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Ohio Bureau of Workers’ Compensation Ordered to Pay Refunds to 270,000 Businesses

A court in Cuyahoga County, Ohio has ruled that the Ohio Bureau of Workers’ Compensation must issue refunds to 270,000 businesses because the Bureau gave high discounts for certain employers, and this cost was subsidized by plaintiffs.

These statewide businesses, most of them small businesses, had filed their class-action lawsuit against the Bureau in 2007, seeking refunds to the tune of $1.3 billion. The lead plaintiff was Cleveland delicatessen Corky & Lenny’s.
Plaintiffs claimed that the Bureau forced them to pay higher premiums in order to provide discounts to members in the group rating program. These members were rewarded with up to 90 percent discounts for having good safety records and lower compensation claims.

The result was that non-group employers paid about $200 million a year extra from 2001-2008 just for subsidizing the discounts to group employers. The lawsuit states that in 2006, many businesses went bankrupt after 6,700 firms removed from groups found their rates had gone up by an average of 697 percent. 

The judgment issued by the court was in their favor, but the actual amount they will get back will likely be a lot smaller than $1.3 billion. The judge ruled they were entitled to the premiums they paid in between 2001-08, but not interest on the premiums. A hearing for deciding the exact amount has been set for March.

Three years ago, the court ordered the Bureau to limit the maximum discounts for group employers to 53 percent.  However, the Bureau maintains that it did not break Ohio state law and denies that the group rating system was prejudiced against non-group employers.

The Bureau has not made public any plans to restructure or eliminate the group rating program. On the contrary, they plan to file an appeal against the court’s verdict.

Did you know?
Texas does not force private employers to get workers’ compensation insurance.
A private employer in Texas may choose not to get workers’ compensation insurance. However, this means the employer will not have immunity against workplace injury liabilities and the resultant personal injury filed by injured workers, or their estates in case of a wrongful death. If the employer has insurance, injured employees are forced to file claims through the workers’ compensation system rather than through litigation.