May 2021 Update

  • All MSIA Supported Bills Pass; All Opposed Fail
  • Anti-Vaccine Discrimination in Employment To the Governor
  • Business Issues Generally Pass; Marijuana Regulation Becomes Law
  • NCCI (Virtual) Annual Issues Symposium 5/11 & 12 – FREE
  • Other Business Bills

With the end of the session, we will go back to our monthly newsletter format with MSIA Update Extras as things hit my desk that are timely. In this May 2021 Update, I provide a wrap up of our legislative results and part of the report by Ronda Wiggers, lobbyist for the Helena Chamber of Commerce. I selected some of her business bills reviews from the Helena Chamber of Commerce (I am personally a member) and they are provided below with the HCC permission.

Workers’ Compensation Bills

Bills MSIA Supported (in numerical order, starting with House bills)

HB 43 (R. Knudsen R-Culbertson) - Telemedicine. This bill broadens the application and makes permanent the COVID-based emergency standards for the use of telemedicine in Montana. Even so, telemedicine is still not used much in Montana in comparison to other states. With the COVID pandemic, telemedicine use both in workers’ compensation and general health has literally sky-rocketed in other states. The bill was signed by Governor Gianforte on 4/19. 

HB 198 (D. Harvey D-Butte) Increase maximum burial benefit in workers’ compensation. This bill raises the maximum death burial benefit to a maximum of $10,000 from the current $4000. MSIA testified in favor of the change identifying our current level is relatively low in comparison to other states and the increase will put Montana with 20 other states at that level or higher. MSIA also supported the amendments to make the benefit a maximum, based on actual costs and to eliminate language which would have had DOLI automatically review the level and make changes on a periodic basis. The new law will require the legislature to again take action to change the benefit level. The bill was signed by Governor Gianforte on 4/1. 

HB 199 (D. Harvey D-Butte) – LMAC – Joint Petitions. This bill is the LMAC bill which also includes permission to the Department of Labor and Industry in their material to injured workers to provide information about additional, non-statutory benefits provided by non-profits. This provides the opportunity to Kids Chance Montana provide information regarding how they can help kids of severely injured or killed parents at work MSIA, other businesses and associations, labor, insurers, and others supported the bill. MSIA testified in support of the bill. The bill was signed by Governor Gianforte on 3/25. 

HB 283 (F. Anderson R-Great Falls) – this bill has been amended as MSIA, the Montana Contractors Association and member MT School Boards Association requested to clarify that junior high school and high school students who were unpaid interns would have to be covered by a written agreement between the school and business partner. MSIA supports the bill as amended, and worked with the sponsor and the others to address the issue of increased costs for businesses that support unpaid postsecondary internships as part of graduation and professional licensing requirements (mostly nurses and medical students) and to maintain unpaid high school internships. The bill was signed by Governor Gianforte on 4/1. 

HB 446 (Marshall R-Hamilton) – Prosthetic Definition. MSIA shepherded this language which will provide in statute the current case law language that a prosthetic is “an artificial substitute for a missing body part.”  This was subject to a proposed rule from the Department of Labor and Industry last year, which defined prosthetic more broadly including assistive devices. That proposed rule was stopped by the Economic Affairs Interim Committee because they saw it as providing a definition, which they considered in the purview of the legislature, not the administrative body charged with implementation of laws. The bill was signed by Governor Gianforte on 4/1.  

HB 655 (Buttrey R-Great Falls) – Medical Marijuana. This bill provides that if an injured worker who does not have a medical marijuana certificate fails or refuses to take a drug test after a workplace accident, there is a presumption that the major contributing cause of the accident was the employee’s use of drugs not prescribed by a physician. In that situation the employee is not eligible for workers’ compensation benefits. The bill was assigned to the Senate Business, Labor and Economic Affairs Committee. The bill was sent to the Governor on 5/4 and he is expected to sign it

SB 65 (S. Fitzgerald R-Great Falls) - this bill provides limited COVID-19 Liability Protection. This bill was part of Governor Gianforte’s requirements for easing the COVID emergency restrictions. MSIA provided testimony in support of the bill. The bill was signed by Governor Gianforte on 2/10 and became effective immediately.

SB 118 (Gauthier R-Helena) –False statements to employers. This is the KRMC bill providing that benefits be eliminated if the injury is the result of false information provided and relied on for hiring regarding disabilities. The bill was supported by the business community and the only opposition was the MT Trial Lawyers Association. The bill was signed by Governor Gianforte on 3/18.  

SB 367 (Morigeau D-Missoula) This bill changes the independent contractor law so that the Department of Labor cannot automatically assume that absent an Independent Contractors Exemption Certificate, the person is an employee. The bill was signed by Governor Gianforte on 4/30. 

