2001 Montana Legislature

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SENATE BILL NO. 164

INTRODUCED BY W. MCNUTT

Montana State Seal

AN ACT REVISING CERTAIN PROVISIONS OF THE UNEMPLOYMENT INSURANCE LAW, THE WORKERS' COMPENSATION ACT, THE OCCUPATIONAL DISEASE ACT, AND SILICOSIS BENEFITS LAW; CLARIFYING THE BURDEN OF PROOF IN WORKERS' COMPENSATION INSURANCE COVERAGE DISPUTES WITH THE DEPARTMENT OF LABOR AND INDUSTRY; RESTORING THE EXEMPTION FROM ATTACHMENT OF UNEMPLOYMENT INSURANCE, WORKERS' COMPENSATION, OCCUPATIONAL DISEASE, AND SILICOSIS BENEFITS; REQUIRING WORKERS' COMPENSATION CLAIMS TO BE ADJUSTED BY AN IN-STATE ADJUSTER; CLARIFYING WORKERS' COMPENSATION INSURANCE COVERAGE REQUIREMENTS FOR TRUCK DRIVERS; REVISING THE WORKERS' COMPENSATION ASSESSMENT METHODOLOGY; RESTORING DISTRICT COURT JURISDICTION IN CASES INVOLVING THE FAILURE OF AN EMPLOYER TO PRODUCE BOOKS AND RECORDS; REQUIRING INSURERS TO FILE REPORTS OF MISCELLANEOUS CLAIM EXPENSES; SPECIFYING THE APPEAL PROCEDURE FOR CASES APPEALED FROM THE INDEPENDENT CONTRACTOR CENTRAL UNIT AND PROVIDING AN APPEAL TIME; CLARIFYING THAT THE WORKERS' COMPENSATION ASSESSMENT IS COMPUTED WITHOUT CONSIDERATION OF A DEDUCTIBLE; CLARIFYING THAT AN APPEAL OF A DEPARTMENT ORDER TO PAY INTERIM BENEFITS IS A NEW PROCEEDING IN THE WORKERS' COMPENSATION COURT; IDENTIFYING THE CURRENT STANDARD FOR MEASURING OCCUPATIONAL DEAFNESS; CLARIFYING THE TIME FOR CERTIFYING A CURRENT EMPLOYEE AS BEING VOCATIONALLY DISABLED; REVISING THE SUBSEQUENT INJURY FUND ASSESSMENT METHODOLOGY; ALLOWING ADDITIONAL ORGANIZATIONS TO BE DESIGNATED AS AUTHORIZED TO REPORT NOTICE OF COVERAGE; REQUIRING THE STATE FUND TO PROVIDE NOTICE OF CANCELLATION TO THE DEPARTMENT 20 DAYS PRIOR TO CANCELLATION; PROVIDING AN ADJUSTMENT IN SILICOSIS BENEFITS THAT IS CONSISTENT WITH THE APPROPRIATION LEVEL; AMENDING SECTIONS 30-9-129, 39-71-107, 39-71-117, 39-71-201, 39-71-304, 39-71-306, 39-71-415, 39-71-435, 39-71-610, 39-71-805, 39-71-906, 39-71-915, 39-71-2204, 39-71-2205, 39-71-2337, 39-71-2339, 39-72-606, 39-72-608, 39-73-103, 39-73-107, AND 39-73-109, MCA; REPEALING SECTION 39-72-605, MCA; AND PROVIDING AN EFFECTIVE DATE AND A RETROACTIVE APPLICABILITY DATE.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:



     Section 1.  Burden of proof -- insurance coverage. (1) In a proceeding brought by the department or an employer to resolve the issue of the existence of workers' compensation insurance coverage for that employer, the initial burden of proof is on the department to demonstrate that:

     (a) the employer is required to have workers' compensation insurance coverage; and

     (b) either:

     (i) that the database of the recognized agent providing proof of coverage indicates that no coverage is reported by an insurer to cover the employer's Montana operations; or

     (ii) that the department confirms with the insurer that reported coverage for the employer that the policy previously covering the employer's Montana operations has been canceled by that insurer.

