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The Courts Address the Challenging Doctrine of Res Judicata

Res Judicata is a legal concept which can be confusing to legal practitioners, especially in the area of workers compensation.  Res judicata is Latin and literally translates to “a matter adjudged.”  Res judicata bars re-litigation of a matter finally adjudicated by a court of competent jurisdiction involving the same parties and the same transaction or occurrence.  The doctrine bars all claims that were or could have been raised in the prior action.  An adjudication connotes there is a legal process, including a hearing after notice and the presentation of evidence before a body authorized by law to make a legal determination.  Res judicata does not apply merely to decisions rendered by courts, as administrative bodies conduct hearings over legal matters in a variety of settings.  Courts have long recognized that res judicata may apply to orders of the Bureau, final orders of the Commission, and judgments of trial courts in the workers’ compensation context.  Generally, if parties had the opportunity to fully litigate a claim issue, which resulted in a final determination, then the parties would be barred from litigating the issue again in the future.  Recently, three decisions from Ohio’s court of appeals illustrate how res judicata can apply to workers’ compensation claims.

In Hayton v. Reliable Staffing Resources, 10th Dist. No. 18AP-237, 2018-Ohio-4985, the claimant filed a workers’ compensation claim alleging an injury at work.  The Bureau obtained a file review to address the causal connection between the physical injuries and the work incident and disallowed the claim.  The claimant neither appealed the order nor requested a hearing before the Industrial Commission.  Several months later, the claimant refiled his claim.  During the administrative proceedings before the Commission, the employer argued the claim was barred by res judicata, however, the Commission disagreed.  Although the Bureau rendered a final order to which the claimant failed to appeal, the Bureau’s order was not based on an “adjudication,” meaning the claimant did not have a meaningful opportunity to present his claim.  The Commission found the Bureau’s order was ministerial in nature, as the decision was based on the mere administrative processing of the claim application.

The employer appealed to the trial court and moved for summary judgment on the basis of res judicata.  The trial court granted the motion, which the claimant appealed to the 10th District Court of Appeals.  The court of appeals, however, reversed the trial court’s judgment echoing the reasoning of the Commission, which is the Bureau’s order was not based on an adjudication.  There was no record evidence the Bureau conducted a hearing in which it heard evidence on the allowance of the claim.  Because the Bureau’s order was based merely on a ministerial act, the court of appeals held the Bureau’s order “was not entitled to the status of judgment for purposes of the doctrine of res judicata, and therefore, was not binding on the claimant.

In Tantarelli v. Decapua Enterprises, Inc., 2019-Ohio-517, the Ohio Supreme Court applied res judicata in the context of an average weekly wage (“AWW”) determination.  The claimant sustained an injury after working for the employer of record for just 3 weeks.  The company calculated the claimant’s AWW by dividing his wages by a 52-week divisor as set forth in R.C. 4123.61, which resulted in a paltry AWW of $22.26.  The claimant moved the Commission to reset the AWW, arguing the 52-week divisor should not have been used because he was unemployed during the remaining 49 weeks prior to injury due to no fault of his own.  A staff hearing officer (“SHO”) found there were no special circumstances warranting a different calculation method to determine the AWW, upholding the AWW set by the company.  The Commission refused further appeal.  Because the SHO’s order involved an extent of disability issue, the claimant’s remedy would have been to file a petition for writ for mandamus in the 10th District Court of Appeals.  Nevertheless, the claimant did not file a mandamus action and the Commission’s order became final.

 

Two years later, the claimant filed a second motion to recalculate his AWW based on special circumstances.  An SHO denied the motion finding the issue barred by res judicata and that there were insufficient special circumstances to warrant recalculation of the AWW.

 

After the Commission refused further appeal, the claimant filed a mandamus action.  The court of appeals denied the writ on the ground that the Commission did not abuse its discretion in finding a lack of special circumstances to warrant a different computation method for claimant’s AWW.  Curiously, the court of appeals did not consider the issue of res judicata.  The claimant appealed to the Ohio Supreme Court, which affirmed the denial of the writ but did so on the basis of res judicata.  The Court noted res judicata applies to final Commission orders and if the claimant did not want the issue barred under res judicata, he needed to invoke the Commission’s continuing jurisdiction under R.C. 4123.52 to modify the prior order.  R.C. 4123.52 requires a showing of “(1) new and changed circumstances, (2) fraud, (3) clear mistake of fact, (4) clear mistake of law, or (5) error by an inferior tribunal.”  Because the claimant failed to invoke the Commission’s continuing jurisdiction, res judicata barred the claimant from re-litigating the determination of his AWW.

 

Finally, the 5th District Court of Appeals addressed how res judicata may apply to appeals pursuant to R.C. 4123.512.  In Henderson v. Canton City Schools, 5th Dist. No. 2018CA00073, 2019-Ohio-610, the claimant had an allowed claim for bilateral shoulder sprains.  After the allowance of the claim, the claimant filed two separate motions requesting the same additional shoulder conditions on differing theories of recovery.  The first motion requested the additional conditions on a direct causation theory; the second requested the additional conditions on a substantial aggravation theory.  Each motion was heard separately by the Commission and ultimately denied in separate orders.  The claimant appealed each final order of the Commission separately to the court pursuant to R.C. 4123.512.

 

Ultimately, the claimant twice voluntarily dismissed the appeal pursuing a direct causation theory, which rendered the Commission’s decision on the additional conditions a final determination.  The claimant then sought to litigate the additional conditions on a substantial aggravation theory under the second appeal.  However, the employer moved the court for summary judgment arguing the claimant’s request for the additional conditions was barred by res judicata.  The trial court agreed and the claimant appealed to the court of appeals.  The court of appeals upheld the trial court’s judgment, reasoning that res judicata bars re-litigation of a point of law or fact, which was at issue in a former action involving the same parties. The claimant argued res judicata should not be applied because she was pursuing different causation theories.  The court rejected the claimant’s argument, noting the doctrine of res judicata requires a claimant to present all possible theories of causation for a single injury in a single proceeding.  The court also noted the claimant could have avoided summary judgment on res judicata grounds if she had consolidated her appeals.  Although the Commission disallowed the additional conditions in separate orders, the claimant had the opportunity to consolidate her appeals once the matter proceeded to court.  By doing so, she could have avoided judgment under res judicata.

 

The above cases illustrate the challenges in making a  res judicata defense.  While the doctrine appears straightforward, the doctrine is complicated in its application.  The takeaway for employers is always raise res judicata as a defense if it appears a motion or claim raises an issue which had been previously adjudicated.  Failure to raise res judicata as a defense may result in waiver of the defense.  If you have questions about the doctrine or you think you may have a res judicata issue, contact us.

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