IN THE SUPREME COURT OF OHIO · 1 INTRODUCTION Memorandum in Support of Jurisdiction of Defendant anyone. program non PAUL W. FLOWERS CO. 50 Public Sq., Ste 1910 Cleveland, Ohio 44113

PAUL W. FLOWERS CO.

50 Public Sq., Ste 1910

Cleveland, Ohio 44113

(216) 344-9393

Fax: (216) 344-9395

IN THE SUPREME COURT OF OHIO _________________________________

CASE NO. 2017-0179

_________________________________

MICHAEL CIRINO, INDIVIDUALLY AND ON BEHALF OF THE CLASS HE REPRESENTS.

Plaintiff-Appellees,

-vs-

OHIO BUREAU OF WORKERS’ COMPENSATION, Defendant-Appellant.

ON APPEAL FROM THE EIGHTH APPELLATE DISTRICT

CUYAHOGA COUNTY, OHIO, CASE NO. 104102

MERIT BRIEF OF PLAINTIFF-APPELLEES,

MICHAEL CIRINO, INDIVIDUALLY AND ON BEHALF OF THE CLASS HE REPRESENTS

W. Craig Bashein, Esq. (#0034591) John P. Hurst, Esq. (#0010569) BASHEIN & BASHEIN CO., L.P.A. Terminal Tower, 35th Floor 50 Public Square Cleveland, Ohio 44113 (216) 771-3239 [email protected] [email protected] Charles J. Gallo, Esq. (#0043714) CHARLES J. GALLO CO., L.P.A. 55 Public Square, Suite 2222 Cleveland, Ohio 44113 (216) 771-5105 [email protected] Paul W. Flowers, Esq. (#0046625) [COUNSEL OF RECORD] PAUL W. FLOWERS CO., L.P.A. Terminal Tower, Suite 1910 50 Public Square Cleveland, Ohio 44113 (216) 344-9393 [email protected] Attorneys for Plaintiff-Appellees, Michael Cirino, et al.

Ronald D. Holman, II, Esq. (#0036776) Michael J. Zbiegien, Jr., Esq. (#0078352) Daniel H. Bryan, Esq. (#0095309) TAFT STETTINIUS & HOLLISTER LLP 200 Public Square, Suite 3500 Cleveland, Ohio 44114 [email protected] [email protected] [email protected] Eric E. Murphy, Esq. (#0083284) Michael J. Hendershot, Esq. (#0081842) Mark E. Mastrangelo, Esq. (#0023603) Jeffrey B. Duber, Esq. (#0018532) Assistant Attorneys General 30 East Broad Street, 17th Floor Columbus, Ohio 43215 [email protected] [email protected] [email protected] [email protected] Attorneys for Defendant-Appellant, Ohio Bureau of Workers’ Compensation

Supreme Court of Ohio Clerk of Court - Filed January 11, 2018 - Case No. 2017-0179

mailto:[email protected]











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TABLE OF CONTENTS

TABLE OF CONTENTS .................................................................................................... ii TABLE OF AUTHORITIES ............................................................................................. iii INTRODUCTION ............................................................................................................. 1 STATEMENT OF THE CASE ........................................................................................... 5 STATEMENT OF THE FACTS ......................................................................................... 7 ARGUMENT .................................................................................................................... 13

PROPOSITION OF LAW: A SUIT AGAINST THE STATE MAY BE FILED IN COMMON PLEAS COURT ONLY TO RECOVER SPECIFIC FUNDS HELD BY THE STATE, OR WHERE THE STATE HAD CONSENTED TO BE SUED BEFORE THE EFFECTIVE DATE OF THE COURT OF CLAIMS ACT. ALL OTHER SUITS AGAINST THE STATE MUST BE FILED IN THE COURT OF CLAIMS ..................................... 13 I. THE NATURE OF THE RELIEF SOUGHT ................................................ 13

II. THE APPROPRIATE TEST FOR JURISDICTION ..................................... 14

A. The Parties’ Narrow Dispute ............................................................... 14 B. The Bureau’s “Like This” Test ............................................................. 15 C. The Traditional Substitution Test ....................................................... 17 D. The Non-Existent and Implausible Contract Claim ........................... 19

III. THE MERITS OF THE CLAIMS FOR RELIEF .......................................... 23 A. The Bureau’s Remaining Arguments ................................................. 23 B. The Identification of Specific Funds .................................................. 23 C. The Agency Relationship .................................................................... 25 D. The Alternative Relief Available ......................................................... 26

CONCLUSION ................................................................................................................ 28 CERTIFICATE OF SERVICE ......................................................................................... 29

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TABLE OF AUTHORITIES

Federal Cases

Bowen v. Massachusetts, 487 U.S. 879, 108 S.Ct. 2722, 101 L.Ed.2d 749 (1988) ........................................... 20, 21

Cox v. Blue Cross Blue Shield of Michigan, 166 F.Supp.3d 891 (E.D.Mich.2015) ............................................................................. 27

Great-W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002) ................................................... 20

Littlefield v. Perry, 88 U.S. 205, 22 L.Ed. 577 (1874) .................................................................................. 27

Toledo, A. A. & N. M. Ry. Co. v. Pennsylvania Co., 54 F. 746 (C.C.N.D. Ohio 1893) ..................................................................................... 27

State Cases

Bank of Am. v. Kuchta, 141 Ohio St. 3d 75, 2014-Ohio-4275, 21 N.E. 3d 1040 .................................................. 24

Cirino v. Bur. of Worker’s Comp., 150 Ohio St. 3d 1442, 2017-Ohio-7843, 82 N.E. 3d 1175 ............................................ 4, 8

Cirino v. Ohio Bur. of Worker's Comp., 8th Dist. No. 104102, 2016-Ohio-8323, 75 N.E.3d 965 ......................................... passim

Cristino v. Ohio Bureau of Workers’ Comp., 118 Ohio St. 3d 151, 2008-Ohio-2013, 886 N.E. 2d 857 ............................................... 23

Dunlop v. Ohio Dept. of Job & Family Services, 10th Dist. Franklin No. 16AP-550, 2017-Ohio-5531 ..................................................... 19

Dunlop v. Ohio Dept. of Job & Family Servs., 10th Dist., Franklin No. 11AP-929, 2012-Ohio-1378 .................................................... 21

Fletcher v. Coney Island, 69 Ohio Law Abs. 264, 121 N.E.2d 574 (C.P.1954) ....................................................... 27

Fox & Assoc. Co., L.P.A. v. Purdon, 44 Ohio St.3d 69, 541 N.E.2d 448 (1989) ..................................................................... 25

Grundstein v. Suburban Motor Freight, 92 Ohio App. 181, 62 Ohio Law Abs. 251, 62 Ohio Law Abs. 252 (2nd Dist.1951) ....... 27

Heartland of Urbana OH, L.L.C. v. McHugh Fuller Law Group, P.L.L.C., 2016-Ohio-6959, 72 N.E. 3d 23 (2nd Dist. Champaign) .............................................. 27

Henley Health Care v. Ohio Bur. of Workers' Comp., 10th Dist. Franklin No. 94APE08-1216, 1995 WL 92101 (Feb. 23, 1995) ......... 18, 21, 27

Hoare v. City of Cleveland, 126 Ohio St. 625, 186 N.E. 710 (1933) ........................................................................... 24

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Hummel v. Hummel, 133 Ohio St. 520, 14 N.E.2d 923 (1938) ........................................................................ 25

Interim Healthcare of Columbus, Inc. v. Ohio Dept. of Admin. Servs., 10th Dist. Franklin No. 07AP-747, 2008-Ohio-2286 ................................................... 18

Keller v. Dailey, 124 Ohio App.3d 298, 706 N.E.2d 28 (10th Dist.1997) ........................................... 18, 21

LaBorde v. Gahanna, 10th Dist. No. 14AP-764, 2015-Ohio-2047, 35 N.E.3d 55 ............................................ 22

Lindley v. Ferguson, 52 Ohio St.2d 60, 369 N.E.2d 482 (1977) ..................................................................... 30

