State ex rel. Pepsi-Cola Bottling Co. v. Morse

[This opinion has been published in Ohio Official Reports at 

72 Ohio St.3d 210

.]




 THE STATE EX REL. PEPSI-COLA BOTTLING COMPANY, APPELLANT, v. MORSE
                                   ET AL., APPELLEES.

          [Cite as State ex rel. Pepsi-Cola Bottling v. Morse, 

1995-Ohio-82

.]
Workers' compensation—Industrial Commission abuses its discretion in awarding
           wage-loss compensation, when.
         (No. 93-2350—Submitted February 21, 1995—Decided May 17, 1995.)
     APPEAL from the Court of Appeals for Franklin County, No. 92AP-1506.
                                  __________________
           {¶ 1} Appellee-claimant, Richard J. Morse, injured his shoulder and upper
back on July 31, 1987 while in the course of and arising from his employment with
appellant, Pepsi-Cola Bottling Company, his self-insured employer. On June 14,
1989, a district hearing officer for appellee Industrial Commission of Ohio allowed
Morse's workers' compensation claim, stating:
           "Temporary Total [disability compensation] from 12-1-87 through 6-13-89,
less Temporary Total [disability compensation] previously paid over the same
period in [claim No.] 930436-22[.]
           "Compensation awarded based on the medical reports of Doctor Yurich
[sic].
           “District Hearing Officer finds that the claimant cannot return to former
position of employment and the employer has no work available within his
restrictions, claimant has reached maximum medical improvement.
           "It is therefore ordered that claimant be paid wage loss under [R.C.]
4123.56[B] * * * from 6-14-89 forward at the rate of two-thirds of his full weekly
wage. Claimant to register with the Bureau of Employment Services and notify
self-insured employer when he returns to work."
           {¶ 2} No appeal was taken.
                             SUPREME COURT OF OHIO




        {¶ 3} On January 15, 1990, Pepsi moved the commission to re-examine
claimant's eligibility for wage-loss compensation. At the June 18, 1990 hearing on
Pepsi's motion, Pepsi tendered a "Foreign Corporation Application for License"
that had been filed with the Secretary of State. The application showed that on
February 6, 1990, a Delaware corporation, "The Steelman Corp. dba Al Ganim
Lounge," had applied for a permanent license to do business in Ohio, i.e.,"to sell
and serve liquor, beverages and food to the public." The application contains the
signature of a Richard Morse, an officer of the corporation. Also submitted was
the Secretary of State's certification of the issuance of a license to "Al Ganim
Lounge" on February 20, 1990.
        {¶ 4} On July 16, 1990, claimant notified Pepsi that he had begun working
at Al Ganim's Lounge on July 8, 1990 at $150 per week. On July 17, 1990, the
district hearing officer issued his order following the June 1990 hearing:
        "The District Hearing Officer grants the employer's motion to the following
extent: employer has provided evidence that claimant experienced a change in his
employment status as of 2/6/90. Employer alleges claimant now owns the Al
Ganiun [sic] Lounge. The District Hearing Officer thus orders the issue of further
wage loss beyond 2/6/90 held in abeyance until claimant provides evidence of his
current weekly earnings or lack thereof. Once said evidence is on file refer to
District Hearing Officer docket on issue of further wage loss entitlement."
        {¶ 5} There was no appeal.
        {¶ 6} On October 23, 1990, claimant moved:
        "[T]hat this claim be set for hearing as soon as possible on the issue of wage
loss. This claim has been held in abeyance since June 18, 1990 for the District
Hearing Officer's order attached hereto. Pursuant to that order, I would ask that
this be set on the DHO docket on the issue of further wage loss entitlement."
        {¶ 7} Accompanying his motion was a C94-A sworn wage statement that
read:




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                                   January Term, 1995




