On November 18th, the Cuyahoga County Common Pleas Court in San Allen v. Ohio BWC issued an injunction prohibiting the Ohio Bureau of Workers’ Compensation from enacting its current group rating plan and requiring it to enact a retrospective rating plan for the policy year starting July 1, 2009. At its core, the decision requires the BWC to set premiums retrospectively, as requested by the plaintiffs, who were a collection of employers that had seen their premiums increase as a result of having been excluded from a group based on claim experience. Historically, the rates have been set prospectively by the BWC despite statutory language that the court said requires the retrospective rating. In reaching its conclusion, the court noted its expectation that its decision would result in lowering base rates for state-funded employers at the expense of the significant discounts that group-rated employers have been receiving.
Often citing its belief that the discounts given to group-rated employers are excessive and actuarially unsound, the BWC has been working to reduce the level of discounts provided to group-rated employers for more than a year. It is therefore unclear at this time whether the BWC will appeal this decision. In addition, it is important to note that the BWC argued that, despite the statutory language indicating that the group rating program should be retrospective in nature, the legislature, in fact, intended a prospective rating plan. If that is the case (and recognizing, of course, the changes to the legislature since enactment of the group rating program), the Bureau conceivably could seek a legislative fix. As of now, however, state funded employers should anticipate no changes in their December 2008 or July 2009 premium bills.