Montana Worried About Pending Workers’ Compensation Ruling

July 4, 2005

A case before the Montana Workers’ Compensation Court could potentially create a $300 million deficit for the state’s workers’ compensation system.

The case before Workers’ Compensation Judge Mike McCarter could, if successful, force the Montana State Fund and other workers’ comp companies to pay permanent disability benefits to injured workers for the rest of their lives.

Those payments now end when the worker is old enough to qualify for Social Security or other retirement benefits.

“We filed this lawsuit because we believe older workers who have been seriously injured should not be denied certain workers’ compensation benefits simply because of their age,” said Helena lawyer Jim Hunt, attorney for the plaintiff.

The law assumes that older workers don’t work because they get Social Security. But many older people keep working even after they start receiving Social Security, and older people who are permanently disabled at work shouldn’t be treated differently because of their age, Hunt told Montana’s Lee Newspapers, which reported on the potential deficit.

Hunt represents Catherine Satterlee, who, while employed at a Buttrey store, hurt herself trying to turn over a 45-pound bag of dog food at the bottom of a shopping cart. She was found to be permanently disabled by her injuries.

She received monthly checks from her employer’s workers’ comp company until she turned 65. Then the checks stopped.

Since then, others have signed on to the suit, including some workers who were old enough to retire at the time they were injured. Those people never received permanent disability payments.

The rationale behind the law is clear, said Nancy Butler, chief lawyer for the State Fund. Workers’ compensation is to help workers.

“But once you’ve retired, you’re out of the labor market,” she said, and workers’ comp companies are no longer the appropriate entities for helping injured elderly people.

The financial crunch would come if the plaintiff were to prevail, and McCarter were to decide those benefits should be applied not only to workers injured in the future, but to every permanently disabled worker since 1981, when the law went into effect.

The costs could be staggering. State Fund officials estimate the agency would have to raise rates by more than 15 percent to cover the benefits. The state-owned but semiprivate State Fund provides most of the workers’ comp insurance in Montana.

The agency’s predecessor, the so-called Old Fund, could be looking at paying an extra $116 million to disabled workers. That entity, however, has no money set aside for emergencies and any unanticipated costs would come out of the state treasury.

The State Fund itself, or the New Fund, may have to pay out an extra $186 million. But the agency only has about $141 million set aside for unanticipated expenses, meaning the state could end up bailing out that workers’ compensation entity, too.

Senate Pres-ident Jon Tester (D-Big Sandy) said there’s no easy way the state can bail out either the State Fund or its predecessor, the Old Fund. Montana businesses can’t afford to pay higher workers’ comp rates, either, he said.

Tester is hoping the Legislature will be able to come up with a way to fix the problem that helps out poor, injured and elderly people while not bankrupting the system and raising rates for employers.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Insurance Journal West July 4, 2005
July 4, 2005
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