           "Pursuant to District Hearing Officer's order of June, 1989, I have registered
with the Ohio Bureau of Employment Services and have been actively seeking
work since that date. On July 5, 1990, I became employed at Al Ganim's Lounge in
Lakewood, Ohio. I have been hired at the rate of $150.00 as a bartender. My
previous average weekly wage while employed by Pepsi Cola Bottlers of Ohio was
$576.84. I respectfully request that I be found to be suffering a wage loss in the
amount of $426.84."
           {¶ 8} A transcribed hearing before a district hearing officer occurred on
January 7, 1991. Claimant's father, Richard C. Morse, testified that he was the sole
shareholder of the Steelman Corporation. He identified his signature as the one on
the incorporation documents submitted by Pepsi and testified that he alone owned
the bar.
           {¶ 9} Claimant's father testified that he paid claimant $150 a week to "ru[n]
the bar for me." He stated that claimant set his own hours and came in "[w]henever
he wants to work." Claimant corroborated this testimony, indicating that he indeed
made $150 a week and generally worked approximately three hours a day, seven
days a week. Claimant also submitted a W-2 form for 1990 that showed $3,900 in
earnings from the bar.
           {¶ 10} Pepsi, in addition to other evidence, offered the purported November
8, 1990 office notes of Dr. Robert S.Yurick, claimant's attending physician. The
notes were unsigned, but contained the typed initials "RSY: jd" in the lower right
corner. These notes indicated:
           "November 8, 1990—Office:
           "Dick was seen back at the office today. Apparently had been doing quite
well until five to six days before being seen in the office when, driving a truck, was
struck broadside and knocked onto the left side of the vehicle and struck his
operated, left shoulder. * * * [H]e has had soreness about the shoulder which he
did not have prior to. He had been back into basketball and using the arm without




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symptoms although he would occasionally have some crepitus, but no pain or
disability until the accident."
         {¶ 11} Following the hearing on January 7, 1991, the district hearing officer
ruled:
         "District Hearing Officer grants claimant's motion, filed 10-23-90, to the
following extent: claimant is not the owner of the Al Ganim Lounge. The business
is owned by the Steelman Corporation, an entity wholly owned by claimant's father,
James [sic] C. Morse. Claimant began working for the Al Ganim Lounge, as a
bartender, on 7-5-90. Claimant is paid $150.00 per week by Al Ganim Lounge/The
Steelman Corporation. Wage loss compensation is to continue, from 2-78-90 [sic],
per proof of earnings submitted."
         {¶ 12} The order was administratively affirmed.
         {¶ 13} Pepsi filed a complaint in mandamus in the Court of Appeals for
Franklin County, alleging that the commission had abused its discretion in
awarding wage-loss compensation. The appellate court denied the writ.
         {¶ 14} This cause is now before this court upon an appeal as of right.
                                  __________________
         Duvin, Cahn, Barnard & Messerman and Jane P. Wilson, for appellant.
         Sammon & Bolmeyer Co., L.P.A., and Albert Sammon, for appellee Morse.
         Betty D. Montgomery, Attorney General, and Charles Zamora, Assistant
Attorney General, for appellee Industrial Commission.
         Thompson, Hine & Flory, Janis B. Rosenthal and Timothy E. Cowans,
urging reversal for amicus curiae, Ohio Council of Retail Merchants.
                                  __________________




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                                January Term, 1995




        Per Curiam.
        {¶ 15} Both procedural and substantive challenges have been made to the
commission's order. Sustaining these objections in part, we reverse the appellate
court's judgment.
                                          I
        {¶ 16} Questioning Pepsi's ability to maintain this cause of action, claimant
points out that Pepsi did not appeal the June 14, 1989 order that first awarded wage-
loss compensation. Advancing a theory that combines elements of res judicata with
failure to exhaust administrative remedies, claimant contends that appellant's cause
of action is barred.
        {¶ 17} Underlying claimant's argument is the belief that once eligibility for
compensation has been established, that eligibility is forever immune from further
challenge. This reasoning, however, ignores the limited application of res judicata
to workers' compensation cases:
        "'It is almost too obvious for comment that res judicata does not apply if
the issue is claimant's physical condition or degree of disability at two entirely
different times * * *. A moment's reflection would reveal that otherwise there
would be no such thing as reopening for a change in condition. The same would
be true of any situation in which the facts were altered by a change in the time frame
* * *.'" State ex rel. B.O.C. Group v. Indus. Comm. (1991), 