Measles v. Indus. Comm., 128 Ohio St. 3d 458, 2011-Ohio-1523, 946 N.E. 2d 204 ..................................... 4, 22, 23

Mortgage Net., Inc. v. Ameribanc Mtge. Lending, L.L.C., 177 Ohio App. 3d 733, 2008-Ohio-4112, 895 N.E. 2d 917 (10th Dist. Franklin) .......... 29

Oakar v. Ohio Dept. of Mental Retardation, 88 Ohio App.3d 332, 623 N.E.2d 1296 (8th Dist.1993) ......................................... 18, 22

Ohio Academy of Nursing Homes v. Ohio Dept. of Job & Family Servs., 114 Ohio St. 3d 14, 2007-Ohio-2620, 867 N.E. 2d 400 .................................... 21, 22, 24

Ohio Academy of Nursing Homes, Inc. v. Barry, 10th Dist. Franklin No. 92AP-1266, 1993 WL 186656 (May 25, 1993) ........................ 17

Ohio Edison Co. v. Ohio Dept. of Transp., 86 Ohio App.3d 189, 620 N.E.2d 217 (10th Dist.1993) ........................................... 17, 21

Ohio Hosp. Assn. v. Ohio Dept. of Human Services, 62 Ohio St.3d 97, 579 N.E.2d 695 (1991) ................................................................ 21, 22

Ohio Patrolmen’s Benevolent Assn. v. Findlay, 149 Ohio St. 3d 718, 2017-Ohio-2804, 77 N.E. 3d 969 ................................................... 4

Racing Guild of Ohio, Local 304 v. Ohio State Racing Com'n, 28 Ohio St.3d 317, 503 N.E.2d 1025 (1986) .................................................................. 29

Reid, Johnson, Downes, Andrachik & Webster v. Lansberry, 68 Ohio St.3d 570, 1994-Ohio-512, 629 N.E.2d 431 ..................................................... 25

San Allen, Inc. v. Buehrer, 8th Dist. No., 99786, 2014-Ohio-2071, 11 N.E.3d 739 ............................................18, 27

Santos v. Ohio Bur. of Workers’ Comp., 101 Ohio St. 3d 74, 2004-Ohio-28, 801 N.E. 2d 441 ........................................ 20, 22, 27

State ex rel. Cleveland Clinic Health Sys. v. Indus. Comm., 10th Dist. Franklin No. 11AP-695, 2013-Ohio-3826 (Mag. Op.) .................................. 16

State ex rel. Crabtree v. Ohio Bur. of Workers’ Comp., 71 Ohio St. 3d 504, 1994-Ohio-474, 644 N.E. 2d 361 ....................................... 17, 26, 28

State ex rel. Ferguson v. Shoemaker, 45 Ohio App.2d 83, 341 N.E.2d 311 (10th Dist.1975) ................................................... 30

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State ex rel. Honda of Am. Mfg., Inc. v. Indus. Comm., 10th Dist. Franklin No. 12AP-268, 2013-Ohio-286 ...................................................... 16

State ex rel. Midview Local School Dist. Bd. of Edn. v. Ohio School Facility Commn., 2015-Ohio-435, 28 N.E. 3d 633 (9th Dist. Lorain) ....................................................... 19

State ex rel. Timken Roller Bearing Co. v. Indus. Commission, 172 Ohio St. 187, 174 N.E.2d 249 (1961) ....................................................................... 30

State v. Noling, 136 Ohio St. 3d 163, 2013-Ohio-1764, 992 N.E. 2d 1095 ............................................... 4

State, ex rel. Marks v. Indus. Comm., 63 Ohio St.3d 184, 586 N.E.2d 109 (1992) ................................................................... 29

Ulhaq v. Trauma Serv. Group, P.C., 114 Ohio App.3d 113, 682 N.E.2d 1050 (1st Dist.1996) ................................................ 29

Zelenak v. Indus. Comm., 148 Ohio App.3d 589, 2002-Ohio-3887, 774 N.E.2d 769 (10th Dist. Franklin).... 21, 22

State Statutes

R.C. 2743.03(A)(2) ..................................................................................................... passim

R.C. 4121.39 ............................................................................................................ 15, 16, 26

R.C. 4121.39(B) & (C) ............................................................................................... 1, 25, 26

R.C. 4123.311 ..................................................................................................................... 26

R.C. 4123.311(A)(3) ........................................................................................................... 28

R.C. 4123.341 .............................................................................................................. passim

R.C. 4123.64(A) ................................................................................................................. 23

R.C. 4123.402 ..................................................................................................................... 15

R.C. 4123.511 ..................................................................................................................... 16

State Constitution

Section 35, Article II of the Ohio Constitution ......................................................... 2, 3, 25

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INTRODUCTION

Defendant-Appellant, Ohio Bureau of Workers’ Compensation (“Bureau”), is

correct that the agency is saving “millions of dollars” each year by issuing workers’

compensation benefits through electronic payments instead of paper checks.

Memorandum in Support of Jurisdiction of Defendant-Appellant Ohio Bureau of

Workers’ Compensation (Bureau’s Memo, p. 1). The arrangement is particularly lucrative

because the Bureau pays nothing to J. P. Morgan Chase (“Chase”) to administer the

Electronic Benefit Transfer (EBT) program. As was confirmed during depositions below,

Chase is compensated for its efforts solely through the fees that are withheld from the

injured workers’ benefits. What is especially disturbing is that none of the workers who

opted to receive their funds through debit cards ever knowingly agreed to pay anything to

anyone. Through the Bureau/Chase promotions they received, they had been misled

instead into believing that they would receive 100% of their benefits.

The fundamental issue that lies at the heart of these proceedings, which the Bureau

is carefully avoiding, is whether the Workers’ Compensation Act (“Act”) allows the EBT

program to be funded from banking fees collected from the injured workers’ benefits. The

highly profitable operation will continue without interruption regardless of how this

lawsuit is resolved. The narrow class that has been approved by the common pleas court

and upheld by a unanimous Eighth District is seeking to recover the remaining portion of

the benefits that the Bureau is legally obligated to remit under the Act.

Despite the insinuations throughout these proceedings that Chase is the real

culprit, the fact remains that the Bureau is charged by law with the non-discretionary,

non-delegable duty to pay the benefits that are due under the Act. R.C. 4121.39(B) & (C).

The Bureau’s sole justification for continuing to withhold the remaining portion of the

awards at issue in this case is that these funds correspond to the fees Chase was

purportedly entitled to collect. But this rationalization effectively shifts the cost of the

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EBT program to the successful claimants, which Ohio law does not permit.

A fundamental component of the historic bargain that produced the Ohio’s

workers’ compensation system has always been that the State and the participating

employers are solely responsible for financing the administrative operations. Section 35,

Article II of the Ohio Constitution specifically provides that:

For the purpose of providing compensation to workmen and their dependents, for death, injuries or occupational disease, occasioned in the course of such workmen’s employment, laws may be passed establishing a state fund to be created by compulsory contribution thereto by employers, and administered by the state, determining the terms and conditions upon which payment shall be made therefrom. [emphasis added]

In accordance with this constitutional authority, the General Assembly directed in R.C.

4123.341 that: “The administrative costs of the industrial commission, the bureau of

workers’ compensation board of directors, and the bureau of workers’ compensation ***

shall be borne by the state and by other employers amenable to this chapter *** [emphasis

added].” No exceptions have been adopted by the legislature that allows even part of

these administrative costs to be charged to the claimants. Id.

During discovery, the Bureau officials who were primarily in charge of formulating

the EBT program acknowledged that they had been unaware of the restrictions imposed

by R.C. 4123.341. T.d. 48, Deposition of Ralph S. Morgan filed August 20, 2012

(“Morgan Depo.”), pp. 160-161; T.d. 49, Deposition of Mary Manderson filed August 20,

2012 (“Manderson Depo.”), pp. 72-73. Soon after the instant class action class lawsuit

was commenced, the Bureau substantially revised the fee schedule in an effort to rectify

the inequities that had been created. T.d. 53, Plaintiff’s Memorandum in Opposition to

Motion for Summary Judgment, Exhibit A. But even though the fees that were unlawfully

collected constitute a small fraction of the Bureau’s annual savings, the state agency is

steadfastly refusing to furnish 100 % of the benefits as required by the Act.

