of the Industrial Commission in common pleas court, Spencer filed a notice of appeal in the common pleas court of Darke County, his county of residence. Spencer’s notice named only FHI as an appellee. He did not name the BWC administrator as a party to the appeal, and did not serve the administrator with the notice of appeal, despite the fact that those actions are required under R.C. 4123.512(B).  Spencer later filed a petition setting forth all of the required information about the workers’ compensation claim under appeal, but again failed to name the administrator as a party or to serve the administrator with a copy of the petition.

FHI filed a motion to dismiss the case, asserting that Spencer’s failure to comply with R.C. 4123.512(B) by naming the BWC administrator as a party in his notice of appeal and serving the administrator with that notice were errors that deprived the court of subject-matter jurisdiction to hear the case. Spencer responded by filing a motion  for leave to amend his petition. He attached a revised petition that named the administrator as a party, and served the administrator with a copy of the revised petition.

While FHI’s and Spencer’s motions remained pending, the Darke County judge transferred the case to the Miami County Court of Common Pleas, on the basis that Spencer’s injury occurred in Miami County and that  R.C. 4123.512(A) requires that the appeal of a workers’ compensation order must be heard in “the county in which the injury was inflicted.” 

The Miami County court granted FHI’s motion to dismiss Spencer’s complaint for lack of subject-matter jurisdiction, concluding that “omitting the Administrator as a party and failing to serve the Administrator with the notice of appeal does not substantially comply” with the requirements of  R.C. 4123.512(B). The court also denied Spencer’s motion to amend his petition because the defective notice of appeal meant that jurisdiction had never vested in the trial court, and therefore the “defect could not be corrected by the amendment of the pleadings.”

Spencer appealed the common pleas court’s judgment. On review, the Twelfth District Court of Appeals reversed  and remanded the case to the trial court for further proceedings.  The appeals court held that “failure to name the Administrator in the notice of appeal or to serve the Administrator with the notice of appeal does not deprive a court of common pleas of subject matter jurisdiction to hear an R.C. 4123.512 appeal.”

The BWC administrator sought and was granted Supreme Court review of the Twelfth District’s ruling.

Writing for the court in today’s decision, Justice Lanzinger noted that Spencer, the prevailing party in the court of appeals, did not file an appellee brief with the Supreme Court, but the court did receive amicus curiae (friend of the court) briefs supporting the Twelfth District’s decision from the Ohio Association of Claimants’ Counsel and the Ohio Association for Justice.  She wrote that resolution of the case hinged on which of two conflicting interpretations of R.C. 4123.512(B) the court found more persuasive.

Justice Lanzinger wrote: “The statute ... sets forth, in the first paragraph of R.C. 4123.512(B) (which consists of one sentence), what a valid notice of appeal must contain: ‘The notice of appeal shall state the names of the claimant and the employer, the number of the claim, the date of the order appealed from, and the fact that the appellant appeals therefrom.’  The next paragraph of subsection (B) states: ‘The administrator of workers’ compensation, the claimant, and the employer shall be parties to the appeal and the court, upon the application of the commission, shall make the commission a party. The party filing the appeal shall serve a copy of the notice of appeal on the administrator at the central office of the bureau of workers’ compensation in Columbus.’”

“The amici in this case assert that the first paragraph of R.C. 4123.512(B) lists the jurisdictional items: (1) the claimant’s name, (2) the employer’s name, (3) the claim number, (4) the date of the order appealed from, (5) and the fact that the appellant is appealing that order.  They contend that the second paragraph, which states that the administrator must be a party to the appeal and that the party filing the appeal must serve a copy of the notice of appeal on the administrator, is not a paragraph addressing jurisdiction.”

“The appellant, the administrator, argues that both subsection (A) and subsection (B) of R.C. 4123.512 are jurisdictional because those subsections contain the statutory requirements that must be fulfilled before one may appeal an order of the Industrial Commission.  He maintains that while subsection (A) sets forth the act required to vest jurisdiction—the act of filing the appeal, the first sentence of subsection (B) relates to the matter being appealed, and paragraph two of subsection (B) relates to the naming and notice requirements of the notice of appeal. According to the administrator, a notice of appeal that omits any of the subsection (A) or (B) requirements is statutorily defective and thereby deprives the court of jurisdiction.”

“The amici’s position is more persuasive. ... The second paragraph of R.C. 4123.512(B) provides a variety of instructions that are directed at multiple parties: ‘The administrator of workers’ compensation, the claimant, and the employer shall be parties to the appeal and the court, upon the application of the commission, shall make the commission a party. The party filing the appeal shall serve a copy of the notice of appeal on the administrator at the central office of the bureau of workers’ compensation in Columbus. The administrator shall notify the employer that if the employer fails to become an active party to the appeal, then the administrator may act on behalf of the employer and the results of the appeal could have an adverse effect upon the employer’s premium rates.’”

“The second paragraph of subsection (B), when read in context, is not a continuation of the first paragraph, dictating additional items that must be included in a notice of appeal. Instead, the second paragraph lists a number of things that are required in addition to or subsequent to a notice of appeal.  Because the statute’s jurisdictional requirements are explicitly limited to filing a notice of appeal, the additional requirements in the second paragraph of subsection (B) are not jurisdictional.”

Justice Lanzinger concluded that, because Spencer’s notice of appeal contained all the information required by the first paragraph of R.C. 4123.512(B), it invoked the jurisdiction of the common pleas court.  Accordingly, Justice Lanzinger wrote, “(w)e therefore affirm the judgment of the court of appeals and remand the case to the Miami County Court of Common Pleas for further proceedings.”

In rendering today’s decision, Justice Lanzinger emphasized the ambiguity in the current statutory scheme that allowed Spencer’s appeal to invoke a court’s jurisdiction without immediate notice to the BWC. She urged the General Assembly “to clarify the jurisdictional requirements for initiating a workers’ compensation appeal.”

Justice Lanzinger’s opinion was joined by Chief Justice Maureen O’Connor and Justices Paul E. Pfeifer, Evelyn Lundberg Stratton, Robert R. Cupp and Yvette McGee Brown. Justice Terrence O’Donnell dissented without opinion.

Justice Cupp also entered a separate opinion, joined by Chief Justice O’Connor and Justice Stratton, in which he concurred with the majority’s legal analysis and urged the legislature to consider necessary changes to the current statutory scheme.  Justice Cupp cited multiple situations in which claimants, employers and the workers’ compensation system itself could suffer negative consequences through the adjudication or settlement of workers’ compensation appeals without the knowledge and active participation of the administrator. “In all these situations,” wrote Justice Cupp, “the Administrator, lacking notice, is unable to protect fully the resources that all parties want to access and that the Administrator is charged with protecting: the state fund and the surplus fund.”

Contacts
Alexandra T. Schimmer, 614.995.2273, for Stephen Buehrer, administrator, Ohio Bureau of Workers' Compensation.

John J. Scaccia, 937.223.7848, for James Spencer.