     (2) The burden then shifts to the employer to demonstrate that the employer is not required either to have workers' compensation insurance coverage or to produce a valid workers' compensation insurance policy covering the employer's Montana operations during the period of time in question. A valid workers' compensation insurance policy is one acknowledged by the insurer to be valid or adjudged to be valid by a court of competent jurisdiction.



     Section 2.  Section 30-9-129, MCA, is amended to read:

     "30-9-129.  (Effective July 1, 2001) Scope. (1) Except as otherwise provided in subsections (3) and (4), this chapter applies to:

     (a)  any transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;

     (b)  an agricultural lien;

     (c)  a sale of an account, chattel paper, payment intangible, or promissory note;

     (d)  a consignment;

     (e)  a security interest arising under 30-2-401, 30-2-505, 30-2-711(3), or 30-2A-508(5), to the extent provided in 30-9-130; and

     (f)  a security interest arising under 30-4-208 or 30-5-118.

     (2)  The application of this chapter to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this chapter does not apply.

     (3)  This chapter does not apply to the extent that:

     (a)  a statute, regulation, or treaty of the United States preempts this chapter;

     (b)  another statute of this state expressly governs the creation, perfection, priority, or enforcement of a security interest created by this state or a governmental unit of this state;

     (c)  a statute of another state, a foreign country, or a governmental unit of another state or a foreign country, other than a statute generally applicable to security interests, expressly governs creation, perfection, priority, or enforcement of a security interest created by the state, country, or governmental unit; or

     (d)  the rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under 30-5-134.

     (4)  This chapter does not apply to:

     (a)  a landlord's lien, other than an agricultural lien;

     (b)  a lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but 30-9-353 applies with respect to priority of the lien;

     (c)  an assignment of a claim for wages, salary, or other compensation of an employee;

     (d)  a sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose;

     (e)  an assignment of accounts, chattel paper, payment intangibles, or promissory notes that is for the purpose of collection only;

     (f)  an assignment of a right to payment under a contract to an assignee that is also obliged to perform under the contract;

     (g)  an assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;

     (h)  a transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health care provider of a health-care-insurance receivable and any subsequent assignment of the right to payment, but 30-9-335 and 30-9-342 apply with respect to proceeds and priorities in proceeds;

     (i)  an assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral;

     (j)  a right of recoupment or setoff, but:

     (i)  30-9-360 applies with respect to the effectiveness of rights of recoupment or setoff against deposit accounts; and

     (ii) 30-9-444 applies with respect to defenses or claims of an account debtor;

     (k)  the creation or transfer of an interest in or lien on real property, including a lease or rents thereunder under the interest in real property, except to the extent that provision is made for:

     (i)  liens on real property in 30-9-213 and 30-9-328;

     (ii) fixtures in 30-9-354;

     (iii) fixture filings in 30-9-521, 30-9-522, 30-9-532, 30-9-536, and 30-9-539; and

     (iv) security agreements covering personal and real property in 30-9-604;

     (l)  an assignment of a claim arising in tort, other than a commercial tort claim, but 30-9-335 and 30-9-342 apply with respect to proceeds and priorities in proceeds; or

     (m)  an assignment of a deposit account in a consumer transaction, except that 30-9-335 and 30-9-342 apply with respect to proceeds and priorities in proceeds; or

     (n) an assignment of payments made to or on behalf of claimants pursuant to Title 39, chapter 51, 71, 72, or 73."



     Section 3.  Section 39-71-107, MCA, is amended to read:

     "39-71-107.  Insurers to act promptly on claims -- in-state adjusters. (1) Pursuant to the public policy stated in 39-71-105, prompt claims handling practices are necessary to provide appropriate service to injured workers, to employers, and to providers who are the customers of the workers' compensation system.

