The Ohio Bureau of Workers’ Compensation (“OBWC”) announced it would pay $420 million to settle a class action accusing the agency of overcharging for workers’ compensation premiums during a seven-year period.
A number of businesses had sued the OBWC claiming some had been overcharged in order to make up for businesses that were charged much lower premiums in exchange for their participation in the agency’s group rating plan. The settlement resolves the lawsuit, which was filed in 2007.
Under the agreement, a $420 million fund will be created to pay employers participating in the lawsuit, attorney fees, court costs and the costs of administering the fund. Any unclaimed funds will be returned to OBWC’s State Insurance Fund to pay claims to injured workers.
The settlement amount is much less than the $859 million a state judge had initially awarded to the plaintiffs. That was reduced to $651 million after an appeals court decision upheld the basic findings but demanded a review of the award. In June, the OBWC filed a notice of appeal to the Supreme Court of Ohio.
BWC Administrator Stephen Buehrer said in a statement that the state had made major changes to its workers’ compensation system over the past several years.
“The policies that were at issue in this litigation in 2007 are not the same ones in place today, and we’re pleased that we have reached a settlement so we can move forward. Improvements have been made to how premiums and discounts are calculated, as well as to billing practices, and premiums are continuing to go down as a result,” he said.
According to Buehrer, the bureau was able to return $1 billion in rebates to customers last year.
If the court gives its preliminary approval to the settlement agreement, class members will be notified with instructions for submitting claims, and a third-party claims administrator will then begin processing claims in the next few months.
“Because of this case, thousands of Ohio businesses who might otherwise have gone out of business are still here — creating jobs and growing our economy,” lead plaintiff Earl Stein said in a statement issued by his attorneys at Garson Johnson LLC.
According to a blog post on Garson Johnson’s website, the class action contended that the BWC violated Ohio law by compelling, without their knowledge or consent, nongroup businesses to subsidize the group-rated ones.
As a result, group-rated employers paid excessively low premiums and did not cover the costs that they presented to the workers’ compensation system and caused the nongroup companies to pay the difference, which was allegedly about $200 million per year.
The plaintiffs are represented by Stuart I. Garson and James A. DeRoche of Garson Johnson LLC and Patrick J. Perotti, Jonathan T. Stender and Nicole T. Fiorelli of Dworken & Bernstein Co. LPA.
Counsel information for the BWC was not immediately available Thursday.
The case is San Allen Inc. et al. v. Stephen Buehrer et al., number CV-07-644950 in the Court of Common Pleas, Cuyahoga County, Ohio.
Categories: Class Actions of Interest