A group of small businesses in Northeast Ohio has been overcharged for workers’ compensation insurance in a class action lawsuit, argued this summer, a local judge found.
The businesses claimed that the steep discounts they were offered to join groups administered by third parties were only possible because the Ohio Bureau of Workers’ Compensation overcharged the businesses who did not qualify for group members.
Cuyahoga County Common Pleas Judge Richard McMonagle said the Bureau of Workers’ Compensation “received and retained excess premiums charged to the Plaintiff Class.” The judge also cited the testimony of several current and former bureau employees, including the department director who testified in that the BWC had known since 2001 that non-group employers were over paying for premiums beyond what they should have paid.
The judge has not yet set damages due to the fact that the financial information and calculations needed are not available. He has ordered the plaintiffs to recalculate their claim for damages by January 28, 2013, upon which he would issue the final order.
The attorneys who represented the plaintiffs believe that more than 100,000 employers were eligible for $1.27 billion in restitution for overpayments from 2001-2009. Garson estimated the damages at a minimum of $800 million to date.
Due to the workers’ compensation bureau being financed by employers’ insurance premiums, the BWC could be forced to either raise insurance premium rates or dip into its reserves to pay for damages.