     (2)  All workers' compensation and occupational disease claims filed pursuant to the Workers' Compensation Act and the Occupational Disease Act of Montana must be adjusted by a person in Montana. For a claim to be considered as adjusted by a person in Montana, the person adjusting the claim is required to determine the entitlement to benefits, authorize payment of all benefits due, manage the claim, have authority to settle the claim, maintain an office located in Montana, and adjust Montana claims from that office. Use of a mailbox or maildrop in Montana does not constitute maintaining an office in Montana.

     (3)  An insurer shall maintain the documents related to each claim filed with the insurer under the Workers' Compensation Act and the Occupational Disease Act of Montana at the Montana office of the person adjusting the claim in Montana until the claim is settled. The documents may be either original documents or duplicates of the original documents and must be maintained in a manner that allows the documents to be retrieved from that office and copied at the request of the claimant or the department. Settled claim files stored outside of the adjuster's office must be made available within 48 hours of a request for the file. Electronic or optically imaged documents are permitted.

     (2)(4)  An insurer shall provide to the claimant:

     (a)  a written statement of the reasons that a claim is being denied at the time of denial;

     (b)  whenever benefits requested by a claimant are denied, a written explanation of how the claimant may appeal an insurer's decision; and

     (c)  a written explanation of the amount of wage loss benefits being paid to the claimant, along with an explanation of the calculation used to compute those benefits. The explanation must be sent within 7 days of the initial payment of the benefit.

     (3)(5)  An insurer shall:

     (a)  begin making payments that are due on a claim within 14 days of acceptance of the claim, unless the insurer promptly notifies the claimant that the insurer needs additional information in order to begin paying benefits and specifies the information needed; and

     (b)  pay settlements within 30 days of the date the department issues an order approving the settlement.

     (4)(6)  An insurer may not make payments pursuant to 39-71-608 or any other reservation of rights for more than 90 days without:

     (a)  written consent of the claimant; or

     (b)  approval of the department.

     (5)(7)  The department may adopt rules to implement this section.

     (8) For purposes of this section, "settled claim" means a department-approved or court-ordered compromise of benefits between a claimant and an insurer or a claim that was paid in full. The term does not include a claim in which there has been only a lump-sum advance of benefits."



     Section 4.  Section 39-71-117, MCA, is amended to read:

     "39-71-117.  Employer defined. (1) "Employer" means:

     (a)  the state and each county, city and county, city school district, and irrigation district; all other districts established by law; all public corporations and quasi-public corporations and public agencies; each person; each prime contractor; each firm, voluntary association, limited liability company, limited liability partnership, and private corporation, including any public service corporation and including an independent contractor who has a person in service under an appointment or contract of hire, expressed or implied, oral or written; and the legal representative of any deceased employer or the receiver or trustee of the deceased employer;

     (b)  any association, corporation, limited liability company, limited liability partnership, or organization that seeks permission and meets the requirements set by the department by rule for a group of individual employers to operate as self-insured under plan No. 1 of this chapter; and

     (c)  any nonprofit association, limited liability company, limited liability partnership, or corporation or other entity funded in whole or in part by federal, state, or local government funds that places community service participants, as described in 39-71-118(1)(e), with nonprofit organizations or associations or federal, state, or local government entities.

     (2)  A temporary service contractor is the employer of a temporary worker for premium and loss experience purposes.

     (3)  Except as provided in chapter 8 of this title, an employer defined in subsection (1) who uses the services of a worker furnished by another person, association, contractor, firm, limited liability company, limited liability partnership, or corporation, other than a temporary service contractor, is presumed to be the employer for workers' compensation premium and loss experience purposes for work performed by the worker. The presumption may be rebutted by substantial credible evidence of the following:

     (a)  the person, association, contractor, firm, limited liability company, limited liability partnership, or corporation, other than a temporary service contractor, furnishing the services of a worker to another retains control over all aspects of the work performed by the worker, both at the inception of employment and during all phases of the work; and

     (b)  the person, association, contractor, firm, limited liability company, limited liability partnership, or corporation, other than a temporary service contractor, furnishing the services of a worker to another has obtained workers' compensation insurance for the worker in Montana both at the inception of employment and during all phases of the work performed.