The common pleas court correctly determined below that the EBT program was

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being financed entirely through banking fees that are being assessed to injured workers,

which violates both Section 35, Article II of the Ohio Constitution as well as R.C. 4123.341.

Merit Brief of Appellant, Ohio Bureau of Workers’ Compensation (“Bureau’s Brief”),

Exhibit 5. The state agency was paying nothing for the cost saving venture. Id., p. 2. A

class was certified for the sole purpose of collecting the remainder of the full benefits due

under the Act. Id., Exhibit 4. Common pleas courts have long been authorized by R.C.

2743.03(A)(2) to issue such equitable, declaratory, and injunctive relief against state

agencies.

The Eighth Judicial District issued a comprehensive decision affirming the trial

court’s ruling in all significant respects. Cirino v. Ohio Bur. of Worker's Comp., 8th Dist.

No. 104102, 2016-Ohio-8323, 75 N.E.3d 965. The unanimous opinion thoroughly

analyzes the controlling law in-depth, and confirms that all of the Bureau’s positions were

carefully evaluated. Notably, the panel recognized the agency’s concern with the

reference to “unreasonable” fees in the class definition and suggested that the trial court

“define the term in order to properly identify the members of the class moving forward.”

Id., ¶114, fn. 15. This directive will be easily satisfied, as any fee charged in violation of

R.C. 4123.341 is unquestionably “unreasonable.”

This Court has agreed to accept a single Proposition of Law, which offers nothing

new to Ohio jurisprudence. Cirino v. Bur. of Worker’s Comp., 150 Ohio St. 3d 1442, 2017-

Ohio-7843, 82 N.E. 3d 1175. No appellate decisions have been cited advocating a

conflicting or erroneous interpretation of the well-settled principles that have been

established through this Court’s earlier explorations of the straightforward issue of the

Court of Claims’ jurisdiction. The Bureau contends instead that in this particular case the

lower courts failed to comply with the uncomplicated standards recognized in Measles v.

Indus. Comm., 128 Ohio St. 3d 458, 2011-Ohio-1523, 946 N.E. 2d 204. In other words,

all four judges “got it wrong.” But as has long been recognized, this is not a court of error-

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correction. State v. Noling, 136 Ohio St. 3d 163, 180, 2013-Ohio-1764, 992 N.E. 2d 1095,

1110, ¶63 (O’Donnell, J., dissenting); Ohio Patrolmen’s Benevolent Assn. v. Findlay, 149

Ohio St. 3d 718, 727, 2017-Ohio-2804, 77 N.E. 3d 969, 976, ¶33 (O’Connor, C.J.,

dissenting). No issues of public or great general interest are thus threatened by the

unerring rulings that were rendered below.

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STATEMENT OF THE CASE Plaintiff, Michael Cirino, commenced this lawsuit almost eight years ago on May

21, 2010. T.d. 1. The Class Action Complaint challenged the validity of the EBT debit card

program and requested suitable equitable, declaratory, and injunctive relief against the

Bureau. No monetary damages were sought. Nor did Plaintiff allege that any sort of

contract existed between the parties that had been breached. An Answer was submitted

on August 5, 2010 denying Plaintiff’s allegations and interposing various affirmative

defenses. T.d. 6.

On December 23, 2010, Defendant Bureau submitted a Motion to Dismiss for Lack

of Subject Matter Jurisdiction. T.d. 12. The agency maintained that Plaintiff was really

seeking “damages” and thus the lawsuit belonged in the Court of Claims. After Plaintiff

opposed the Motion, the application was denied in an entry dated March 12, 2012. T.d.

33 & 34; Bureau’s Brief, Exhibit 3.

In accordance with Civ. R. 23(C)(1), Plaintiffs filed their Motion for Class

Certification on August 15, 2012. T.d. 43. Simultaneously, the Bureau submitted a

Motion for Summary Judgment. T.d. 42. The agency’s Opposition to Motion for Class

Certification then followed on September 14, 2012. T.d. 52. Three days later, Plaintiff

submitted his Memorandum in Opposition to the Motion for Summary Judgment

(“Plaintiff’s S.J. Memo”). T.d. 53. Included in this submission was his own cross-motion

arguing that he and the similarly situated class members are entitled to relief as a matter

of law. Reply briefs then followed. T.d. 54 & 59. The summary judgment briefing

concluded after the Bureau was permitted to submit a Surreply on November 28, 2012.

T.d. 61.

Judge Janet Burnside conducted a hearing upon the Motion for Class Certification

on October 21, 2014. In an entry that was issued that same afternoon, the parties were

directed to provide further evidentiary submissions. T.d. 76. They did so on October 28,

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2014. T.d. 77 & 78. In a follow-up entry dated January 27, 2015, Judge Burnside

confirmed that the parties had been afforded an opportunity to identify all of the relevant

evidence supporting their positions. T.d. 81.

In a Journal Entry dated January 13, 2016, Judge Burnside granted Plaintiff’s

Motion for Class Certification. T.d. 82; Bureau’s Brief, Exhibit 4. Detailed analysis was

furnished explaining how the court had considered all of the requirements of Civ.R. 23

and rejected each of the Bureau’s positions. Id. A separate Judgment Entry was released

on the same date denying the Bureau’s Motion for Summary Judgment but granting

Plaintiff’s Cross-Motion. T.d. 83; Bureau’s Brief, Exhibit 5. The court directed that a

hearing would be held on March 28, 2016 to determine the amount of the unpaid benefits

that needed to be restored under principles of equity. Id.

Before the hearing could be held, however, the Defendant Bureau commenced the

instant appeal on February 11, 2016. T.d. 84. Following briefing and oral argument, a

decision was released on December 22, 2016 unanimously affirming the common pleas

court. Cirino, 2016-Ohio-8323. The panel judiciously examined and overruled the

Bureau’s challenges to both subject matter jurisdiction and the appropriateness of class

certification. Id., ¶1-118. The court further concluded that appellate jurisdiction was

lacking over the Assignment of Error addressing the summary judgment ruling. Id., ¶119-

126.

The Bureau sought further review in this Court upon three Propositions of Law.

An Order was issued on September 27, 2017 accepting only the question of whether the

common pleas court possessed valid subject matter jurisdiction over the lawsuit. Cirino,

150 Ohio St.3d 1442.

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STATEMENT OF FACTS

The following facts were established during discovery and are not in dispute.

Ralph S. Morgan (“Morgan”) has been the Bureau’s Manager of Benefits Payable for over

26 years. T.d. 48, Morgan Depo., p. 9. Sometime in 1995 or 1996, he began to develop a

new cost-saving project. Id., p. 21. The Bureau had been issuing benefit payments

through electronic fund transfers (EFT) to injured workers who had checking or savings

accounts. Id., pp. 13-14. It occurred to Morgan that debit cards could be used to pay funds

electronically to those workers who did not have bank accounts. Id., pp. 21-22. The

electronic transfers cost only a small fraction of the expense involved in printing and

mailing paper checks, which could be as high as $3.00. Id., pp. 22-23.

A pilot program was conducted with Bank One, which allowed the injured workers

to receive one hundred percent of their benefits through the EBT cards. T.d. 48, Morgan

Depo., pp. 24-27. All costs of the administration were paid by the Bureau. Id., pp. 25-26.

According to Morgan, the pilot program was a success. Id., p. 27.

When the decision was made to implement the electronic payment system on a

permanent basis, negotiations were held with Chase. T.d. 48, Morgan Depo., pp. 38-42.

According to Morgan, the financial conglomerate insisted upon a fee schedule to be

approved by the Bureau. Id., p. 42. During an initial meeting, Morgan had expressed

misgivings with the fees. Id., p. 46. In particular, he was concerned that the workers

could only make one free withdraw from a participating bank each month, and then were

charged $5.00 for each subsequent transaction. Id., pp. 66-67 & 123. Since benefits were

being issued bi-monthly, he felt that a second withdraw should be allowed without charge.

