COLUMBUS, Ohio-Ohio voters' decisive defeat of a workers compensation reform law last week likely kills the prospects for significant workers comp changes in the state for the near future.

In one of the few insurance-related ballot initiatives in the country last week, 57% of Ohio voters rejected State Issue 2, which asked whether a new workers compensation law passed earlier this year should be allowed to go into effect.

The final but unofficial tally was 1,711,701 "no" votes and 1,286,188 "yes" votes, a spokeswoman for the Ohio secretary of state said.

An almost 15 percentage-point gap between no and yes votes surprised spokesmen for both sides, who thought results would be closer.

According to employers, the law would have eliminated waste, fraud and abuse as well as speeded benefits payments to injured workers. That would have eliminated the need for costly personal-injury lawyers.

The campaign over workers comp reform legislation in the exclusive-fund state was "bitter" and "heated," according to spokesmen for the victorious Committee to Stop Corporate Attacks on Injured Workers, a coalition composed of the AFL-CIO and trial attorneys.

The campaign also pitted Dem-ocrats against Republicans, who control the Legislature.

Both sides made misleading statements in an effort to woo voters, according to several complaints each side filed with election officials about the wording of campaign mailings and advertising.

At the root of the referendum was S.B. 45, signed into law in April. The 104-page measure contained primarily pro-employer changes to the state's workers compensation laws, designed to improve the timeliness, duration and delivery of lost-time and impairment benefits in Ohio (BI, June 30).

Ohio AFL-CIO President William A. Burga said that it was "the worst anti-worker, anti-family bill in Ohio history" and that the "takeaways" it contained were "unnecessary and unjustified."

For example, the law would have made it more difficult for injured workers to obtain permanent partial disability benefits. In addition, it would have closed most claims after five years rather than 10 and reduced to 26 weeks from 200 weeks some wage-loss benefits for injured workers who were able to work but could not find jobs.

The depth of organized labor's concern was demonstrated late in the summer, when it submitted roughly twice the number of signatures needed to get the measure challenging the law on the fall ballot. Labor's successful petition drive stayed implementation of the law pending the Nov. 4 vote (BI, Sept. 8).

From the start, employers faced an uphill battle because the wording of the referendum, as dictated by Ohio law, required that a majority of voters give a "yes" vote, which is considered harder to obtain in a ballot initiative than a "no" vote.

However, employers' cause was endorsed by nearly every major newspaper in the state, noted Andrew Doehrel, chairman of Keep Ohio Working, the broad-based employer and business coalition that campaigned for passage of the referendum and enactment of the law.

In addition, pro-business supporters significantly outspent their opponents.

By late October, they spent nearly $3.25 million, more than 21/2 times the $1.21 million their opponents spent, according to campaign disclosure reports.

Labor, in fact, used the money issue in its campaign.

In his victory statement, Mr. Burga said: "Today we've made history. We've proven that in Ohio, people can be more powerful than money."

The outcome disappointed employer and insurer supporters of the new law.

"We felt we were in a very close race with a large number of undecideds. It appears that the undecideds voted no," said Mr. Doehrel of Keep Ohio Working. The no votes were spread around the state and dominated in 73 of 88 counties, according to his statistics. However, absentee ballots favored employers.

The complex nature of the issue hurt employers, said Richard D. Schafstall, senior counsel with Cincinnati-based Cinergy Inc., a gas and electric company. Mr. Schafstall serves on several board committees of the National Council of Self-Insurers. "If you have an issue that is almost impossible to educate voters about through TV sound bites, then the likelihood is that undecided voters will vote no," he said.

"As much as I think it is a good-government bill, I think the message has been sent," Mr. Schafstall said. It will be "difficult" in the short term to get legislators to consider more workers comp reform, he said.

After the referendum's defeat, Gov. George V. Voinovich asked the administrator of the Ohio Bureau of Workers Compensation to summarize non-controversial measures in the defeated workers comp bill.

"The goal is to find consensus provisions that both sides can support," said Patricia Madigan, deputy press secretary for Gov. Voinovich, who appeared in several of the pro-employer's advertisements.

However, it is uncertain how legislators will view even a watered-down version of the reform bill, especially because the governor has announced plans to run for the U.S. Senate next fall.

The failure of the reform effort in Ohio is not expected to have national implications, said a spokesman for the American Insurance Assn. in Washington. "The Ohio situation is an aberration, given the string of victories across the states the past several years in passing workers comp reform," the spokesman said. The AIA is concerned about the condition of Ohio's workers comp system, even though private insurers do not cover workers comp in Ohio.

In Ohio, though, "the need for workers comp reform has not gone away by voting 'no' on Issue 2. The need is still there from a service viewpoint to injured workers, from a cost impact on employers, from an economic development standpoint of being able to attract and retain jobs in the state of Ohio," said Mr. Doehrel.

The defeat means the system will experience less cost savings that could be passed onto employers.

According to a statement from Keep Ohio Working, "While there have been modest rate reductions and premium credits in the past year, Ohio's workers compensation costs still remain higher than many of the states we typically compete with when trying to attract new businesses and good jobs for Ohioans. By eliminating unnecessary waste, fraud, abuse and delays from the system," the Issue 2 reforms would have contributed to a more efficient and cost-effective workers comp system and strengthened Ohio's competitive standing.