Attorney dealing with private employers’ claim believes other public bodies could follow; state will respond next month

By JAY MILLER,  August 27, 2013 |  Crain’s Cleveland Business


In the wake of a successful class action by private employers, the city of Cleveland has filed a “me-too” lawsuit against the Ohio Bureau of Workers’ Compensation that claims it was overcharged for insurance premiums. And an attorney involved in the private employers’ lawsuit suspects more public bodies may follow Cleveland’s lead.

In its complaint, the city contends the bureau was undercharging public employers that could qualify for a group rating plan. At the same time, the lawsuit maintains, public entities such as Cleveland that did not qualify for group rating were paying unjustifiably high workers’ compensation insurance premiums.

The city filed the lawsuit in Cuyahoga County Common Pleas Court June 28. The case is assigned to Judge Carolyn Friedland. The lawsuit asks the court to order the bureau to repay an unspecified amount of excessive premiums paid.

Because the workers’ comp bureau is financed by employers’ insurance premiums, it could be forced either to raise insurance premium rates or dip into its reserves should it be asked to repay premium overpayments.

City spokeswoman Maureen Harper said Cleveland’s case “is based on a ruling in a similar case, a suit involving private employers that found private non-group rated employers were also historically overcharged for premiums.”

In an email, Bureau of Workers’ Compensation spokeswoman Melissa Vince said, “BWC is aware of the lawsuit and will be filing a response in mid September.”

Last March, Cuyahoga County Common Pleas Judge Richard McMonagle awarded a group of more than 270,000 Ohio private employers $859 million because, he ruled, the bureau charged excessively high premiums to the employers over an eight-year period.

Attorneys for the suing employers in that case, known as San Allen v. The Ohio Bureau of Workers’ Compensation, claimed private-sector employers that did not qualify for membership in insurance-buying groups subsidized discounts of as much as 90% to employers that could join them.

After the San Allen lawsuit was filed in 2007 and, the bureau said, in response to a consultant’s study that found recipients’ claims experience did not justify the highest discounts, the bureau changed its premium structure to reduce the discount to group-rated employers.

At the time of the San Allen ruling by Judge McMonagle, the bureau issued a statement that it believed its actions were lawful and that no restitution was warranted. The bureau has appealed the judge’s decision to the Ohio Eighth District Court of Appeals.

Stuart Garson, one of the San Allen group’s attorneys, speculated last week that other cities might follow Cleveland’s lead.

“I would not be surprised to see a class action filed somewhere in Ohio against the bureau — totally on our theory and completely using the judgment (by Judge McMonagle) and our arguments — for public employers, which would be municipalities and school systems,” Mr. Garson said.