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MONTANA SELF INSURERS' ASSOCIATION

Legislative Update 1/6/2023 – Week 1

  • Barnhart Decision – Concurrent Employment
  • House Rules
  • Legislative Speculation
  • Business Days at the Capitol
  • Barnhart Decision – Concurrent Employment


On December 27 in a unanimous decision, the Supreme Court decided Barnhart v MSF and overturned the Workers’ Compensation Court (WCC) decision regarding concurrent employment benefit levels, when the injured worker can return to one job, but not another. Ms. Barnhart injured her back while working two jobs. She was assessed a Class 2 impairment and was released to return to work at her full-time job but not her part-time position. The full-time position paid less per hour than the part time position, which ultimately becomes important in the Supreme Court determination. However, the Court also commented on what could happen should the opposite hold true. 


In simple terms, MSF calculated Barnhart’s PPD impairment benefits based on her combined wages and following their interpretation of the law that benefits should be based on actual wage loss, calculated her continuing indemnity benefits based on her part time wages (since she could not return to that employment). The WCC disagreed and ordered MSF to pay the continuing indemnity benefits based on the combined wages. MSF appealed. 


The Supreme Court supported the MSF interpretation of the law and found that the WCC interpretation would lead to Barnhart receiving more in PPD benefits than her actual part time wage loss, and she would have received this benefit in addition to her full-time wages. In the decision discussion, the Supreme Court said, “His [the WCC Judge] interpretation will also cause the relationship of PPD to actual wage loss to be wildly disproportionate in factually similar cases.” They also concluded, “We must reject an interpretation that leads to an unreasonable result in favor of another that will lead to a reasonable result.” 


The WCC Barnhart decision was the subject of one of the questions in the MSIA public policy position survey this past summer. MSIA members resoundingly supported the ultimate determination by the Supreme Court. As a result of this decision, the statutory language does not need to be changed as concurrent employment benefits based on actual wage loss is supported by the Supreme Court. 


  • House Rules


When we think of the legislative process, we rarely think about the rules each chamber adopts each session to govern, how they govern. However, the rules adopted by each chamber become particularly important as the issues involved become more important. 


This legislature, for the first time in what seems to be forever and may well be forever, has a 2/3 majority in both chambers. That means that without the minority Democratic input, theoretically, the Republican majority can do, pretty much whatever it wants to. That’s true, if the party stays together. As in any grouping of 150 people, there are different shades of either red or blue. Members of the “Conservative Solutions Caucus” who have worked across the aisle in the past to push through some important changes in Montana worked with the minority Democrats to set up a couple of rules that could be significant. 


First, the House adopted a rule that allows 55 votes to “blast” a bill out of committee. Last session that number had been 60. The floor can vote to over-ride a committee action to release a bill for full body debate and action. Without this “blast” opportunity, if a bill died in committee, it died. In 2015, the legislature created “silver bullets” which allowed leadership to effectively do the same thing, with a limited number of bills. Since then, the House has adopted this blasting process whereby they vote as a body to release a bill. With the reduction from 60 to 55, the minority has more opportunities to work with members of the majority to blast a bill. With only 32 seats in the minority (again assuming they all vote in lock-step), the difference between having to get 28 votes from the 68-member majority and 23, is larger than the numbers suggest. 


Second, in a nod to the more conservative wing of the Republican majority, the House voted to create special committees based on specific topics. Perhaps the most notable of these is the Special Committee on Election Integrity. However, unlike other committees, these special committees must move bills to a standing committee for consideration. That standing committee then can either kill the bill, amend it or pass it on to the floor for consideration. As discussed above, a Special Committee bill could be blasted out of a Standing Committee, should there be enough votes to do so. 


The upshot is the rules are important and provide a glimpse into how things may shake out during the session. While the Republicans have a clear majority and on core issues, are likely to do what they want. The benefit of a democracy is that majority rules include minority rights and not everything on the Republican agenda will be a slam dunk. 


At this point, there are no workers’ compensation proposals that may be subject to either a Special Committee, or a blast motion. However (read the quote at the top of this Update).


  • Legislative Speculation


We are only in the first week of the session. The House Business and Labor Committee, where most of the workers’ compensation bills will be heard (or the Senate Business, Labor and Economic Affairs) seems to be a good bit ahead of other committees in hearing bills and taking action. None of their bills have been particularly controversial to this point and none have addressed any workers’ compensation issue. Even so, they are re-defining legislative efficiency.


Senator Shane Morigeau (D – Missoula) has SB 22, introduced at the request of the Economic Affairs Interim Committee. This bill is the clean up language for the independent contractor bill from last session. The goal of the effort, then and now, is to require the Department of Labor to check beyond the absence of an Independent Contractor Exemption Certificate (ICEC) when making a determination that someone is an employee. Last sessions’ bill was a little flawed, which was discovered during the rulemaking process and this language is intended to clear up that error. 


Senator Ryan Lynch (D – Butte) has a presumption bill draft, LC 84, which expands the occupational disease presumptions for firefighters to add ovarian cancer after 15 years of service and testicular cancer after 10 years of service. LC is the designation for language that has not yet been formally introduced – once that happens, it is assigned a House or Senate Bill #.


Representative Nelly Nichol (R – Billings) has a series of proposals addressing Montana State Fund issues. In speaking with her, one of her proposals is to allow the state to bid out their workers’ compensation coverage, or to become self-insured. Senator Mark Noland (R – Big Fork) also has proposals that address MSF operations. In prior years, as a member of the House, Senator Noland has also sponsored State Fund operation bills. None of these proposals have been released as drafts yet so it is only speculation as to what they might do and what impact they may have on the overall Montana workers’ compensation market. 


Senator Greg Hertz (R – Polson) has SB 126, which would have the state re-fund the monies it appropriated from the State Fund’s investment accounts in 2017 to address the state budget shortfall at that time, with interest. Senator Hertz is an MSF policyholder and a lead plaintiff in an unsuccessful suit against the state regarding that legislative action. The speculation is this bill, in its current form is not likely to go anywhere but might be used as a vehicle for other changes. 


Representative Kenneth Walsh (R – Twin Bridges) has HB 178 which clarifies that injuries which occur off the clock and as the result of social or recreational activity, are not compensable. The bill would clarify the law defining that a social or recreational activity is one that includes exercise, pleasure, relaxation or voluntary of optional preparation related to the employment. For example, this would clarify that should a ski area employee, off the clock during a work day, ski down the hill an injure themselves they would not be covered by WC in that specific instance. If they were on the clock, they would be covered. 


  • Business Days at the Capitol


Finally, the Montana Chamber of Commerce sponsored their annual Business Days at the Capitol, always the first two days of session. This year, we heard about a proposal sponsored by Senator Steve Fitzpatrick (R – Great Falls) to add comparative fault and contributory negligence to product liability law and to consider the age of the product and the concept of the “innocent seller” protections. Lt Governor Kristen Juras reported on the Red Tape Relief project, which has resulted in several bills to repeal parts of the law that are redundant, contradictory or otherwise pointless. Glenn Oppel, President of the Montana Chamber. reported on a proposal to raise the business equipment exemption to $1M, which would mean 88% of businesses would be exempt (and therefore see a significant decrease in tax liabilities). Attendees also heard about the two new medical schools set to open in Montana, helping to address the medical provider shortage we have. Finally, David Smith of the Montana Contractors Association, reported that the occupation of construction has a high suicide rate and the additional resources proposed by the Governor in his budget to mental health are welcome. 


Thanks guys. Any comments, questions or input are always appreciated. Just reach out to me.