Monday, January 31, 2011

Representative Hansen's take on HB334

We recieved this update from HD 33 Representative Kris Hansen on Worker's Compensation Reform on Saturday.  ...........thanks for keeping us informed


Since Workers' Compensation is such a big issue this time, I wanted to send you some information on HB 334 which will have a hearing in House Business & Labor Committee on January 31. HB 334 is an alternative to HB87 which came out of the Labor-Management Advisory Council. I think there is a growing general consensus that HB87 would not do enough to curb the extraordinary rates we pay in Montana. The numbers I heard, at best, would have reduced Work Comp costs by 1%, and might have even caused an increase of up to 4%.

Especially in smaller communities, there are many family-run businesses that operate on tight margins with slim profits. Workers’ comp costs can be the final straw that ends up closing down these local employers. For larger operations, it can mean the difference between doing business here in Montana or going several hundred miles across the border.

Take for instance a company that pays a coal miner $50,000 a year. Under the current system, the employer pays more than $3,000 in workers’ comp costs over 12 months. By comparison, a similar employer in Wyoming pays only $500 in workers’ comp costs for an employee who earns the same wage.

With that writing on the wall for HB87, Representative Scott Reichner of Big Fork, started working to see if something else could be done to more drastically reduce the Work Comp costs faster. Montana has by far the highest workers’ compensation rates in the country. Alaska is second-highest at #49, and Montana would have to come down 11% just to get to #49.

One of the things we talked about so much during the campaign was reducing these Work Comp cost and creating opportunities for more jobs in Montana. This is why I am supportive of HB334. It is likely this is going to be one of the biggest jobs bills of the session. It will allow more money to stay in employers' hands instead of going to pay the awful rates they currently have to pay to insure their employees. They can use that extra money to invest in or expand their businesses and to hire new employees. That makes for the possibility of reinvestment in local economies.

Before he introduced the bill, Rep. Reichner sent it to the NCCI, which reviews Work Comp laws to see what their impacts would have on rates. As I understand it, all the insurers use NCCI, so there is no partisan spin on it. NCCI’s assessment of HB334 says that in the first year after implementation, workers’ comp costs will decrease anywhere from 21% to 44%. Not "may" but "will." And that is just in the first year. It will get better after that. If we hit the 21% figure, we would move from 50th in the nation to about 45th. If we hit the 44% figure, we would move to about 23rd in the nation. Those are major savings that have an immediate impact on jobs in our community.

Some of the things that are proposed to change in HB334 include modifying the permanent partial disability component of workers’ compensation. PPD claims only represent 9% of claims, but they account for almost 70% of the total costs. Another major component of HB334 is that it provides for closure of medical benefits 5 years after the date of injury with a few exceptions for more serious cases or for prosthetics and things like that. In other words, a Work Comp claim won't stay open for a lifetime with employers never knowing if a closed case can be re-opened and paying higher rates because of it.

Another thing the bill will address is what is called "course and scope" problems. Right now, because of some court decisions, an employer's Work Comp insurer might have to pay Work Comp benefits to an employee for accidents that didn't happen "within the course and scope of the employer's business." For instance, if an employee leaves work on a break and goes home to let out the dog and falls down and breaks his arm, the employer's Work Comp insurance might have to cover that accident. But Work Comp is supposed to cover work-related injuries that were under the employer's control or at least within the scope of the employer's business, for instance, an employee of McDonald's slips on french-fry oil and breaks his arm. Work Comp should not cover accidents that happen while an employee is doing his own business on his own time. HB334 would clarify what "course and scope" can mean.

Anyway, hope this helps you get some good information out to our folks. There are some other, smaller Work Comp bills in the hopper also, but this is the big one. It has the potential to have the biggest impact fastest.


Note* --  HB 334 can be found here


  1. It’s not so hard to figure out. Cut the fraud and you would cut the expense by half. Everyone reading this knows at least one person that has scammed the system.

  2. Back in the early 90's there was an overhaul of the workmans comp. Rick Hill headed it up. The same auditor that uncovered that is about to release an outside audit of the correctional department.I should be interesting.

  3. What I see is people having to sue workers comp. just to get the help they need. I have watched them try and starve out person after person only to pay inflated amounts later to compensate the injured party. It would be much cheaper to pay those with real injuries and treat them like people.

  4. Cranky
    We have been researching this issue and I wonder if you would be willing to e-mail us details of instances where you know Workers Comp has tried to starve out legit claims? We would like to present both sides at some point