Id., pp. 43-44. Chase was willing to do so only if the requirement of monthly bank

statements was eliminated, which the Bureau was unwilling to concede. Id., p. 45.

An “Agency Service Agreement” was nevertheless entered with the financial

institution. T.d. 48, Morgan Depo., pp. 45-47 & 155. Chase was afforded broad authority

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to assess fees to the injured workers, none of whom were parties to the arrangement:

12. Fees. Chase will charge the Cardholders for its services rendered in accordance with the Fee Schedule in Attachment A, which Chase may change with reasonable notice to the Cardholder.

Supplement to Merit Brief of Defendant-Appellant Ohio Bureau of Workers’

Compensation (“Defendant’s Supp.”), S-62.

According to the fee schedule that the Bureau approved, the injured workers could

withdraw their funds at “participating Visa member bank branches” free of charge just

once each month. Defendant’s Supp., S-65. After that, $5.00 was deducted from the

account for each such transaction. Id. There was no charge for using the Chase ATMs,

but a fee of $1.50 was assessed for all others. Id. Limits were imposed upon the amounts

that could be withdrawn from the machines at one time, thereby guaranteeing that

multiple fee-generating transactions would be required. T.d. 48, Morgan Depo., pp. 17-

18, & 162-163.

Morgan acknowledged that the Bureau was obligated to furnish the injured

workers with all the benefits that had been awarded to them. T.d. 48, Morgan Depo., pp.

24-25, 124-125, & 155. The Manager had nevertheless approved Chase’s plan to assess

the fees, which was later endorsed by the Bureau’s Administrator. Id., pp. 37-39. Morgan

later claimed during his deposition that he had been unaware of the requirement set forth

in R.C. 4123.341 for all administrative costs to be borne by the state government and

participating employers. Id., pp. 160-161.

The Bureau’s EBT Coordinator, Mary Manderson (“Manderson”), also maintained

that she had been unaware that the Revised Code required the Bureau and participating

employers to fund the cost of administering the workers’ compensation system. T.d. 49,

Manderson Depo., pp. 72-73. She acknowledged that the Bureau paid nothing for the

EBT program. Id., p. 55. The only money that Chase collected was from the fees that were

withdrawn from the workers’ accounts. Id., p. 56. Before the Agency Service Agreement

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was entered, Chase had actually been promoting the arrangement with the promise that

the Bureau would not be charged anything. Id., p. 70.

Manderson confirmed that Morgan had previously expressed that the Chase fee

schedule was unfair. T.d. 49, Manderson Depo., pp. 24-25. She shared this sentiment,

since the workers were being paid benefits twice a month. Id., p. 25. They should have

been allowed to access their funds at least two times a month without being charged a fee.

Id., p. 33. The fees also had to be paid when additional withdrawals had to be made

because the maximum limits had been exceeded. Id., pp. 38-39. Consequently, the

charges could be avoided only if the injured worker was able to withdraw all of the

electronic deposits just one time a month from a Chase bank or ATM, provided that the

maximum limit was not reached.

The EBT program was aggressively promoted as a superior alternative for workers’

compensation benefit payments. The widely disseminated “Electronic Benefit Card”

agreement extolled the many advantages of the program and included assurances such

as:

Why you should receive the Electronic Benefit Card? Why shouldn’t you? 1. Pay no more check-cashing fees! Receive 100 percent of

your benefit. 2. Receive around-the-clock access to your money. You can

use the Electronic Benefit Card at any bank machine, anywhere (with no ATM fees if used at Chase machines).

3. Make bill payments by phone. 4. Use it like a credit card for making purchases (only without

the costly finance charges). [italic original, underlining added]

Defendant’s Supp., S-14. Not even the fine-print warned that Chase would be collecting

fees for a variety of transactions. Id. No one thus could have appreciated when they

signed and returned the Electronic Benefit Card agreement that these charges would be

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deducted from their accounts, let alone how to avoid them. Id. EBT Coordinator Morgan

conceded that the documentation that was furnished to the newly enrolled workers did

not disclose the fees that would be assessed after the first withdrawal each month. T.d.

48, Morgan Depo., p. 90.

By January 10, 2008, the electronic funding program was mandatory for all injured

workers receiving benefits from the Bureau. T.d. 48, Morgan Depo., pp. 146-147. Many

of them were not even asked to sign an enrollment agreement. Id., pp. 83, 91, & 108.

Unless certain “hardship” criteria could be satisfied, they were forced to accept the EBT

cards (and the fees) even if they still wanted regular checks. Id., pp. 16-19 & 108-109.

Plaintiff, Michael Cirino, was one of the injured workers who was forced into the

EBT program. On August 20, 2009, he received a notice from the Bureau that for his

“security and convenience,” the debit card account had been established for him with

Chase. Defendant’s Supp., S-13. Once again, the fees were never mentioned. Id. Like

every other class member, Plaintiff learned of them only after the deductions had been

assessed from his account. T.d. 46, Deposition of Michael Cirino filed August 15, 2012

(“Cirino Depo.”), pp. 70-75, 82 & 86. He certainly had no idea that the fees could have

been avoided if he could manage to make just one withdraw a month. Id., p. 88. Plaintiff

proceeded to complain to his workers’ compensation attorney that he was no longer

receiving all of the benefits that had been awarded to him. Id., pp. 75-76.

The Bureau has taken great liberties with the evidentiary record in an attempt to

create the illusion that all of the injured workers willingly accepted Chase’s fees. For

instance, this Court has been assured that:

*** Each Claimant received a card-holder agreement, which contained a fee schedule for various card transactions. Cirino Dep., R. 46, Ex. 8 (cardholder agreement) at 5; id., Ex. 9 (cardholder mailer) at 1 (Supp. S-309; S-310).

Defendant’s Brief, p. 4. Only Plaintiff’s deposition has been cited in support of this

representation, but he never testified that anyone “received a card-holder agreement[.]”

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Id. To the contrary, he specifically denied that he had ever “seen a fee schedule from

Chase Bank.” Cirino Depo., p. 114. And while this Court’s attention has also been directed

to Exhibits 8 and 9 from the same deposition, Plaintiff denied that he had ever received

these materials and they were never otherwise authenticated during the questioning. Id.,

pp. 113-114 & 128-129.

Plaintiff’s testimony in this regard was undisputed. An affidavit from Manager

Morgan was submitted by the Bureau in support of the Motion to Dismiss, which did not

claim that the fee schedules were ever provided to the debit card recipients or they had

entered any agreements with Chase. Defendant’s Supp., S-57-59. The only exhibit the

defense witness authenticated was the Agency Service Agreement that that had been

entered strictly between the Bureau and the financial conglomerate. Id., S-60-67. Later

in the proceedings a second affidavit was prepared for and executed by Morgan, which

offered a passing reference to the “agreements” that supposedly existed between each of

the debit card recipients and Chase. Id., S-153, paragraph 7. But no explanation was

offered for how any such contracts had been entered and no new exhibits were

authenticated. Id., S-152-154. Morgan did not even claim that the fee schedules had been

disseminated to anyone. Id. As far as his latest sworn statement revealed, the charges

were disclosed only in the “Chase Agreement” that had been entered with the Bureau. Id.,

S-153, paragraph 7.

Because paper checks no longer had to be issued to the injured workers, substantial

administrative expenses were saved by the EBT program. T.d. 48, Morgan Depo., p. 23.

During a conference, the audience had been advised that the Bureau was saving over 4.6

million dollars annually. Id., pp. 109-110.

Meanwhile, Chase was financing the program by collecting fees from the injured

workers’ benefit accounts that were a small portion of the savings realized by the Bureau.

Plaintiff’s Exhibit 3, attached to T.d. 43, Plaintiff’s Motion Class Cert. Vice President and

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Senior Project Manager Tracy Dangott (“Dangott”) has confirmed that the Bureau has

never been charged anything for the EBT debit card program. T.d. 41, Deposition of Tracy

Dangott filed August 15, 2012 (“Dangott Depo.”), p. 25. Furthermore, the state agency

had approved all of the mandatory fees that were assessed against the workers’ accounts.

