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Cleveland
Plain Dealer…
Ohio
businesses want nearly $1.3 billion in workers' compensation premiums
returned
By Peter Krouse
Monday, August 20, 2012
CLEVELAND, Ohio -- More than 270,000 Ohio employers, most of them small
businesses, hope a Cuyahoga County judge concludes they were charged
excessive workers' compensation premiums and are owed nearly $1.3
billion.
But the Ohio Bureau of Workers' Compensation contends the premiums it
charged the businesses between 2001 and 2008 were fair and that many of
those claiming to be unfairly penalized, at times benefited from the
system.
Lawyers for the two sides delivered opening statements Monday as the
lawsuit, filed in late 2007 by Woodmere restaurant Corky &
Lenny's and other businesses, went to trial before Common Pleas Judge
Richard McMonagle.
At issue are discounts that the bureau granted to businesses that
banded together to form group insurance plans. The suit claims
businesses that were not part of group insurance plans paid absurdly
high premiums to offset the discounted rates of those businesses in
group plans.
The problem was exacerbated by the insured groups dropping members who
had claims filed against them, said Stuart Garson, one of several
attorneys representing the plaintiffs. That meant the groups would not
be docked with higher premiums the following year.
"You culled the group every year," Garson said.
As a result, companies paying group rates were not charged premiums
sufficient enough to cover their losses, lawyers for the plaintiffs
contend, forcing companies who were not part of groups to make up the
difference.
After the lawsuit was filed, McMonagle ordered the bureau to change its
system for setting premiums for injury insurance in 2009.
The bureau lowered discounts, once as high as 90 percent for group
plans, to a maximum of 53 percent, eliminating the need for deep
subsidies and reducing the incentive for group plans to shed members
facing claims, Garson said.
Earl Stein, co-owner of Corky & Lenny's, said his business got
tossed out of a group after the restaurant sustained a claim or two and
its annual premium jumped from $25,000 to $95,000.
Stein said he had expected the premium to go up some, but not nearly as
much as it did. After the bureau changed its system, he said, his
premiums became reasonable. The businesses offer an example of two
carpentry firms of similar size, but with much different insurance
rates. Neither had any claims against it, but the one that was not part
of a group paid $48,050 a year for insurance, while the other firm with
a group rate paid $4,805.
The bureau does not believe the non-group members who paid the higher
fees are entitled to restitution…
Read the rest of the article at Cleveland Plain Dealer
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