Ohio BWC Premium Refunds Issued For $255 Million

July 14, 2015 By JL Risk Management Consultants

Ohio BWC Premium Refunds Possible

The Ohio BWC premium refunds were issued this week to 24,140 overcharged employers across the state. The Ohio BWC originally had an almost $1 billion ruling to pay for premium overcharges.

Building Ohio BWC Premium statehouse oin ohio

Wikimedia commons – Bob Hall

There are many articles on the situation in this blog.

The Ohio BWC is one of the few remaining monopolistic funds in the US. The BWC has not been administered without having a few problems along the way including investing in gold coins.

The original case was appealed and the amount owed was lessened significantly by the courts. The case was finally settled this week for $425 million which is less than one half of the original ruling.

Two interesting side notes were that

If you read the article title and then read the preceding paragraph, the state retained $160 million for the Ohio State Insurance Fund.
A comment was made in the original AP report that many companies did not know they were covered by the class action and did not pursue the matter as a party to the lawsuit.
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Our company had actually offered our services to Ohio employers to assess whether they were not involved in the matter. The state of Ohio even budgeted out and spent $$ on an advertising campaign to let employers know there were possibly refunds available.

We were offering our services for a minimal charge to Ohio employers. However, we found it to be a wasted effort as the response was very small to say the least.

It is beyond my comprehension why more companies did not pursue receiving a premium refund. The worst that could have happened was to be told No after filing the proper paperwork.

There is no sure number on how many of the smaller employers would have received a premium refund. The closest reference found was “a large number.”

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Ohio Workers Comp Crisis Was Rumbling For Few Years

February 10, 2010 By JL Risk Management Consultants

Ohio Workers Comp Crisis Comes To A Head

The Ohio Workers Comp crisis reached a fever pitch this month. I have not mentioned Ohio for a few months. Ohio is one of the few remaining monopolistic state funds where the state is the only insurance carrier.

Picture of Ohio workers comp crisis breaking like rope

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Recently, a county court judge’s ruling certified the original suit as a class action which allows 100,000 small businesses statewide to seek upwards of $1.5 billion in restitution for allegedly being overcharged on their workers’ compensation premiums.

I had analyzed the Ohio situation in one of my past posts. The rumblings started when a statistically unfair advantage was generated by pulling together employer groups but not allowing all companies into these groups.

The Ohio Bureau of Workers Compensation (BWC) had overcharged small business by allowing certain employer groups to have Workers Compensation coverage at heavily discounted rates. The BWC charges below-cost rates to group members to make up for the losses by overcharging businesses that don’t qualify for a group.

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The attorney for the class action group said the flawed method entices employers with unrealistically low premiums. When a work-related injury occurs and forces a business out of a group, it creates a risk-averse system that allows the group to maintain a pristine claim experience and artificially low premiums because the ejected member must now pay excessively high premiums.

The bottom line is that monopolistic state funds do not act like a true business or insurance carrier. That is why they are not sustainable in today’s current insurance market. There are now only four monopolistic funds left. If they do not adopt business models similar to the regular market insurance carriers, the remaining ones will likely not survive.

Who will eventually pay for the possible $1.5 billion from the Ohio mess? The taxpayers will end up with the tab.

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Ohio BWC (Bureau of Workers Compensation) Loses Major Court Case

November 22, 2008 By JL Risk Management Consultants

Ohio map stamp Ohio BWC Bureau Of Workers Compensation

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Ohio BWC Loses Court Case On Interesting Premium Calculations

I had previously posted about how the Ohio BWC is not acting as a true insurer and is using number voodoo to charge smaller employers outrageous premiums while giving certain employer groups enormous discounts. Ohio small businesses were being discriminated against due to their size in the area of Workers Compensation premiums.

Smaller employers do take a hit when looking at cost per unit of coverage. Of course, small companies always pay more per unit for anything from pens to building rent.

Last week, a judge ruled against the Ohio BWC and issued a restraining order blocking the Ohio Bureau of Workers’ Compensation from implementing its prospective group rating plan for policies incepting next year.

The bureau must implement a retrospective rating plan based on loss history for group policies rather than its established method of determining premiums by anticipating future losses. I still do not understand how they can predict future losses without looking at the prior losses. As I said earlier, it was all number voodoo.

Picture Of Judge Watching Ohio BWC Prosecution In Court

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Insurance based on the future only without looking at the past is call naive forecasting. The Ohio BWC attempted to go outside of the rating infrastructure that has been in place since the 1930’s. Viable alternatives to insurance seem to appear every year. The Ohio BWC plan was not one of them.

As I have said many times before in this blog, monopolistic state funds are becoming dinosaurs in the area of Workers Compensation. If a private insurance carrier operated in the same manner as the WSI in North Dakota or the BWC in Ohio, the insurance commissioner would fine them and/or place them in receivership.

An insurance system cannot be operated like a government agency in the current Workers Comp marketplace. There are four monopolistic state funds. I wonder how long they can survive.

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Ohio Monopolistic Workers Comp System Having Problems

August 13, 2008 By JL Risk Management Consultants

Ohio Monopolistic Workers Comp System May Be Up For A Few Changes

Did Ohio Monopolistic BWC fail? I have posted on this one a few times in the past. As you can see from the last post, the people that suffer the most from wholesale and somewhat unfounded changes to a Workers Comp system are the premium payers.

Map of Ohio Monopolistic with night time drawing

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Ohio’s state-run monopolistic system is not working that well. There have been so many cases of internal fraud and bad decisions in the last five years. The worst had to be the investment of premiums paid into gold coins.

North Dakota has experienced a huge amount of internal turmoil over the last few years. There were investigations and even arrests made on some of their employees. They ended up with a huge surplus that was likely based on improper claims denials.

