Ohio BWC Settles Premium Class Action Dispute: Ohio Businesses to Submit Refund Claim Forms by October 22, 2014

After six and half years of litigation in the trial court and appellate court, the Ohio Bureau of Workers' Compensation (“BWC”) has agreed to settle a lawsuit brought on behalf of Ohio businesses alleging that the BWC overcharged them for workers' compensation premiums for years. The BWC agreed to establish a $420 million settlement fund for the benefit of the settlement class, consisting of businesses that paid BWC premiums as non-group rated employers for any policy year 2001 to 2008. Claim forms have been distributed by the settlement administrator and are due by October 22, 2014.

The case, San Allen, et al. v. Ohio Bureau of Workers’ Compensation, was filed in Cleveland, Ohio on December 19, 2007. The Plaintiffs, a collection of Ohio businesses, alleged that the Ohio BWC established an unlawful group rating system that violated Ohio Revised Code 4123.29 and 4123.34, which require the BWC to “develop fixed and equitable rules controlling the rating system ….” The BWC had implemented a “group rating system” that allowed employers to be treated as a single entity for the purposes of determining their workers’ compensation premiums. Because the system was not “retrospective”, group sponsors were able to reconfigure the groups each year, leading to artificially large discounts to the groups. Because the BWC is revenue neutral, to make up for the shortfall BWC charged the non-group employers inflated premiums greater than the risk they brought to the system. By way of example, a carpenter “in group” might be charged $4,500 annually for workers' compensation premiums. That same carpenter, with the exact same claims history, “out of group” would be charged $45,000 in premiums. The BWC fixed the rating system after the lawsuit was filed.

The BWC denied the allegations, contending that its Administrator has broad discretion to set workers’ compensation premium rates. On March 20, 2013, the trial court entered judgment for over $859 million in favor of the San Allen class. The BWC appealed that judgment, and the 8th District Court of Appeals reduced the judgment amount to approximately $651 million. The BWC then petitioned the Ohio Supreme Court, asking that the high court accept the case and reverse the entire judgment. With that petition pending, the parties reached a settlement under which the BWC would create a Settlement Fund in the gross amount of $420 million. The Ohio Supreme Court has stayed the BWC’s appeal to allow the Settlement to move forward.

The parties have established a website, www.OhioBWCLawsuit.com, which explains the mechanism for submitting claims. In order to receive any compensation they may be due, all members of the San Allen class are required to submit to the claims process as set forth on that website. If you believe that you may have a claim you can contact the settlement administrator at 1-844-322-8230. Claim forms are due on October 22, 2014.

If you have any questions regarding a workers’ compensation issue or other employment practices matter, please call a member of our Workers’ Compensation or Corporate and Business Practice Groups.