What had previously been a small lawsuit filed by seven Ohio companies seeking restitution from the Ohio Bureau of Workers' Compensation was expanded when Judge Richard McMonagle reclassified the lawsuit as a class-action suit. This ruling expands the lawsuit - San Allen Inc. dba Corky and Lenny's v. BWC - to include an estimated 100,000 small businesses.
The original lawsuit, which sought to recoup what the plaintiffs alleged were excessive and unfair insurance premiums charged for workers' compensation insurance, now pits two groups of small businesses against each other. The first, members of managed insurance groups, have for years been receiving steep discounts from the Ohio Bureau of Workers' Compensation. In some cases these discounts have amounted to up to 90 percent. To make these steep discounts possible, the bureau either ejected from its rolls or excluded from membership all businesses that had ever had a workers' compensation claim made against them. This second group is the group filing suit.
The group's major claim is that to allow for the steep discounts the first group was awarded, the Ohio Bureau of Workers' Compensation put an unfair burden on the second group. They claim that the discounts in effect produce insurance for the first group that their premiums do not cover, forcing the second group to support the first. This claim is supported by 11 accounting groups, including Deloitte Consulting.
According to the Ohio Bureau of Workers' Compensation, one-third of the employers belonging to the second group - approximately 2500 per year - either stopped paying their workers' compensation premiums or went bankrupt. This resulted in a significant loss of jobs for the workers whom the workers' compensation system is designed to protect.
In a 2008 ruling, Judge McMonagle "found the current group rating system hopelessly wanting, unlawful and ordered it simply to comply with Ohio law," according to attorney Stuart I. Garson of Seaman Garson LLC. This ruling was thrown into confusion when, in December 2008, the Ohio General Assembly changed the law to make the current system legal. This change in the law affected the Bureau of Workers' Compensation's fiscal year beginning July 2009. This has not, however, stalled attempts by the plaintiffs to seek restitution for their higher premiums. It is estimated that an eventual ruling in favor of the small business owners could reach a settlement of as much as $1.5 billion.
A ruling and possible change in how the Ohio Bureau of Workers' Compensation does business would be important for several reasons. There is the possibility that all businesses could pay more equitable premiums, which would enable more businesses to hire more workers. This would be an obvious "win" for the plaintiffs. The Bureau, however, claims that a ruling against it could cost the state some 100,000 potential jobs. Mr. Garson refutes this, stating there has not been "any evidence presented or even suggested that fixing the group rating system" would cost Ohio so many jobs.
