MONTANA SELF INSURERS' ASSOCIATION

MSIA UPDATE November 2024

• Election Results
• Bill Draft Junque Files
• CO State Fund to Mutualize?
• Welcome New MSIA Member – ExamWorks Compliance Solutions
• Trolls, Truths & AI – Webinar 12/5 @ 10a MST

That Was the Election That Was

There are a couple of things that strike me as a result of the election outcomes in our state this year. Republicans ran a very good campaign, however, Democrats in Montana (and likely elsewhere) significantly underperformed. The Democrats didn’t just lose the statewide races, they got pounded.

Turnout was about what we expect in Montana at 74.5% of the electorate participating. New laws as a result of the 2023 session provided that once a county started counting ballots, they could not stop for any breaks – and they could not release any information on preliminary counts until the last ballot had been voted. I understand that was at 4am in Gallatin county (that means the individual was on line by 8p of election day). There are a number of reasons why that ballot took so long to be cast, they did not necessarily have to stand there the whole time, but I have to imagine (and hope, frankly) there were questions about the validity of the ballot that had to be administratively answered before it could officially be voted.

As a quasi-political junkie I always counted on the 40-40-20 rule of American politics. No matter which party you were working with, you could count on about 40% of the vote as your base. To win, you needed to figure out how to move the majority of the remaining 20% of the voters to your side. The definition of a blow-out was where the split was 60 – 40.

Statewide, Montana Democrats with limited exceptions, failed to make their 40% - which means they never had a chance. As a result, statewide, it was a blow-out for the Republicans.

• Governor Gianforte won 59% to 38%,
• Secretary of State Jacobson won 61% to 35& (Jacobson was also the top vote getter – even beating Trump by some 12,000 votes)
• AG Knudsen won 60% to 40%,
• State Auditor’s Office James Brown won 61% to 38%,
• Office of Public Instruction Susie Hedalen won 59% to 41% and
• Clerk of the Supreme Court incumbent Bowen Greenwood won 57% to 39%.

While the Republicans apparently did not have to work to hard to win – they did not make many mistakes, if any, in their races statewide and dominated the statewide results.

US Senate & Congress

In the most watched race, Jon Tester lost 53/45 to Tim Sheehy – that’s the largest differential in any of Tester’s four races and a bit of a surprise that it is as large as it is. Representative Ryan Zinke beat Monica Tranel by 52/45 – Tranel performed worse than she did two years ago. And in the other Congressional seat, Troy Downing ran away with the race 66/34 – in fairness, his opponent John Driscoll spent about $5000 on his campaign, which included damages from hitting a deer while driving his truck. However if Driscoll’s campaign represents the Democratic base for the party in the district, making the new 40-40-20 more like 35 – 45 – 20, it is likely going to be some time before we elect a Democrat to any state-wide office.

Supreme Court

In the Supreme Court races, Broadwater County Attorney Cory Swanson beat Federal Magistrate Jerry Lynch 54 % to 46% for the Chief Justice seat, and District Court Judge Katherine Bidegaray beat District Court Judge Dan Wilson by the same numbers. This is interesting because these are likely the two highest profile Supreme Court races in history. Those who paid attention recognize that the Republican party and the groups supporting their positions supported Swanson and Wilson. The Democrats and their support groups supported Lynch and Bidegaray. I’m not sure how to explain this split vote.

Constitutional Initiatives

The Constitutional Initiatives provided some drama and it will be interesting to see what happens during the session regarding the abortion initiative.

• CI 126 - would have eliminated party affiliated primaries and moved the top four vote getters in a primary to the general election.
• CI 127 – a companion to CI 126 would have required that the winner garner at least 50% of the vote. Failing that there would be another election run-off between the top two vote getters for the seat.

Both of these initiatives failed. Despite heavy spending and lots of grass roots efforts, the parties appeared to oppose them and they were able to bring out the voters to oppose the changes. There is a saying which seems to fit here – ‘Montanans don’t like the way things are and can’t stand change.’ That pretty much sums up my analysis of the results on these two initiatives.

