Ohio settles lawsuit over workers' comp overcharging

Matt Roche • Jul 25, 2014 at 1:12 PM

A years-long legal fight over allegations that hundreds of thousands of Ohio employers were overcharged workers' compensation premiums from 2001 to 2009 was settled Wednesday night.

The state agreed to create a $420 million fund to pay claims to employer -- many of them small businesses -- that had sued over the premiums. The Ohio Bureau of Workers' Compensation and a group called Pay Us Back Ohio BWC announced the agreement.

The $420 million is about half of the $860 million that a Cleveland judge had ordered the bureau to pay in March 2013.

An appeals court upheld the bulk of that ruling this spring but ordered a recalculation of the damages that reduced the award to $651 million. The bureau also had been pursuing an appeal with the Ohio Supreme Court.

Both sides praised the settlement last night.

"Ohio has made major changes to its workers' compensation system over the past several years," Steve Buehrer, the bureau's administrator and CEO, said in a statement. "The policies that were at issue in this litigation in 2007 are not the same ones in place today, and we're pleased that we have reached a settlement so we can move forward. Improvements have been made to how premiums and discounts are calculated, as well as to billing practices, and premiums are continuing to go down as a result.

"Sound management of the trust fund made it possible to return $1 billion in rebates to customers last year, and major investments in workplace safety are helping employers do a better job of preventing injuries by keeping their workers safe. All of these improvements are paying off for workers and businesses, and we're going to keep building on them."

The lead plaintiff in the case, Earl Stein, said in a statement that the bureau adopted a formula in 2009 that corrected the premium imbalance that many employers were paying.

"Because of this case, thousands of Ohio businesses who might otherwise have gone out of business are still here -- creating jobs and growing our economy," Stein said. "This is a wonderful outcome. The past abuses have ended, thousands of businesses who were overcharged will now get money back that can be reinvested, helping them grow their businesses -- and the families and employees who were hurt by this system will now have additional resources to help rebuild their lives."

The group also noted that the settlement acknowledges the importance of the bureau's authority to set rates.

If Judge Richard McMonagle of Cuyahoga County Common Pleas Court gives preliminary approval to the settlement, class members will be notified with instructions for submitting claims, the bureau said.

A third-party claims administrator is expected to begin processing claims in the next few months.

A special master will be appointed to oversee the claims administrator. The fees of both were capped at $2 million, according to the settlement.

If the claims exceed $420 million, each employer would receive a pro-rated share of the settlement fund. Class members entitled to $10 or less are not eligible for payment. Any unclaimed money would be returned to the bureau.

The fund also will cover the cost of attorney fees and the cost of administering the fund.

It's not immediately clear how much central Ohio businesses would receive as part of the settlement.

When McMonagle ordered the $860 million in damages, Pay Us Back BWC estimated that $105 million was owed to 35,000 businesses in the Columbus area, including 3,000 employers owed $5,000 or more and 143 due at least $100,000. One employer is due $1.4 million.

The bureau has set aside money to cover the verdict.

Mark Williams of The Columbus Dispatch (MCT)

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