Ohio businesses face a conundrum. In today's international economy, companies must think globally. But in these troubled times, Ohio manufacturers and service companies, as well as U.S. lending institutions, must consider the risks of conducting business abroad.
Many Ohio companies and their lenders may be unaware that the Export-Import Bank of the United States (EXIM Bank) can help reduce the risks of international transactions. EXIM Bank provides a wide array of complementary programs and services to facilitate the export of U.S. goods and services to global markets. These programs enable Ohio businesses, large and small, to compete more effectively in international markets through risk mitigation and credit enhancement.
Since EXIM Bank was created 70 years ago, it has supported more than $400 billion worth of U.S. exports. EXIM Bank assists U.S. exporters in a wide range of activities, from the export of consumable agricultural products to the construction of manufacturing plants.
EXIM Bank financial products include loan and pre-export working capital guarantees, credit insurance, direct loans and limited-recourse project finance. It also offers a number of specialty products that may be particularly attractive to small businesses, companies that provide environmental products and services, and so-called underserved exporters -- companies unable to obtain traditional financing for their exports and rural companies with no experience in exporting.
Some multinational corporations are significant users of EXIM Bank's programs. Ohio companies familiar with these programs may be under the misconception that EXIM Bank products are so complex and costly that they can be utilized only in large, multibillion dollar development projects.
In fact, EXIM Bank is a user-friendly agency that offers products to help virtually every U.S. business compete in a worldwide economy. A significant percentage of EXIM Bank transactions directly benefit small business.
U.S. exporters can use EXIM Bank's short-term insurance products to insure up to 90 percent of foreign receivables (up to 95 percent for letter-of-credit transactions and 98 percent for agricultural products) against a wide variety of political and commercial risks. Payment terms of up to 180 days can be offered to the foreign buyer, and the proceeds from the insurance policy can be assigned to a lender to facilitate receivables financing.
Short-term insurance cover is available both to U.S. exporters and U.S. lenders, and can be obtained to cover a single or multiple foreign buyers.
EXIM Bank also offers medium-term coverage through its insurance products, as well as its loan guarantee program. Medium-term products cover risks associated with receivables from the export of capital equipment, its installation and spare parts.
Repayment terms of up to five years are available for transactions over $350,000. The medium-term program can be used for transactions up to $10 million and can insure against 100 percent of the financed portion of the receivables. It also covers both the political and commercial risks of default.
EXIM Bank also offers a working-capital guarantee program that U.S. exporters can use as an additional enhancement to obtain favorable advance rates for pre-export working capital, to increase liquidity and to obtain receivables financing. Under the working capital program, a U.S. exporter obtains a loan from a U.S. lender with EXIM Bank acting as a guarantor.
Finally, for larger transactions or for those eligible for longer repayment terms, EXIM Bank can provide long-term guarantees, direct loans and structured, limited recourse project finance.
Perhaps the most attractive attribute of many EXIM Bank programs is that U.S. exporters and lenders ultimately pay little or nothing to use them. Even banking and legal fees can be financed under EXIM Bank programs, and the ultimate cost of the EXIM Bank product can be included in the financial package offered to the foreign buyer.
M. Sean Purcell is a partner in the Washington, D.C. office of Vorys, Sater, Seymour and Pease LLP, where he specializes in corporate law and international financial transactions. Reach him at (202) 467-8800.
The recent determination by the Bureau of Workers' Compensation to eliminate the 75 percent premium rebate that many employers have been receiving is a prime example. Because many businesses have become accustomed to receiving the rebate, the unbudgeted leap in premiums will negatively impact their bottom line.
Be prepared for increases over your historic premiums for the upcoming year.
Ohio Supreme Court decisions will also have an impact on Ohio businesses. In Norgard v. Brush Wellman, 95 Ohio St.3d 165 (2002), the court addressed the question of when the statute of limitations begins to run in employer intentional tort claims. In Norgard, the injured worker filed a complaint alleging that his employer intentionally harmed him tort five years after it had been determined that he had developed an occupational disease due to his employment.
Prior to the decision, many employers understood the statute of limitations for such claims to be two years following the diagnosis of the condition. The court ruled that the injured worker was not required to file his case until two years after he became aware of the employer's "wrongful conduct."
Bailey v. Republic Engineered Steel, 91 Ohio St.3d 38 (2001), addressed work-related psychological trauma.
Prior to Bailey, most understood the law to require that in order to be compensable, a worker's psychological trauma had to arise from one worker's physical trauma.
