The Akron Legal News

Bill aims to protect small firms from big workers' comp costs

TIFFANY L. PARKS
Special to the Legal News
Published: October 13, 2015

Rep. Robert McColley believes lawmakers have a duty to correct inequities in existing law.

With that in mind, McColley, R-Napoleon, is jointly sponsoring a bill with Rep. Michael Henne, R-Clayton, that would allow a state fund employer to have a workers’ compensation claim that is likely to be subrogated by a third party paid from the surplus fund account in the state insurance fund rather than charged to the employer’s experience.

“I can tell you with full confidence that House Bill 207 corrects a major equitable problem we have in our existing workers’ compensation law, an inequity that results in Ohio’s small businesses basically being held at fault for accidents that were not their fault or the fault of their employees,” McColley said.

“Under any other circumstance, if you were in a traffic accident that was not your fault, but was the fault of the other driver involved in the accident, the other driver’s insurance would pay the damages resulting to your vehicle, your paycheck, your body and your overall pain and suffering.”

However, an exception to this rule exists in current state law.

“While it is true that under our laws an employer is liable for the acts of its employees, this general rule is extended beyond its equitable reach under Ohio’s workers’ compensation laws in that Ohio’s employers are essentially liable for the acts of others that happen to their employees, regardless of fault,” McColley said.

“This simply is not right and HB 207 would correct this inequity, while preserving the ability of the injured employee to obtain adequate medical treatment, lost wages and other damages.”

In presenting the bill to members of the House Insurance Committee, Henne asked lawmakers to imagine being an employer whose employee is hit at a red light by a distracted driver.

“The other driver has insurance, you have uninsured motorist coverage just in case he didn’t, yet this incident may cost your company dearly,” he said.

“It is the responsibility of every employer to provide a safe work environment for their employees. If an employee is injured, the employer is responsible for the damages. Because your employee is operating within the scope of his employment this incident needs to be reported to BWC and could have devastating consequences.”

In such a situation, Henne said the reporting claim may get the employer kicked out of their group rating program.

“In addition, this may cause a rate surcharge and cause your premiums to increase multiple more times. All for a claim in which you and your employee did nothing wrong and there is adequate insurance by the liable party to pay the claim,” he said.

Because Ohio law designates the Bureau of Workers Compensation as the primary insurer for employees’ claims that arise in the line of duty, the employers’ premiums currently rise by approximately 50 percent with any claim made against the employers, regardless of fault of the employers or the employers’ employees.

“HB 207 would fix this problem by allowing claims that are the fault of a third party to be paid out of a surplus fund that will be maintained by the Bureau of Workers’ Compensation, instead of being charged to the employer’s policy,” McColley said.

“Payments out of the surplus fund will allow employees to be made whole, while still preserving the ability of employers to continue paying the group rates for their workers’ compensation premiums.”

Mike Heister, the owner of Cincinnati-based Heister Insurance, offered proponent testimony for HB 207 on behalf of the Professional Independent Agents Association of Ohio.

“This legislation would go a long way in rectifying a problem that is unique to Ohio’s workers’ compensation system by providing Ohio employers with the opportunity to avoid negative repercussions to their business that occurred through no fault of their own,” he said.

“While this issue is not likely a large-scale problem, if you’re the impacted employer, it matters. In other words, this is not necessarily a problem of frequency, but rather severity.”

The Ohio chapter of the National Federation of Independent Business has also backed the proposal.

Charlie Smith, NFIB/Ohio special counsel and owner of Charles D. Smith & Associates in Columbus, said the proposed legislation is an important step in the right direction for employers who find themselves subjected to a workers’ compensation claim that was clearly caused by a third-party.

“This solution is long overdue and will help level the playing field for small employers while still preserving the rights of the injured worker to receive adequate treatment and compensation,” he said.

“We firmly believe this legislation provides for common sense reform to protect small employers from accidents that they could have never prevented. Under the narrow circumstances in this bill, we feel these employers should not lose eligibility for some discount programs and/or see their premiums spike for something that is not their fault.”

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