The Board of the Ohio Bureau of Workers Compensation at its meeting today approved an 85% premium rebate of the workers compensation premiums paid for the year ending June 30, 2017 for private sector employers and calendar year 2016 for public employers. Checks should go out to the eligible employers over several weeks in July, 2018. There may be some steps employers should take to ensure that they are eligible for the checks. Employers must pay any overdue premium amounts and send in outstanding payroll reports before June 8, 2018. Current contact information should be verified, so the checks go to the proper location. The justification for the rebate is good investment returns, falling claims, and prudent fiscal management. Once again, this demonstrates the concrete benefits to employers’ pocketbooks of controlling injuries and defending claims.
An Ohio court of appeals last week confirmed that a primary benefit of using staffing companies – the staffing company’s payment of workers’ compensation premiums covering the loaned employees – shields both the staffing company and its customer from workplace negligence claims.
Ohio’s Eighth District Court of Appeals, in Thomas v. PSC Metals, 2018-Ohio-1630 (8th Dist. Ct. App., Apr. 26, 2018), found that an employee who was on loan to PSC Metals from a staffing company could not sue PSC for negligence because the employee was covered by the workers’ compensation insurance policy obtained by the staffing company. (The employee had originally sued the staffing company as well, but dismissed those claims.) The employee argued that because he was an employee of the staffing company, and the staffing company (not PSC) had paid the premiums for the workers’ compensation insurance policy, only the staffing company was shielded from negligence claims under Ohio’s workers’ compensation immunity statute. The court of appeals disagreed, affirming summary judgment in favor of PSC.
The court first found that, even though the employee was on the staffing company’s payroll, he was also an employee of PSC because an “employee may have more than one employer for purposes of workers’ compensation immunity.” Even though the staffing contract specified that PSC was not the employer, PSC’s right of control over the manner and means of the employee’s work made it an employer for purposes of immunity.
Second, the court found that PSC had complied with its obligations to provide workers’ compensation coverage to the employee by virtue of the policy purchased by the staffing company. The court rejected the employee’s argument that only the staffing company had immunity because it – not PSC – had paid the policy premiums. It found that, for purposes of immunity, it does not matter whether the staffing company or customer pays the premiums, as long as someone does so. Further, it noted that PSC did pay the premiums, indirectly, through the fees it paid to the staffing company.
This case highlights the advantages provided by the increased use of staffing companies, and the importance of ensuring that the contract between the staffing company and its customer adequately manages the risks and potential liability of the parties. For more information on how to manage these issues, please contact one of Frantz Ward LLP’s Staffing Industry attorneys.
Dangerous precedent with respect to the State’s use of Ohio employers’ money has just been set with the passing of House Bill 49, the state’s Biannual Appropriation Bill. Specifically, House Bill 49 contains a provision authorizing the Office of Budget and Management (OBM) to “raid” BWC and Industrial Commission budgets, transferring up to two percent of those budgets to the General Revenue Fund. This is despite the fact that the BWC and Industrial Commission budgets are funded entirely by employers’ premiums and assessments, not state taxes. On June 30, 2017, despite virtually unanimous opposition to the proposed change amongst employers and business groups in Ohio, House Bill 49 passed with this budget change intact.
In the short term, this measure essentially forces Ohio employers to subsidize, at least in part, any and all state operations through their BWC premiums rather than state taxes. In the long term, this change creates a dangerous precedent in authorizing the raiding of funds collected for one specific purpose to be used to cover budget shortfalls elsewhere, completely unrelated to that intended purpose. It makes future premium rebates less likely and creates an additional burden on Ohio’s “State Fund” employers. In addition, this change presents an issue of constitutionality – Ohio’s Constitution reserves these BWC and Industrial Commission funds for the treatment of injured workers and the promotion of safer workplaces.
Employers and business groups will continue to oppose this measure, possibly through litigation. Frantz Ward will follow this issue closely.
