Ohio, businesses clash in court over workers' comp

A legal challenge to the way Ohio sets job-injury insurance rates is unwarranted because the system is fair and follows legislative mandates, an attorney for the state said Tuesday as a court battle closely watched by business and industry began.

Attorneys for seven employers upset about rising worker-comp premiums asked Cuyahoga County Common Pleas Judge Richard McMonagle to block the Ohio Bureau of Workers' Compensation from using a rate-setting system that it considers unfair.

The system covers about 270,000 employers and paid nearly $2 billion in 2007 in benefits to workers for on-the-job injuries.

Steven Miller, a Cleveland attorney representing the bureau, told the judge that the system is fair, takes into account an employer's work-injury claim record and follows mandates set by Ohio lawmakers.

The request for an injunction against the rate-setting method should be rejected because the businesses who filed the lawsuit didn't first try to resolve their concerns through the agency's administrative channels, Miller said.

In addition, state law bars judges from interfering with the rate-setting process, Miller said.

The hearing on the injunction could last days. If the complicated matter involving insurance risks goes to trial with depositions and expert testimony, it could take more than a year to resolve, Miller said. The judge didn't comment on a timetable.

Speaking on behalf of businesses challenging the rate-setting method, attorney James DeRoche said the agency had ignored repeated consulting reports and its own critical internal study on how to improve the fairness of rate-setting.

"They have refused to fix the problem," he said.

When some employers get a group discount of up to 85 percent, "That's not a fair system and they are required to have a fair system," DeRoche said.

Dozens of business people who back the lawsuit against the workers' compensation bureau overflowed the court, most wearing lime-green T-shirts with a slash through the words, "BWC Group Rating."

One protester, Rick Zachman, service manager of a Cleveland heating and cooling contractor with about 20 employees, said back injuries suffered by a few crew members were likely to send just the heating side of his workers' comp insurance rates from $5,000 a year to $15,000.

"We try to be a safe and sound company," he said.

Maria Smith, an agency spokeswoman, said the bureau is reviewing all its rating programs, "each being examined for its effectiveness and fairness."

Prior to recently trimming discounts, the bureau acknowledged that the set-up it had in place was rewarding groups of businesses with spotless safety records that banded together into coalitions or associations, but hurt companies that experienced even one serious accident.

The bureau handled about 172,000 job-injury claims last year, including 176 work-related deaths. About 10 percent of claims were dismissed.