Most of the states that were once monopolistic have failed and/or to a fully open market system. The states usually convert their monopolistic system to a private carrier, then to an open market system. These carriers usually lose a huge portion of their market share–such was the case in Nevada.

It is my prediction that all of the monopolistic state funds will convert to a private system in the future.

Update – Ohio’s BWC still provides all of the Buckeye State’s employers with Workers Compensation policies.

Why have monopolistic states been failing over the last few years? Workers Compensation insurance is based on a free-market system. Letting the government run the programs have resulted in horrendous results in some cases. Workers Comp cannot be administered like a government program.

Bottom Line – You cannot let governmental officials run the system. Their job is to monitor the Workers Comp system to make sure there is a level, legal, and fair playing field.

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Ohio BWC Sued For Creating Privileged Employer Groups

August 10, 2008 By JL Risk Management Consultants

Ohio BWC Created Illegal Preferred Risk Groups

Ohio BWC insureds file a huge lawsuit. Business owners will try to convince a judge that Ohio plays favorites with some companies by offering unfair discounts in money they must pay to the state’s fund for injured workers.

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Attorneys representing several businesses, including a sandwich shop and a copper tube manufacturing firm, plan to ask a Cuyahoga County judge on Tuesday to bar the BWC using the rate-setting system.

Bureau officials say recent changes they made to the system will improve the fairness of the rate-setting system to make Ohio attractive to business investment.

At issue is the bureau’s practice of offering discounts of up to 90 percent – and 85 percent next year – for business groups with records of workplace safety. The lawsuit contends that businesses outside such groups are subsidizing the injured-worker system.

The lawsuit could affect 85,000 businesses that pay non-group rates. The lawsuit claims such non-group employees pay more than $200 million to subsidize 98,000 group-rated employees.

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An example of the premium overcharging by the Ohio BWC of a doughnut business of 35 years:

Paying $800 yearly to insure four full-time employees and nine part-timers
Two injury claims five years ago involving falls on wet floors. One was minor and one required surgery.
The two claims caused the Workers Comp premium to rise to $10,000 as the company was removed from the preferred groups.
That is a 1,250% increase in premiums!

The lawsuit contends the bureau tries to anticipate what will happen in the coming year when setting rates rather than following the law and applying the workplace experience of the past year to premiums.

Businessman Reaching Ohio BWC Financial Goals Vector Image

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James Barnes, the agency’s chief legal officer, said the bureau has worked over the past year to refine rate-setting. “These steps are part of a deliberate and comprehensive effort to make rates and premiums even fairer and more accurate for all employers,” he said in a statement.
Prior to the December decision to cut discounts, the bureau acknowledged that the set-up it had in place was handsomely rewarding groups of businesses with spotless safety records that banded together into coalitions or associations, but hurt companies that experienced even one serious accident.

A third of the 6,800 businesses that lost their group rating in 2006 because of a serious accident or death involving an employee either stopped paying insurance or filed for bankruptcy, according to the bureau.

Stuart Garson, an attorney for the companies challenging the workers’ comp bureau, said the agency had the right to take safety records into consideration in setting premiums, but said its rate-setting formula wasn’t fair to all employers.

BWC handled nearly 172,000 job-injury claims last year, including 176 work-related deaths, and about 10 percent of claims were dismissed. In 2006 it paid out more than $1.9 billion in benefits and collected more than $2.1 billion from employers.

Next Up – What is the Real Problem Here? I have posted it numerous times. Coming Soon – I will see how the Ohio BWC formulas compare to other states.

Article On Ohio Workers Compensation

May 8, 2008 By JL Risk Management Consultants

Ohio Workers Compensation System

Map of Ohio Workers Compensation In Globe Graphic

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Below is an article about Ohio Workers Compensation. Ohio is one of the states that has a state-run Workers Compensation system. I have predicted that all monopolistic Workers Comp systems will eventually fail and/or open up to a free-market system. Ohio’s Workers Comp system basically failed, but was propped up by the state government. It is great to see Ohio adapt a great cost saver for employers.

Nearly 280,000 employers participating in the Ohio Bureau of Workers’ Compensation (BWC) system have the opportunity to select the managed care organization (MCO) that will manage their workers’ comp claims for the next two years. MCO open enrollment is underway and runs through May 30, 2008.

BWC’s mission is to protect injured workers and employers from loss as a result of a workplace accident, and to enhance the general health and well-being of Ohioans and the Ohio economy. A network of 24 MCOs support this mission, serving as a primary link between injured workers, medical providers, employers and BWC.

MCOs assist Ohio’s employer community regarding medical management and return-to-work initiatives for their injured employees. They partner with employers to ensure prompt filing of claims, timely treatment for injured workers and swift implementation of recovery programs.
“As Ohio businesses compete in today’s global economy, one of any employer’s most important assets is a safe and healthy work force,” said BWC Administrator Marsha Ryan. “When an unfortunate incident occurs in the workplace, the goal of a safe and timely return to work is paramount. MCOs are an important component in ensuring rapid and adequate treatment for the injured worker.”

Picture Of Doctor And Medical Personnel Ohio Workers Compensation At Hospital Room

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Every two years, BWC holds an open enrollment period that allows Ohio’s public and private state-fund employers the opportunity to evaluate each MCO’s customer service and medical management performance. It is the employers’ decision to remain with its current MCO or to choose another MCO to medically manage workers’ compensation claims.

BWC provides MCO services to Ohio employers as part of their workers’ compensation premium payment. These services are available at no additional cost.

To assist Ohio employers in choosing their MCO during this open enrollment period, BWC offers educational resources including the MCO Selection Guide and MCO Report Card. These tools can be found by visiting ohiobwc.com, or more information may be provided by phone at 1-800-OHIOBWC.

Next up – A Question from one of our readers