Since 1993, the Ohio Workers’ Compensation Act (O.R.C. §4123), has provided firefighters and police officers additional workers’ compensation benefits. Specifically, it is presumed that firefighters and police officers who suffer from cardiovascular, pulmonary, or respiratory disease after being exposed to heat, smoke, toxic gases, chemical fumes and other toxic substances during the course of their employment, obtained it through the course of and arising out of their employment. Additionally, this section expands the traditional two year workers’ compensation statute of limitations to eight years.
On January 4, 2017, Ohio Governor John Kasich signed the Michael Louis Palumbo, Jr. Act (Ohio Senate Bill 47), renamed after Michael Palumbo, a captain with the Willowick Fire Department who battled with brain cancer after 25 years of service. The Act expands the protections given to firefighters under O.R.C. §4123.68 by adding certain cancers to the list of presumed occupational diseases to firefighters – thus a firefighter who is disabled due to certain cancers will be presumed to have contracted that disease during the course of and arising out of his or her employment as a firefighter.
However, this Act includes specific parameters that must be met to fall under this presumption:
- The firefighter must be disabled as a result of cancer
- The firefighter must have had at least six years on hazardous duty (as defined in 5 C.F.R. 550.902: a “duty performed under circumstances in which an accident could result in serious injury or death, such as duty performed on a high structure where protective facilities are not used or on an open structure where adverse conditions such as darkness, lightning, steady rain, or high wind velocity exist”)
As this is a presumption, it may be rebutted with evidence showing the firefighter:
- Contracted this type of cancer before joining the fire department
- Has exposure, outside of the scope of their official duties, to tobacco products, or other conditions that would indicate an extremely high risk of that cancer, and that was probably a significant factor in the cause or progression of the cancer
- Was not exposed to a qualifying cancer
- Is over 70 years old
- Has not been assigned to hazardous duty in more than twenty years
Theoretically, a firefighter who has not worked in 20 years could possibly bring a workers’ compensation claim as long as they had at least six years of hazardous duty. It is important for employers to thoroughly document all workplace related injuries and exposure to harmful chemicals or toxins.
On November 28, 2016, the United States District Court for the Northern District of Texas denied industry employers’ efforts to enjoin OSHA from beginning to enforce portions of OSHA’s May 2016 final rule that purports to prohibit, among other things: 1) disciplinary action against employees for not immediately reporting work-related injuries or illnesses; and 2) blanket, automatic post-accident/injury drug and alcohol testing.
In May 2016, OSHA published a new record keeping rule that included, among other provisions, an express anti-retaliation prohibition. Commentary to OSHA’s final rule suggested that employer policies requiring immediate reporting of injuries could have a chilling effect on employees reporting slow-developing or chronic injuries or illnesses. According to OSHA, to be reasonable, the policies must allow for reporting within a reasonable time after the employee realizes that he or she has suffered a work-related injury instead of requiring reporting immediately following the occurrence of an injury. The Commentary also implied that post-incident drug or alcohol testing under a blanket policy could constitute prohibited retaliation. Instead, OSHA instructed employers to “limit post-incident testing to situations in which employee drug use is likely to have contributed to the incident, and for which the drug test can accurately identify impairment caused by drug use.”
The National Association of Manufacturers and similar industry groups and employers filed a lawsuit in the Northern District of Texas (TEXO ABC/AGC, Inc., et al. v. Perez, Civil Action No. 3:16-cv-01998-D) shortly after the final rule was published, challenging the rule’s anti-retaliation provisions and seeking a preliminary injunction to prevent OSHA from beginning to enforce the provisions until the Court decided their underlying legal challenge. Although the original effective date for the rule had been August 10, 2016, OSHA voluntarily postponed its enforcement of the anti-retaliation provisions until December 1, 2016 to allow the Court to rule on the request for preliminary injunctive relief.
The Court has now denied the employers’ request for injunctive relief on narrow grounds, holding that the employers could not demonstrate immediate, irreparable harm if enforcement of the anti-retaliation rule became effective. The Court’s decision was limited to the element of irreparable harm, and did not reach the underlying merits of the claim that the new rule creates an unlawful enforcement scheme under OSHA. In short, the Court has allowed OSHA to implement the new rule without deciding whether the rule is valid.
