Unless you are a really large employer, one with 500 employees or more, you have no option; Ohio is one of a handful of states that does not permit insurance companies to cover workers' compensation claims.
Most people who invested in the stock market did well in the late '90s; those invested in the market in the last few years have taken a bath. The Bureau of Workers' Compensation is no different. As with insurance companies, the bureau maintains a portfolio of investments -- it is sometimes said that the Ohio Bureau of Workers' Compensation is the world's largest "single line insurance company."
The stock market downturn, coupled with rising medical costs, has revealed that the state's workers' compensation system remains in need of reform.
During the strong economy of the late '90s, the bureau used healthy investment returns to grant premium "rebates" to Ohio businesses insuring through the state fund. For the premium periods of July 1, 1997, through Dec. 31, 2002, the bureau declared rebates of 75 percent.
Although the bureau always cautioned that this was a temporary opportunity to roll back premiums, many businesses budgeted on the premise that the good times were here to stay.
For the premium period beginning Jan. 1, 2003, the bureau had to end the rebate program. Profits from management of its portfolio could no longer immunize employers from paying the real cost of the state's workers' compensation system.
Nearly everyone in Ohio's business community believes those costs are greater than they need to be. In 1997, a coalition of businesses prompted the enactment of the most significant overhaul of the workers' compensation program in its history. After extensive legislative debate and compromise, Ohio had comprehensive workers' compensation reform.
Under the reform package, it would be harder for claimants to secure workers' compensation for nonwork related conditions. Lifetime compensation would not be awarded largely on the basis that the claimant had grown older. Compensation would have to be better supported by objective medical evidence.
Resorting to a little-used portion of the state constitution, organized labor and the claimants' bar put the comprehensive reform legislation to a popular vote. A war of television commercials ensued and, not surprisingly, few Ohioans could sort through the claims and counterclaims made about the complex legislation.
Ultimately, voters endorsed the status quo and Ohio workers' compensation law returned to the way it was before the reforms were enacted.
Many businesses lost interest in workers' compensation reform because the rejection of the 1997 corrections coincided with the rebate program. Now, rebates are gone but the uncorrected excesses of the system remain. The rebates were an anesthesia that kept the employer community from feeling the pain of a flawed and biased system. The anesthesia has now worn off.
Many of the 1997 reforms were unquestionably sound. The best need to be re-enacted, lest the referendum vote be remembered as a purging of the baby with the bath water.
Without reform, Ohio workers' compensation costs will re-emerge as the silent killer of jobs. What other line item on your budget just quadrupled? Bradley K. Sinnott is a partner with Vorys, Sater, Seymour and Pease LLP, where he practices in the area of employment relations. Reach him at (614) 464.8278 or www.vssp.com.