Supreme Court Classification Code Decision Goes Against BWC

When a State Supreme Court Classification Code decision hits the blogosphere, the readers of J&L Risk Management’s articles and free newsletter should hear about the news.

A tremendous thanks to WorkCompCentral for writing the article and providing a link to the decision.  Some Workers’ Comp publications do not provide links to the decisions.  WorkCompCentral always does which lets Workers Comp Class Code geeks like me read the whole decision.   You can find a copy of the decision at this link (PDF file download).

Ohio is a monopolistic state meaning that the Buckeye State’s employers can only purchase workers comp insurance from the Bureau of Workers Compensation (BWC).   A few states have converted from a monopolistic Workers Comp system to an open market system since 2000.  Nevada and West Virginia converted completely to an NCCI-based system.Wikimedia Commons – PixOnTrax

The one word that stuck out in the Supreme Court classification code decision was “shoehorn.”  – see the below section.  Another significant note to the Supreme Court Classification Code ruling was the decision to use NCCI classification codes starting in 1997.

Monopolistic North Dakota and Washington state still use their own class codes.

Ohio Supreme Court Classification Code Decision Excerpts

{¶ 13} In 1997, the bureau notified OKI that it was in the process of converting its manual classifications to those established by the National Council of Compensation Insurance (“NCCI”). (The Ohio General Assembly mandated this
change in 1993. Am.Sub. H.B. No. 107, 145 Ohio Laws, Part II, 2990, 3113.) The classifications the bureau assigned to OKI under the NCCI manual were 8742, “salespersons or collectors—outside,” and 8810, “clerical office employees.”

{¶ 39} In this case, we conclude that it is not enough for the bureau to simply consider OKI—a private employer that cannot levy taxes—to be a public employer and a taxing district without first explaining whether an increase in hazard
over OKI’s former manual classifications makes 9443 the manual classification that best describes OKI’s business. As this court has observed, “[t]he bureau should not be permitted under the guise of administrative convenience to shoehorn an employer into a classification which does not remotely reflect the actual risk encountered.” Progressive Sweeping Contrs., Inc., 68 Ohio St.3d at 396, 627 N.E.2d 550.

III. CONCLUSION

{¶ 40} In light of the foregoing, we reverse the Tenth District’s judgment and issue a limited writ of mandamus ordering the bureau to evaluate the degree of hazard in OKI’s business and to explain—if the bureau so concludes after
conducting that analysis—why manual classification 9443 best describes OKI’s business, with respect to the degree of hazard.

Bottom Line – A State Supreme Court Classification Code decision shows that a company should always check its classifications to make sure you are paying the correct Workers Comp premium.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.

Share This Article: