In Ohio, the doctrine of exhaustion of administrative remedies is a court-made rule of judicial economy which is generally required as a matter of preventing premature interference with agency processes, so that the agency may function efficiently and have an opportunity to correct its own errors, to afford the parties and the courts the benefit of its experience and expertise, and to compile a record which is adequate for judicial review. The purpose of the doctrine is to permit an administrative agency to apply its special expertise and in developing a factual record without premature judicial intervention.
Failure to exhaust administrative remedies is not a jurisdictional defect, and such a failure will not justify a collateral attack on an otherwise valid and final judgment. Failure to exhaust administrative remedies is an affirmative defense which must be timely asserted in an action or it is waived. CivR 8(C) and 12(H): (decided under former analogous section) Gannon v. Perk, 46 Ohio St. 2d 301, 75 Ohio Op. 2d 358, 348 N.E.2d 342, 1976 Ohio LEXIS 635 (1976).
ADMINISTRATIVE AGENCIES GENERALLY.
When a state agency's decision is discretionary and by statute not subject to appeal, an action in mandamus is the sole avenue of relief available to a party challenging the agency's decision: Ohio Acad. of Nursing Homes v. Ohio Dep't of Job & Family Servs., 114 Ohio St. 3d 14, 867 N.E.2d 400, 2007 Ohio LEXIS 1458, 2007 Ohio 2620, (2007).
Two important competing concerns are implicated when a party wishes to challenge a particular state actor's decision that expressly is not appealable. The first concern is that the unavailability of an appeal indicates the clear intention that full discretion is to be entrusted to the state agency. The opposing concern is that if an agency's discretionary decision were truly allowed to be absolutely unchallengeable, an aggrieved party would have no remedy whatsoever, giving the state agency unfettered discretion and raising fundamental due process concerns under Ohio Const. art. I, § 16, which provides that a remedy shall be available "by due course of law." In light of these very significant competing concerns, courts have determined that some level of review must be recognized. Furthermore, courts have determined that a writ of mandamus provides an appropriate balance between the extreme of allowing no challenge at all and the other alternative of completely ignoring the explicit directive that an agency's particular determination is not meant to be appealable. In such a mandamus action, the aggrieved party can challenge the agency's decision, but must demonstrate an abuse of discretion before relief can be provided.