• CI 128 provides a Constitutionally guaranteed right to abortion. This is obviously a hot-button issue here – and across the country. More and more states are seeing initiatives either for or against abortion access since Rowe v Wade was overturned by the US Supreme Court in the Dobbs decision.

This initiative passed by a decent margin in the state - about 58/42. Over the past few sessions the legislature has tried to change popular vote initiatives impacts on cannabis until this past session, when they seemed to get the message that Montanans supported medical and recreational cannabis use. They then seemed to put regulatory guidelines to put in place what had passed, as opposed to trying to change what had passed. Particularly since Governor Gianforte has been in office, the legislature has enacted more restrictive abortion bills, which the Courts typically have overturned. Given my observation that the legislature tries to make initiatives fit their vision, it will be interesting to see what transpires with this initiative.

The Legislative Races

All 100 House seats were up for election and half the 50 Senate seats were up. The other half of the Senate seats will be up in 2026. Even though they got pounded statewide, the Democrats picked up legislative seats, though there were no real surprises in the local statehouse races. Two things are in play here – first, after having a super-majority in both chambers in the last legislative session, the Republicans were destined to lose some seats. Second, and honestly more important, there were more Democratic majority districts in the 2020 Census re-drawn maps. It takes four years after the Census for final maps to be drawn and this was the first election with the new districts.

Last session, in both the House and the Senate, the Republicans had a super-majority – they held enough seats that they could over-ride a veto – and pass Constitutional Initiatives onto the ballot with single party votes. That did not happen as the different factions in the Republican majority last session had a difficult time agreeing on what they wanted. By my count (always suspect), the 2025 House will be split 60 – 40 the Senate will be split 32 – 18 both favoring the Republicans.

The legislative races did not provide any real surprises – with re-districting applying for the first time as a result of the 2020 Census, the expectations were that we would not see a super-majority again. Generally the Republicans won the seats they were expected to win and the Democrats won the seats they were expected to win. There are a handful of districts that are pretty evenly split and the vote totals reflected that. SD 2 and the corresponding House Districts, 3 & 4 (Flathead county) saw tight races. Democrat Dave Fern bested Republican Doug Adams for the SD 2 seat. The House Districts split, with Democrat Debo Powers defeating Cathy Mitchell in HD 3 and Republican Lyn Bennett defeating Lindsey Jordan in HD 4. The other Senate seats anticipated to be close, SD 21 & SD 24 did not live up to expectations. In SD 21 (parts of Big Horn/Rosebud & Yellowstone counties) Republican George Lammers beat Sharon Stewart-Peregoy relatively handily, 57/43. In SD 24, (Yellowstone) Republican Mike Yakawich beat Mark Nicholson also by a respectable margin, 54/46.

House Districts 15 (Lake & Glacier counties), 42 (Big Horn/Yellowstone counties),45, 46 & 47 (all Yellowstone county), HD 57 (Gallatin/Park counties), 60 and 62 (both Gallatin county) saw tight races with the difference typically less than 300 votes. Democrats appeared to take all of those seats.

The legislature will come to Helena next week to select leaders in the caucuses and the chambers. All of the leadership seats will be contested, with the exception of the Senate Minority, who is expected to select Senator Pat Flowers (D-Belgrade) as their leader again. The leadership selections are always a first sign of how a legislative session may go.

Session dates have been set – January 6 – April 30 – and there are 11 Saturdays scheduled this session. The start is a little later than usual, Montana has traditionally started January 2 and the end date seems to ensure that legislators will be home in May.

We will again provide a MSIA Weekly UPDATE of the legislative activities, and continue to identify issues from across the country at least once a month to members. MSIA will also be participating in the annual Business Days at the Capital hosted by the Montana Chamber of Commerce. Among other things, the Governor and legislative leaders typically outline what they hope to accomplish during the session at this event. It very rarely turns out that way, but it is interesting to see how it starts.

What Does It All Mean?

