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Cleveland judge awards Ohio employers $860M for overcharges

4:46 PM, Mar 20, 2013   |    comments
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  • COLUMBUS -- A Cleveland judge has ruled Ohio employers are collectively owed $860 million after being overcharged for nearly a decade by Ohio's insurance fund for injured workers.

    Cuyahoga County Common Pleas Judge Richard McMonagle's Wednesday ruling involving the Ohio Bureau of Workers' Compensation affects about 270,000 mostly small-business owners.

    Many are unaware they're covered by the class action.

    "We've spent years on this case and the BWC never denied that we were overcharged. Now the Court has ordered them to pay. Tens of thousands of businesses can now put those dollars back to work, creating and protecting Ohio jobs," explained Earl Stein, lead plaintiff in the case and owner of Corky and Lenny's, a popular delicatessen on Cleveland's east side.

    "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 remember that they work for us."

    Through numerous motions, hearings and the trial, the Bureau has never denied that they overcharged over 272,000 businesses. Last week during a final hearing to determine the damage amount, the Bureau's experts calculated that the overcharges were $400 million dollars.

    "The Court says we were damaged by nearly $860 million dollars. Last week I heard the Bureau's experts acknowledge $400 million in damages." Stein noted, "My message to the Bureau – pay us the $400 million and we can fight over the other $460 million later."

    An employers' organization Pay Us Back Ohio BWC has set up an informational web site, www.PayNowBWC.com, with an employer search feature.

    McMonagle ruled in favor of the business owners in December, agreeing they had paid unfair premiums from July 2001 to June 2009, when a new fee structure was put in place.

    The amount to be returned has been argued since then. The bureau plans to appeal.

    Wednesday afternoon, plaintiffs' attorneys released a statement:

    "Justice has prevailed. We are thrilled for all of the Ohio businesses who are owed restitution after suffering years of unlawful overcharges at the hands of the Ohio Bureau of Workers' Compensation. As the judge found, the BWC knew for years that it was imposing excessive annual premiums on thousands of businesses, and also destroying many businesses with huge rate increases."

    "Now is the time for the BWC to do the right thing and immediately reimburse these businesses. If the BWC is truly business friendly it will not further delay payment so tens of thousands of small businesses can reinvest those dollars into creating and protecting Ohio jobs."

    BWC's response was:

    "We are disappointed in the Judge's order today in the San Allen case and we do plan an appeal. We maintain our actions were lawful and restitution is not warranted in this case.

    While the plaintiffs have argued that BWC was unjustly enriched by the premiums it charged to members of the class, consider:

    • The actual claims costs and expenses of the companies in the class exceeded their premiums paid to BWC at a disproportionately higher rate than those companies not in the class.
    • These employers' claims costs were $861 million more than the premiums they paid during the period, and BWC's net assets decreased by $2.5 billion over that period.
    • On a dollar-for-dollar basis, for every dollar of premium collected during the class period, the class members as a whole had $1.26 in claims costs.
    • Every dollar BWC collects from employers is spent on the prevention of workplace accidents and the care of those Ohioans injured on the job.

    "We believe the dollars we've collected have been spent appropriately and that all Ohio businesses have benefitted and continue to benefit from BWC programs and services. Moreover, under the leadership of Governor John Kasich, BWC has worked to maintain low and stable rates. Ohio's private employers have saved an estimated $210 million in premiums over the past two years, during which time BWC reduced base rates and reduced its administrative budget."

    "Until such time as the matter is ultimately resolved by the courts, BWC will continue its emphasis on promoting money-saving programs like Destination: Excellence, which reward employers for creating programs that improve workplace safety and get injured workers healed and back to work sooner."

    Associated Press

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