An Improved Ohio Workers’ Comp System Continues to Face Challenges

The Ohio workers’ compensation system is by all accounts in much better shape than it was in the dark days of 2007, when the Ohio Bureau of Workers’ Compensation was embroiled in a series of investment scandals. The recent successes, as well as continuing controversies, have kept the Ohio workers’ comp system in the headlines and made it one of the most covered stories in Insurance Journal‘s Midwest region in 2010.

In October, Ohio’s progress in reducing costs for Ohio employers was recognized in a national study. The biennial Oregon Premium Ranking Study showed Ohio has fallen from third highest in the country with an average private employer base rate of $3.32 per $100 of payroll in 2007, to 17th with just $2.24 per $100 of payroll in 2009.

In June 2010, the BWC approved a 3.9-percent overall private employer premium rate decrease, bringing to 35-percent the overall base rate reduction since July 1, 2007. According to the BWC, it has lowered base rates in 84 percent of the manual classifications used to compute employer premiums.

Outgoing Ohio Gov. Ted Strickland recently praised the BWC’s board of directors and Administrator Marsha Ryan for bringing stability, fairness and better service to Ohio’s workers’ compensation system.

The BWC reported that in an unplanned visit to the agency, Gov. Strickland noted, “The Ohio BWC is a big deal. A lot of people don’t understand how massive it is or how many lives it touches. Businesses, injured workers and Ohio families are all affected by it.”

He also told that board and Ryan that they “had succeeded in doing what I intended. This organization is de-politicized and is running as a well-run business with two goals; making sure injured workers are taken care of, and the assets of Ohio businesses are protected.”

The state-backed BWC handles claims for 1.2 million injured workers each year and provides workers’ compensation insurance protection for over 260,000 employers.

Changes Ahead

Strickland’s recent loss in his bid for re-election to the governor’s office means changes are in store for the BWC, however, so the state’s workers’ comp system will likely continue to grab headlines in the year to come.

In November, Ryan resigned as BWC administrator, in advance of an announcement by Ohio Governor-elect John Kasich that Senator Steve Buehrer, a Republican from Delta, would be taking Ryan’s place in Kasich’s administration.

Ryan was appointed by Gov. Strickland and has served as BWC’s administrator since May 2007. Her resignation is effective Jan. 9, 2011.

Ryan and Strickland were struck by the Ohio Senate’s recent denial of future roles for four directors on BWC’s board.

“Each director denied today has served Ohio’s injured workers and employers admirably and played an integral role in improving Ohio’s workers’ compensation system. These four individuals were approved by a unanimous vote in 2007 by this very same Senate. It’s apparent that the new administration can’t wait to put politics back into the Bureau,” Ryan said in an announcement released by the agency.

Problems at the Workers’ Comp Council

The Ohio Workers’ Compensation Council was created in 2007 in the wake of an investment scandal at the Ohio BWC and charged with protecting the state’s insurance fund for injured workers.

But in the past year it has been embroiled in a scandal of its own triggered by the firing of its three-member staff.

According to Associated Press reports, Council Director Virginia McInerney fired three employees – two staff attorneys and an executive assistant – on Feb. 16. The fired employees then brought charges of wrongful discharge, religious discrimination and harassment, age discrimination and retaliation.

Those charges led to hearings before the House Insurance Committee, whose chairman, Dan Dodd of Hebron, a Democrat, has questioned whether the office under McInerney was too politically sensitive and compromised the objectivity of its analysis of a bill involving workers’ comp discounts.

McInerney, a veteran employee of the nonpartisan Legislative Service Commission, has strongly denied that partisanship played any role in the office’s work.

Caught in the cross hairs was an important analysis the office was preparing on legislation concerning changes to the Bureau of Workers’ Compensation group insurance discounts for employers.

Ohio operates the largest public insurance fund for injured workers in the U.S. and the group discounts have been a key sticking point. The bureau was required to adjust its processes after judge ruled the so-called group rating program unfair to many businesses.

The BWC board is considering a nationally-recognized, split-experience rating plan that, according to Chief Actuarial Officer John Pedrick, is seen as a national standard, and used in 38 states.

The plan places more emphasis on claim frequency rather than claim severity when assessing an employer’s risk – or experience – which plays a significant role in the employer’s premium rates. The board is considering a timeline that will put the split-plan in place beginning July 1, 2011, for a “beta year” trial to determine how rates will be impacted, with full implementation scheduled for July 1, 2012.

Ethical Questions

The BWC was also the focus of negative headlines when one of its managers was resigned amid ethical questions about whether his private side business benefited from connections he made while on the state payroll.

The BWC’s interim director of self-insurance, James Fograscher, on Oct. 26 resigned from the position he held for nine months, according to the Associated Press. The department he managed regulates 1,200 Ohio businesses – many of them larger – that carry their own workers’ comp insurance.

His departure came shortly after questions about his business, Executive Huddle, were referred to the Ohio Ethics Commission. A division of the company, The Ergo Huddle, offers ergonomic services similar to those provided by the bureau.

Fograscher declined to comment when contacted by the AP but Bureau spokeswoman Maria Smith said the department has asked the Ethics Commission to determine whether Fograscher crossed any lines.