In Bailey, after accidentally running over a co-worker with a tow motor, the tow motor operator filed for benefits alleging only a psychological injury. The Supreme Court held that his claim was compensable because there was, in fact, a contemporaneous physical trauma (albeit not to the claimant) -- to the co-worker.
Employees in Ohio who lose two body parts (hands, arms, feet, legs, eyes, or any combination thereof) in the workplace are entitled to receive permanent and total disability benefits under an Ohio statute. In a decision that shocked many employers, State ex rel. Thomas v. Indus. Comm., 97 Ohio St.3d 37 (2002), the Supreme Court held that the loss of an arm necessarily includes the loss of a hand.
Because the injured worker lost both an arm and a hand, he qualified, under law, for statutory permanent total disability benefits.
Whether any of these issues will be revisited by the high court or become the topic of legislative reform in 2003 is unknown.
One message to Ohio business is, however, clear. Be vigilant.
Mary Eileen Purcell is an attorney in the Cleveland office of Vorys, Sater, Seymour and Pease LLP where she practices in the labor and employment group with an emphasis in workers' compensation. She can be reached at 216.479.6104 or www.vssp.com.
In May, in response to complaints that representatives of third-party administrators (TPAs) were exceeding the scope of a 1970 agreement, the Board of Commissioners on the Unauthorized Practice of Law of the Ohio Supreme Court issued a finding that the majority of the activities undertaken by these representatives constitute the unauthorized practice of law.
Since 1970, nonattorney hearing representatives have been authorized to represent the interests of employers at administrative hearings throughout Ohio. Under the 1970 agreement between the Unauthorized Practice of Law Committee of the Ohio State Bar Association and TPAs, a TPA representative was permitted to attend any hearing before the Industrial Commission and advise the hearing officer(s), without comment, of documents or parts of documents within the file.
TPA representatives were not permitted to examine or cross-examine witnesses; interpret statutory provisions, administrative rulings or case law; make or give legal interpretations; or comment on the nature of the evidence presented, the credibility of witnesses, the weight of the evidence or the legal significance of the documentation on file.
The issuance of the board's report in May caused widespread confusion. Many of the hearings where a TPA or union representative was present on behalf of an interested party were put on continuance. On May 21, the Ohio Industrial Commission issued a statement that essentially proposed a "business as usual" approach until the Supreme Court ruled on the board of commissioners' findings and recommendations.
In a further effort to return to the status quo, on June 2, the Industrial Commission adopted a new resolution (R04-1-01) recognizing the 1970 agreement and setting forth the guidelines for participation by TPA and union representatives at administrative hearings.
R04-1-01 expanded upon the 1970 agreement by adding provisions which prohibit TPA and union representatives from providing legal advice to injured workers or employers; giving legal opinions or citing case law to injured workers or employers; and providing stand-alone representation at a hearing for a fee.
The future of workers' compensation practices in Ohio now rests squarely in the hands of the Ohio Supreme Court. Until the final ruling is issued, we may only speculate as to the outcome and the ultimate impact that the decision will have. However, it appears that, regardless of the decision, there will be significant changes to the workers' compensation system.
The most drastic change would come if the Supreme Court adopts the board's recommendations wholesale. In that case, TPA and union representatives would be effectively barred from actively participating in administrative hearings. That alternative could be catastrophic to thousands of jobs, the very existence of small businesses, and, potentially, the entire workers' compensation system.
On the opposite end of the spectrum, the court could disregard the board's recommendations but would, in all likelihood, call for stricter interpretation and enforcement of the 1970 Agreement and R04-1-01. Regardless of the court's decision, we must prepare for what appears to be a new era in Ohio workers' compensation.
With respect to preparing now for future possibilities or inevitabilities, all businesses should establish a back-up plan and relationship with legal counsel that could be expanded to include global representation in the event that the Supreme Court adopts the board's recommendations. Start by checking with your present legal representatives to see if they have the personnel, capacity and expertise to handle all workers' compensation hearings. Also, find out if they have a good support staff that could handle some matters to maintain a lower cost base.
Finally, find out whether they would consider alternative billing procedures such as flat rates to reduce legal fees. MARY EILEEN PURCELL is an attorney in the Cleveland office of Vorys, Sater, Seymour and Pease LLP, where she practices in the labor and employment group with an emphasis in workers' compensation. Reach her at (216) 479-6104 or www.vssp.com.