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Published: Thursday, 10/20/2005

Groups back direction of Bureau of Workers' Compensation

BY JIM PROVANCE
BLADE COLUMBUS BUREAU

COLUMBUS - The business community, labor unions, and attorneys representing injured workers yesterday came to the defense of the Ohio Bureau of Workers' Compensation, offering no support for the idea of privatizing the embattled agency.

While criticizing rare-coin and hedge-fund investments and other practices that have cost the system as much as $1 billion in returns, they worried that a major administrative overhaul could undo what they consider to be progress the agency has made during the last decade in reducing premiums and speeding up claims.

The House State Government Committee has begun a general discussion on possible administrative reforms of the $14.3 billion insurance fund for injured workers that is fueled by employer premiums and investment returns. Ohio is one of just five states with a government monopoly on workers' compensation insurance.

House Speaker Jon Husted (R., Kettering) has said Republicans are willing to consider the idea of turning over part or all of the agency's operations to private insurers. A number of proposals have been offered by Democrats and Republicans to overhaul the agency, but so far private operation appears to be a nonstarter among lawmakers.

"There was the consensus among those who testified today that they sort of like the system structured the way it is," said Rep. Stephen Buehrer (R., Delta), the committee's chairman. "Yeah, they'd like to see a tweak or two, but they kind of like what they see."

The BWC administrative system largely dates to 1995, when the prior BWC board was replaced with a nine-member Workers' Compensation Oversight Commission that sets rates and establishes investment policy. The governor was given the temporary power to appoint the agency's director, authority later made permanent.

Tom Fiore, director of labor and human resources policy for the Ohio Chamber of Commerce, tossed out a number of potential administrative reforms, but endorsed none of them. On that list was privatization, but with a number of warnings attached.

"Something in the neighborhood of 98 percent of the fund has been a solid investment," Mr. Fiore said. "Within the state system, there is the potential for dividends to come back in the form of credits. In my research, I have not found in any other state where you've got credits coming back of 75 percent of what your premiums costs are."

The investment returns have stopped at least temporarily in the wake of the investment scandals, with the bureau raising premiums 4.4 percent.

The Blade first reported in April about problems with the bureau's $50 million rare-coin investment with former Toeldo-area coin dealer Tom Noe, a prominent Republican fund-raiser. The newspaper in June was also the first to report the bureau's $215 million loss in a Bermuda hedge fund.

"Ohio is a model of the benefit of a state insurance fund," said Phil Fulton, president of the Ohio Academy of Trial Lawyers. "Since 1995, premiums are down an average of 32 percent for private-sector employers. Ohio has premium rates lower than the national average and lower than all of our neighboring states of Michigan, Indiana, Kentucky, West Virginia, and Pennsylvania, and over $10 billion in premium dividends have been returned to employers."

Mr. Buehrer said he remains undecided, but expressed skepticism that a state monopoly remains the best option for Ohio.

"The trend has been away from pure public systems, and here [Mr. Fulton] is today telling us that 44 states are wrong, and that the five or six that have a public system are right," he said.

Contact Jim Provance at:

jprovance@theblade.com

or 614-221-0496.



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