Id., pp. 54 & 81. Over a dozen different charges were thus imposed. Id., p. 47. The injured

workers were even assessed an “inactivity fee” when the debit cards were not used with

sufficient frequency. Id., pp. 100-101.

After his lawsuit was underway, Plaintiff received an “Important Fee Change

Notice” from Chase. T.d. 53, Plaintiff’s S.J. Memo., Exhibit A. He was advised that

effective September 1, 2012, the “Ohio BWC Prepaid Card Fee Schedule” was being

modified to substantially reduce the amounts that were being withdrawn. Id. Instead of

just one free teller-assisted withdraw each month, the participants were going to be

allowed to access their funds following each deposit. Id. The charges were also eliminated

for the transfer of funds to a bank account through the Chase website. Id. At least to this

limited extent, the Bureau and Chase appear to be recognizing - as Morgan and

Manderson had six years earlier - that permitting just one free withdrawal a month

guaranteed that substantial fees would be generated for Chase as the disabled workers

accessed benefits that were being issued bi-weekly.

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ARGUMENT

This Court has agreed to accept jurisdiction only over the Proposition of Law

addressing the common pleas court’s jurisdictional authority. As will be developed in the

remainder of this Brief, both the trial judge and unanimous appellate court properly

concluded that Plaintiffs are seeking only equitable, declaratory, and injunctive relief

within the plain and ordinary meaning of R.C. 2743.03(A)(2), and thus Defendants’

Motion to Dismiss was properly denied.

PROPOSITION OF LAW: A SUIT AGAINST THE STATE MAY BE FILED IN COMMON PLEAS COURT ONLY TO RECOVER SPECIFIC FUNDS HELD BY THE STATE, OR WHERE THE STATE HAD CONSENTED TO BE SUED BEFORE THE EFFECTIVE DATE OF THE COURT OF CLAIMS ACT. ALL OTHER SUITS AGAINST THE STATE MUST BE FILED IN THE COURT OF CLAIMS

I. THE NATURE OF THE RELIEF SOUGHT

Plaintiff’s narrowly tailored theory of recovery is far simpler than Defendant

Bureau is attempting to portray. The sole object of this proceeding is to require the agency

to comply with the Workers’ Compensation Act by paying the remaining portion of the

benefits that have been approved. Each of the class members has received only part of

their benefits because Chase was allowed to deduct fees from the amounts that were

deposited in the EBT accounts. Because it is the Bureau’s legal responsibility under the

Act to ensure that successful claimants receive all of the benefits due to them from the

workers’ compensation fund, declaratory, equitable, and injunctive remedies are

appropriate. It is that simple.

The Bureau’s responsibilities are set forth in R.C. 4121.39, which states with

regards to benefit payments that:

(A) Except as provided in section 4123.402 of the Revised Code, review and process all applications for claims;

(B) Award compensation and make payment on all

noncontested claims;

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(C) Make payment on orders of the industrial commission and district and staff hearing officers as provided in section 4123.511 of the Revised Code; ***

This Court has observed that:

The limited power R.C. 4121.39 accords the bureau is consistently reflected in the remainder of the statutory framework of Ohio's workers' compensation system. The bureau's role is ministerial, not deliberative. The bureau gives way to the commission when a party contests an award, necessitating a weighing of evidence and a judgment. The bureau then makes the payments based upon the commission's judgments. [emphasis added]

State ex rel. Crabtree v. Ohio Bur. of Workers’ Comp., 71 Ohio St. 3d 504, 507, 1994-

Ohio-474, 644 N.E. 2d 361, 365; see also State ex rel. Honda of Am. Mfg., Inc. v. Indus.

Comm., 10th Dist. Franklin No. 12AP-268, 2013-Ohio-286, ¶ 7; State ex rel. Cleveland

Clinic Health Sys. v. Indus. Comm., 10th Dist. Franklin No. 11AP-695, 2013-Ohio-3826,

¶ 42 (Mag. Op.) Although authority was granted in R.C. 4123.311(A)(3) to retain Chase

as an “agent” for purposes of administering the debit card program, this legislation

stopped well short of reliving the Bureau of the ultimate responsibility for ensuring that

100 percent of the awards are issued to the successful claimants. Plaintiff is now seeking

to enforce the “clear legal duty” that has been imposed upon the Bureau to pay the full

benefits that are lawfully due. State ex rel. Crabtree, 71 Ohio St.3d at 510.

II. THE APPROPRIATE TEST FOR JURISDICTION

A. The Parties’ Narrow Dispute

The Bureau’s Proposition of Law is legally correct, and thus would not alter Ohio

jurisprudence if endorsed by this Court. The parties’ dispute revolves instead around

whether the lower courts properly applied the familiar jurisdictional standards that have

been developed through numerous precedents to this particular case.

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B. The Bureau’s “Like This” Test

The Bureau has fashioned a new test for determining the scope of Court of Claims

jurisdiction, which asks only whether the State “consented to a suit like this before 1975.”

Bureau’s Brief, p. 28 (emphasis added). According to this logic, common pleas courts

have no authority to adjudicate any action unless it “resembles a suit that would have been

litigated in an equity court and that sought equitable remedies.” Id., p. 18.

While the Bureau’s dissertation on pre-1975 case law is somewhat interesting from

an academic standpoint, the present reality is that equitable principles have been

repeatedly recognized as the appropriate mechanism for forcing recalcitrant state officials

to pay funds that are legally due. Ohio Edison Co. v. Ohio Dept. of Transp., 86 Ohio

App.3d 189, 193–194, 620 N.E.2d 217, 220–221 (10th Dist.1993) (action against the

Department of Transportation for payment of relocation costs required by statute); Ohio

Academy of Nursing Homes, Inc. v. Barry, 10th Dist. Franklin No. 92AP-1266, 1993 WL

186656, *5–6 (May 25, 1993), aff’d 71 Ohio St. 3d 5, 640 N.E. 2d 1139 (1994) (recognizing

that lawsuit against the Ohio Department of Human Services to require the payment of

sums withheld from Medicaid reimbursement qualified as equitable relief); Henley

Health Care v. Ohio Bur. of Workers' Comp., 10th Dist. Franklin No. 94APE08-1216,

1995 WL 92101, *2–4 (Feb. 23, 1995) (finding claim was equitable, not contractual, which

sought payment of the cost for supplies owed by the Ohio Bureau of Workers’

Compensation); Keller v. Dailey, 124 Ohio App.3d 298, 303–306, 706 N.E.2d 28, 31–33

(10th Dist.1997) (holding that employee of the Ohio Department of Agriculture could

pursue equitable claim for unpaid overtime compensation in the common pleas court,

although any request for damages could be heard only in the court of claims); Oakar v.

Ohio Dept. of Mental Retardation, 88 Ohio App.3d 332, 336–338, 623 N.E.2d 1296,

1298–1299 (8th Dist.1993) (recognizing that common pleas court possessed jurisdiction

over action to require the Ohio Department of Mental Retardation and Developmental

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Disabilities to refund an estate’s erroneous claim payment); San Allen, Inc. v. Buehrer,

8th Dist. No. 99786, 2014-Ohio-2071, 11 N.E.3d 739, ¶58-59 (action to recover premium

overcharges from the Ohio Bureau of Workers’ Compensation); State ex rel. Midview

Local School Dist. Bd. of Edn. v. Ohio School Facility Commn., 2015-Ohio-435, 28 N.E.

3d 633, ¶14-16 (9th Dist. Lorain) (school district permitted to proceed with a claim against

the School Facilities and Construction Commissions in the common pleas court to recover

funding required by statute); Dunlop v. Ohio Dept. of Job & Family Services, 10th Dist.

Franklin No. 16AP-550, 2017-Ohio-5531, ¶ 14 (“It is well-established that a plaintiff may

assert a claim for equitable restitution arising out of a state agency’s wrongful collection

or retention of the plaintiff’s money.”) Each of these authorities recognizes tacitly, if not

openly, that an action to recover specific funds that a state agency is wrongfully

withholding is based upon equitable remedies that were available prior to 1975 and thus

falls within the state’s waiver of immunity.

