BWC Long-Term Premium Plan Impacts Group Rating Program

Posted on July 2, 2008 by Brian Hall

On June 27, 2008, the Ohio Bureau of Workers’ Compensation (BWC) Board of Directors unanimously approved the first phase of a long-term plan that will transition to a new split experience rating method for calculating premium rates that is designed to cushion the premium blow that state-funded employers frequently receive as the result of a single costly workers' compensation claim. In addition, the plan will:

-- Gradually reduce the maximum group rating discount from 85 to 77%beginning July 1, 2009, with a 20% annual cap on premium rate increases caused by these discount reductions;

-- Cap premium increases at 100% for all employers, including those that have been removed from a group; and

-- Develop additional inducements for employers to manage costs and improve workplace safety.

According to the BWC's press release, the long-term plan proposes a gradual transition to the new experience rating method over three years. The first phase of the plan was approved with further study on the group rating rules and governance to be complete by 2009. Other aspects of the long-term plan, such as an additional discount reduction in 2010 and the rating transition in 2011 will be addressed after further testing and impact analysis are complete.

The plan looks to be a step in the right direction for Ohio's state-funded employers. At a minimum, the BWC expects that the changes ultimately will reduce base rates by 23 to 27%. Though it continues the recent reductions in the discounts associated with the group rating program, the plan should make it more difficult for employers to be removed from a group and, for those that are removed, less costly.

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Intentional Tort Amendment Found Unconstitutional

Posted on April 10, 2008 by Jeff Weber

On March 18, 2008, the Court of Appeals for the Seventh Appellate District struck down the portion of Ohio’s Tort Reform Act that created a heightened standard for employees bringing intentional tort claims against their employers. Specifically, Kaminski v. Metal & Wire Prods. Co., Case No. 07-CO-15 (7th Dist. March 18, 2008), was the first appellate decision addressing the constitutionality of this heightened standard, and it found the standard improper.

Normally, an employee who suffers a workplace injury cannot file a lawsuit but must, instead, seek compensation under Ohio’s workers’ compensation system. Proof that the employer’s conduct was intentional, however, allows the employee to go around the workers’ compensation system and file a lawsuit for damages. 

Under the law in effect before the 2005 passage of R.C. 2745.01 – the tort reform provision challenged in Kaminski –the employee had to prove that the employer required the employee to act knowing that an injury was “substantially certain” to occur. Determining whether employer fault rose to this “substantially certain” level was hotly contested in intentional tort cases, with many employers believing that the standard as applied by most courts was too low. 

R.C. 2745.01 essentially raised this standard by clarifying that “substantially certain means that an employer acts with deliberate intent to cause an employee to suffer an injury….” It further required that employees prove all elements of intentional tort claims by “clear and convincing” evidence – a more stringent burden of proof than the typical “preponderance of the evidence.”

The Kaminski court found that this “deliberate intent to injure” standard was so high that it effectively eliminated the cause of action for employer intentional torts. The court then cited earlier Ohio Supreme Court precedent that rejected as unconstitutional efforts to legislate a common-law cause of action out of existence. Based on those cases, the court found that R.C. 2745.01 was unconstitutional.  The court’s ruling effectively restores the old “substantially certain to occur” standard and eliminates the requirement that employees prove a “deliberate intent to injure” through clear and convincing evidence.

Kaminski binds only lower courts within the Seventh Appellate District, which includes Belmont, Carroll, Columbiana, Harrison, Jefferson, Mahoning, Monroe, and Noble counties. It may nevertheless be cited as persuasive authority by other appellate districts, and it is therefore likely that the constitutionality of R.C. 2745.01 eventually will be addressed by the Supreme Court of Ohio.

We’ll keep an eye on this and provide you with updates.
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