MT State Fund: Big Sky Country to See Decreases… Again

24 Mar, 2017 Angela Underwood


Helena, MT ( — Laurence Hubbard, President and CEO of Montana State Fund, said the recent five percent decrease in workers' comp costs and negative rate increase since 2007 is a product of frequency and severity, both in terms of wage loss and medical benefits.

The Treasure State must have a handle on frequency and severity with numbers ranking it 11th highest overall by the 2016 Oregon Workers’ Compensation Premium Rate Ranking Report. The standard five percent rate decrease is applicable with an effective date from July 1, 2017 to July 1, 2018, "but we can do better," Hubbard said.

"Once we get to the national average, I think we can save tens of millions of dollars in the system. It's difficult getting injured workers back to work in Montana. We are a very rural state, a lot of small businesses where if someone gets hurt they are the only one on that ranch or farm,” he said.

"You just don't have alternative return-to-work options for small employers. But we are making incremental improvements. It is a positive direction reducing cost and accident," Hubbard said, a former president of the American Association of State Compensation Insurance Funds. 

Al Ekblad, executive secretary of the Montana AFL-CIO, grew up in the union with his father and mother, respectively members of the Operating Engineers Local #49 and Minnesota Education Association, and remains part of reform passionately.

"The Labor Movement is engaged in this process because we need to protect workers. Employees must be ensured that they will receive the care they have earned, and need, if they are injured on the job," said Ekblad, a 20-year-member of the Montana Public Employees Association.

One of 25 state funds throughout the country not connected to any insurance carrier uses rate-making methods similar to private carriers. Hubbard, who served on the Board of Directors for the National Council of Compensation Insurance, explained the major benefits and reform bill called the House Bill 334 in 2011. "There was a number of provisions in that bill that the NCCI, The National Council on Compensation Insurance, priced at -22 percent on lost-cause reductions.

"About 12.4 was priced out on a provision that terminated medical benefits on most permanent partial disability cases after five years from the date of injury," he said, adding the only extension offered was by a Department of Labor medical panel. According to NCCI Montana State Advisory Forum 2016, key workers' compensation-related topics in the 2016 legislation included "first responder presumption; employer/employee definition; medical cost management; independent contractors and misclassification; exclusive remedy; and opt-out."

NCCI reports among other national economic indicators impacting the industry include slow private employment growth pushing "premium increases from higher payroll and higher expected claim frequency for new workers," and accelerated wage growth causes "upward pressure on payroll and premium as well as indemnity severity."

"Those savings back in 2011, when that bill passed, they were vetted by NCCI and carriers' inner-rate structure," Hubbard said, adding "we have been holding rates flat or reducing throughout the recession as well as the recovery period to the present rate decrease of five percent."

Hubbard said another positive proponent of that bill was "our ability to settle undisputed medical benefits." He said that, historically, Montana was not able to settle undisputed medical benefits. The provision changed that. "It allowed us to reach settlements with injured workers for their indemnity and future medical benefits which really helped bring closure to what otherwise would have been very long claims.”

"The other thing that was involved was the implementation of utilization treatment guidelines,” he said. “In Montana, our Department of Labor adopted something very similar to the Colorado guidelines, that was not priced in that bill by NCCI, they say it was indeterminate, but I believe it has had a major influence in treatment patterns for injured workers since it improves the quality of timely and appropriate referral."

Ekblad, who was a member of the Laborers Union Locals #254, #1334, and #1686 during his Montana employment, said, "It would be wrong to place all of the cost savings on the backs of workers."

Insurance Commissioner Matt Rosendale and Gov. Steve Bullock seem to be pleased with the decrease. “Montana is trending in the right direction on work comp and I’m optimistic about the impact the State Fund reduction will have on Montana businesses,” Rosendale said in a statement. “The more we continue to improve the climate for doing business in Montana, the more jobs and prosperity Montana businesses can create.”

As for the governor of the Big Sky Country, he said “Montana’s strong fiscal management and efforts by employers to keep workers safe results in more hard-earned dollars to invest in business, employees, and Montana’s economy.”

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    • Angela Underwood

      Author Angela Underwood has worked as a reporter, feature writer and editor for more than a decade. Her prior roles as Municipal Beat Correspondent with Gannett and Public Information Officer for Toms Rivers government in New Jersey have given her experience on both sides of the political and media fences, making her passionate about policy and the public’s right-to-know.

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