The Ohio Bureau of Workers’ Compensation has reached an agreement in principle to settle the San Allen case, a class action lawsuit filed in 2007 against the BWC over the pricing of workers’ comp policies that were in place between 2001 and 2008.
Under the agreement, BWC will pay no more than $420 million to settle the lawsuit that was filed in 2007 by a group of Ohio businesses claiming that the agency had overcharged mostly small-business owners who paid non-group premiums. The lawsuit filed in 2007 asked for $1.3 billion in damages.
A Cuyahoga County judge in December 2012 agreed the case could go forward but asked the group to lower the amount of the damage request.
The 8th Ohio District Court of Appeals in May 2014 said the BWC group premium plans in place at the time amounted to an illegal rating system that resulted in employers being overcharged nearly $860 million over several years, the Associated Press reported.
According to the appeals court, the agency had established a system of winners and losers by giving discounted premiums to companies that joined group insurance plans and charging companies outside of the plans excessive rates to pay for the discounts.
The lawsuit claimed around 270,000 companies had been overcharged, according to AP.
The BWC said that while the appeals court upheld most of the initial trial court decision, it remanded the case to the trial court to reduce the original award to account for benefits received by class members who were also in group rating.
At the end of June, the BWC filed an appeal with the state Supreme Court.
The original amount of $860 million was subsequently reduced to just under $651 million, according to the final settlement agreement filed with the Court of Common Pleas in Cuyahoga County, Ohio. It was then further reduced to $420 million, the settlement document filed on July 23 indicates.
In a statement announcing the proposed settlement, BWC Administrator/CEO Steve Buehrer stated:
“Ohio has made major changes to its workers’ compensation system over the past several years. The policies that were at issue in this litigation in 2007 are not the same ones in place today, and we’re pleased that we have reached a settlement so we can move forward. 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. Sound management of the trust fund made it possible to return $1 billion in rebates to customers last year, and major investments in workplace safety are helping employers do a better job of preventing injuries by keeping their workers safe. All of these improvements are paying off for workers and businesses, and we’re going to keep building on them.”
Under the settlement agreement, a third party administrator will manage the claims process. A $420 million fund will be created to pay for claims to employers participating in the lawsuit, the class’s attorney fees, court costs and the costs of administering the fund.
Claims submitted by eligible class members must be postmarked no later than Sept. 22, 2014, the agreement stipulates.
The settlement agreement is subject to the final approval of the court.