Ohio v. Mansfield Tire & Rubber Co.

660 F.2d 1108, 5 Collier Bankr. Cas. 2d 204
CourtCourt of Appeals for the Sixth Circuit
DecidedSeptember 29, 1981
DocketNo. 81-3101
StatusPublished
Cited by2 cases

This text of 660 F.2d 1108 (Ohio v. Mansfield Tire & Rubber Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ohio v. Mansfield Tire & Rubber Co., 660 F.2d 1108, 5 Collier Bankr. Cas. 2d 204 (6th Cir. 1981).

Opinion

WEICK, Circuit Judge.

The Industrial Commission of Ohio, Bureau of Workers’ Compensation, the State of Ohio and its officers have appealed directly to this court under 28 U.S.C. § 1293(b) (Supp.1981) from an order of the Bankruptcy Court for the Northern District of Ohio, Western Division, entered in Chapter Eleven proceedings, in which Mansfield Tire and Rubber Company (Mansfield) is the Debtor. The sole issue in the case, as stated in the order of the Bankruptcy Court from which the appeal is taken, was whether the actions of the Industrial Commission [1109]*1109of Ohio in adjudicating the claims of Mansfield’s employees for workers’ compensation benefits pursuant to Chapters 4121 and 4123 of the Ohio Revised Code amount to enforcement of the police or regulatory powers of the State of Ohio. If the actions of the Industrial Commission in adjudicating such worker’s compensation claims for benefits did amount to enforcement of the police or regulatory powers of the State, then they are exempt from the automatic stay provisions of the Bankruptcy Act, 11 U.S.C. § 362. The appellants had filed an adversary complaint against the Debtor in the Bankruptcy Court seeking the order vacating the automatic stay asserting that the activities of the Industrial Commission in administering Ohio’s workers’ compensation laws were expressly excepted from the automatic stay by virtue of sections 362(b)(4) and 362(b)(5) of the Act because the stay would disrupt the administration of the law. The Bankruptcy Court was of the opinion that the activities of the Industrial Commission of Ohio in adjudicating workers’ compensation claims did not amount to enforcement of the police or regulatory powers of the State and hence were not excepted from the automatic stay under sections 362(b)(4) and 362(b)(5). The Bankruptcy Court declined to vacate the stay and dismissed appellants’ complaint. The result is that the Industrial Commission of Ohio has been enjoined from performing its statutory duties authorized by the Constitution of Ohio in processing the claims of Mansfield’s employees for workers’ compensation for personal injuries, death or occupational disease arising out of their employment by Mansfield. The injunction is in effect until further order or the termination of the proceeding which was commenced in 1979. Mansfield has not cited a single case where any bankruptcy court has ever entered such an order and we have found none. To say the least, Mansfield’s injured workers are not being treated fairly by Mansfield. We are of the opinion, for the reasons hereinafter set forth, that the order appealed from is erroneous and we reverse and vacate the stay.

I

Workers’ Compensation is mandated by the Ohio Constitution, as amended, Article II, Section 35 (1923)1 and has been in effect since 1912. Ohio Revised Code, Chapters 4121 and 4123 were enacted by the Ohio [1110]*1110legislature under the constitutional grant of authority. Participation in and compliance with the compensation program in Ohio is mandatory for all employers who employ more than one employee. Ohio Rev.Code § 4123.35.

Claims of workers for injury, occupational disease or death must be filed with and are determined by the Industrial Commission of Ohio which has exclusive jurisdiction subject only to appeal to the Common Pleas Court of Ohio and Ohio appellate courts. No other courts have jurisdiction, not even federal courts.

An Ohio employer may comply with the law in one of two ways. The employer may make payments into the State Insurance Fund in the amount of premium fixed by the Industrial Commission. Such employers are liable only for the payment of premiums and the State Insurance Fund is responsible for the payment of benefits. Claims for unpaid premiums against bankrupt employers are entitled to priority under section 64(a)(4) of the Bankruptcy Act of 1898. In re Pan American Paper Mills Inc., 618 F.2d 159 (1st Cir. 1980). Alternatively, the employer has the option to operate as a “self-insured” employer. The latter method is accomplished by meeting certain preliminary requirements not relevant here and by posting bonds or other securities with the Industrial Commission to secure the performance of its obligations as a self-insurer. In case of disagreement between a worker and a self-insurer over the validity of a claim, it is resolved by the Industrial Commission as the employer has no authority to reject claims.

Mansfield has been doing business in Ohio since 1912 and was amenable to the Worker’s Compensation Act of the State of Ohio. From July 1, 1958, until November 1, 1978, Mansfield operated as a self-insured employer under the Act. Although the briefs and the record on appeal are not as clear as they should be, it appears that for each of these years Mansfield arranged through bonding companies for the deposit of surety bonds with the Industrial Commission as security for the performance of its duties as required by law. In one year, Mansfield assigned a $100,000 United States Treasury Note due July 31, 1979, to the Industrial Commission absolutely. The rights and duties of the parties as regard that note were not before the Bankruptcy Court nor are they before this court.

On November 1, 1978, Mansfield elected to insure future workers’ compensation liability by paying into the State Insurance Fund the amount of premium as fixed by the Industrial Commission pursuant to Ohio Rev.Code § 4123.35. For those claims which arose prior to November 1, 1978, Mansfield continued to pay benefits directly to its employees.

On September 19, 1979, Mansfield ceased paying the pre-November 1, 1978, self-insured claims and thus became, as regards those claims, a “non-complying employer” under Ohio Rev.Code § 4123.75. As far as this court can determine from the briefs, record and oral argument, there are apparently about 400 worker claims by Mansfield employees which arose during the years 1958 to 1978. These claims are apparently in various stages of administration. Most, we assume, have been finally adjudicated and payments were being made to the workers by Mansfield. There may also be some claims which have not been finally adjudicated, such process having been automatically stayed by the Bankruptcy Court.

On October 1, 1979, Mansfield filed a petition under Chapter 11 of the Bankruptcy Act. With the filing of the petition, the automatic stay provisions of 11 U.S.C. § 362(a) went into effect, and by the terms of § 362(a)(1),2 the appellants were auto[1111]*1111matically stayed from administering Ohio’s workers’ compensation laws as they apply to Mansfield.

On November 13, 1979, the appellants filed an adversary complaint in the Bankruptcy Court requesting that the automatic stay be lifted inasmuch as appellants are exempted from the automatic stay provisions by the exceptions provided in 11 U.S.C.

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Bluebook (online)
660 F.2d 1108, 5 Collier Bankr. Cas. 2d 204, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ohio-v-mansfield-tire-rubber-co-ca6-1981.