Group Rating Settlement
In the July, 2014 Comp Connection, we reported the Bureau settled the Group Rating litigation (San Allen, Inc. v. Buehrer, Administrator, Bur. Of Work Comp.), agreeing to create a $420 million fund, from which each employer would receive a pro-rata share of the settlement fund. The case returned to the trial court, which granted preliminary approval to the settlement in late August, 2014.
As part of the preliminary approval, the court issued a notice, setting forth which employers may be eligible to receive a pro-rata share of the settlement proceeds. Under the notice, non-group rated state fund employers in one or more of the policy years from 2001-2008 are considered eligible “Class Members.” Employers who were group rated during the above years also may be entitled to a reduction for benefits received as group rated employers. To receive compensation, Class Members must submit a “claim form” to the Settlement Administrator by October 22, 2014. If a state fund employer wishes to object to the settlement, it may do so by October 22, 2014. A final approval hearing will take place November 19, 2014. Under the preliminary approval order, settlement proceeds should be issued to Class Members in early 2015.
For more information on filing a claim for compensation, below are copies of the court’s Preliminary Approval Order, Amendment to Preliminary Approval Order, and Court Ordered Notice of Class Action and Proposed Settlement. You may also contact a member of our workers’ compensation group by clicking here.
REMINDER: 9 days to register for Bugbee & Conkle’s FREE Annual Employment Law Seminar:
September 25, 2014
12:30 — 4:30 p.m.
Hilton Garden Inn Perrysburg, OH
THE BUREAU APPROVES ANOTHER $1 BILLION REBATE
Last year, state fund employers received a rebate from the Bureau as part of its “Billion Back” program. On August 13, 2014, Governor John Kasich and Bureau Administrator Stephen Buehrer announced a second $1 billion rebate to state fund employers, called “Another Billion Back.” According to the Bureau, the strength of the Bureau’s investment portfolio has enabled the agency to rebate additional money to state fund employers.
After the close of business on September 26, 2014, the Bureau will identify which employers are eligible for the rebate. All state fund employers are eligible, as well as private employers and PECs, which were billed during specifically defined policy periods. According to the Bureau’s website, the rebate will equal 60 percent of an employer’s annual premium. The Bureau anticipates distributing checks as early as October, 2014, assuming approval by the Bureau’s board of directors.
More information on the Another Billion Back program can be found on the Bureau’s Website by clicking here.
Court of Appeals Finds Bureau Properly Required Employer to Reclassify Employees Retroactively
In State ex rel. Aaron’s, Inc., v. Bur. of Work. Comp., 2014-Ohio-3425, a Bureau audit found a state fund employer misclassified its employees . For several years the employer classified 76% of its employees as clerical, where only 6% of its workforce should have been classified as such. Because of the magnitude of the employer’s misreporting, the Bureau retroactively applied the reclassification for 24 months (the statutory maximum), which required the employer to repay the Bureau $2 million in underpaid premiums.
The employer filed a petition for writ of mandamus in the 10th District Court of Appeals, arguing the Bureau should not be permitted to retroactively apply the reclassification where the Bureau’s custom had been to apply reclassifications prospectively in the absence of a finding of fault or wrongdoing on the part of the employer. The court of appeals rejected the employer’s argument, finding the Bureau was well within its discretion to apply reclassification retroactively, especially considering the magnitude of the misclassification.
Employers should note the Bureau has broad discretion in rate-setting matters. As a general rule, the court’s will defer to the Bureau on such matters unless the Bureau’s decision is arbitrary, capricious, or discriminatory.