The Supreme Court of Ohio today dismissed an attempt by more than 2,100 local governments to collect refunds from the Ohio Bureau of Workers Compensation (BWC) for alleged overpayments made more than a decade ago.

At the request of the BWC, the Supreme Court ordered Cuyahoga County Common Pleas Court Judge John P. O’Donnell to dismiss the city of Parma’s class action lawsuit. The ruling is the latest to reject refunds of premiums to public employers. The BWC agreed to pay $420 million in refunds to private employers in 2014.

In a unanimous per curiam opinion, the Supreme Court reiterated that Parma’s lawsuit could only be filed in the Ohio Court of Claims. The ruling is based on a 2020 decision in which the Court told the city of Cleveland that its attempt to recoup overpayments from the BWC belonged in the Court of Claims. In today’s decision, the Court noted that Parma could not use  “artful pleading” to bypass the Court of Claims’ jurisdiction and instead pursue a case in common pleas court.

Decades-Long Payment Dispute Persists
State lawmakers authorized the BWC to implement a group rating program for small Ohio employers in the early 1990s. The plan allowed small employers to band together to qualify for the same premium discounts as large employers. The BWC had two separate insurance funds, a “private fund” paid by private employers and a “public fund” paid by government agencies.

In 2007, a number of private employers that did not participate in the group rating program initiated a class action lawsuit against the BWC, claiming that they were being overcharged premiums in order to provide unjustified discounts to the group-rated employers. In 2012, the non-group employers won a $859 million judgment against the BWC. In 2014, about 270,000 private employers received refunds as part of the San Allen v. Buehrer settlement. But public employers were excluded from the settlement.

Cleveland and Parma led efforts by local governments to collect refunds from the bureau, making similar claims that group-rated public employers were getting the same unjustified discounts as the group-rated private employers.

Cleveland initiated its lawsuit against the BWC in 2013 to recoup payments it made from 1997 to 2009 to the BWC. The Cuyahoga County Common Pleas Court awarded the city $4.5 million based on the arguments the private employers used in the San Allen case.  But the Supreme Court vacated that award in its Cleveland v. Ohio Bureau of Workers’ Comp. decision.

High Court Decision Leads to New Lawsuits
In January 2021, Parma filed two new lawsuits, one in the Court of Claims and the other with Judge O’Donnell in Cuyahoga County. The lawsuits made separate legal arguments. In the Court of Claims, Parma sought an award of damages for the alleged overcharged premiums. In the common pleas court, Parma sought a declaratory judgment, asking the trial court to determine the amount of refund the bureau owed Parma and the local governments. Parma also asked for an injunction to prohibit the BWC from refusing to pay any refund.

The Court of Claims dismissed Parma’s lawsuit, finding the case was filed too late and the statute of limitations prevented the case from being considered.

The BWC asked Judge O’Donnell to dismiss the case, arguing it could be pursued only in the Court of Claims based on the Cleveland decision. Judge O’Donnell refused the request, ruling that the Supreme Court rejected Cleveland’s attempt to seek restitution, and that Parma was making a different legal claim that was not covered by the Cleveland decision.

The BWC sought a writ of prohibition from the Supreme Court seeking to have Judge O’Donnell stop hearing the case, and writ of mandamus to dismiss the case.

Supreme Court Analyzed Legal Claim
The Supreme Court noted that under the Court of Claims Act, R.C. 2743.01 et seq., the Court of Claims has exclusive jurisdiction to hear all “legal” claims made against state agencies. Legal claims include those that seek money damages from the state. Parma maintained that its claims for a declaratory judgment and an injunction were “equitable claims,” not legal claims seeking damages, and that the Court of Claims Act does not prevent such lawsuits from being filed in common pleas court.

The opinion noted that in the Cleveland decision, the Court articulated principles for determining the difference between an equitable claim and a legal claim when the party is seeking money from the state. Equitable claims, in general, are to retrieve a “specific thing,” while a legal claim is a right to recover money “generally out of the defendant’s assets.” Unless the money is in a “specifically identifiable fund,” or is traceable to items on which the fund’s money was spent, then the party is making a legal claim.

The Court stated that it is not bound by Parma’s labels of its equitable claims, and instead must analyze the nature of what the city is seeking. The Court determined that Parma is seeking refunds of premiums it paid between 2001 and 2011.

The Court determined that Parma is not pointing to a specific fund in the BWC holding just the money Parma paid a decade ago, but found that money was commingled with premiums paid by other public employers. The Court found that there is no way to trace the money deposited into the fund during that time to determine how it was spent by the BWC. Instead, Parma and the local governments were seeking refunds from the BWC general funds, and that is a legal claim, which can only be heard in the Court of Claims.

2022-0108. State ex rel. Ohio Bur. of Workers’ Comp. v. O’Donnell, Slip Opinion No. 2023-Ohio-428.

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