58 Ohio St.3d 199, 201

, 

569 N.E.2d 496

, quoting 3 Larson, Workers' Compensation Law (1989),
Section 79.72(f).
        {¶ 18} Facts were altered by the passage of time in the case at bar. On July
8, 1990, claimant returned to the work force. Because claimant's return, at a
minimum, might affect his rate of wage-loss compensation, the commission
properly reopened the matter of continuing eligibility for wage-loss compensation.
        {¶ 19} The commission's intervention effectively split the wage-loss
question into two segments. The first, addressed by the June 14, 1989 order, covers




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claimant's period of unemployment from June 14, 1989 through July 7, 1990. The
second, determined by the January 7, 1991 order, involved claimant's eligibility for
wage-loss compensation while employed from July 8, 1990 forward. Pepsi pursued
its administrative remedies as to the latter period, but not the former.
       {¶ 20} Pepsi has, therefore, preserved its right to challenge claimant's wage
loss over the period of employment following July 7, 1990. It cannot, however,
relitigate claimant's entitlement to wage-loss compensation from June 14, 1989
through July 7, 1990. Pepsi attempts to excuse its failure to appeal by arguing that
the lack of "some evidence" of wage loss made the June 14, 1989 order void ab
initio. Pepsi is incorrect. The lack of "some evidence" does not equate to an order
rendered without jurisdiction. Accordingly, Pepsi cannot credibly defend its failure
to appeal the June 14, 1989 order, nor can it allege new and changed circumstances
sufficient to warrant re-examination of the order. Pepsi's alleged proof of claimant's
intent to abandon the labor market existed prior to the initial wage-loss hearing and
does not, therefore, represent a new or changed circumstance.
       {¶ 21} Having affirmed Pepsi's right to contest wage-loss entitlement from
July 8, 1990 forward, we turn to the first of Pepsi's two procedural propositions.
Ohio Adm. Code 4121-3-32(D) states:
       "[T]he payment of compensation [f]or wage loss pursuant to division (B) of
section 4123.56 of the Revised Code shall commence upon application with a
finding of any of the following* * *[.]" (Emphasis added.)
       {¶ 22} The claimant did not file a separate and express request for wage-
loss compensation. The only application of any kind before the district hearing
officer was claimant's original claim application, i.e., his "C-50" application for
payment of compensation and medical expenses. Pepsi argues that the original
application may not be construed as an application for wage-loss compensation
within the purview of Ohio Adm. Code 4121-3-32(D). We disagree.




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                               January Term, 1995




        {¶ 23} Ohio Adm. Code 4121-3-32(D) does not state how an application for
wage-loss compensation must be made. However, the fact that the application at
issue did not expressly request wage-loss compensation is not conclusive of
whether it was indeed such a request. See State ex rel. Gen. Refractories Co. v.
Indus. Comm. (1989), 

44 Ohio St.3d 82, 83

, 

541 N.E.2d 52, 54

. Certainly, the more
clearly articulated the request, the better. Under these circumstances, however, we
find that the commission did not abuse its discretion in addressing claimant's wage-
loss eligibility.
        {¶ 24} The C-50 form is specifically designed to act as an application for
temporary total disability compensation. Given the statutory interrelationship
between temporary total disability and wage-loss compensation under R.C.
4123.56, the commission did not err in considering claimant's wage-loss eligibility
upon submission of claimant's C-50.
        {¶ 25} Pepsi's remaining procedural objection involves the commission's
failure to subpoena payroll and tax records that Pepsi deemed significant. We again
reject Pepsi's argument.
        {¶ 26} Under R.C. 4123.08, the commission's subpoena power is
discretionary. For the purposes of establishing the amount of claimant's earnings,
it was within the commission's prerogative to find that the production of payroll
and tax records was superfluous given the evidence that was before it, including
claimant's W-2 form. As will be discussed infra, the commission's determination
of claimant's average weekly wage was supported by "some evidence."
Accordingly, the commission did not abuse its discretion.




