Ohio employers win $860 million after overcharged by workers’ compensation insurer

A Cuyahoga County judge has awarded nearly $860 million in restitution to a group of Ohio employers involved in a class-action lawsuit that began in 2007. The suit claimed that the Ohio Bureau of Worker’s Compensation, which provides worker’s compensation benefits to about two-thirds of Ohio’s workforce, overcharged the more than 270,000 employers for worker’s compensation insurance because of inequities in their group coverage program.

Common Pleas Court Judge Richard McMonagle ruled that employers who were excluded from the group program were charged excessive premiums over an eight year period from 2001 to 2009. Many of the employers named in the suit weren’t even aware that they were a part of it.

Stuart Garson, one of the attorneys representing the employers, said “Now is the time for the BWC to take responsibility.”

The BWC plans to appeal, so the restitution won’t be quick to come to the employers.

The group rating program under the BWC allows businesses which are relatively similar to join together under one sponsor in order to qualify for premium rates. Qualification for the group rating is based on few or no injury claims and excellent workplace safety records.

The main argument in the suit goes that businesses excluded from the group rating program were being unfairly forced to subsidize the premium group rating discounts. Basically, the money the group rating program participants were saving was coming out of the pockets of the non-group employers. Often times it only took one injury claim to disqualify a business from group rating eligibility.

In 2007, then BWC administrator Marsha Ryan wrote in a letter that 6700 employers’ premiums rose by an average of nearly 700% after being excluded from the group rating program. After disqualification, 31% of those businesses cancelled their insurance altogether or were forced to file for bankruptcy.

BWC spokeswoman Melissa Vance said the claims costs and expenses spent by the bureau over those eight years exceeded the premiums the excluded employers paid by $861 million. She also said the restitution asked for in the lawsuit would have to be drawn from premiums the BWC collects from employers to treat employees hurt on the job.

In his ruling McMonagle didn’t accept those arguments. Neither did Garson, saying the BWC has nearly $9 billion in net assets and can make the restitution without having to raise premiums.

The BWC, which is an independent body despite its board being appointed by the governor, was handed a restraining order last year concerning the group rating program for not complying with state law regarding how rates are set. The program was allowed to continue, but the BWC was ordered by the Ohio General Assembly to reform it, setting limits to the discounts available at 53%. Discounts given out to groups had been up to 90% while employers not in groups saw increases of 100% or more when the program began.

Of the 270,000 employers affected by the ruling, nine are owed more than $1 million and 1,142 are owed more than $100,000.

During the hearings, McMonagle’s courtroom was packed with supporters of the employers’ group Pay Us Back Ohio BWC, organized in conjunction with the lawsuit, which also started the informational website PayNowBWC.com. Contact my Atlanta workers compensation firm.

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