A lawsuit has been filed in Montana to stop a money grab by the State of Montana.
States — and there are several — that have quasi-public workers’ compensation companies. They appear to have deep pockets and with budgets tight in almost every state these days, Legislatures are tempted to raid the coffers of these agencies.
It almost happened in the PIA Western Alliance state of Oregon with its SAIF Corporation and has happened in Montana. Other states could follow. The PIA Western Alliance — representing independent insurance agents and companies in Alaska, Arizona, California, Idaho, Montana, Nevada, New Mexico, Oregon and Washington — opposes such actions.
In Montana at issue is Senate Bill 4. It was proposed by Governor Steve Bullock and passed during the November 2017 special session of the Montana Legislature. The bill imposes a “management fee” on Montana State Fund (MSF) assets.
The result is the taking of $30 million dollars from policyholders and injured workers.
Professional Independent Agents of Montana (PIA) President Travis Clark first brought this issue to the attention of PIA Montana members and the PIA Western Alliance. He quickly got involved and encouraged the PIA to support the funding of a lawsuit to prevent the State of Montana from illegally taking funds from the MSF to balance the state’s budget.
The PIA Montana, other insurance groups, business groups and individuals, former members of the Montana State Fund board of directors and some Montana Senate and House members object to the state’s taking MSF monies and using it for purposes other than worker’s compensation. All opposed contend the move by the governor and the Legislature is not only unlawful but it is just plain bad policy.
A steering committee — the Montana State Fund Justice Coalition — was formed shortly after the MSF board of directors refused to file a suit to reclaim the money. The group consists of Montana State Fund policyholders and injured workers. It began raising money to stop the state’s action.
At the urging Travis Clark, the PIA Montana board of directors authorized the sending of a sizable check to the aid in a pending lawsuit. Dollars from PIA member agents and others followed and the coalition is now fully funded.
This week — after a few weeks of preparation — the coalition filed suit against the State of Montana for breach of contract and violation of the U.S. and Montana Constitution. The suit is asking the court to declare the statute authorizing this taking of private assets unconstitutional.
The group is led by business owner, state representative and Polson, Montana Republican Greg Hertz who said, “This money is collected as insurance payments from policyholders to be used for the benefit of injured workers. These funds are private assets and it is unconstitutional for the government to disguise this taking as a ‘fee’ and use the money for purposes that are not related to workers compensation.”
Travis Clark agrees. “The Montana Constitution orders the money it collects, the interest on that money and any dividends from investments to only be used for workers compensation-related purposes. It can also be given back in the form of dividends but that’s it.”
MSF policyholder Wayne Dykstra — who is also a former MSF board member — is a plaintiff in the lawsuit. “When there are excess dollars in the State Fund, they have, by law, been returned to policyholders to reduce premiums and the cost of doing business in Montana. This is an outright seizure of private assets that would set a precedent and put our workers compensation system in jeopardy,” he said.
The coalition maintains the MSF was set up as a public corporation that competes with private insurance companies and gives employers a guaranteed market to purchase workers compensation insurance. By law, MSF assets are held in trust both for injured workers and employers and are not to be used for any other purposes.
Here are some of the groups supporting the coalition:
• The Professional Insurance Agents of Montana (PIA)
• The Montana Chamber of Commerce
• Montana Roofing Contractors
• Montana Building Industry Association
• National Federation of Independent Business
• Montana Motor Carriers Association
• The Independent Insurance Agents Association
What’s even better, more than 30 Montana businesses and associations have contributed to help fund the lawsuit.
For more information contact Greg Hertz, at 406-253-9505