     (4)  An interstate or intrastate common or contract motor carrier doing business that maintains a place of business in this state who and uses drivers an employee or worker in this state is considered the employer of that employee, is liable for workers' compensation premiums, and is subject to loss experience rating in this state unless:

     (a)  the driver worker in this state is certified as an independent contractor as provided in 39-71-401(3); or

     (b)  the person, association, contractor, firm, limited liability company, limited liability partnership, or corporation furnishing drivers employees or workers in this state to a motor carrier has obtained Montana workers' compensation insurance on the drivers employees or workers in Montana both at the inception of employment and during all phases of the work performed."



     Section 5.  Section 39-71-201, MCA, is amended to read:

     "39-71-201.  Administration fund. (1) A workers' compensation administration fund is established out of which all costs of administering the Workers' Compensation and Occupational Disease Acts and the statutory occupational safety acts the department is required to administer, with the exception of the subsequent injury fund, as provided for in 39-71-907, and the uninsured employers' fund, are to be paid upon lawful appropriation. The department shall collect and deposit in the state treasury to the credit of the workers' compensation administrative administration fund:

     (a)  all fees and penalties provided in 39-71-205, 39-71-223, 39-71-304, 39-71-307, 39-71-308, 39-71-315, 39-71-316, 39-71-401(6), 39-71-2204, 39-71-2205, and 39-71-2337; and

     (b)  all fees paid by an assessment on each plan No. 1 employer, plan No. 2 insurer, and plan No. 3, the state fund of 3% of paid losses, plus administrative fines and interest provided by this section. The assessments must be 3% of the following

     (2) For the purposes of this section, paid losses include the following benefits paid during the preceding calendar year for injuries covered by the Workers' Compensation Act and the Occupational Disease Act of Montana without regard to the application of any deductible whether the employer or the insurer pays the losses:

     (i)(a)  total compensation benefits paid; and

     (ii)(b)  except for medical benefits in excess of $200,000 per for each occurrence that are exempt from assessment, total medical benefits paid for medical treatment rendered to an injured worker, including hospital treatment and prescription drugs.

     (2)(3)  Each plan No. 1 employer, plan No. 2 insurer subject to the provisions of this section, and plan No. 3, the state fund, shall file annually on March 1 in the form and containing the information required by the department a report of paid losses pursuant to subsection (1)(b) (2).

     (3)  An assessment of the plan No. 1 employer or plan No. 2 insurer may not be less than $500. If at any time during the fiscal year a plan No. 1 employer is granted permission to self-insure or a plan No. 2 insurer is authorized to insure employers under this chapter, that plan No. 1 employer or plan No. 2 insurer is subject to an initial assessment equal to the minimum assessment against plan No. 1 employers and plan No. 2 insurers.

     (4)  Payment of the assessment required by this section must be submitted by the employer or insurer under plan No. 1, plan No. 2, or plan No. 3 in:

     (a)  one installment made on or before July 1; or

     (b)  two equal installments made on or before July 1 and December 31 of each year. If an employer or insurer fails to pay the assessment required under this section, the department may impose a fine of $100 plus interest on the delinquent amount at the annual interest rate of 12%.

     (5)  (a) Beginning July 1, 2000, each plan No. 2 insurer providing workers' compensation insurance and plan No. 3, the state fund, shall collect from the insurer's policyholders an amount equal to the insurer's assessment through a surcharge based on premium. When collected, assessments may not constitute an element of loss for the purpose of establishing rates for workers' compensation insurance but, for the purpose of collection, must be treated as separate costs imposed upon insured employers.

     (b)  The total of this assessment must be stated as a separate cost on an insured employer's policy or on a separate document submitted to the insured employer and must be identified as "workers' compensation regulatory assessment surcharge". Each assessment surcharge must be shown as a percentage of the total workers' compensation policyholder premium.

