WCI State challenges insurance status

WCI's workers' compensation costs will grow if it joins the state program.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- Concerned about WCI Steel's financial woes, the Ohio Bureau of Workers' Compensation is challenging the steelmaker's ability to continue paying its own workers' compensation costs.
Jim Samuel, BWC chief of corporate affairs, said the struggling Warren company does not meet the financial requirements the bureau has set for self-insured businesses.
"What it means is they have to purchase a workers' comp policy from us," he said.
Losses reported
WCI filed reports Wednesday with the federal Securities and Exchange Commission saying it lost $17.5 million in the first half of fiscal 2003. Its combined losses for 2001 and 2002 topped $138 million.
"This is something we hate to do, but we are required to do it by law to protect other self-insured companies and to protect injured workers," Samuel said. "It's just reached the point with WCI that we cannot allow them to continue. They've had significant losses in the last couple years."
WCI, which has been self-insured for workers' compensation since 1988, said it has appealed the bureau's denial of its self-insured status and is awaiting a hearing on the issue. The company will retain its self-insured status until the appeal is heard.
Samuel said the appeal will be scheduled in June before the Self Insured Review Panel, an independent board mainly composed of self-insured companies.
They have a stake in the situation, he explained, because WCI's payment obligations to injured workers, rehabilitation and health-care providers would be assumed by the other self-insurers if WCI was unable to pay.
WCI officials estimate it would have to pay about $6.5 million a year for coverage under the BWC plan, more than three times what the company spent last year.
Records show WCI spent $1.9 million on workers' compensation costs in fiscal 2002 and spent $700,000 in the first half of fiscal 2003.
But Samuel argued that it's unfair to say costs would triple because of the changing and continuing nature of workers' compensation claims. With a BWC policy, he said, coverage would continue for injured workers, even if the company no longer existed.
Under BWC rules, self-insured employers pay benefits directly to their injured employees and service providers and do not pay workers' compensation premiums into the state insurance fund. Disputes in self-insured claims are referred to the Ohio Industrial Commission.
Out of 280,000 employers in Ohio only 1,100 have been granted self-insured status.
WCI announced a three-part restructuring plan earlier this month aimed at stopping the company's losses and making it profitable again. Spokesman Tim Roberts said the company is working on all parts of the plan but will not be releasing regular reports on its progress.
"We're working vigorously to solve our problems and to avoid bankruptcy," Roberts said, "but at this point we can't guarantee anything.