None of these courts have held that special tracing rules or some other arcane

requirements must be satisfied before a common pleas court can order the funds to be

released to the rightful owners. Nor has there ever been any suggestion that granting such

relief somehow violates the doctrine of separation-of-powers, which the Bureau is now

asserting for the first time in these protracted proceedings. Bureau’s Brief, pp. 26-28. It

is inconceivable that these constitutional principles could be violated by a judicial order

requiring a state agency to comply with the legislature’s directives.

In its zeal to “protect the fund” at all costs, the Bureau is not only urging this Court

to overturn decades of established precedent but also the decision that was rendered in

Santos v. Ohio Bur. of Workers’ Comp., 101 Ohio St. 3d 74, 2004-Ohio-28, 801 N.E. 2d

441. A class of injured workers was seeking in that instance to force the Bureau to refund

subrogation payments that had been collected under authority of a statute that was later

determined to be unconstitutional. Id., 101 Ohio St. 3d at 75, ¶2-4. The Eighth District

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had reversed the common pleas court on the grounds that only the Court of Claims

possessed jurisdiction over the action to secure monetary relief. Id., ¶6. This Court

disagreed following a careful review of the authorities addressing the proper scope of

equitable relief, including Great-W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204,

122 S.Ct. 708, 151 L.Ed.2d 635 (2002), and Bowen v. Massachusetts, 487 U.S. 879, 108

S.Ct. 2722, 101 L.Ed.2d 749 (1988). Id., 101 Ohio St. 3d at 76-77, ¶10-16. Justice (later

Chief Justice) O’Connor explained for the unanimous Court that:

This court held *** that the workers' compensation subrogation statute was unconstitutional. Accordingly, any collection or retention of moneys collected under the statute by the BWC was wrongful. The action seeking restitution by Santos and his fellow class members is not a civil suit for money damages but rather an action to correct the unjust enrichment of the BWC. A suit that seeks the return of specific funds wrongfully collected or held by the state is brought in equity. Thus, a court of common pleas may properly exercise jurisdiction over the matter as provided in R.C. 2743.03(A)(2). [emphasis added]

Id., 101 Ohio St. 3d at 78, ¶17. Accordingly, there is no need to engage in any inquiry over

whether an action seeking to recover wrongfully collected or withheld funds from a state

agency “resembles” a pre-1975 proceeding, because that question has been answered in

the affirmative over-and-over-again. No one, including a governmental official, is legally

entitled to keep that which does not belong to them.

C. The Traditional Substitution Test

This Court should continue to adhere to the established standard for determining

if an action against the state belongs in the Court of Claims, which asks whether the relief

sought is really a substitution for a loss. This fundamental principle was applied in Ohio

Hosp. Assn. v. Ohio Dept. of Human Services, 62 Ohio St.3d 97, 98, 579 N.E.2d 695

(1991), which involved an indistinguishable claim that a state agency was refusing to pay

the full Medicaid funds due to a hospital under federal and state law. The state argued

that notwithstanding the violations, the hospital was seeking damages and sovereign

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immunity barred the claim. Id., at 103-104. This Court observed in response that:

Damages are given to the plaintiff to substitute for a suffered loss, whereas specific remedies “are not substitute remedies at all, but attempt to give the plaintiff the very thing to which he was entitled.” D. Dobbs, HANDBOOK ON THE LAW OF

REMEDIES 135 (1973). Thus, while in many instances an award of money is an award of damages, “[o]ccasionally a money award is also a specie remedy.” [italics original, emphasis added]

Id., 62 Ohio St.3d at 105, quoting Bowen, 487 U.S. 879. Following the release of Ohio

Hosp. Assn., 62 Ohio St.3d 97, numerous courts have considered whether the recovery

sought is really a “substitute for a suffered loss” in distinguishing damages from equitable

relief. Ohio Academy of Nursing Homes v. Ohio Dept. of Job & Family Servs., 114 Ohio

St. 3d 14, 18, 2007-Ohio-2620, 867 N.E. 2d 400, 404, ¶15-19; Ohio Edison Co., 86 Ohio

App.3d at 194; Zelenak v. Indus. Comm., 148 Ohio App.3d 589, 2002-Ohio-3887, 774

N.E.2d 769, ¶18 (10th Dist. Franklin); Henley Health Care, 1995 WL 92101, at *3; Keller,

124 Ohio App.3d at 303; Dunlop v. Ohio Dept. of Job & Family Servs., 10th Dist. Franklin

No. 11AP-929, 2012-Ohio-1378, ¶ 16. The instant action falls squarely in line with this

unbroken chain of authorities, which seeks to require the Bureau to release the benefits

remaining due to Plaintiff and that are being unjustly held in the workers’ compensation

fund.

As the Eighth District properly recognized below, Plaintiffs have never sought

money damages as a substitute for a loss. Cirino, 2016-Ohio-8323, ¶50-51. They are

seeking the benefits that remain due to them under the Act, which is “the very thing” to

which they are entitled. Id., ¶50, citing Interim Healthcare of Columbus, Inc. v. Ohio

Dept. of Admin. Servs., 10th Dist. Franklin No. 07AP-747, 2008-Ohio-2286, ¶ 15. The

Tenth District has thus recognized that an order requiring the payment of workers

compensation benefits “presents a form of relief that merely requires a state agency to pay

amounts it should have paid all along, clearly constituting equitable relief and not money

damages.” Zelenak, 148 Ohio App.3d at 594, ¶19. Likewise in an action to recover funds

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from the state that had been brought in the probate division of the court of common pleas,

the Eighth District held that:

Remedy for loss suffered is the kind of damages action the Court of Claims Act prohibits filing against the state in any court except in the Court of Claims. An attempt to give plaintiff in equity that which he is entitled and deny the state that to which it is not entitled is “other equitable relief” contemplated by the General Assembly in R.C. 2743.03(A)(2) and can be granted by the probate court when properly before it. [emphasis added]

Oakar, 88 Ohio App. 3d at 337-338.

Plaintiff is seeking his own money, which never rightfully belonged to the Bureau,

Chase, or anyone else once his claim was approved under the Act. See LaBorde v.

Gahanna, 10th Dist. No. 14AP-764, 2015-Ohio-2047, 35 N.E.3d 55, ¶19. No allegations

have been raised in the Complaint that a defendant has committed a “tort,” violated a

“contract,” or otherwise inflicted some sort of “damage” for which compensation would

be recoverable at law. Ordering the payment of benefits that are being unjustifiably

withheld is the antithesis of “substitute compensation” that would belong in the Court of

Claims. Ohio Hosp. Assn., 62 Ohio St.3d at 104–105; Santos, 101 Ohio St.3d at 78; Ohio

Academy of Nursing Homes, 114 Ohio St.3d at 18.

D. The Non-Existent and Implausible Contract Claim

As previously observed, the Bureau’s position ultimately is that the lower courts

failed to properly apply the holding of Measles, 128 Ohio St.3d 458, to the particular facts

of this case. In that lawsuit, the workers’ compensation claimants had all been entitled to

permanent total disability benefits paid in weekly installments. Id., ¶3. They elected to

receive lump-sum advancements instead through R.C. 4123.64(A), which required a

written agreement to be submitted to and approved by the Industrial Commission. Id.,

¶3-4. Each of the standardized forms warned that the weekly benefits that remained due

would be permanently reduced for the life of the claim. Id., ¶4. In the complaint they

filed in a common pleas court, the plaintiffs maintained that this reduction should have

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ended at an earlier point in time. Id., ¶4-5.

In upholding the trial court’s dismissal of the lawsuit for lack of subject matter

jurisdiction, this Court observed that: “[I]t is impossible to judge whether BWC

unlawfully deprived [plaintiffs] of statutorily guaranteed benefits without evaluating the

contract they executed that defines those benefits.” Measles, 128 Ohio St.3d at 462, ¶12.

Consequently, the “heart of this matter is a contract dispute,” that could only be heard in

the Court of Claims. Id., ¶12.

