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UPDATE | The State of Ohio Settles Worker's Comp Overpayment

Posted on Mon, Jul 28, 2014 @ 09:34 AM

by David J. SchmittDavid J. Schmitt

A lot can change in a few weeks. Only a matter of days ago, the State of Ohio appealed the San Allen litigation to the Ohio Supreme Court. If you have seen my earlier blog posts on this case, you may recall that pursuant to the trial court ruling, employers who paid Ohio Worker’s Compensation premiums between 2001 – 2008, and which were not group-rated, were found to be entitled to reimbursement for a portion of their premiums.

In the case of San Allen, Inc., et al, v. Stephen Buehrer, Administrator of the Ohio BWC, Cuyahoga County Court of Common Pleas, Case No. CV-07-644950, the plaintiffs consist of Ohio employers who paid workers compensation premiums during the indicated period, and which did not receive group-rated premium discounts. The lawsuit contended that the BWC’s premium discounts for group-rated employers were too steep and that the BWC overcharged other employers to make up the difference.

The plaintiffs initially requested close to $1.3 Billion in reimbursement for class members. In a decision issued December 28, 2012, Judge Richard McMonagle that the class was entitled to reimbursement in the amount of $860 Million Dollars.

Unsurprisingly, the Ohio BWC appealed the decision to the Cuyahoga County Court of Appeals.  That Court has upheld the lower court’s decision, and was unstinting in its criticism of the BWC, stating,  “Reduced to its irreducible essence, this appeal is about a cabal of Ohio Bureau of Workers’ Compensation bureaucrats and lobbyists for group sponsors who rigged workers’ compensation 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 of Appeals also returned the case to the trial court for a recalculation of damages, based on the State’s assertion that some employers were being credited for years in which they were not actually class members. This led to a reduction in the award from $860 Million to $650 Million.  

Even after this reduction, the State appealed the case to the Ohio Supreme Court, but continued to negotiate with class counsel. Yesterday, a tentative settlement in the amount of $420 Million was announced. I describe this as “tentative” because the settlement must be approved by the trial court judge. Judge McMonagle has shown himself to be sympathetic to the plaintiff employers, and there is some chance, albeit a small one, that he may refuse to approve the settlement and tell the parties to negotiate further. Additionally, attorney’s fees will be deducted from the total, and those too must be approved by the judge.

Once approved, class counsel will be required to notify all class members of the settlement and the method by which they can submit their claim for reimbursement. While the formula is not yet known, it will undoubtedly be based on the amount of premiums paid and the number of years in which the company was a class member, i.e., was not group rated.

As developments continue to arise in this case, Cors & Bassett will provide further information and guidance to assist you. Please contact David Schmitt  at djs@corsbassett.com or by phone at 513-852-2587 if you would like to discuss this matter further.

Tags: Ohio Workers' Compensation, San Allen Litigation