SB 374 (C. Smith R-Billings) – Physician Dispensing. Montana is one of four or five states which does not permit general physician dispensing of prescription drugs. The bill was generated to support Direct Primary Care and to reverse that law. MSIA worked with Senator Smith and MSF to amend the bill to maintain the law as it is regarding workers’ compensation treatments – that is to exclude workers’ compensation treatments from being eligible for physician dispensed drugs. This is significant studies have demonstrated that physician dispensed drugs are tied to extended recoveries, longer durations, higher costs for drugs and higher indemnity benefit costs. The bill also continues to prohibit physicians from dispensing opioids. With the amendments requested by MSIA and others, MSIA testified in support of passage of the bill with the changes. It was telling that the Montana Pharmacists Association also supported the bill. The bill was sent to the Governor on 5/4 and he is expected to sign it. 

Next the “Watch” Bills (MSIA did not take a position and maintained awareness and provided some reporting on the bill as it could have had an impact on members’ ability to do business or create potential issues within the marketplace)

HB 415 (J. Carlson R-Manhattan) – this bill would have made it illegal to discriminate in hiring or employment for those who choose not to get vaccinated. MSIA is monitoring the bill and at this time has not taken a position. The bill failed to pass the House on a 50-50 vote on 2/25 and failed on a motion to reconsider 47 – 53 on 2/26. At the time, MSIA warned that while the bill was currently dead, it might come back to life. And, it did – see HB 702 below which is a more refined version of the same proposal. 

MSF Bills: The following four bills were all aimed at the State Fund and how they operate. MSIA did not take a position on any of them and monitored them. The Commissioner of Securities and Insurance (the insurance regulator), the AFL/CIO (labor), the Montana Chamber of Commerce, the NFIB (small business), the IIA – MT (insurance agents), MT Farm Bureau, MT Stockgrowers Association and other agriculture associations, the MT Loggers Association and MT Wood Products Association, the Motor Carriers of Montana (trucking) association the MT Building Industry Association and other business groups opposed the bills. On some of them, the insurance industry also opposed the language. Victory Insurance Co, a group called FAIR Montana, an individual small business and a former plaintiff attorney employee were the only supporters. 

HB 512 (Noland R-Big Fork) – MSF pricing programs. This bill would prohibit the MSF use of rating tiers, schedule rating and set in statute an expense constant for use within the State Fund’s loss cost multiplier calculation used in setting rates. In addition, the language would prohibit any business with an experience modification factor from being part of an MSF Safety Group. In limiting MSF’s pricing options, this bill too, can have an impact on the states’ workers compensation market. The bill was tabled in the House Business and Labor Committee on 2/26 and died at that time.

HB 513 (Noland R-Bigfork) – MSF dividends and management compensation. This bill would prohibit MSF from providing dividends and limit executive management compensation to 150% of the Governor’s compensation. The bill was tabled in the House Business and Labor Committee on 2/26 and died at that time.

HB 514 (Noland R-Bigfork) – MSF to pay premium tax. This language would require MSF to pay the premium tax applicable to all other insurance carriers. The bill was tabled in the House Business and Labor Committee on 2/26 and died at that time.

SB 322 (Bogner R-Miles City) – This bill would have required MSF to end its other states’ coverage program for MT based businesses, require them to contract with all insurance producers and to pay commissions based on other states’ residual market levels. The bill was tabled in the Senate Business, Labor and Economic Affairs Committee on 2/26 and died at that time.    

HB 701 (M. Hopkins R-Missoula) does not change the law regarding the current limitation on workers’ compensation paying for medical marijuana. The current language (MCA 39-71-407 (6)(c) provides that workers’ compensation insurers are not required to pay for medical marijuana to cover a debilitation condition. There is no change to this language. 

The bill regulates how the initiative passed by the electorate in November will be implemented by the Department of Revenue. Medical marijuana regulation will also be moved from DPHHS to DOR. Under the bill, counties that did not support the I-190 Initiative, will be required to hold another election to determine if they will permit recreational marijuana use in their jurisdictions. According to news reports, about half the counties opposed the initiative and the populous counties supported it. The bill wound up being supported by the Montana Cannabis Guild and conservation groups who were promised a share of the tax revenues raised by the initiative’s passage. Recreational use marijuana will be taxed at 20% and localities which permit it, can add a 3% tax of their own. The medical marijuana tax rate remains at 4%. The bill will be sent to the Governor, who is expected to sign it.

