A class-action lawsuit filed in 2010 against the Ohio Bureau of Workers’ Compensation (BWC) seeking the return of administration fees collected by a bank was improperly filed and must be pursued in the Ohio Court of Claims, the Ohio Supreme Court ruled today.

The Supreme Court determined that the lawsuit filed by workers’ compensation recipient Michael Cirino seeks a form of legal relief, rather than equitable relief. The Court majority sided with the BWC, which argued that the Cuyahoga County Common Pleas Court did not have jurisdiction to hear Cirino’s case because the bureau only can be sued for a legal claim in the Ohio Court of Claims in Columbus.

In the Court’s lead opinion, Chief Justice Maureen O’Connor wrote that the crux of Cirino’s class-action claim is that workers’ compensation benefit recipients were harmed by fees charged by JP Morgan Chase in the course of administering an electronic benefit-payment program for the BWC. Because Cirino is asking the bureau to pay back the money Chase collected, he is asking the bureau to compensate the plaintiffs for a loss, which is “a classic form of legal relief,” the Court ruled.

Justices Patrick F. Fischer and Mary DeGenaro joined the Chief Justice’s opinion.

In a concurring opinion, Justice R. Patrick DeWine also agreed with the bureau, noting that Cirino’s claim was for legal relief rather than equitable relief because he was not seeking restitution of particular funds held by the bureau.

Justices Sharon L. Kennedy and Judith L. French joined Justice DeWine’s opinion.

Justice Terrence O’Donnell dissented, writing that in two similar cases where the BWC and another state agency were found to be improperly withholding and recouping money from recipients, the suits were deemed equitable and permitted to proceed in common pleas court.

Mandated Switch from Check to Electronic Payments Prompts Dispute
Before 2006, BWC paid benefits by either paper check or electronic funds transfer into a recipient’s bank account. The General Assembly gave the bureau the authority to all but end the distribution of paper checks in favor of expanding reliance on electronic transfers, including through debit cards. It authorized the bureau to contract with “an agent” to issue the cards to benefit recipients and administer the program. Regardless of which payment method the bureau used, it was required to pay all “administrative costs” under R.C. 4123.341.

Chase was selected in 2006 to administer the debit card program. The bureau would transfer funds to Chase, which set up accounts for each workers’ compensation recipient who was not enrolled in direct deposit. The agreement provided participants with several methods to access the funds. Some were free, while others required a fee. For example, one free visit to a teller at a Chase branch was permitted each month, but after that visit, a $5 fee was charged for every subsequent visit that month.

Cirino began receiving workers’ compensation benefits in 2009 and was entitled to $443 a week, which was paid to him in a biweekly amount of $886. He received his first few payments by paper check, and then was notified to switch to an electronic method. Cirino declined to give the BWC his bank account information, which was required for him to receive payments by direct deposit, so he was enrolled in the Chase-operated debit card program.

Cirino visited a Chase branch to withdraw in cash his first bimonthly payment. When he returned two weeks later to withdraw his second, he was told there would be a $5 fee. Cirino then spoke to an attorney and continued to withdraw his benefits by visiting a teller, incurring numerous $5 fees. In 2010, he filed a class-action lawsuit against the bureau on behalf of all recipients of BWC benefits who were charged fees to access their benefits.

Suit Filed in County Court
Cirino filed his case in Cuyahoga County Common Pleas Court, arguing that the debit card program violates R.C. 4123.341 because the workers, not the state and the employers that fund the BWC, are paying “administrative costs” when fees are charged by Chase.

The bureau sought to dismiss the case for lack of jurisdiction and argued that because Cirino is ultimately asking the state to pay back the money withheld by Chase, he is seeking legal relief. Claims for legal relief against the state are within the exclusive jurisdiction of the Court of Claims, which was established in 1975 to handle most lawsuits against the state where the state is not protected by immunity.

The trial court, citing the Ohio Supreme Court’s 2004 Santos v. Ohio Bur. Of Workers’ Comp. decision, ruled that a suit seeking the return of specific funds wrongfully collected or held by the state is an equitable claim, and that common pleas courts have the right to hear equitable claims. It found that Cirino was seeking specific funds — the money Chase withheld from his benefits for the fees — and that Chase is an agent of the BWC acting on behalf of the state, so the funds are essentially in the hands of the bureau.

The BWC appealed the decision to the Eighth District Court of Appeals, which affirmed the trial court’s decision. The BWC then appealed to the Supreme Court, which agreed to hear the case.

Court Examines Nature of Worker’s Claim
In her lead opinion, Chief Justice O’Connor wrote the Court needed to determine whether the relief Cirino sought was equitable or legal. The opinion noted a common pleas court may hear claims against the state that are equitable in nature, typically in the form of a declaratory judgment or an injunction. Suits for money damages, however, are within the exclusive jurisdiction of the court of claims.

The opinion noted that a claim seeking compensation for a loss is one that seeks money damages, whereas a claim seeking the return of specific funds seeks restitution, which can be either legal or equitable in nature. The opinion found that Cirino’s claim is arguing that the plaintiffs have been damaged by the fees charged by Chase, meaning that a payment by the bureau based on those fees is seeking compensation for a loss. Cirino’s claim is legal in nature, which means it may only be pursued in the Court of Claims, the Court concluded.

The opinion also stated that the case is distinct from Santos, in which the bureau held money taken directly from recipients, who sought the return of the specific funds taken by the BWC, making their claim equitable.

“The only specific funds identified by Cirino are the fees collected by Chase, not any money withheld by the bureau,” the opinion stated.

The opinion also declined to rely on the argument that the claim is equitable because Chase is the bureau’s agent.

The Court reversed the Eighth District’s decision and directed the common pleas court to dismiss the case.

Concurrence Focuses on Fund Location
In his concurrence, Justice DeWine maintained the focus on the form of relief sought in a claim against the state “invites inconsistent results and provides little guidance to lower courts.” He suggested the case can be resolved more cleanly by focusing on the location of the specific funds Cirino seeks.

The opinion explained that Cirino’s benefits were in the possession of the BWC until they were transferred to Chase. The “particular funds” Cirino seeks are not in the possession of the BWC, it explained. Any remedy due Cirino would not come from particular funds held by the BWC, but rather from the bureau’s general funds. That makes his claim one of legal relief and belongs in the Court of Claims, the opinion concluded.

Dissent Finds Similarity to Prior Ruling
In his dissent, Justice O’Donnell wrote that in Santos the Court determined the suit was in equity. As in that case, Cirino does not seek a substitute payment from the bureau, but instead seeks the funds unjustly withheld through the bureau by its agent, Chase, in the form of a fee.

He also noted the Court’s 1991 Ohio Hosp. Assn. v. Ohio Dept. of Human Servs. case where the Ohio Department of Human Services implemented a new rule that lowered Medicaid reimbursement rates. Several Medicaid providers filed a case seeking equitable relief in common pleas court. The Court invalidated the rule and found the money withheld from reimbursement that the providers sought was not money damages, but equitable relief.

“Because Cirino’s claim seeks the full monthly benefit of his award, the administrative costs assessed by Chase are costs of administering the benefits program to be borne by the state. Thus, this is an equitable claim and therefore the common pleas court, not the Court of Claims, has jurisdiction in this case,” the dissenting opinion concluded.

2017-0179. Cirino v. Ohio Bur. Of Workers’ Comp., Slip Opinion No. 2018-Ohio-2665.

View oral argument video of this case.

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