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                                           II
       {¶ 27} We next turn to the merits of claimant's request for wage-loss
compensation. Former R.C. 4123.56(B) read:
       "Where an employee in a claim allowed under this chapter suffers a wage
loss as a result of returning to employment other than his former position of
employment * * *, he shall receive compensation at sixty-six and two-thirds of his
weekly wage loss not to exceed the statewide average weekly wage for a period not
to exceed two hundred weeks."
       {¶ 28} To prevail, a claimant must, therefore, show that he or she has
suffered diminished wages as a result of a medical impairment that is causally
related to the industrial injury. Pepsi disputes the existence of diminished wages
and medical impairment. Pepsi alternatively argues that if one or both do exist, it
is not because of the industrial injury.
       {¶ 29} Pepsi's dual allegations intersect on the question of medical
impairment. Claimant's allowed conditions must underlie claimant's inability to
secure comparably paying employment in order for him to be entitled to benefits.
In this case, medical evidence submitted by Pepsi suggests that claimant has no
impairment from the allowed conditions. That same evidence indicates that the
claimant reinjured his shoulder in a nonindustrial auto accident. The commission's
order is impermissibly silent on this issue, necessitating a return for further
consideration.
       {¶ 30} Examining claimant's allegation of diminished wages, we find
"some evidence" to support the $150 average weekly wage found by the
commission. Documentary and testimonial evidence established a $150 weekly
income for claimant.      The sole evidence submitted by Pepsi was a private
investigator's statement that he overheard claimant tell a bar patron that he
(claimant) owned the lounge. Even if accepted, however, it does not prove that
claimant's weekly wage exceeded $150. Pepsi's criticism of claimant's evidence is,




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                                  January Term, 1995




therefore, unpersuasive, given the lack of contrary evidence and the commission's
exclusive authority to evaluate evidentiary weight and credibility.
        {¶ 31} Assuming arguendo that $150 accurately reflects claimant's weekly
earnings, Pepsi contends that diminution is due to voluntary choice, not an
industrially related medical impairment. Specifically, Pepsi argues that (1) claimant
has deliberately received underinflated wages, and (2) by taking employment at the
tavern as opposed to taking a higher paying job elsewhere, claimant deliberately
and voluntarily kept his wages low. Upon review, we find that Pepsi has raised a
legitimate issue that the commission wrongly failed to explore.
        {¶ 32} Following the lead of decisions on temporary total disability and
impaired-earning capacity, State ex rel. The Andersons v. Indus. Comm. (1992), 

64 Ohio St.3d 539

, 

597 N.E.2d 143

, implies that voluntary acts that limit earnings can
bar wage-loss compensation. Pepsi points to two acts which it claims establishes
that claimant has deliberately limited his wages.
        {¶ 33} The first, and least persuasive, act centers on claimant's ability, as
bar manager, to set wages. Pepsi contends that claimant made less than the part-
time waiters he supervised; therefore, claimant's failure to set his wages above those
he oversaw represented a deliberate limitation of earnings.
        {¶ 34} Pepsi's position lacks merit for two reasons. First, without knowing
the bar's financial situation—claimant's father testified that it had not turned a
profit—claimant's ability to pay himself more is mere speculation. Second, if
claimant is making less than his staff, it may stem from hours worked, not hourly
rate. Claimant's waiters, before tips, made approximately $4 to $5/hour. Claimant's
$150 salary divided by twenty-one hours equals approximately $7/hour—a wage
rate higher than that of his staff.
        {¶ 35} Pepsi's better argument is one that may ultimately prove inherent
whenever lower-paying alternate employment underlies a request for wage-loss
compensation -- the reason for taking the job. This is particularly relevant where




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the alternate employment is a part-time job, since the combined amount of wages
and compensation could produce close to a full-time weekly income for part-time
work. Wage-loss compensation was not intended to provide a disincentive to
resumption of full-time employment or to subsidize—at the State Insurance Fund's
or self-insured employer's expense—a part-time lifestyle. Conversely, if a part-
time job is the only work available within a claimant's post-injury capabilities, he
or she should not be discouraged from accepting it.
        {¶ 36} We find, therefore, that the commission abused its discretion in
failing to discuss this issue in this case - so, too, the question of the medical cause
of claimant's disability.
        {¶ 37} Accordingly, the judgment of the court of appeals is reversed, and
the commission is ordered to vacate its order and to reconsider Pepsi's motion in
accordance with this opinion.
                                                                  Judgment reversed.
        MOYER, C.J., WRIGHT, PFEIFER and COOK, JJ., concur.
        DOUGLAS, J., dissents.
        RESNICK and F.E. SWEENEY, JJ., dissent and would affirm the judgment of
the court of appeals.
                                 __________________




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