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 has ruled.
Cuyahoga County Common Pleas Judge Richard McMonagle’s decision involving the Ohio Bureau of Workers’ Compensation affects about 270,000 mostly small-business owners, many unaware they are covered by the class action. His order rejected the state’s arguments for paying a smaller amount.
The lawsuit, which began in 2007, said the bureau gave discounted premiums to companies that joined group insurance plans and charged companies not in the group plans 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 they had been charged unfair premiums from July 2001 to June 2009.
Lawyers for the businesses argued 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 as high as 90 percent.
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 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 the employers did not suffer any harm that entitles them to restitution.
Spokeswoman Melissa Vince said the bureau spent $861 million more in claims costs and expenses for the affected companies during the disputed period than they paid in premiums – even as the fund’s net assets shrunk. For every dollar in premiums paid, affected businesses had $1.26 in claims costs, she said.
McMonagle ultimately rejected the bureau’s arguments.
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