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Montana Looking to Overhaul State's Workers Comp

Source: A.M. Best

Posted on 25 Feb 2011

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Montana Rep. Scott Reichner said he expects the state's House of Representatives to pass a GOP-backed bill that, if approved by the Senate and signed by the state's governor, would mark the most comprehensive workers' compensation overhaul in the state's history. But the bill still faces tough opposition from those who take issue with some of its provisions, particularly the bill's cutoff date for those who receive medical assistance.

H.B. 334, which Reichner introduced in August, is one of two bills that have been working their way through the Republican-controlled House that seek to move Montana from the top of the list of the states with the most expensive workers' compensation premium rates. An average of $3.33 per every $100 of payroll goes to paying workers' compensation premiums -- the highest percentage in the country, according to a report released by the Oregon Department of Consumer and Business Services.

Reichner's bill includes such cost-cutting measures as ending medical benefits 60 months after the date of the injury and creating a list of doctors that injured workers can see for treatment, as opposed to letting them request their personal doctor. Reichner said the National Council on Compensation Insurance estimated that H.B. 334 would save $84 million to $183 million in the first year alone -- a drop of between 20% and 44%.

"For far too long, we have seen businesses pull out of Montana because our workers' comp rates are too high. These rates put far too great a burden on our ability to create jobs," Reichner said, noting that Montana borders North Dakota, which has the lowest workers' compensation premium rates in the country. He said that workers' compensation is one of the top issues his constituents raise when he meets with them.

North Dakota businesses must purchase coverage from the state's Workforce Safety and Insurance agency, an employer-financed, no-fault insurance state fund.

Some of the bill's cost-cutting measures have been criticized for going too far in cutting benefits for workers. The 60-month medical assistance time line isn't long enough for workers who suffered significant injuries, said State Sen. Jim Keane, D-Butte.

Keane said Reichner's bill has other "significant problems" that will need to be reworked when it reaches the Senate. "Both parties want to have a positive outcome on workers' comp," Keane said. "But the Reichner bill puts too much on the backs of workers by throwing them off their medical assistance after 60 months."

Keane said he supported an earlier workers' compensation bill introduced by Rep. Chuck Hunter, D-Helena, which was backed by the state's Labor-Management Advisory Council. That bill, H.B. 87, which included panel reviews for those approaching the five-year mark, appears to have died in committee. When H.B. 87 was passed out of the state's joint House and Senate Economic Affairs Interim Committee, which meets between the biannual legislative sessions, in August, there was some confusion over whether the proposed legislation would lower costs or raise them.

Kenton Brine, assistant vice president for the Northwest region at the Property Casualty Insurers Association of America, said insurance companies largely support the Reichner bill, though they also dislike the 60-month cutoff. Brine said, "H.B. 334 has some real muscle behind it. But we don't support the idea of terminating medical benefits after 60 months."
Reichner said he thinks a hard deadline of 60 months is "the only way you can be sure that people aren't going to enter the system and never leave."

He added that he thinks it will also reduce workers' compensation fraud, saving additional funds.
Regardless, whatever changes the Republican-controlled Senate makes will have to be approved by Gov. Brian Schweitzer, a Democrat who has the power to make line-item vetoes under state law.

The top five writers of workers' compensation in Montana in 2009, according to BestLink, which provides online access to A.M. Best's database of insurance information, were: Montana State Fund, with a 64.4% market share; Liberty Mutual Insurance Cos., with 14.7%; American Insurance Group Inc., with 4.6%; Zurich Financial Services NA Group, with 3%; and Travelers Group, with 2.1%.