The board of Montana State Fund, the state’s largest workers’ compensation insurer, cut its rates by 20 percent, in a move that some hope will help the business community and encourage more job creation and higher wages.
The 7-0 vote by the Montana State Fund board (MSF) comes on the heels of House Bill 334, a workers’ compensation reform package passed in the 2011 legislative session. The new rates for MSF’s 26,000 customers will kick in July 1, 2011.
Although its workers’ compensation costs are going down, Montana has the highest workers’ compensation rates in the country. And lawmakers made workers’ compensation reform a top priority. If the 20 percent cut is followed by other workers’ compensation insurers in Montana, it would mean a savings of about $80 million in workers’ compensation rates.
The MSF board’s decision was not made without some hesitancy though, as board member James Swanson of Glendive wondered if 20 percent was too deep a cut and suggested going with a reduction of about 17 percent instead.
But two legislative liaisons to the board, Rep. Chuck Hunter, D-Helena and Sen. Joe Balyeat, R-Bozeman, told the panel that lawmakers – and some businesses – would complain if the reduction were any less than 20 percent.
“If you go below 20 percent you’ll hear cries of ‘Wait a second, cut more,'” Balyeat said.
The National Council on Compensation Insurance, the nation’s largest provider of workers’ compensation data, had estimated a 22.4 percent cut in the cost of losses, but that does not include operating costs and other fees such as contribution to equity. Laurence Hubbard, state fund CEO, said he and his staff were more comfortable in recommending a 20 percent cut.
“It’s something that makes me nervous, but not outside the range of what makes me feel comfortable,” he told board members.
On May 2, Commissioner of Securities and Insurance Monica Lindeen approved a 22.4 percent loss cost filing.
Board chairwoman Elizabeth Best of Great Falls asked Hunter if the Legislature was expecting a 22.4 percent reduction or greater.
He said lawmakers were expecting the decrease to be “very close” to what NCCI had estimated and said any deviation from that would be “disturbing.”
Montana paid nearly $400 million in workers’ compensation rates last year, officials said. Lawmakers say they consistently hear from business owners that the high rates are keeping them from expanding their business, paying employees better or forcing them to move out of state.
In 2006, the governor started Labor-Management Advisory Council, made up of labor and management representatives, to look at workers’ compensation reform. LMAC, headed by Lt. Gov. John Bohlinger, came up with HB 87, which was approved last summer by the state’s Economic Affairs Interim Committee, which was headed by Sen. Jim Keane, D-Butte. The plan was discarded earlier in the session as GOP leaders said it did not provide deep enough cuts fast enough. Rep. Scott Reichner, R-Bigfork, was approached by House Speaker Mike Milburn, R-Cascade, shortly after the Nov. 2 elections to come up with a workers’ compensation reform package that would bring bigger savings faster than other proposals. HB 87 was replaced in favor of HB 334, which officials said incorporates a lot of LMAC’s ideas.
Gov. Brian Schweitzer said he had problems with HB 334, saying he wanted an effective bill that would not come back to haunt lawmakers and proposed some compromises. The 51-page HB 334 was signed by the governor April 12.
However, representatives from several unions said they were disappointed that several proposals adopted by LMAC to improve the system for injured workers were not in HB334 and apparently rejected by GOP leadership.
“Unfortunately, our goal of doing no harm to injured workers was disregarded by the Republican legislative leadership resulting in many workers, especially low wage workers and minimum wage workers suffering reduced wage replacements,” the union groups said in a prepared statement.
They encouraged Montana employers and employees to recognize that reducing the state’s high rate of on the job accidents could save an additional $150 million. “…more workers would go home to their families without cuts, bruises, broken bones or debilitating physical conditions. Everyone wins with that.”
Among provisions in the bill are ending medical benefits 60 months after the day the injury occurred instead of the last time medical services were used. It does allow people to have the benefits renewed every two years with a panel review. It sets up fee schedules. Permanent Partial Disability is 9 percent of the claims but 70 percent of the cost. A part of the proposal is to require an impairment rating of at least Class 2, or “moderate” impairment, instead of “mild” in order to receive Permanent Partial Disability wage loss benefits.
The bill also provides the ability for insurer and worker to agree to settle non-disputed medical benefits. And it prohibits claims for workers’ compensation benefits in cases where employees are on breaks off the premises.
Source: Montana Watchdog
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