We had previously reported, back in late 2012, that the Cuyahoga County Court of Common Pleas determined that the Bureau of Workers’ Compensation’s group rating programs were illegal. That decision was appealed to the 8th District Court of Appeals, which issued its decision/analysis of the situation on May 15, 2014. The 8th District has agreed with the Common Pleas Court that the group rating programs are unconstitutional and, as a result, state-fund employers in Ohio may be entitled to hundreds of millions of dollars in premium rebates.
The gist of the 8th District’s very lengthy opinion is that the group rating program resulted in inappropriately and artificially inflated premium costs for employers who did not qualify for group rating discounts. Rather than establishing premiums for employers based upon their individual injury experiences, the group rating program inflated the premium costs for employers who were not invited to join group rating programs that were managed by third party administrators.
Non-group rating members were essentially, in the court’s opinion, charged with the financial obligation to make up for the reduced premiums being charged to group rating program members. The exact amount of premiums to be refunded to certain Ohio employers is still subject to calculation, with the 8th District remanding the case to appropriately calculate the amount of reimbursement to employers who obtained the benefit of group rating during only a part of the period over which such programs have been in operation.
You can fully expect this matter to be appealed to the Ohio Supreme Court and, therefore, the “final decision” on the issue is yet to come. It is interesting and important to note that two judicial entities have determined that group rating is problematic, illegal, and disproportionately costly to many state-fund employers in Ohio.
We will continue to monitor progress in this case and report developments to you as they arise.