Ohio Bureau of Workers' Compensation

Ohio Bureau of Workers' Compensation

Agency overview
Formed	1912
Headquarters	William Green Building 30 West Spring Street, Columbus, Ohio
Website	www.bwc.ohio.gov

Since its founding in 1912, the Ohio Bureau of Workers' Compensation (OBWC or BWC) has provided medical and compensation benefits for work-related injuries, diseases and deaths. As of the fiscal year ending June 30, 2015, BWC provides workers' compensation insurance coverage to approximately 253,000 public and private sector employers in the State of Ohio. In FY15, BWC paid $1,648,599,923 in benefits covering 791,638 open claims, including 93,936 new claims approved in FY15. It collected $1,954,174,000 in premiums in FY15, and incurred $279.6 million in administrative costs.^[1] With assets under management of more than $29 billion, OBWC is the largest exclusive state-operated and second largest overall provider of workers’ compensation insurance in the United States.

BWC is headquartered in Columbus, Ohio, but maintains 11 customer service offices throughout the state. BWC provides insurance to about two-thirds of Ohio's work force. The remaining workers receive coverage through a self-insurance program for large, financially stable employers who retain the financial risk for their companies’ workers’ compensation claims. BWC employs approximately 1,900 people.

Governance & Structure

Day-to-day operations of the bureau are handled by a Chief Executive Officer/Administrator, who is appointed by the Governor. The BWC Board of Directors, also appointed by the Governor, oversees the agency's operations. The 11-member board provides professional expertise, accountability and transparency, and a broad representation of BWC's customers. The board also includes members with expertise in financial accounting, investments and securities, and actuarial management.^[2]

Administrator/CEO

Appointed by the Governor, the Administrator/CEO administers & directs all programs & policies of the Bureau of Workers’ Compensation. In conjunction with a senior team overseeing Employer Services, Medical Services, Safety Services and Claims Services, as well as a number of operational divisions such as Human Resources, IT and Actuarial, the Administrator/CEO develops & coordinates agency policy & directs establishment of goals & objectives for the efficient operation & highest quality customer service improvements of agency. That individual must also monitor overall development/progress to ensure a quality, customer focused Workers’ Compensation system for Ohio employers & employees. The current Administrator/CEO of Ohio BWC is Sarah Morrison,^[3] appointed by Governor John Kasich in May 2016.

Board of Directors

It is the responsibility of the BWC Board of Directors to strengthen operational accountability and transparency, and guide overall administrative policy. As fiduciaries of Ohio's workers' compensation system, the board maintains the solvency of the BWC's funds and provides independent verification of BWC's financial and operational performance.^[4]

Since its first meeting in 2007, the board has taken a number of steps to help ensure strong governance and a workers' compensation system, including:^[5]

• Formed a governance committee responsible for developing policies and advising on best practices.
• Began hosting public forums to invite feedback from BWC customers and hear their suggestions for improvement.
• Adopted a net asset policy to maintain prudent funded net assets to support the financial strength of the State Insurance Fund.
• Approved BWC's first-ever formulary to allow for a thorough clinical review of each new medication and assure access to medications aid in the recovery of injured workers and support their return to work.
• Approved $2 billion in rebates to private employers and local governments.
• Expanded statewide efforts to protect Ohio's workers by tripling funding for safety grants.
• Voted seven times to reduce private employer rates, and eight times to reduce local government employer rates. Premiums for private employers are down 28.2 percent overall since 2011 and local governments have been reduced an overall 26.5 percent over the same time period.
• Approved the issuance of $1.2 billion in premium credits to Ohio employers as part of BWC's transition to prospective billing.
• In total, since 2011, BWC has saved employers $4.8 billion in premium reductions, rebates, credits and grants.

History

With the signing of the Ohio Workmen's Compensation Act on June 15, 1911, Ohio became one of the first in the nation to create a no-fault system that would allow compensation to workers in the event of a workplace accident while also shielding employers from potentially crippling legal action brought by the worker. On March 1, 1912, the Ohio General Assembly created the State Insurance Fund and in 1913, made coverage by employers mandatory. Later that year, on April 28, 1913, Lemuel C. Fridley became the first Ohioan to receive a workmen's compensation check under the new system.^[6]

Safety became a priority early on, including the creation of the Ohio Safety Congress & Expo in 1930. It has grown to the largest such conference in the Midwest, with more than 6,000 attendees, 200 vendors and 200 classes annually. In 2016, it was expanded to include a Medical & Health Symposium for providers, with its inaugural focus being on pain and neuromusculoskeletal management.^[7]

The Ohio Bureau of Workmen's Compensation was created by the General Assembly in 1955 to administer the State Insurance Fund, and in 1977, its name was changed to the Ohio Bureau of Workers' Compensation.

In 1993, the General Assembly made workers' compensation fraud a felony and the bureau created a special investigations department to pursue such fraud. In FY 2015, The department identified more than $60 million in overpayments, closed 1,514 cases, including 665 in which the original allegation was founded. Two hundred and twenty nine cases were referred for prosecution and there were 151 convictions.