     (c)  The portion of the plan No. 2 assessment identified as a premium surcharge for an individual plan No. 2 insured employer must be calculated as a percentage to be applied to premium. The percentage applied must be determined by the amount of the plan No. 2 assessment, as determined in subsection (1)(b), divided by the total net premium as calculated under 33-2-705 paid by all plan No. 2 insured employers during the preceding calendar year.

     (d)  The portion of the plan No. 3 assessment identified as a premium surcharge for an individual plan No. 3 insured employer must be calculated as a percentage to be applied to premium. The percentage applied must be determined by the amount of the plan No. 3 assessment, as determined in subsection (1)(b), divided by the total net premium as calculated under 33-2-705 paid by all plan No. 3 insured employers during the preceding fiscal year.

     (e)  On or before March 31, 2000, and each March 31 thereafter, the department, in consultation with the advisory organization designated pursuant to 33-16-1023, shall notify plan No. 2 insurers and plan No. 3, the state fund, of the insurer assessment identified as the premium surcharge percentage to be effective for policies written or renewed annually on and after July 1 of that year.

     (f)  The assessment provided for in subsection (1)(b), which will be identified as a premium surcharge, must be collected at the same time and in the same manner that the premium for the coverage is collected. This premium surcharge must be excluded from the definition of premiums for all purposes, including computation of insurance producers' commissions or premium taxes, except that an insurer may cancel a workers' compensation policy for nonpayment of the premium surcharge. Cancellation must be in accordance with the procedures applicable to the nonpayment of premium.

     (4)  Each employer enrolled under compensation plan No. 1, compensation plan No. 2, or compensation plan No. 3, the state fund, shall pay a proportionate share of all costs of administering and regulating the Workers' Compensation Act and the Occupational Disease Act of Montana and the statutory occupational safety acts that the department is required to administer, with the exception of the subsequent injury fund, as provided for in 39-71-907, and the uninsured employers' fund. In addition, compensation plan No. 3, the state fund, shall pay a proportionate share of these costs based upon paid losses for claims arising before July 1, 1990.

     (5) (a) Each employer enrolled under compensation plan No. 1 shall pay an assessment to fund administrative and regulatory costs. The assessment is equal to 3% of the paid losses paid in the preceding calendar year by or on behalf of the plan No. 1 employer or $500, whichever is greater. Any entity, other than the department, that assumes the obligations of an employer enrolled under compensation plan No. 1 is considered to be the employer for the purposes of this section.

     (b) An employer formerly enrolled under compensation plan No. 1 shall pay an assessment to fund administrative and regulatory costs. The assessment is equal to 3% of the paid losses paid in the preceding calendar year by or on behalf of the employer for claims arising out of the time when the employer was enrolled under compensation plan No. 1.

     (c) Payment of the assessment provided for by this subsection (5) must be paid by the employer in:

     (i) one installment due on July 1; or

     (ii) two equal installments due on July 1 and December 31 of each year.

     (d) If an employer fails to timely pay to the department the assessment under this section, the department may impose on the employer an administrative fine of $500 plus interest on the delinquent amount at the annual interest rate of 12%. Administrative fines and interest must be deposited in the workers' compensation administration fund.

     (6) (a) Compensation plan No. 3, the state fund, shall pay an assessment to fund administrative and regulatory costs attributable to claims arising before July 1, 1990. The assessment is equal to 3% of the paid losses paid in the preceding calendar year for claims arising before July 1, 1990. As required by 39-71-2352, the state fund may not pass along to insured employers the cost of the assessment for administrative and regulatory costs that is attributable to claims arising before July 1, 1990.

     (b) Payment of the assessment must be paid in:

     (i) one installment due on July 1; or

     (ii) two equal installments due on July 1 and December 31 of each year.

     (c) If the state fund fails to timely pay to the department the assessment under this section, the department may impose on the state fund an administrative fine of $500 plus interest on the delinquent amount at the annual interest rate of 12%. Administrative fines and interest must be deposited in the workers' compensation administration fund.

