MT Senator Seeks $50 Million "Legislative Dividend" from Montana State Fund

Posted by Dean Blackaby | Jan 20, 2015 | 0 Comments

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Sen. Jim Keane - (D)

Senator Jim Keane, a Democrat from Butte, appears ready to do battle with the Montana State Fund again.  A bill drafted and ready for delivery (LC0035) proposes requiring the Montana State Fund to make a one-time deposit of $50,000,000 into the account used to pay claims for what is referred to as the "Old Fund."   The "Old Fund" represents liabilities from injury and occupational disease claims occurred prior to July 1, 1990.  The money grab is nothing new.

Now, if you're scratching your head and wondering how many claims could there possibly be that pre-date 1990 -- the answer is a lot and far more than you might imagine.  As a former MSF attorney, I spent a significant amount of time each week working on injuries from the 1980s, reaching back into the 70's on occasion.  "Old law" was very liberal and in an era of statutorily mandated "liberal construction" by the Courts, these claims present a substantial burden.   To be fair, some claims suffer from the frenetic, sometimes desperate decisions made by insurers including the State Fund, back in those days when everything was basically on fire.

Compounding this situation is what can fairly be described as some disingenuous legislative dealing on the part of the Montana Legislature.  Today's legislators are either unaware or, more troubling, don't care that past legislatures appropriated money from MSF coffers previously on the condition that the General Fund would assume the liabilities of the Old Fund.  The focus is not the obligations assumed by past legislatures but rather as it is every year, legislators and budget folks eyes for Montana State Fund's bank account.   While they don't concern themselves with the details of what is required for actuarial soundness, they do see what they consider to be "found" money and will redefine equity and surplus if need be.

At the core is a fundamental irritant -- Montana State Fund's role as a quasi-agency lacking the same type of oversight endured by state agencies.  That tension will always exist so long as MSF is charged with "operating like an insurance company."  That charge is what keeps situations like the "Old Fund" from arising again and allows the maintenance of anything remotely resembling a competitive marketplace for workers' compensation insurance.  Some would like to treat MSF like any other agency but the fact is MSF is unlike any other agency under the state's umbrella.  Perhaps record dividends for policyholders is too much and the Legislature wants its own dividend.

The current bill says a one-time deposit but in reality, it will never be just once.

About the Author

Dean Blackaby

Attorney representing individuals hurt at work; mediation of workers' compensation disputes; settlement consultant focusing on Medicare Secondary Payer compliance and Medicare set-asides.

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