The Texas District Court’s ruling means that OSHA’s regulations are now in effect, allowing OSHA to investigate complaints by employees who have suffered retaliation under blanket drug and alcohol testing policies or who have suffered adverse or disciplinary action for “late” injury reporting. In addition to ongoing litigation, additional complications may result from additional/different regulatory changes made by the incoming new presidential administration early next year. For now, however, OSHA’s regulations are fully in effect. They have not been “approved,” however, so employers cited under them are able to challenge the citation based upon the rules’ invalidity. Employers are urged to consult with counsel to determine whether immediate changes to their accident reporting and drug testing policies and programs are needed, and, of course, whenever they receive a citation under these rules.
The Ohio Supreme Court recently held that employees need not prove they were actually injured on the job to prevail in a retaliation claim.
Employers should already be aware that, under Ohio law, they may not discharge or take punitive action against an employee for filing a workers’ compensation claim after sustaining an injury at work. The Ohio Supreme Court recently issued a decision that will deter employers from disciplining even employees who file bogus workers’ compensation claims. In Onderko v. Sierra Lobo, Inc., Slip Opinion No. 2016-Ohio-5027, the Court held that a Plaintiff in a retaliatory discharge claim is not required to prove that he or she was injured on the job, but only that he or she was discharged for filing a workers’ compensation claim.
In the Onderko case, the employee had been denied workers’ compensation benefits because the Industrial Commission found that he was actually injured outside of work, not on the job. After his claim was denied, his employer terminated him for his deceptive attempt to get workers’ compensation benefits for a non-work-related injury. The employee then sued his employer for retaliatory discharge.
It was undisputed that the employee had been fired for filing the invalid workers’ compensation claim. The employer argued that, because the employee’s claim had been denied, the employee could not prevail in a retaliation claim as a matter of law. The Supreme Court disagreed, clarifying that a retaliation claim requires only that the employee prove that he was discharged for filing a workers’ compensation claim for a work-related injury and that proof that a work-related injury actually occurred is not necessary.
The dissent warned of the implication of the Court’s decision, stating:
A court should not construe the statute in a manner to encourage fraudulent claims for workers’ compensation benefits, and here, the Bureau of Workers’ Compensation determined that there was no workplace injury. The evidence therefore supports the trial court finding that Sierra Lobo, Inc., fired Onderko for filing a fraudulent claim.
The majority clarified that its holding does not suggest that a fraudulent or false claim for workers’ compensation may be pursued without penalty and that such conduct still may provide grounds for termination. The filing of a false claim is a crime in Ohio. Whether fraud is valid defense to a retaliation claim, however, was not specifically addressed by the Court. In this case, the employer certainly felt that the claim was deceptive.
Onderko is one of a series of cases that have broadened the strike zone for retaliation plaintiffs. The case instructs employers to use caution when disciplining or discharging an employee who has filed an unsuccessful workers’ compensation claim, even where the claim appears to be bogus. To take such adverse action, the employer must have a legitimate non-retaliatory reason unrelated to the employee’s exercise of his or her rights under the workers’ compensation statutes.
Is Your Business Owed a Refund?
The parties have reached a proposed settlement in the San Allen, Inc., et al. v. Ohio Bureau of Workers’ Compensation case. This class action case, which began back in December 2007 and included a class of approximately 270,000 Ohio businesses, arose out of allegations that the Ohio Bureau of Workers’ Compensation (“BWC”) had overcharged state-fund Ohio employers that were not group-rated between the years 2001 and 2008.
Pursuant to the proposed settlement, the BWC has agreed to create a Settlement Fund in the gross amount of $420,000,000. After deductions for attorneys’ fees and other associated costs and expenses, the remainder of the fund will be paid on a pro rata basis to qualifying Class Members who file timely claims. The Court will consider the proposed settlement at a Final Approval Hearing on November 19, 2014.
Are you a member of the class?
The plaintiff class consists of employers who, in one or more policy years from 2001-2008:
- subscribed to the state workers’ compensation fund;
- were not group-rated; and
- reported payroll and paid premiums in job classifications for which the non-group effective base rate was “inflated” due to application of the group experience rating plan.
How do I know if I qualify for a refund?
