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Ohio workers comp bureau agrees to pay as much as $420M in settlement

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The Ohio Bureau of Workers’ Compensation has settled its long-standing legal dispute with a group of small business owners.

The BWC has agreed to pay out as much as $420 million to a group of 270,000 Ohio employers who joined a class action suit originally filed by a group of Cleveland-area employers in 2007.

The settlement, which still needs approval by the appeals court, ends a planned appeal by the BWC to the Ohio Supreme Court.

Both a Cuyahoga County Commons Pleas judge and a three-judge 8th District Court of Appeals panel agreed that the plaintiffs in what came to be called the San Allen case were entitled to refunds from the BWC of hundreds of millions of dollars in premium overpayments paid between 2001 and 2008.

Common Pleas Court Judge Richard McMonagle awarded $859 million in damages. The appeals court affirmed the decision but sent the damage award back to the lower court, saying that some employers might not be entitled to all of the damages awarded.

The award was reduced to $651 million in May. The BWC on June 27 filed its intent to appeal to the Supreme Court.

Both courts agreed that the bureau had granted unreasonably steep discounts, as much as 90%, to employers who annually could join groups at the expense of employers who did not qualify for group membership.

Those discounts were offset by excessively high premiums paid by employers not in groups. An employer could be excluded from group membership for a period of years if they had even a single claim filed against them.

In a statement issued last night, BWC administrator Steve Buehrer acknowledged that the discounts were inappropriate by saying that the bureau has since changed its discount policy.

“Ohio has made major changes to its workers’ compensation system over the past several years,” he said. “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.”

Under the settlement, the bureau will pay $20 million into a settlement fund that will pay for claims to employers participating in the lawsuit, the class’s attorney fees, court costs and the costs of independent administration of the fund.

Jay Miller writes for Crain’s Cleveland Business, a sister publication of Business Insurance.