     (7) (a) Each employer insured under compensation plan No. 2 or plan No. 3, the state fund, shall pay a premium surcharge to fund administrative and regulatory costs. The premium surcharge must be collected by each plan No. 2 insurer and by plan No. 3, the state fund, from each employer that it insures. The premium surcharge must be stated as a separate cost on an insured employer's policy or on a separate document submitted to the insured employer and must be identified as "workers' compensation regulatory assessment surcharge". The premium surcharge must be excluded from the definition of premiums for all purposes, including computation of insurance producers' commissions or premium taxes. However, an insurer may cancel a workers' compensation policy for nonpayment of the premium surcharge. When collected, assessments may not constitute an element of loss for the purpose of establishing rates for workers' compensation insurance but, for the purpose of collection, must be treated as a separate cost imposed upon insured employers.

     (b) The amount to be funded by the premium surcharge is equal to 3% of the paid losses paid in the preceding calendar year by or on behalf of all plan No. 2 insurers and 3% of paid losses for claims arising on or after July 1, 1990, for plan No. 3, the state fund, plus or minus any adjustments as provided by subsection (7)(f). The amount to be funded must be divided by the total premium paid by all employers enrolled under compensation plan No. 2 or plan No. 3 during the preceding calendar year. A single premium surcharge rate, applicable to all employers enrolled in compensation plan No. 2 or plan No. 3, must be calculated annually by the department by not later than April 30. The resulting rate, expressed as a percentage, is levied against the premium paid by each employer enrolled under compensation plan No. 2 or plan No. 3 in the next fiscal year.

     (c) On or before April 30, 2001, and on each succeeding April 30, the department, in consultation with the advisory organization designated pursuant to 33-16-1023, shall notify plan No. 2 insurers and plan No. 3, the state fund, of the premium surcharge percentage to be effective for policies written or renewed annually on and after July 1 of that year.

     (d) The premium surcharge must be paid whenever the employer pays a premium to the insurer. Each insurer shall collect the premium surcharge levied against every employer that it insures. Each insurer shall pay to the department all money collected as a premium surcharge within 20 days of the end of the calendar quarter in which the money was collected. If an insurer fails to timely pay to the department the premium surcharge collected under this section, the department may impose on the insurer an administrative fine of $500 plus interest on the delinquent amount at the annual interest rate of 12%. Administrative fines and interest must be deposited in the workers' compensation administration fund.

     (e) If an employer fails to remit to an insurer the total amount due for the premium and premium surcharge, the amount received by the insurer must be applied to the premium surcharge first and the remaining amount applied to the premium due.

     (f) The amount actually collected as a premium surcharge in a given year must be compared to the 3% of paid losses paid in the preceding year. Any amount collected in excess of the 3% must be deducted from the amount to be collected as a premium surcharge in the following year. The amount collected that is less than the 3% must be added to the amount to be collected as a premium surcharge in the following year.

     (8) On or before April 30, 2001, and on each succeeding April 30, upon a determination by the department, an insurer under compensation plan No. 2 that pays benefits in the preceding calendar year but that will not collect any premium for coverage in the following fiscal year shall pay an assessment equal to 3% of paid losses paid in the preceding calendar year, subject to a minimum assessment of $500, that is due on July 1.

     (9) An employer that makes a first-time application for permission to enroll under compensation plan No. 1 shall pay an assessment of $500 within 15 days of being granted permission by the department to enroll under compensation plan No. 1.

     (10) The department shall deposit all funds received pursuant to this section in the state treasury, as provided in this section.

     (6)(11) The administration fund must be debited with expenses incurred by the department in the general administration of the provisions of this chapter, including the salaries of its members, officers, and employees and the travel expenses of the members, officers, and employees, as provided for in 2-18-501 through 2-18-503, as amended, incurred while on the business of the department either within or without the state.

     (7)(12) Disbursements from the administration money must be made after being approved by the department upon claim for disbursement.

     (13) The department may assess and collect the workers' compensation regulatory assessment surcharge from uninsured employers, as defined in 39-71-501, that fail to properly comply with the coverage requirements of the Workers' Compensation Act and the Occupational Disease Act of Montana. Any amounts collected by the department pursuant to this subsection must be deposited in the workers' compensation administration fund."