If you are a class member, you should have received a “Notice of Class Action and Proposed Settlement” (“Notice”). A few items to note, however. You may not be entitled to a refund if you were group-rated during several of the policy years and the savings you received during those years offset any harm you incurred during the years you were not eligible for group-rating. If the amount you overpaid is not completely offset by the amount you saved while you were group-rated, then you may still be eligible for a refund.
What should I do if I believe my company qualifies for a refund?
Attached to the Notice is a “Sworn Proof of Claim” that needs to be completed and postmarked no later than October 22, 2014. Each Proof of Claim has its own unique identifying number, which corresponds to a BWC policy number, and only one Proof of Claim can be submitted for any given BWC policy number. Please note that the Proof of Claim must be notarized and submitted with a completed IRS Form W-9. A Certificate of Good Standing from the Ohio Secretary of State must also be submitted (see below for information regarding dissolved or bankrupt companies). The Proof of Claim form should be submitted to:
San Allen Inc. v. Ohio Bureau of Workers’ Compensation, c/o GCG
P.O. Box 10107
Dublin, Ohio 43017-3107
Incomplete or late claims will not be paid. If you did not receive a Notice or Proof of Claim, you can call 1-844-322-8230 for more information. Be sure to have your BWC Policy Number available.
My company dissolved or filed for bankruptcy. Is the company still eligible for a refund?
Yes, your company may still be eligible for a refund. You will need to provide documentation, in the form of a statement, indicating that the company is no longer in operation and has been dissolved or is bankrupt, and further, that the person signing the Proof of Claim is the authorized representative of the dissolved company or the bankruptcy trustee of the bankrupt company.
How can I tell if the effort is worth it?
To find out how much your payment could be, go to www.OhioBWCLawsuit.com. Click on “Online Policy Information Portal” and enter both your BWC Policy Number and your claim number (taken from the Proof of Claim). The resulting number is the gross amount of your overpayment as calculated by the parties to the court case. This number will likely be your maximum recovery.
Are there any other options?
If you disagree with the Settlement, you can file objections with the Court. All objections must be filed by October 22, 2014.
By a 4-3 vote in Sutton v. Tomco Machining, the Ohio Supreme Court added a new public policy cause of action to the workers compensation system. The decision, summarized here, allowed an employee to bring a suit for retaliation following his firing after he reported a workplace accident, but before he had done anything to file a workers compensation claim. The statute allows retaliation claims, but only for retaliation after an employee has filed a claim or engaged in certain other specified activities. The Court, in a decision written by Chief Justice O’Connor, found that the law as written established a clear public policy and that granting a new right for claims not falling within the law would not interfere with what the legislature intended. The majority then further ruled that the relief available under the new public policy cause of action would be limited to the relief that could be provided under the statute.
The dissenters argued that filling in perceived gaps was a legislative function, which the Court was not suited to perform. Even if an expanded right to sue seemed like a good thing, the Court did not have the benefit of the legislative process to enable it to consider all aspects of the issue. Justice Cupp, who had extensive legislative experience before joining the Court, wrote:
“The conduct that the statute seeks to prohibit is an employer’s retaliating against an employee after the employee takes some action in pursuit of a workers’ compensation claim. This is the entire essence of the statutory proscription. Because the statute does not also proscribe employer conduct that may tend to discourage or prevent the employee from pursuing a claim in the first instance, it is clear that the legislature chose not to include such conduct. If the legislature had so intended, it would have been a simple matter for it to include language proscribing such conduct. … It may be good public policy to include an employer’s preemptive conduct within the statutory proscription, or there may be adverse consequences to such a policy that are not apparent on its face. This court has insufficient information available to it to make such a far-reaching policy choice. In any case, the legislature did not include such wording, which makes it clear that the legislature intended not to regulate in this area beyond the conduct proscribed in R.C. 4123.90.”
This is another in the line of cases that make it more difficult for employers to operate their businesses, not because they engage in retaliation or other violations of law, but because they are unable to count on what the laws actually say. As a result, they cannot get cases resolved at an early stage, before expenses pile up. There really is nothing employers need to do differently as a result of this case, other than to make sure their employment practices liability insurance covers the risk, or at least the defense costs.