Ohio employers are collectively owed $860 million after being overcharged for nearly a decade by the state insurance fund for injured workers, a Cleveland judge ruled yesterday. Cuyahoga County Common Pleas Judge Richard McMonagle's decision involving the Ohio Bureau of Workers' Compensation affects about 270,000 employers, most of them small-business owners, and many are unaware that they are covered by the class action.
Ohio employers are collectively owed $860 million after being overcharged for nearly a decade by the state insurance fund for injured workers, a Cleveland judge ruled yesterday.
Cuyahoga County Common Pleas Judge Richard McMonagle’s decision involving the Ohio Bureau of Workers’ Compensation affects about 270,000 employers, most of them small-business owners, and many are unaware that they are covered by the class action. His order rejected the state’s arguments for paying a smaller amount.
About $105 million of the total is owed to 35,000 businesses in the Columbus area, said Brian Wright of Pay Us Back Ohio BWC, a group that represents the employers.
More than 3,000 local businesses are owed $5,000 or more, and 143 are due $100,000 or more, he said. The biggest sum owed to a Columbus employer is $1.4 million.
“I don’t want to say who it is, as we haven’t contacted them, and they probably don’t even know yet,” Wright said.
The lawsuit, which began in 2007, said the bureau gave discounted premiums to companies that joined group insurance plans, while charging companies not in the groups excessive rates to pay for the discounts.
McMonagle ruled in December in favor of business owners who didn’t participate in the group rating program, agreeing that they had been charged unfair premiums from July 2001 to June 2009.
Lawyers for the businesses argued that companies paying group rates were not charged premiums that covered their losses, which forced the other companies to cover the difference. The bureau discounted its group plans by as much as
A new fee structure took effect in July 2009, after McMonagle ordered the bureau to change its system for setting premiums for injury insurance. The maximum discount set by the bureau for group plans is 53 percent.
The amount that employers are owed in overcharges has been a matter of dispute. Employers suing Ohio in 2007 originally asked for $1.3 billion, which included interest on the amount claimed, but McMonagle asked them to revise the figure downward after declining to award the interest.
During an evidentiary hearing last week, the state argued that the employers did not suffer any harm that entitles them to restitution. Spokeswoman Melissa Vince said the $860 million exceeds claims costs and expenses for the affected companies during the disputed period.
McMonagle ultimately rejected the bureau’s arguments.
“The court finds that the figure submitted by the plaintiffs was calculated accurately,” he wrote.
The lead plaintiff expressed approval of the ruling in a statement issued by Pay Us Back Ohio BWC.
“Tens of thousands of businesses can now put those dollars back to work, creating and protecting Ohio jobs,” said Earl Stein, owner of Corky and Lenny’s deli in Cleveland. “We constantly hear that the state wants to be more business-friendly, yet when we were clearly wronged, they refused to do the right thing. It’s time the BWC remembers that they work for us.”
Pay Us Back Ohio BWC has set up PayNowBWC.com, a website with a search feature allowing employers to check on what might be owed them.
Vince said the bureau plans to appeal, which means immediate reimbursements aren’t likely. Vince said the money for payouts would come from a surplus of about $8 billion held by the $24.5 billion insurance fund for injured workers.
The pooled policies and premiums are managed by third-party administrators, generally very large companies, that approach groups such as the Ohio Chamber of Commerce and professional associations to offer the group policies.
Companies that had claims resulting from employee injuries were kicked out of the groups and then charged higher premium rates while group members paid the lower rates.
In a 2007 letter, BWC then-Administrator Marsha Ryan wrote that in 2006, 6,700 employers saw their premiums increase by an average of
697 percent after they were kicked out of the group. Thirty-one percent of those employers either canceled their workers’-compensation insurance or filed for bankruptcy protection.
Dispatch Reporter Steve Wartenberg contributed to this story.