BWC ON THE HOOK FOR OVER CHARGING NON-GROUP RATED EMPLOYERS

Cuyahoga County Common Pleas Judge Richard J. McMonagle recently issued a decision in San Allen v. Buehrer, Administrator, BWC (Cuyahoga County Court of Common Pleas 2012), No. CV-07-644950 on December 28, 2012 in favor of thousands of Ohio employers who were not eligible for or removed from a group rating plan from 2001 to 2009.  A class action suit filed on behalf employers who were allegedly charged excessive workers’ compensation premiums to subsidize other employers who enjoyed the benefits of inclusion in group rating programs has reached a partial resolution, with BWC found in violation of two Ohio statutes. 

In the 28 page decision, the court found that though BWC did not violate the Equal Protections rights of the Plaintiff employers, BWC did violate Ohio statutes and admitted to treating group rated and non-group rated employers inequitably.   The decision indicates that BWC had a rational basis for treating group/non-group employers differently, in that implementing workplace safety incentives represented a legitimate government interest.  However, BWC specifically violated Ohio Revised Code § 4123.29 and § 4123.34(C) by implementing a prospective rating plan rather than a retrospective plan as required by statute, and by neglecting to “develop fixed and equitable rules controlling the rating system” which “shall conserve to each risk the basic principles of workers’ compensation insurance.” 

Judge McMonagle’s decision drew heavily from the testimony of BWC actuary officials, who admitted to overcharging non-group employers in order to offer deeper premium discounts to group employers.  The class of non-group employers was found entitled to restitution without interest, but the amount is to be determined.  In calculating the amount BWC will be required to repay, the court will rely upon the formula established by the Plaintiffs’ actuarial expert, not upon the formula of BWC’s expert.  A hearing on the final restitution figure is scheduled for March 14, 2013. 

The Ohio Chamber of Commerce estimates the restitution amount could be between $1.3 and $2 billion dollars.  BWC’s assets appear to be robust enough at well over $6 billion to cover the potential judgment.  BWC is almost certain to appeal the decision and the restitution formula to the Eighth District Court of Appeals and the case will likely end up before the Ohio Supreme Court before reaching final resolution.  For those employers who may be eligible for restitution, don't look for a check in the mail any time soon.