HB 702 (J. Carlson R- Manhattan see also HB 415, above) HB 702 emerged and passed with surprising rapidity. The bill received an amendatory veto and that language was approved by both chambers. The bill prohibits discrimination in employment practices based on vaccine status. Employers are permitted to recommend vaccinations but cannot mandate vaccinations for their workers. The bill does not limit vaccination status to COVID-19 vaccines but applies to any vaccines. It provides carve outs for school and day care facility vaccine requirements and based on the amendatory veto language, exempts licensed nursing homes, long-term care facilities or assisted living facilities from its’ standards. Governor Gianforte signed the bill today, 5/7.

In an opinion piece published in the Great Falls Tribune on April 26, Rich Rasmussen, President and CEO of the Montana Hospital Association, an MSIA member, stated, “Current medical guidance and federal rules determine how healthcare organizations approach infection prevention in the healthcare setting for diseases like, hepatitis B, MMR, Varicella (chickenpox), DTaP (diphtheria, tetanus and pertussis), and Meningococcal.” He continued, “Healthcare workers are at risk for exposure to serious, and sometimes deadly, diseases. Protecting employees, patients, and community members by confirming vaccine status should remain an option for healthcare facilities.” Rasmussen concluded, “Lets be clear: if HB 702 passes, visitors will be severely limited from seeing their loved ones at a hospital or a nursing home. [This was prior to the amendatory veto language exempting nursing homes. - PS] Instead of turning the corner, we’ll see prolonged and indefinite continued use of masks by healthcare workers.” 

SB 395 (Hertz R-Polson) – PBM Regulation. This bill provides further regulation of Pharmacy Benefit Managers and would require annual reports to their clients as well as the Insurance Department regarding prices and pricing. It is primarily aimed at health insurance and originally could have included workers’ compensation as health care coverage. In speaking with the CSI office, they want all PBMs in the state to be regulated and they, and the sponsor have accepted a proposal to properly define workers’ compensation and to limit its’ application to Plan 2 and 3 policies only. With the agreed changes the bill passed and was sent to the Governor on 5/4. 

Bills MSIA Opposed

LC 2208 (Trebas R-Great Falls) – Exclusive remedy. This bill draft would have reduced the current intentional negligence standard to willful negligence to pierce the exclusive remedy of workers’ compensation. MSIA (strongly) opposed this bill as it changes the “grand bargain” of guaranteed benefits in exchange for a no-fault system. Injured workers would have far greater incentive to sue their employers and co-workers with a far greater chance of winning than they currently do. The result will be significantly higher costs to employers as they would be providing workers’ compensation benefits and have to fight off the lawsuits for workers who were injured. The language, while requested and drafted, was never formally introduced.

HB 297 (Rep Caferro D-Helena) – this bill would have provided guaranteed workers’ compensation benefits to nurses who contract COVID. A couple of majority members commented that the bill only covered nurses, not other health care workers, first responders or essential workers. MSIA was the lead opponent on this language as the bill guaranteed benefits, regardless of where the disease may have been contracted. It removed the concept of work to qualify for workers’ compensation benefits and replaced it with employment. The bill also prohibited carriers from using the losses to individually rate the employer – thus requiring subsidies from all other employers in the state. The bill was tabled by the House Business and Labor Committee on 2/19 and died at that time. 

HB 412 (A. Olsen D- Missoula) – Choice of Provider. This bill would roll back the 2011 HB 334 workers’ compensation system reform of providing the employer or carrier the choice of medical provider to treat workers’ compensation injuries. MSIA opposed the bill. At the time of passage, NCCI assigned a more than 8% decrease in overall system cost to making the change to the current law. The system has seen significant average cost decreases since 2011 and we have been steadily reducing the average time away from work as the result of workers’ compensation injuries. Trial lawyers and labor have tried unsuccessfully every session since 2011 to repeal the choice of provider language. This is the 2021 attempt. Making this change would only serve to increase costs in the system, increase treatments and delay recoveries. The bill was tabled by the House Business and Labor Committed on 2/26 and it died at that time.

HB 511 (Gunderson R-Libby) – MSF financial standards. This bill would reduce the Risk Based Capital (RBC) MSF would be required to carry (RBC is one of the regulatory financial measurements to assure the insurance carrier can meet its’ financial obligations), permit MSF rates to only meet the RBC requirement, eliminate the requirement that in cases where costs are less clear that MSF rates be more conservative (higher) than not, require MSF adopt the NCCI loss cost filings and provide a statutorily set expense ratio for the MSF loss cost multiplier at .35% MSIA provided informational testimony on the potential marketplace impact of lowering the financial standards MSF would have to meet. The bill was tabled by the House Business and Labor Committee on 2/26 and it died at that time.

