Ohio Inspector General Resists Investigating Massive Rigging of Workers’ Compensation Premium Rates

A two-part series in the Sept. and Oct. 2014 issues of The Columbus Free Press reported on the Ohio Bureau of Workers’ Compensation (BWC) setting employers’ insurance premiums illegally and unfairly for many years. The violations were revealed in the class-action lawsuit of San Allen v. Buehrer, in which Ohio’s 8th District Court of Appeals in May 2014 affirmed BWC’s liability to Ohio employers.

In Nov. 2014, the trial judge in the case, Richard McMonagle of the Cuyahoga County Court of Common Pleas, approved a $420 million settlement agreed to by BWC and the plaintiffs’ attorneys.

McMonagle had ruled in 2012 that BWC knowingly violated state law and acted unfairly in setting hundreds of thousands of Ohio employers’ workers’ compensation premium rates. The illegal rates were imposed on employers for over 15 years, until the lawsuit forced the agency to stop in 2009. BWC’s records submitted at trial indicated its conduct caused many thousands of employers to close due to shockingly high – and completely illegal – premium increases.

The appeals court said the illegal and inequitable premiums were caused by a “cabal” of BWC bureaucrats and lobbyists who had “rigged” the rates. As shown in The Free Press’ previous articles, this wrongdoing enabled special interests in the workers’ compensation field to make obscene profits on the backs of the devastated and destroyed Ohio employers.

After The Free Press’ articles came out, the nonpartisan good-government group Common Cause Ohio asked Ohio Inspector General Randall Meyer to investigate the misconduct revealed by San Allen. Samuel Gresham Jr., the group’s chair, pointed out in a Nov. 3, 2014 letter that Ohio law requires the inspector general to investigate “wrongful acts and omissions” in state government and to ensure that corrective action is taken and responsible parties are held accountable.

Even though wrongful acts and omissions were indisputably exposed by San Allen, the Inspector General’s Office declined to investigate. In a Nov. 12, 2014 letter sent to Common Cause Ohio on behalf of the office, investigative attorney Joshua Beasley indicated the transgressions described in San Allen were adequately addressed in an investigation report issued on August 21, 2007, by then-Inspector General Thomas Charles.

But the 2007 report examined allegations that BWC had wrongly lowered the premiums of certain favored employers based on political considerations. In contrast, San Allen said BWC had colluded with lobbyists to intentionally set all employers’ premium rates illegally and unfairly. This was entirely different behavior from what was examined in 2007.

Moreover, after the 2007 report concluded that BWC had not illegally adjusted individual employers’ premiums, the Cleveland-based employers’ group We’ve Had Enough.Net, which was formed to advocate for workers’ compensation reform in Ohio, received complaints that the report had covered up an immense amount of BWC wrongdoing.

Based on a review of the investigation documents obtained from a public records request, the group sent state officials a 21-page letter, dated Feb. 5, 2009, protesting numerous failings of the report. Four of the biggest problems found were:

(1) The report blamed all the premium adjustments on one obscure bureaucrat who had since left BWC. But the investigation documents revealed involvement of other state officials, including agency heads appointed by governors Bob Taft and George Voinovich.

(2) The report claimed that the investigation found nothing to contradict the claims of some BWC officials that the premium changes were made solely to keep Ohio employers from going out of business. On the contrary, the investigation materials revealed that many changes were made for other reasons, including employers complaining to legislators or threatening to go to the media about their high premium bills.

(3) The report ignored that in granting favorable premium changes for some employers, BWC violated laws requiring all similarly situated employers to be treated equally.

(4) The report failed to address the legality of premium relief given to businesses owned by some state officials.

Although this list is just a small part of the 21 pages of problems that We’ve Had Enough.Net identified, it is a further reason the report is an unacceptable response to the intentional BWC lawbreaking and collusion with lobbyists revealed by San Allen. Besides not addressing the wrongdoing exposed by the recent case, the report failed miserably at addressing the separate BWC misconduct examined in 2007.

Essentially the same points were made in a Nov. 25, 2014 follow-up letter sent to Inspector General Meyer by Gresham on behalf of Common Cause Ohio. In view of the 2007 report’s many deficiencies and its irrelevance to what was revealed in San Allen, the group again asked for an investigation of the breaches of the public trust described in the case. They are still waiting for a response.

Unless it reverses course, the Inspector General’s Office will have used the 2007 report not only to cover up a huge amount of corruption back then, but also to provide an absurd excuse for refusing to investigate and hold state officials accountable for the massive additional corruption recently revealed by San Allen.

Ohioans can expect similar whitewashes in the coming years. In early 2015, Gov. John Kasich reappointed Meyer to another four-year term as inspector general. Kasich’s response to the cover-ups by Meyer and Charles has been to reward them both with further tenure in high offices in Ohio’s state government.