Cuyahoga Court of Common Pleas Judge Richard J. McMonagle still needs to approve a settlement agreement announced Wednesday evening between plaintiff lawyers and the Ohio Bureau of Workers Compensation that would return $420 million in overcharged premium payments to approximately 230,000 businesses.
Tonight’s agreement stems from a lawsuit filed in January of 2008 by businesses who asserted a claim for common law “unjust enrichment” based on violations of Section e, Article 1 and Section 35, Article II if the Ohio Constitution. Later that year in August, a trial court conducted a multiple day trial on the plaintiff’s claims and granted injunctive relief. In March of 2013, the court entered a judgment for plaintiffs in the amount of $859,440, 258.79.
The Ohio Attorney General’s Office hired Brennan, Manna & Diamond to handle the case on behalf of BWC. Charter school operator David Brennan is a founding partner at the firm which was awarded the unbid contract by AG Mike DeWine. Controlling board records show that DeWine has paid the firm over $4.5 Million since 2011 to handle the case. In 2009 Brennan donated $11,000 to Mike DeWine’s campaign.
Last month attorneys for BWC sought to push the matter to the Ohio Supreme Court to review the decision of the Eight District Court of Appeals, which said the workers’ compensation insurance premium rates were rigged against certain employers. An offset of $208,461, 519.97 was determined, which reduced the court judgment to $650,978,738.82, subject to terms and conditions of the stipulation, court documents show. An agency spokesman noted the agency has already set up a reserve account from which payments to the companies will be made, according to published reports.
Judge McMonagle and the appeals judges found that Ohio employers who participated in the agency’s group-rating plan were charged low premiums, but businesses not in the plan had to pay much higher amounts to make up for the discounts the favored companies received.
“We’re pleased that we have reached a settlement so we can move forward,” BWC CEO Steve Buehrer said in a statement. “Improvements have been made to how premiums and discounts are calculated, as well as to billing practices.”
Who gets what from the settlement payout? According to court documents, some will go to court costs, all reasonable out-of-pocket expenses incurred by BWC and the costs of services provided by the Special Master and the Settlement Administrator, any fee and expense award made by the Court to Class Counsel, any incentive compensation made by the Court to the named plaintiffs and payment to authorized and eligible Class members up to stipulated amounts.
While some wonder why the Kasich Administration didn’t keep the case before the Supreme Court, where Republican-dominated judges might reduce the amount further or outright rule for the administration, having to pay only about half the original amount is a clear win for BWC. Maybe the prospect of a Kasich-friendly Supreme Court ruling was enough to coax plaintiff lawyers to settle for $420 million.
Back in 2006, when pay-to-play scandals at BWC were prominent among other corruption scandals under then GOP Gov. Bob Taft, a draft internal audit showed that in 75 percent of the 153 largest reductions the agency granted, agency rules were not followed, or there was no record authorizing or explaining the changes to determine whether they were legitimate.