The unsurprising Measles decision relied in large part upon Cristino v. Ohio

Bureau of Workers’ Comp., 118 Ohio St. 3d 151, 2008-Ohio-2013, 886 N.E. 2d 857. The

injured worker in that case had settled his permanent total disability benefits claim with

the Bureau for a lump-sum payment, but challenged the calculations employed to reduce

the future payments to present value. Id., ¶2-3. The plaintiff acknowledged that the

intent of the lawsuit was to require the state agency to comply with the agreement, the

exact terms of which were disputed by the parties. Id., ¶12. Chief Justice Moyer took care

to observe for the majority that no claims had been raised founded upon a statutory right

to benefits. Id., ¶13-14. Since the complaint sought to enforce a contract that had been

entered with an instrumentality of the state (i.e., the lump-sum settlement agreements),

common pleas court jurisdiction was lacking. Id., ¶15-16.

In an effort to squeeze into Measles, the Bureau has insisted that Plaintiff’s claims

also sound in contract. Bureau’s Brief, p. 15. But in 35 pages of analysis, the only

“contract” that has been identified is the one that supposedly existed between the debit

card holders and Chase. Id., pp. 15-16. And the only record evidence that purportedly

establishes this agreement has been cryptically cited as follows:

*** Cirino bound himself to the terms of the Chase debit-card program when he declined direct deposit and activated a Visa debit card. App. Op. ¶ 13 (recounting testimony that by activating debit card claimants agreed to the “‘terms and conditions’” of the card) (citation omitted)). The Chase contract is integral to Cirino’s claims.

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Id., p. 15. In the paragraph of the appellate opinion that the Bureau is touting as

established fact, the Eighth District was simply recounting – without endorsing – Chase

Vice President Dangott’s far-fetched opinion that once anyone activated a debit card they

were bound to all the terms and conditions of the fee schedule that had been negotiated

and solely approved by the Bureau. Cirino, 2016-Ohio-8323, ¶13. Notwithstanding

nearly eight years of litigation and appeals, that implausible and patently inadmissible

testimony is the best the State of Ohio has been able to muster in support of the existence

of a contract with the debit card recipients that can only be enforced in the Court of

Claims.1

Even if the lower courts were somehow bound to follow the Chase Vice President’s

theory on when a binding contract exists, this case is still easily distinguished from both

Measles and Cristino. In those two decisions, the contracts that were identified were

between the plaintiffs and the state agency, and thus they could only be enforced in the

Court of Claims. Here, the only agreement that Plaintiff supposedly entered is with Chase.

Bureau’s Brief, pp. 15-16. If Plaintiff had wanted to sue the financial institution for

somehow violating that alleged contract, he absolutely could have done so in the common

pleas court. See generally, Bank of Am. v. Kuchta, 141 Ohio St. 3d 75, 80, 2014-Ohio-

4275, 21 N.E. 3d 1040, 1046, ¶20.

Nor is there any conceivable reason for Plaintiff to pursue a breach of contract

claim against Chase. The financial institution has provided a valuable service to the

workers’ compensation system by furnishing the debit cards and maintaining the injured

workers’ accounts, and is thus entitled to reasonable compensation under principles of

quantum meruit. Reid, Johnson, Downes, Andrachik & Webster v. Lansberry, 68 Ohio

1 It should go without saying that the Chase Vice President’s ludicrous views on how contracts are formed in Ohio could be properly rejected by the lower courts as an inadmissible legal opinion for which the witness was far from qualified to render. Hoare v. City of Cleveland, 126 Ohio St. 625, 627, 186 N.E. 710, 711 (1933).

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St.3d 570, 1994-Ohio-512, 629 N.E.2d 431; Fox & Assoc. Co., L.P.A. v. Purdon, 44 Ohio

St.3d 69, 541 N.E.2d 448, 48 (1989). The fact that the debit card agreements did not

require the workers to pay the fees thus would not necessarily preclude Chase from

prevailing. Hummel v. Hummel, 133 Ohio St. 520, 528, 14 N.E.2d 923, 927 (1938).

The unrealistic “go sue Chase” retort is thoroughly undermined by the inescapable

reality that the Bureau is solely responsible for paying benefits under the Act. R.C.

4121.39(B) & (C). While the financial institution is entitled to collect reasonable

compensation for the services provided, the state agency was prohibited by law from

foisting these expenses onto the successful claimants. Section 35, Article II, Ohio

Constitution; R.C. 4123.341. Because the Bureau is ultimately responsible under the Act

for ensuring that all the benefits that have been awarded are fully paid to the rightful

recipients, the state agency is the only proper defendant in this action to enforce the law.

R.C. 4121.39(B) & (C).

There is thus no merit to the fear that “if the Bureau were to claw back the fees that

Chase earned by serving Ohio’s workers’ compensation claimants, the Bureau would

breach its agreement with Chase and torpedo a program that benefits thousands of

workers’ compensation claimants.” Bureau’s Brief, p. 35. No one is asking for Chase to

disgorge anything in this lawsuit, which seeks instead for these administrative costs to be

borne solely by the state and the participating employers as mandated by R.C. 4123.341.

The Bureau alone negotiated and accepted Chase’s fees, and has no right to expect anyone

else to foot the bill for a highly successful program that is saving millions of dollars in

administrative expenses each year.

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III. THE MERITS OF THE CLAIMS FOR RELIEF

A. The Bureau’s Remaining Arguments

The remainder of the Bureau’s arguments do not concern subject matter

jurisdiction (i.e., whether the Complaint really seeks an award of damages at law), but

challenge instead whether equitable relief is available at all under the facts that have been

established in the record. These contentions thus exceed the scope of the Proposition of

Law that this Court agreed to accept. Nevertheless, it is worth noting that all of these

defenses on the merits are unfounded.

B. The Identification of Specific Funds

The Bureau maintains that any claim for equitable restitution must fail because

Plaintiff “does not seek ‘specific funds’ in the hands of the Bureau.” Bureau’s Brief, p. 21.

The notion that Plaintiff’s remaining benefits are actually being withheld by Chase is

simply a game of hide-the-ball. As set forth in R.C. 4121.39(B) & (C) and State ex rel.

Crabtree, 71 Ohio St. 3d at 507, the Bureau has been assigned the non-discretionary

responsibility of paying all the benefits that are lawfully due to the award recipients.

There is nothing in the text of R.C. 4123.311 or any other statute that has been cited even

remotely insinuating that this duty is conclusively satisfied once the benefits are issued to

a third-party, particularly one that has no intention of remitting the entire amount to the

injured workers. The remainder that is due to Plaintiff can indeed be found in the

Bureau’s hands, which have been clenched tight for the last eight years.

Under the Bureau’s twisted logic, a successful claimant’s benefits could be paid to

a complete stranger yet no relief would be available in equity. The state agency’s

arrangements with Chase are no concern for Plaintiff, who is still entitled by R.C. 4121.39

to expect that the Bureau will pay him everything that has been awarded under the Act.

The lower courts have refused to allow the state agency to evade its fundamental

responsibilities in this regard, and these sound decisions should be left intact.

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Like the courts below, this Court should reject any suggestion that equitable

authority can be easily avoided through transfers of funds to third-parties. Not

surprisingly, the Bureau has failed to identify any authorities actually supporting such a

contrived view, which amounts to nothing more than “too bad, your money is gone.” Such

counter-intuitive logic cannot be reconciled with fundamental tenets of equity, which

“looks to substance rather than form.” Littlefield v. Perry, 88 U.S. 205, 223, 22 L.Ed. 577

(1874); Grundstein v. Suburban Motor Freight, 92 Ohio App. 181, 185–186, 62 Ohio Law

Abs. 251, 62 Ohio Law Abs. 252 (2nd Dist.1951). “The foundation principle of equity is

that there should be no right without an adequate remedy.” Fletcher v. Coney Island, 69

Ohio Law Abs. 264, 276, 121 N.E.2d 574, 582 (C.P.1954). Accordingly, equitable powers

may be shaped to relieve a wrong so long as consistent with the governing law. Heartland

of Urbana OH, L.L.C. v. McHugh Fuller Law Group, P.L.L.C., 2016-Ohio-6959, 72 N.E.

