Lawsuit Seeks to Stop Montana From Raiding Fund

Date: January 22, 2018

Private workers’ compensation funds should not be a “cash cow” for legislators

Contact: Luke Wake, NFIB Senior Staff Attorney, [email protected]
or Karen Harned, Executive Director, NFIB Legal Center, [email protected], or Riley Johnson, Montana State Director, [email protected]

HELENA, Mont., Jan. 22, 2018—A lawsuit filed today in Lake County by the National Federation of Independent Business and a coalition of Montana businesses aims to stop the state from appropriating private assets from the Montana State Fund, which the state seeks to take for unrelated budgetary needs.

“Employers pay into workers’ compensation programs to ensure that employees who suffer workplace injuries are guaranteed the medical coverage they need, but funds paid into workers’ compensation remain private assets,” said Riley Johnson, NFIB’s Montana state director. “That means that the government can’t simply come in and take what it wants whenever there is a need for revenue.”

The lawsuit challenges Montana’s taking of Montana State Fund monies for purposes other than workers’ compensation or any service provided to the MSF. NFIB and the other plaintiffs are asking the court to declare the statute ‘authorizing’ this taking of private assets unconstitutional. The lawsuit seeks to prevent the state from using the MSF monies for anything unrelated to workers’ compensation or a legitimate service provided to the MSF.

“They are calling this a ‘fee,’ where in fact, it’s just an outright government seizure of private assets,” said Karen Harned, executive director of NFIB’s Small Business Legal Center. “We’ve seen similar issues arise in other states. You have to look past labels and ask whether we’re really dealing with a fee or a flat-out unconstitutional taking of private assets. And in Montana’s case, it’s clear that state is simply raiding private funds to fill public coffers, which is strictly forbidden under both Montana and federal laws.”

Every employer in Montana with at least one worker must by law pay workers’ compensation premiums.
Although employers can pay worker’s compensation coverage through private insurance companies, the State Fund was set up as a public corporation to give employers another option in Montana. By law, it is supposed to operate exactly like a private insurance company, except that businesses paying into the State Fund retain an interest in its assets, which are held in trust both for injured workers and the employers who have contributed the money.

“At times, the fund has run a deficit, forcing higher premiums, and at other times, the fund has run a small surplus, allowing for reduced premiums,” added Johnson. “Adjustments have always been made to keep the fund solvent and fulfilling its purpose, but state legislators just can’t seem to keep their greedy mitts off it. It’s got to stop!”

The cost of meeting their workers’ compensation premiums is a huge worry for business owners, especially smaller ones. In its latest quadrennial Small Business Problems and Priorities study, NFIB found workers’ compensation costs ranked 13th among 75 issues of concern to small-business owners.

Additional information from the Montana State Fund Justice Coalition can be read here.


Celebrating its 75th anniversary, the National Federation of Independent Business is the Voice of Small Business, taking the message from Main Street to the halls of Congress and all 50 state legislatures. NFIB annually surveys its members on state and federal issues vital to their survival as America’s economic engine and biggest creator of jobs. NFIB’s educational mission is to remind policymakers that small businesses are not smaller versions of bigger businesses; they have very different challenges in remaining open.

National Federation of Independent Business/Montana
491 South Park Ave.
Helena, MT 59601
Twitter: @NFIB_MT

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Related Content: News | Legal | Montana | Workers Compensation

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