Jan 2, 2013

Ohio Court Rules that Bureau of Workers' Compensation Overcharged Thousands of Small Employers for Premiums

Alert | Ohio Employment Services Alert

A Cuyahoga County Common Pleas Court judge ruled on Friday, December 28, 2012, that the Ohio Bureau of Workers' Compensation ("BWC" or "Bureau") overcharged thousands of Ohio employers that did not qualify for membership in group rating programs from 2001 to 2008 for workers' compensation premiums during those years. The case was filed in 2007 by Corky & Lenny's, a suburban Cleveland deli, on behalf of a class that may include up to 270,000 small Ohio employers. The plaintiffs claimed that employers that were not permitted into groups organized by third-party administrators throughout the state paid excessive premiums into the BWC's state insurance fund in order to subsidize deep discounts that were offered to employers that did qualify for group membership. While the complaint initially alleged that damages to those employers could exceed $1.7 billion, counsel for the plaintiffs conceded that the damages were actually more in the neighborhood of $800 million. Judge Richard McMonagle gave the plaintiffs until January 28, 2013, to provide an updated estimate of the current damage figure. In a 28-page opinion, Judge McMonagle relied on the testimony of current and former BWC employees, as well as outside consulting actuaries retained by the Bureau, to reach his decision; including a current actuarial director who testified that the "BWC knew that at least by 2001 that non-group employers were paying 'excessive premiums' beyond what should have been paid." Moreover, the opinion listed numerous exhibits and witnesses that referenced the BWC admitting that its faulty group rating plan was overcharging non-group employers during the years in question...

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