Our workers’ compensation system is not perceived to be in crisis. Housing, property taxes, Medicaid expansion (the current law sunsets June 30) and all the social issues – not the least of which will be abortion - will draw much more attention. With what one would hope would be a more cohesive Republican majority, we hope to garner some attention to deal with the issues we have identified, although we’re not likely to make headlines.

Our issues this session will be addressing employer provided transportation and limiting coverage to when the employee is using a vehicle for work purposes (as opposed to at any time), some of the litigation reforms embodied in last session’s HB 678 and again, taking defensive actions against expansion of presumptive coverages and choice of provider.

MSF does not have any proposals to privatize, nor do they seem to want to push for additional freedom from state IT or purchasing requirements – at least at this time. Their stated goals are things we can support as well – providing the WCC Judge the authority to replace a Guardian ad Litem and a clarification of application of the Department of Labor’s ability to award interim benefits over an insurers’ decision (the Rainey decision). MSIA supports both changes.

The legislators-elect and the hold-over Senators, will decide on leadership and rules next week. Those conversations can give us a glimpse of what we might be able to expect from this coming session. On the other hand, I live by the NY Surrogate Court quote, “No man’s life, liberty or property are safe while the legislature is in session.” (1 Tucker 248 N.Y. Surr. 18).

Bill Draft Junque Files

It’s getting to be legislative time, so forgive me for delving into the weeds some. There is a new rule through the Montana Legislative Service office to limit disclosure of the background information in a bill draft file. These have been called “junque files” because they contain emails, letters, notes and more regarding the original ideas and creation of bill language – including correspondence between the legislator who requested the bill, the people they were working with and members of the legislative staff who were working on the bill.

You have seen bill draft titles such as “Generally Revise Worker’s Compensation law.” Obviously that can be anything. Being able to learn what the original ideas were, and who suggested it to the legislator, can provide significant information about what the proposal is intended to accomplish, and why it was requested in the first place. For years, the junque files have been open to disclosure. This year, the Legislative Service office reversed course and the files will be held as confidential, unless the legislators approve their being available.

The Montana Environmental Information Center (MEIC) has filed suit in Cascade County to have the new rule declared unconstitional. Of course it will take some time for the suit to be heard and decided. We are not likely to have a decision – nor an ultimate decision until after the session.

Workers’ compensation issues rarely fall within the realm of big secrets – particularly in the current times when the system is not in crisis. Choice of provider bill language is pretty straightforward. As is presumption language, and benefit increases (or decreases) or independent contractor change proposals. The advantage we have as well, is that other states have likely tried to address the same issues, and that language is available. On the insurance side of our business, much of the legislative ideas come from regulators’ associations like the NAIC or IAIABC or N-COIL (National Conference of Insurance Legislators) and the ideas are not new, nor surprising. That’s not to say they’re all good for the Montana market – but that we know what they are and what the background is.

CO State Fund to Mutualize?

Every once in a while there is talk about a state fund becoming a mutual insurance carrier. With the first one in Michigan (late 1980’s – I helped draft some of that law), and other state funds (not in any particular order), New Mexico, Maine, Rhode Island, Nevada, West Virginia, Arizona, Maryland, Missouri, Oklahoma, Utah and perhaps others, there is some appeal for states to take that step. Notably, both Nevada and West Virginia went from a monopolistic state fund – where private carriers were not permitted to sell workers’ compensation coverage to private entities to no state entity and all carriers competing. Wyoming, North Dakota, Washington and Ohio remain monopolistic state fund states. In those states, coverage must be provided either by self insurance or by the state. Montana is what is known as a three-way system – self-insurance, private carriers and the State Fund (in statute as Plan 1, 2 or 3).

Colorado started moving and ‘modernizing’ their state fund statutory structure, known as Pinnacol, some time ago. In the late 80’s early 90’s they changed it from a state agency to a state authority, then to a semi-regulated carrier, which is what it is today. However, it is still an entity of the state. The Montana State Fund is similar – it is treated as a regulated carrier but is still an entity of the state with some advantages in the marketplace and a requirement they cannot turn down a coverage request. In simple terms – consider that no one in their right mind would voluntarily cover an explosives manufacturer. Yet, as a legal employer, they require coverag. In some states, the private market is required to pool the losses and provide coverage. In our state and others, the state fund is required to provide that coverage.

