Categories: Human Resources, Policy & Regulation, Workers' Compensation,
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San Allen vs. Ohio BWC – Case Update

On December 28, 2012 a decision was issued regarding the civil action lawsuit against BWC by Judge Richard J. McMonagle from the Cuyahoga County Court of Common Pleas in favor of the plaintiffs, finding the Ohio Bureau of Workers’ Compensation in violation of two Ohio statutes.

This class action complaint was filed in 2007 stating that BWC has been treating group rated and non-group rated Ohio employers inequitably, which violates the Ohio Revised Code.

Judge McMonagle found that BWC “unlawfully charged the plaintiff class excessive premiums in violation of Ohio Revised Code 4123.29 and 4123.34, and the plaintiff class is thereby entitled to restitution for those overcharges.” During the decision,  BWC produced new figures essential to calculating the final damages to the plaintiffs. On January 28th, the plaintiffs are required to submit the final restitution calculation to the court.

A formula created by the plaintiff’s actuarial expert, Allen Schwartz, has been approved to be used to calculate the exact amount that the plaintiff class was overcharged. After the restitution formula, referred to as the “Schwartz Formula”, is submitted to the court BWC will have until February 28th to object and the final restitution calculation is set for a March 14th hearing.

Since this case was presented to the courts there have been several estimates regarding the overcharge to non-group employers during policy years July 2001 through June 2008. Attorneys representing the plaintiff class, Garson and DeRoche from Seaman Garson LLC., estimated the overcharge at $1.27 billion.

BWC’s net assets decreased by $814 million in December resulting in net assets of almost $8.0 billion as of December 31, 2012. The Bureau has recorded a loss contingency of $854 million as a result of the Cuyahoga County Common Pleas Court decision, awarding damages to the plaintiff class in the San Allen case.

The future existence of group rating has been a concern brought up by Ohio employers, which BWC addressed in September of 2009  with the “plan for Adequacy and Equity in Ohio’s Group-Experience-Rating Program” report. The report and action were required by House Bill 79 signed in January of 2009 to protect both group rated and non-group rated employers.

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