The Ohio Attorney General's office has been granted an extension to March 6 to file objections to the magistrate ruling.
And while state officials declined to comment on the case due to pending litigation, if the magistrate decision is upheld, it is expected the state will appeal to the Ohio Supreme Court. If that happens, the case may not be resolved until sometime next year.
"We feel very strongly in our arguments," Spiker said. "And based on the way the magistrate wrote his decision—he agreed with us—we think it is a very strong decision, and I'm cautiously optimistic it will be upheld."
The origins of this peculiar case trace back to the BWC's first payout to employers amid the flare-up of COVID-19 in spring 2020.
That year, the BWC paid nearly $8 billion to Ohio employers across three dividend payments. Gov. Mike DeWine had said that money was "about keeping businesses open and people employed" as the economy grappled with the pandemic.
The BWC provided a total of $1.54 billion to employers in its first payment in 2020. Kent Elastomer received $155,069, or 100 percent of its premium for the 2018 policy year.
Spooner asked the state about refunds for employers like Kent Elastomer who were enrolled in the group-retro program, which is a performance-based incentive program where BWC-certified sponsors create groups of employers who manage safety and claims in order to achieve lower premiums.
Per that program, employers continue to pay their own individual premiums and have the opportunity to receive retrospective premium adjustments based upon the combined performance of the group. Depending on that performance, employers are handed either a premium refund or an assessment.
Regardless of the dividend payment, Kent Elastomer was anticipating a group-retro refund of approximately $40,000. For the group the company participated in, the maximum refund is up to 68 percent of its standard premium.
The company would've applied that money to safety-related measures, said Don Leeper, senior vice president, finance and administration, for Kent Elastomer.
According to court documents, though, the BWC said it would not be issuing any refunds or additional premium billings related to the 2018 policy period.
"Because we have already provided the dividend equaling 100 percent of the paid premium, we will process the three Group-Retrospective rating evaluations to capture the performance of the group for historical purposes, however no financial transaction will post to the employer's account," a BWC official wrote. "This is being done to prevent employers from receiving more in refunds than what was paid in premium for 2018, necessitating issuance of 1099" forms and employers needing to claim that as income for tax purposes.
But Kent Elastomer claimed that it was still entitled to a refund.
It argued in follow-up hearings that the BWC not issuing that refund—which the agency said was appropriate because it effectively nullified prior programs when it agreed to provide the $1.5 billion in dividend payments to employers in April 2020—constituted an improper rule change to the Ohio Administrative Code, something that typically requires public notice.
"Basically, what the bureau said was, we gave you 100 percent of the premium, so therefore you are not entitled to any more money," Spiker said. "But we felt the bureau was outside of their ability to simply unilaterally alter the Ohio Administrative Code."
The OAC was later amended to cap recovery for a program participant at 100 percent of the premium paid, but that didn't happen until after Kent Elastomer challenged the BWC. It did so twice before seeking a writ of mandamus in the appellate court. The case was filed in August 2021.
The magistrate noted the "crux of the matter in this case is whether the BWC was within its authority to alter the rules governing the program for the 2018 year and not issue any refunds under the program as a result of the dividend."
Ultimately, the magistrate ruled that the BWC "acted without authority" in altering rules that applied to the 2018 program and granted a limited writ of mandamus.
That's where the case stands now as the state works on filing objections to that ruling.
"What the bureau did could be viewed as common sense, because if you got everything back, what else do you want?," opined Joseph Gross, a labor and employment lawyer with Benesch. "But the company's position is that you can't make common-sense decisions if they are not founded on a particular rule that has gone through notice and public comment."
Gross said the outcome is tough to predict. While the decision is well-written, he said, "I've seen other well-written recommendations that get reversed."
If the magistrate's ruling carries through, though, that could trigger additional payments to employers in a comparable position as Kent Elastomer. It might also lead to refunds related to the 2019 policy year for group-retro participants.
As far as the BWC being possibly on the hook for another $244 million in group-retro refunds for just 2018, Joe Spooner, president of Spooner Inc., said that's a figure his firm came up with based on gross estimations. How much any one company might receive in a group-retro refund could vary widely, as it depends on a mix of criteria for the company and the group they belong to.
"It is weird that an employer could get a refund of more than 100 percent back, but that is what the rule says, and that is what the company wants," Gross said. "There's nothing wrong with wanting to take advantage of a rule, even if from the outside looking in it doesn't seem quite right."
