The Supreme Court of Ohio has issued a ruling in State ex rel. K&D Group, Inc. v. Buehrer (2013-Ohio-734) that will affect the determination of whether a business must assume the workers’ compensation claims of any company it acquires.

In 2004, K&D Enterprises contracted with Fame-Midamco to purchase an apartment complex that was managed by Mid-America. Before the closing on this sale, K&D Enterprises created a new company (Euclid-Richmond Gardens) and assigned its rights in the apartment complex to that new company. Euclid-Richmond Gardens then hired K&D Group, a property-management company, to operate the apartment complex.

In 2009, the Ohio Bureau of Workers’ Compensation audited K&D Group and determined that it was a successor in interest to the business operations of Mid-America. As a result, K&D Group was obligated to assume the workers’ compensation claims for which Mid-America was responsible. K&D Group appealed this determination by the Bureau, which resulted in the current decision by the Supreme Court of Ohio.

The Supreme Court ruled in favor of K&D Group, finding that it was not a successor in interest to Mid-America because Mid-America did not voluntarily transfer its business of managing the apartment complex to K&D Group. Rather, the transfer of Mid-America’s business to K&D Group occurred through several external transactions.

The Court noted that K&D Group’s hiring of Mid-America employees, its assumption of Mid-America’s tenants’ leases, and K&D Group having the same workers’ compensation manual numbers as Mid-America were facts insufficient to show that Mid-America had voluntarily transferred its business to K&D Group.

Because the Bureau could not show that Mid-America voluntarily transferred its business operations to K&D Group on these facts, the Court overturned the Bureau’s determination that K&D Group was a successor in interest to Mid-America’s workers’ compensation claims.