COLUMBUS, Ohio (AP) - The director of the state insurance fund for injured workers said Friday that he's disappointed with an unusually pointed appeals court decision that says the fund overcharged employers by hundreds of millions of dollars.
Steve Buehrer, Ohio Bureau of Workers' Compensation administrator and CEO, said the agency is considering its options.
Buehrer said he's pleased the court recognized that many businesses benefited from a program that put companies in group rating plans. But the court also said the plans resulted in nearly 300,000 companies being overcharged.
The 8th Ohio District Court of Appeals on Thursday said the plans amounted to an illegal rating system that resulted in employers being overcharged nearly $860 million over several years. It said the agency set up a system of winners and losers by giving discounted premiums to companies that joined group insurance plans and charging companies outside of the plans excessive rates to pay for the discounts.
"Reduced to its essence, this appeal is about a cabal of Ohio Bureau of Workers' Compensation bureaucrats and lobbyists for group sponsors who rigged workers' compensation insurance premium rates so that for employers who participated in the BWC's group rating plan, it was 'heads we win,' and for employers who did not participate in the group rating plan, it was 'tails you lose,'" the court said.
The court's unanimous ruling affects about 270,000 mostly small-business owners who paid non-group premiums from July 2001 to June 2009. Many are unaware they are covered by the class-action lawsuit that lead to the ruling.
The suit, which began in 2007, now returns to a Cleveland judge to recalculate the exact amount owed employers.
In March 2013, Cuyahoga County Common Pleas Judge Richard McMonagle rejected the state's arguments for paying less than the $860 million.
That order followed his December 2012 decision in favor of business owners who didn't participate in the group rating program.
The bureau's pooled policies and premiums were managed by third-party administrators, generally large companies, that approached groups such as the Ohio Chamber of Commerce and various professional associations to offer group policies.
Companies with worker-injury claims were kicked out of the groups then charged higher premium rates while group members paid lower rates. The bureau discounted its group plans as high as 90 percent.
In its Thursday decision, the appeals court said businesses outside the group plans were forced "to subsidize excessive, undeserved premium discounts" given to employers "handpicked by group sponsors," The group sponsors acted with a temerity "untempered by any notions of equity" from the bureau, the court said.
The bureau implemented a new fee structure in July 2009 after McMonagle ordered it to change its system for setting premiums for injury insurance. The maximum discount set by the bureau for group plans is 53 percent.