Scandals and controversies

Coingate

In 2005, the OBWC became involved in a massive investment scandal that ultimately contributed to the defeat of the Republican Party leadership of the state government in Ohio.^[8] It was revealed in early 2005, in part by a Toledo, Ohio, newspaper The Blade that the OBWC had invested hundreds of millions of dollars in high risk or unconventional investment vehicles run by people closely connected to the Ohio Republican Party who had made large campaign contributions to many senior Republican party officials.

Most notably, a rare coin investment fund has attracted particular scrutiny after it was reported that two coins worth more than $300,000 had been lost. Further investigation then revealed that coins worth $10–$12 million were missing and that only $13 million of the original $50 million invested could be accounted for. Thomas Noe, a Republican Party fundraiser and activist was charged with running a criminal enterprise, the theft of $13 million from the fund, and of keeping a second set of books to cover for it.^[9]

Private equity investments

In the aftermath of the Coingate scandal, the OBWC determined to reduce its exposure to investments perceived as "alternative" or "high risk" which included an $400 million portfolio of over 60 private equity and venture capital investment funds. A sale of the portfolio was reported in 2007.

However, as part of that sale process, OBWC engaged Ennis Knupp to conduct a thorough valuation of its alternative investment holdings. The Columbus Dispatch subsequently made a request under the Freedom of Information Act to receive the Ennis Knupp valuation report, which included confidential materials that the various private equity firms objected to OBWC disclosing. The various private equity firms settled a lawsuit with the Columbus Dispatch allowing a partial disclosure, however the generally secretive private equity industry followed the outcome closely.^[10][11]

Subsequent events

In the years following the Coingate scandal, OBWC has replaced its senior management and investment teams and has been scrutinized heavily by the new Democratic administration in Ohio.^[12]

On June 26, 2007, however, the OBWC was again in the news as a result of the theft of a laptop containing personal information for 439 injured workers.^[13]

On January 13, 2009, Ohio inspector general's office investigation reported that a high-paid employee had been spending most of his work hours, since 2005, downloading and viewing audio and video files from sexually explicit websites during working hours. The case was referred to prosecutors for possible charges involving theft of state time and the inspector general urged the BWC to monitor more closely its employees' computer use.^[14][15]

In January 2013, a plaintiff class of more than 270,000 Ohio businesses filed a report claiming it was due $860 million after the Ohio Bureau of Workers Compensation was found to have over-charged class members from 2001 to 2009. The report follows a decision from Judge Richard McMonagle of the Cuyahoga County Court of Common Pleas that the Ohio BWC violated two state statutes by charging the class excessive premiums. During the trial, the BWC conceded that the rates it charged non-group employers from 2001 to 2009 were excessive, according to case summary. BWC employees explained that those employers were charged a "huge surcharge" that resulted from a "broken group rating system." ^[16] On March 20, 2013, Cuyahoga County Common Pleas Judge Richard McMonagle ordered the Ohio Bureau of Workers Compensation to refund $860 million in illegal over-charges to some 270,000 employers.^[17] In response to statements made by the Bureau's Administrator Steve Buehrer indicating a desire to appeal the decision, class members created a non-profit organization called Pay Us Back Ohio BWC, Inc.^[18][19] to organize the 270,000 employers against the Bureau of Workers' Compensation's costly appeal of the decision.

Thirteen months after the BWC filed its appeal, Ohio's 8th Appellate District Court upheld the original Court's decision and blasted the state agency^[20] saying that, "this appeal is about a cabal of Ohio Bureau of Workers’ Compensation (“BWC”) bureaucrats and lobbyists for group sponsors who rigged workers’ compensation insurance premium rates so that for employers who participated in the BWC’s group rating plan (“group-rated employers”), it was “heads we win,” and for employers who did not participate in the group rating plan ("nongroup-rated employers"), it was "tails you lose."^[21] Just days before the decision, Ohio Governor John Kasich stated during a television interview that if the employers were owed money he would help them get it back.^[22] In response, members of Pay Us Back Ohio BWC, Inc. called on the Governor to instruct the Bureau to comply with the court orders and give back the money it owes."^[23]

In July 2014, the lawsuit was settled for $420 million and more than 24,000 checks totaling approximately $165 million were distributed to plaintiffs. The plaintiffs attorneys received $137.5 million.

Creation of a Board of Directors

In 2007, following the Coingate scandal, the Ohio Legislature created the BWC Board of Directors to strengthen operational accountability and transparency, and guide overall administrative policy. As fiduciaries of Ohio's workers' compensation system, the board maintains the solvency of the BWC's funds and provides independent verification of BWC's financial and operational performance.

See also

• Government of Ohio
• Coingate scandal
• Thomas Noe
• William Green Building

References

• Noe got early start in rare coin business by Mike Wilkinson, Toledo Blade, April 3, 2005.
• Special Report: Ohio Coin Funds, CoinLink.
• Coingate:The GOP's Culture of Corruption
• "Coins of the Realm", Alternet, June 29, 2005.
• "What's the Matter With Ohio?", by Paul Krugman, New York Times, June 17, 2005.
• Grand Jury Charge Noe with 53 Felony Counts by Mike Wilkinson and James Drew, Toledo Blade, February 13, 2006
• Chronology of Noe's Involvement (in Coingate), Toledo Blade, February 13, 2006
• Text of Noe's 53-count Indictment, February 13, 2006

External links

• Ohio BWC (official website)