The Ohio General Assembly bailed out the BWC group rating system on the last day of the legislative session, passing Substitute HB 79 which removes the word "retrospective" from the statute. The change was necessitated because Judge Richard McMonagle of Cuyahoga County Court of Common Pleas issued an injunction requiring the Bureau to administer its group rating program in a retrospective fashion, as technically required by the statute. The one-word change eliminates the need to apply the program in that manner and reinstates group rating as we know it.
Judge Richard McMonagle, after hearing evidence and testimony for over a week, issued the preliminary injunction preventing the Bureau from implementing the current Group Rating plan for the policy year beginning July 1, 2009. This unexpected decision would have had a major impact upon State Fund rating for the next policy year.
The case was brought by several employers, on their own behalf and on behalf of a class of employers not yet certified, some of which were denied group rating. Plaintiff employers asked for a preliminary injunction and restitution for premium payments previously made. Judge McMonagle granted the preliminary injunction enjoining the current group rating plan for next year. Essentially, the Judge took a literal reading of the one provision of the statute, pointing out that the statute speaks of "retrospective" group rating. After hearing the voluminous testimony and written evidence, the Judge concluded that there is nothing "retrospective" about the current group rating program.
The Bureau had argued that the statute does not mean all group rating must be only retrospective, and introduced some evidence that the word "retrospective" was a typographical error. The Judge dismissed this argument, stating that the legislature needed to correct its mistakes and the Bureau could not do so through its regulations. Surprisingly, no mention was made in his opinion of the fact that we have been operating under this system for almost 20 years. Ignoring past practices, he decided that "retrospective" is the operative word and, as a result, the current program does not match the statute and a preliminary injunction is appropriate.
The legislature moved quickly to amend the statute to correct the problem. Taking testimony from a number of interested parties, including James Barnes, General Counsel of the BWC, George Wilkinson of Dinsmore & Shohl on behalf of the Ohio Manufacturer's Association, and Stuart Garson, lead attorney in the Cleveland case, the Senate Insurance, Commerce and Labor Committee moved passage of the bill on the 16th, and the Senate approved it. The House concurred today and sent it to the Governor, who is expected to sign it.
At the end of the day, the people who stood to suffer were the 100,000+ employers who are currently in group rating and, of course, their associations and their third-party administrators. In contrast, of course, the other 80,000 to 100,000 employers would say that those in group rating are paying pennies on the dollar for their insurance coverage. The sudden change brought about by the injunction would have created chaos for Ohio employers.
While group rating as we know it will be around in 2009, it is unclear now what will happen now to the lawsuit. Plaintiffs intend to ask for restitution, according to Plaintiffs' attorney, James DeRoche, who applauded the court's decision.