Cuyahoga County Common Pleas Court Finds Ohio BWC Group Rating Program Resulted in Overcharges to Non-Group Employers, Orders Restitution
Beginning on August 20, 2012, a bench trial was conducted before Cuyahoga County Common Pleas Court Judge Richard McMonagle in a class action lawsuit against Stephen Buehrer, the Ohio Bureau of Workers' Compensation Administrator, in his official capacity in which a class of employers alleged that they were unlawfully excluded from participating in, or were dismissed from, the Bureau's group-rating program during the years from 2001 to 2009. As a result, the plaintiff companies alleged that they were overcharged by the Bureau and sought restitution of the excess premiums paid. Judge McMonagle issued his decision last week finding in favor of the plaintiffs.
Judge McMonagle initially rejected the plaintiffs' claims that the group rating program violated the Equal Protection clause of the Ohio Constitution, finding that the state's interest in maintaining workplace safety is a legitimate government interest that the group-rating program encourages by offering lower premiums as an incentive for employers to improve their safety records.
Judge McMonagle then held, however, that the BWC violated both Ohio Revised Code (R.C.) 4123.29 and 4123.34(C). Specifically, he concluded that the BWC's group rating plan was not "retrospective" as was required during that time period by §4123.29(A)(4). In addition, he found that the BWC violated R.C. 4123.34(C)’s requirement that the administrator “develop fixed and equitable rules controlling the rating system” which “shall conserve to each risk the basic principles of workers’ compensation insurance.” The result in this regard was not terribly surprising in that the BWC in essence conceded that the rates charged to non-group employers during the period in question were excessive.
Because the court held that the BWC's premiums collected from the plaintiff class of employers was excessive, the BWC will have to pay back the unlawfully collected excess premiums. The amount, however, remains subject to question. What is known at this time is that the court has accepted the plaintiffs' actuarial experts formula for calculating the amount owed, which apparently produces a substantially higher number than the formula proposed by the BWC's expert. Both parties will be given an opportunity to present evidence as to the correct amount to be paid back and then a hearing on the matter will be held on March 14. There are various estimates reported as to the actual amount, with most suggesting that it will be in the nine or 10 figure range.