Court Rules Ohio Bureau of Workers’ Compensation Overcharged Employers

The Cuyahoga Court of Common Pleas has issued its long-awaited decision in the San Allen v. BWC class-action lawsuit.  This case was pursued by a class of Ohio employers to challenge the BWC’s administration of Ohio’s workers’ compensation group rating programs between 2001 and 2009.  The Court ruled in favor of this group of Ohio employers on all of the main issues in the case.  Specifically, the Court found that the BWC had charged certain Ohio employers excessive and unreasonable workers’ compensation premiums.  The BWC will have to reimburse a massive amount of Ohio employers for the excessive premium.

The Court’s initial Order did not address the specific amount of damages.  The Court issued a Final Order setting a final global figure of restitution.  The Court did acknowledge that there may be an estimated 29,000 employers that will not receive any restitution based on the formula.  The final amount of the damages owed by the BWC to employers could approach $1 Billion.  The BWC currently has a surplus in excess of $6 Billion; therefore, whatever the final damages are, the BWC should have the funds to cover the award without having to increase premiums.  It is also important to note that the period at issue is 2001 to 2009.  This case does not have any impact on the current group rating system that began after 2009. 

The Court found that the BWC admitted at trial that it had charged excessive and unreasonable premiums to non-group rated employers from 2001 to 2009.  The testimony confirmed that the BWC charged extra premiums to non-group-rated employers due to the faulty group rating plan.  Other key findings by the Court include the following:

• The Court held that it was not necessary for the employers to seek a remedy through the BWC administrative process because the BWC Adjudicating Committee lacked the jurisdictional authority to address the employers’ claims. 
• The Court held that the BWC did not violate the employers’ rights under the Equal Protection Clause per the federal or Ohio constitutions. 
• The Court found that the BWC admitted to inappropriately charging excessive premiums to non-group rated employers. 
• The Court ruled that the BWC violated Ohio Revised Code Sections 4123.29 and 4123.34 due to the excessive and unreasonable premiums charged to non-group members and with their prospective-experience rating plan. 
• The Court ruled that the BWC must “disgorge” the excess premiums the unlawfully collected from the non-group members during the time period at issue.
• The Court ruled that the method for calculating the amount of restitution would be based on the formula created by Plaintiff’s expert, Allen Schwartz.  The Court rejected the formula of the BWC expert. 
• The Court refused to require the BWC to pay interest on the premiums found to be overpaid to the BWC. 

The BWC has appealed this order on both the findings that it violated O.R.C. 4123.29 and 4123.34 as well as the formula for determining the statutory amount of restitution.  It is likely that this claim will ultimately land in the Ohio Supreme Court for a final determination. 

NOTE:  This general summary of the law should not be used to solve individual claims since slight changes in the fact situation may require a material variance in the applicable legal advice.

This information provided by:
Edward D. Murray is a director at the law firm of Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A. in Canton.  Feel free to contact him with workers’ compensation questions at emurray@www.kwgd.com or 330-497-0700.

Lisa A. Fike is an associate attorney at the law firm of Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A. in Canton.  Feel free to contact her with workers’ compensation questions at lfike@www.kwgd.com or 330-497-0700.