HB 550 (A. Olsen D-Missoula) – Presumptive COVID WC coverage for front line, first responders and essential workers. MSIA testified in opposition to the bill. The bill was tabled in the House Business and Labor Committee on 2/26 and died at that time. 

NCCI Virtual Annual Issues Symposium 5/11 & 12 - - FREE

NCCI is also hosting their second virtual Annual Issues Symposium (AIS) on May 11, from 10:45a – 2p Mountain time and May 12 from 10:45a – 1:15p Mountain time. Registration is required and is free. I have been to a number of AIS meetings in person, and attended last year’s hurriedly put together virtual meeting representing MSIA. The information is good, providing NCCIs perspective on national results and forecasts, as well as some of their most recent research and guest speakers that are typically worth the time. There is no substitute for in-person attendance as there are 600 or so workers’ compensation stakeholders in attendance from everywhere in the country. 

Other Business Issues (as reported by Ronda Wiggers for the Helena Chamber of Commerce)

Let’s begin with tax…

The final version of HB 303 increases the amount of business equipment that is exempt from taxation from the current $100,000 to $300,000. Two bills passed affecting income taxes. The first is the Governor’s SB 159 that reduces the top bracket from 6.9% to 6.75%. Although this is a small decrease, when combined with SB 399, will reduce it further to 6.5%. SB 399 is a total re-write of Montana income tax code. It changes our starting point to Federal Taxable Income rather than Gross income and it eliminates the marriage penalty and the need to file separately. SB 159 is set to become effective first, with the more complicated SB 399 following for tax year 2023.

HB 663 uses marijuana tax proceeds to increase the GTB for schools. This change will result in property taxes being reduced by over $10 million statewide. This calculation will effect each district a bit differently, but everyone should see a decrease in the school portion of their property taxes.              

All of the bills that resulted in a lower tax rate are currently on hold. The Federal ARPA funds stipulate that no state can receive funds if they lower any of their tax collections. Our Attorney General has joined many others in a lawsuit that is challenging this requirement. The legislature crafted the bills to become effective either when a judge rules in favor of the states, the Federal government changes the requirement, or the funding expires.

Although the tax changes are now law, you will likely not see a change in your tax bill until next year.

HB 252 creates a non-refundable employer tax credit for employer paid trades education. The program does not need to be thru a College of Technology nor approved by any state agency. Simply, the employer pays for an employee to get trade/technical training and can receive a tax credit for 50% of the cost, up to $2000 per employee with a cap of $25,000 per business. It can even cover a week of continuing education for product specific training. There is a list of 26 trades that can use this credit. 

HB 254 – Revise Wrongful Discharge Act Increases the probationary period from 6 months to 12 months; adds “the employee’s material or repeated violation of an express provision of the employer’s written personnel policies” as a reason to dismiss for good cause; adds being absent from work for more than 5 days without explanation as cause; and further limits the amount of damages a dismissed employee can receive. 

HB 472  revises liability under the consumer protection act. It limits treble damages in a civil liability action (under the consumer protection act) to only awards of less than $100,000 and dis-allows attorney fees if over $100,000 is awarded. 

HB 282 Revises labor laws relating to the employment of minors. It creates the definition of a “student employee” to allow students 16 years of age or older to work under the direct or close supervision of an experienced person in jobs that were previously off-limits to minors. (manufacturing explosives, logging and sawmills, operating power tools, metal work, mining, freight elevator, slaughtering and meatpacking, operating power driven bakery equipment, brick and tile work, excavation, roofing, and agriculture, among others). The thought behind this is that it may give students exposure to trades that they are currently not allowed to work during the time in their life when they are determining their future career and study path. 

HB 555 Revise civil liability laws on personal property exempt from execution – this bill increases the value of personal property that is exempt from a judgement to adjust for inflation. For household goods, firearms and crops: from $4500 to $7000; vehicles from $2500 to $4000; and for tools of trade from $3000 to $4500.

HB 629 Provides for job creation tax credits for businesses that increase their employee count by 10 in the first year and 15 in the second year for job positions that pay at least $50,000 per year and are in the sectors of construction, natural resources, mining, agriculture, forestry, manufacturing, transportation, utilities or outdoor recreation. For counties with populations of less than 20,000 the job growth requirement is 5 the first year and 7 the second year. 

SB 91 Requires fiscal notes to include business impacts. This bill has come forward in the past and we have always struggled with how they would gather the business information, as it may be very different for different businesses. The bill is now amended to work with a college economics class, or something similar, to have them do the analysis. If the budget director cannot contract with a college class, or someone similar, to do the analysis at no cost to the state, the bill is void.