In Colorado, Governor Jared Polis (D), facing a significant budget shortage, is proposing to spin off their state fund, Pinnacol,into an independently operated mutual company. That would provide Pinnacol the opportunity to not only write in other states, but to write other lines as well. Polis is estimating the change would provide some $100 million to the state coffers to help balance the budget. One of the ways the state would see additional revenue is through taxes Pinnacol is currently exempted from – premium, property and corporate income taxes. The move apparently continue to let Pinnacol be the carrier of last resort. Among the issues to be worked out is Pinnacol’s contribution to Colorado’s PERA – the state employees retirement program. That’s very likely where the real money hits the road.

The idea has been proposed before in Colorado– notably in 2012 and 2021. In both cases, labor and workers’ advocacy groups opposed the proposals and were able to stop them. With a budget crisis and the Governor supporting the proposal, that may be enough to over-ride their concerns and put a new competitor into the marketplace.

Conversions from the past – Utah immediately comes to mind – can be run as successful insurance carriers. One of the concerns in our current WC marketplace is the pricing programs the Workers’ Compensation Fund of Utah has put in place in Montana to capture business. Lower premiums are very attractive and Montana has lost some self insured employers to the guaranteed market as a result. The question of course, is how long can the race to the lowest premium go? At some point, carriers will have to raise prices, and the formerly self insured employers will realize they no longer control their claims, costs or relationships with their injured workers.

There are no current proposals in Montana to convert the Montana State Fund to a mutual insurance carrier. MSF would like some freedoms from the state IT systems and purchasing processes, but in the past those proposals have died at some point in the legislative process. Other proposals to eliminate the State Fund and turn everything over to private carriers have also died in the legislative process. Some of those proposals were overly complex, and for the most part, the costs to business, particularly small business, were too high.

MSIA does not take a position on the administrative make-up of the State Fund. We will take positions on changes which will positively or adversely affect the Montana workers’ compensation system. As long as competition is fair, MSIA will not take a position on the operations of competitors. 

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Trolls, Truths & AI - Navigating the Muddy Waters of Social Media Investigations

MSIA Webinar 12/5 @ 10a MST

Featuring Michael Petrie, founder and CEO of Webutation

MT Insurance Producer License* CE credit & MT WC Claims Examiner License CE credit available.

AI is everywhere – we use it everyday – even if we’re not aware of it. That’s the problem – we’re often not aware of it – and the bad guys can lie, cheat and steal, and we may never know until it’s too late.

Join us by registering on line at Trolls, Truths & AI on the MSIA website or by contacting the MSIA directly. MSIA members have access to unlimited seats (if you are receiving this, there is no charge).

Advance registration is required. 

Michael Petrie is an expert’s expert and this is a cutting-edge course. WARNING – This course may not be for the faint of heart. If you think your social media information is safe – if you think you control what’s out there about you - - you NEED this course. Michael Petrie is a renowned social media investigation expert, and he will lead us beyond the basic search strategies that used to work. Our world has moved on, whether we know it or not, and we will learn insights into the latest tools, methodologies and legal considerations essential for successful social media investigations – that will stand up to legal scrutiny.

• Implementation of advanced search strategies to efficiently locate relevant social media content supporting investigations
• Application of best practices for capturing - - and preserving - - social media evidence
• Utilization of cutting edge tools and techniques for analyzing social media data at scale in claim contexts
• Navigating the legal and ethical considerations surrounding social media investigations
• Developing strategies for presenting social media evidence.

We will also go through the legal and ethical considerations in capturing, analyzing and using the results of an enhanced social media investigation.

Register today for Trolls, Truths & AI –Navigating the Muddy Waters of Social Media Investigations - presented by Michael Petrie, CEO of Webutation.