Ohio employers could share refunds totaling $861 million if acourt decision holding that the state workers' compensation fundovercharged employers is upheld.

Judge Richard J. McMonagle of Cuyahoga County Common Pleas Court(Cleveland) made such a ruling March 3 and will hold a hearing onthe decision March 14.

James DeRoche, a partner at Seaman Garson L.L.C., Cleveland,says McMonagle could finalize the decision that day or shortlyafterwards.

The decision was a response to a class-action lawsuit firstfiled in 2007.

In his decision, McMonagle ruled that the Ohio Bureau ofWorkers' Compensation knowingly charged inequitable rates to someemployers.

" …the evidence that has been established since the preliminaryinjunction displays that the BWC was aware of the inequity in thesystem; was aware it was violating the statutory mandate; and wasaware that the non-group employers were charged excessive premiumsdating back to 1991," McMonagle says.

"By charging non-group employers excess premiums that the BWCknowingly created inequity, the BWC engaged in a course of conductthat it knew violated the very purpose of the statute," the judgeadds.

 "We definitely intend to appeal," says Bill Teets, BWCcommunications director. "As far as the group-rating program, itrewards small companies for getting together and maintaining saferworkplaces." 

Teets contends, "The decision is based on the concept that BWCfund was enriched by the way the group rating program at the timewas set up. We disagree. We don't believe the plaintiffs sufferedany harm that entitled them to restitution."

More than 270,000 of the 300,000 employers in the class definedby the court would get refunds if the decision is sustained,DeRoche and Teets agreed.

DeRoche said that a BWC appeal just to the next higheststate-appellate court would delay the refunds for a year; an appealto the state's highest court would mean the refunds would bedelayed up to two years.

"It depends on what the state wants to do," DeRoche says."Whether the BWC wants to be stubborn, or whether it wants to paythe people the money back that they are owed promptly," hesaid.

DeRoche cites a PowerPoint presentation to the court indicatingthat the "BWC has a surplus of over $7.9 billion even after takinga contingent liability charge of $854 million due to ourlawsuit."

He says the surplus substantially exceeds the BWC's ownguidelines.

But Teets disagrees. He says the BWC maintains its surplus inorder to stabilize rates in the face of high-claims years,potential high medical costs and the fact that WC claims have along tail.

Teets notes that the BWC is currently dealing with some claimsdating back to the 1940s.

DeRoche says that some claimants will get perhaps $250, butothers up to $50,000, and others up to $1 million. The largestpayment will be $1.6 million.

He says 77,000 employers will get more than $1,000, and 50,891employers stand to get over $2,000.

Teets defended the state. He said that during the period coveredby the lawsuit, from July 2001 to June 2009, claims costs for theplaintiffs in the class exceed premiums paid by $861 billion, andthe BWC's net assets declined by $2.5 billion.

But DeRoche said that argument "completely missed the point;they are talking at cross-purposes."

DeRoche says the BWC argument "is completely irrelevant to theissue as to whether they overcharged some employers for thecoverage during the period.