3d 23, 43-44, ¶90 (2nd Dist. Champaign); Toledo, A. A. & N. M. Ry. Co. v. Pennsylvania

Co., 54 F. 746, 751–752 (C.C.N.D. Ohio 1893). Even when confronted with a “we gave it

away” defense, courts in equity are therefore fully empowered to impose the just result.

The Bureau’s reliance upon authorities such as Cox v. Blue Cross Blue Shield of

Michigan, 166 F.Supp.3d 891 (E.D.Mich. 2015), is seriously misplaced. That federal

lawsuit had been dismissed because the complaint had not even alleged that a specifically

identifiable fund existed that could support a claim for equitable restitution. Id., at 896.

Here, however, the benefits that remain due to Plaintiff are sitting in Ohio’s workers’

compensation fund. The amount owed can be easily determined with certainty, as he is

still entitled to the difference between that which has been awarded and that which he has

received. The fund that the Bureau administers has been found to be sufficiently specific

on prior occasions to allow the imposition of equitable relief. Santos, 101 Ohio St.3d at

78; Henley Health Care, 1995 WL 92101, *2-4; San Allen, 2014-Ohio-2071, ¶58-59. This

case is no different.

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C. The Agency Relationship

The Bureau continues to deny that Chase was ever its agent, but never furnishes a

plausible explanation for why such proof is necessary to justify the relief requested in the

Complaint. Bureau’s Brief, pp. 34-35. Plaintiff is seeking the remainder of the benefits

that are due to him under the Workers Compensation Act, which the Bureau – not Chase

– is legally obligated to pay. State ex rel. Crabtree, 644 N.E.2d at 365. The money

presently sits in the workers’ compensation fund, and can be easily calculated by

subtracting the amount the injured worker has received to date from the amount

originally awarded to him. Establishing an agency relationship between the Bureau and

Chase simply is not necessary to require the state agency to comply with the law.

The Bureau’s understandable effort to disentangle itself from Chase is not just

pointless, but also legally flawed. As the Eighth District has justifiably observed, not only

had an Agency Services Agreement been executed between the Bureau and Chase, but

R.C. 4123.311(A)(3) also authorized the entry of such contracts “with an agent” to both

supply the debit cards and properly credit the accounts. Cirino, 2016-Ohio-8323, ¶59.

The Bureau now insists that the lower courts blundered by failing to recognize that “Chase

was Cirino’s agent for the purpose of carrying out his instructions on how to access those

funds.” Bureau’s Brief, p. 34. But that far-fetched relationship has not been

memorialized in any agreement or statutory directive. The Bureau has yet to identify

anything that Plaintiff signed, endorsed, or ratified authorizing fees to be deducted from

the benefits that had been awarded to him. To the contrary, the only “evidence” that has

been offered in this regard is the patently inadmissible musings of Chase Vice President

Dangott. Bureau’s Brief, p. 15.

As much as the state would like to distance itself from the financial institution that

is reaping substantial profits from Ohio’s injured workers, the binding principles of

agency cannot be escaped. Mortgage Net., Inc. v. Ameribanc Mtge. Lending, L.L.C., 177

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Ohio App. 3d 733, 2008-Ohio-4112, 895 N.E. 2d 917, 920, ¶13 (10th Dist. Franklin) (“All

that is required to form an agency relationship is consent by both parties.”); Ulhaq v.

Trauma Serv. Group, P.C., 114 Ohio App.3d 113, 682 N.E.2d 1050, 1052 (1st Dist.1996)

(“an agency relationship arises under an expressed or implied agreement.”) After all, it

was the Bureau – and only the Bureau – that enabled Chase to deplete the injured

workers’ benefits one fee after another.

D. The Alternative Relief Available

In the end, it should be observed that the Bureau’s misguided reasoning focuses

almost entirely upon Plaintiff’s claim for equitable restitution and disgorgement.

Bureau’s Brief, pp. 8-35. But appropriate injunctive and declaratory relief will be

sufficient to require the agency to tender the benefits that remain due. Racing Guild of

Ohio, Local 304, Serv. Employees Intern. Union, AFL-CIO, CLC v. Ohio State Racing

Com'n, 28 Ohio St.3d 317, 319–320, 503 N.E.2d 1025, 1028 (1986). Even if the Bureau

succeeds in establishing that equitable relief is unavailable to Plaintiff, these alternative

remedies can still accomplish the same objective.

Ohio law recognizes that declaratory judgments can be sought against the Bureau

of Workers’ Compensation to determine a claimant’s rights under a statute. State, ex rel.

Marks v. Indus. Comm., 63 Ohio St.3d 184, 186, 586 N.E.2d 109, 111 (1992). In this

instance, a legitimate dispute exists between the parties as to whether Plaintiff has

received all the benefits that were ordered to be paid to him under the Workers’

Compensation Act. Resolving this purely legal issue will determine, without more,

whether the state agency remains obligated under the controlling statutes to issue

additional benefit payments to the injured worker. A declaratory judgment is therefore a

suitable mechanism for resolving the controversy.

Another readily apparent alternative is injunctive relief. Such directives can be

issued to require state agencies and officers to comply with their legal obligations.

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Lindley v. Ferguson, 52 Ohio St.2d 60, 369 N.E.2d 482 (1977); State ex rel. Timken Roller

Bearing Co. v. Indus. Commission, 172 Ohio St. 187, 189, 174 N.E.2d 249 (1961). Even

though claims based upon rights of contract against the State must be heard in the Court

of Claims, common pleas courts still retain jurisdiction to direct officials to release funds

that are owed by law. State ex rel. Ferguson v. Shoemaker, 45 Ohio App.2d 83, 94–95,

341 N.E.2d 311, 319 (10th Dist. 1975). Accordingly, an equitably remedy will be

unnecessary if appropriate declaratory and injunctive relief are ordered as requested in

the Complaint.

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CONCLUSION

Because the common pleas judge and unanimous Eighth Judicial District all

justifiably concluded in accordance with this Court’s established precedents that the

Complaint seeks only equitable, declaratory, and injunctive relief within the meaning of

R.C. 2743.03(A)(2), the decisions rendered below should be affirmed in all respects.

Respectfully Submitted,

s/ W. Craig Bashein W. Craig Bashein, Esq. (#0034591) John P. Hurst, Esq. (#0010569) [OF COUNSEL] BASHEIN & BASHEIN CO., L.P.A.

s/ Paul W. Flowers Paul W. Flowers, Esq. (#0046625) [COUNSEL OF RECORD] PAUL W. FLOWERS CO., L.P.A. Attorneys for Plaintiff-Appellees, Michael Cirino, et al.

s/ Charles J. Gallo Charles J. Gallo, Esq. (#0043714) CHARLES J. GALLO CO., L.P.A.

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CERTIFICATE OF SERVICE

I certify that a copy of the foregoing Merit Brief has been sent by e-mail, on this

11th day of January, 2018 to:

Ronald D. Holman, II, Esq. (#0036776) Michael J. Zbiegien, Jr., Esq. (#0078352) Daniel H. Bryan, Esq. (#0095309) TAFT STETTINIUS & HOLLISTER LLP 200 Public Square, Suite 3500 Cleveland, Ohio 44114 [email protected] [email protected] [email protected] Attorneys for Defendant-Appellant, Ohio Bureau of Workers’ Compensation

Eric E. Murphy, Esq. (#0083284) Michael J. Hendershot, Esq. (#0081842) Mark E. Mastrangelo, Esq. (#0023603) Jeffrey B. Duber, Esq. (#0018532) Assistant Attorneys General 30 East Broad Street, 17th Floor Columbus, Ohio 43215 [email protected] [email protected] [email protected] [email protected]

Attorneys for Defendant-Appellant, Ohio Bureau of Workers’ Compensation

s/ Paul W. Flowers Paul W. Flowers, Esq., (#0046625) PAUL W. FLOWERS CO., L.P.A. Attorney for Plaintiff-Appellee, Michael Cirino, et al.








Documents

IN THE SUPREME COURT OF OHIO · 1 INTRODUCTION Memorandum in Support of Jurisdiction of Defendant anyone. program non PAUL W. FLOWERS CO. 50 Public Sq., Ste 1910 Cleveland, Ohio 44113