MONTANA SELF INSURERS’ ASSOCIATION - MSIA
Expansion of Presumptive Diseases for Fire Fighters
Current Montana law (MCA 39-71-1401 and 1402) provides for presumptions that fire fighters who get specific cancers got them as a result of their work, and therefore they are automatically covered under workers’ compensation law and entitled to workers’ compensation benefits. There is a limit of $5 million per claim under the new law and there is a phase-in, based on expected gestation periods for different cancers fire fighters may get. Employers (mostly municipalities and cities and towns) can dispute the presumptions, but it is typically conceded the presumption is difficult to overcome.
The Legislature has the authority to determine who should get benefits and what benefits they should get. Professional fire fighters, as employees of municipalities, cities and towns are automatically covered. This law was new in 2019 and provided that fire fighters employed since 2014 were covered, so for some of the cancers there was an immediate impact. Volunteer fire fighting companies have the option of providing coverage for their volunteers or not. Since volunteer departments are funded through donations, providing this coverage tends to be an expense some volunteer companies choose to forego.
Adding benefits to the workers’ compensation system, particularly benefits that dealing with end of life situations, can be very expensive. That is the case with the new law too. Montana State Fund, the largest carrier in the state, increased its fire fighter rate by 20% effective July 1, 2020 and their actuaries anticipate more increases as the years go on – if nothing else happens. This contemplates the current law limiting individual fire fighter claims to $5 million dollars each for these presumptive benefits.
Montana is not the first state to enact these types of provisions. Even so, there is limited history of the cost impact in other states. These presumptive benefits tend to be paid by individual municipalities, cities and towns, who tend to self-insure and therefore use tax dollars to pay for workers’ compensation benefits. The evidence so far is that these claims tend to be rare, but when they happen, they are expensive, with up to millions of dollars paid per claim. For self-insured cities, towns and municipalities, that is a millions of dollars per claim hitting their tax base.
MSIA opposes expanding these presumptive disease benefits to apply automatically to volunteer fire fighters or to expanding on the list already in statute. At the least, Montana should see what kind of results the current law, which took effect July 1, 2019 will have on benefit costs for fire fighters and our local taxes. In comparing cancer rates for the general population, adjusting that to the cancer rates for fire fighters, and then adjusting those results for the overall costs for cancer treatments in both situations, actuaries can project expected costs. As a result of those projections, Montana cities workers compensation rates for fire fighters increased by about 61% from prior to implementation to current.
One could argue that the projections are just that, and could be wrong. That’s true. However, Montana law requires the benefit to be paid, whether the insurance company or the self-insured municipality, city or town can afford them. In short, it is more prudent when paying for required benefits to be financially conservative, than leave the city, town or insurer bankrupt and no one gets benefits.
This Montana law is based on Idaho law, which is also relatively new. According to NCCI, a state licensed workers’ compensation statistics operation in both states, the average Idaho lost time claim cost was $44,261. An informal survey of four Idaho cities, employing about 500 fire fighters total, had six claims which met the criteria and a total cost of $3.3 million for those six claims. That is an average cost of $550,000 per claim, more than 10 times the cost of an average lost time claim. It is true – few claims but those that do happen are very expensive.