     Section 6.  Section 39-71-304, MCA, is amended to read:

     "39-71-304.  Books, records, and payrolls to be open to inspection -- penalty for refusal -- subpoenas. (1) The books, records, and payrolls of an employer pertinent to the administration of this chapter must always be open to inspection by the department or any authorized employee of the department for the purpose of ascertaining the correctness of the payroll, the number of workers employed, and other information that may be necessary for the department and its management under this chapter. Refusal on the part of an employer to submit the books, records, and payrolls for inspection will subject the offending employer to a penalty not exceeding $500 for each offense, to be collected through a workers' compensation court civil action in the name of the state and paid into the state treasury.

     (2)  In addition to the remedy provided in subsection (1), the department may issue subpoenas and compel testimony for the production of evidence, including books, records, papers, documents, and other objects as that may be necessary and proper in regard to any investigation or proceeding under this chapter. In the case of disobedience of a subpoena issued and served or the refusal of a witness to testify as to any matter for which the witness may be interrogated in a proceeding before the department, the department may apply to the workers' compensation a district court for an order to compel compliance with the subpoena or testimony. Disobedience of the court's order constitutes contempt of court."



     Section 7.  Section 39-71-306, MCA, is amended to read:

     "39-71-306.  Insurers to file summary reports of benefits paid for injuries, miscellaneous expenses, and statements of medical expenditures. (1) Every Each insurer shall, on or before the 15th day after each state government fiscal quarter ends, file with the department:

     (1)(a)  summary reports of benefits for all compensation payments made during the previous state fiscal quarter to injured workers or their beneficiaries or dependents; and

     (2)(b)  statements showing the amounts expended during the previous state fiscal quarter for all medical services for injured workers; and

     (c) statements showing all miscellaneous amounts, other than compensation and medical expenditures, paid during the previous state fiscal quarter to or on behalf of injured workers or their beneficiaries or dependents and not otherwise reported as an expenditure for the workers' compensation administration assessment provided for in 39-71-201.

     (2) An insurer that fails to file the summary report after a 5-day grace period after the date on which the report is due may be assessed a penalty in an amount of not less than $250 or more than $1,000 to be deposited in the workers' compensation administration fund."



     Section 8.  Section 39-71-415, MCA, is amended to read:

     "39-71-415.  Procedure for resolving disputes regarding independent contractor status. (1) If an individual, employer, or insurer has a dispute as to whether an individual is an independent contractor or an employee, as defined in this chapter, any party may, after mediation pursuant to department rules, petition the workers' compensation court for resolution of the dispute.

     (2)  If a claimant and insurer have a dispute over benefits and the dispute involves an issue of whether the claimant is an independent contractor or employee, as defined in this chapter, and after mediating pursuant to department rule, either party may petition the workers' compensation judge for resolution of the dispute in accordance with 39-71-2905.

     (3) A dispute between an employer and the department involving the issue of whether a worker is an independent contractor or an employee, but not involving workers' compensation benefits, must be brought before the independent contractor central unit of the department for resolution. A decision of the independent contractor central unit is final unless a party dissatisfied with the decision appeals by filing a petition for mediation within 10 days of service of the decision. A party may petition the workers' compensation court for resolution of the dispute within 45 days of the mailing of the mediator's report. An appeal from the independent contractor central unit to the workers' compensation court brought pursuant to this part is a new proceeding.

     (3)(4)  Notwithstanding the provisions of subsection (1), an individual may apply to the department for an exemption from the Workers' Compensation Act in accordance with 39-71-401."



     Section 9.  Section 39-71-435, MCA, is amended to read:

     "39-71-435.  Workers' compensation and employers' liability insurance -- optional deductibles. (1) An insurer issuing a workers' compensation or an employer's liability insurance policy may offer to the policyholder, as part of the policy or by endorsement, optional deductibles for benefits payable under the policy consistent with the standards contained in subsection (3).

     (2)  The advisory organization designated under 33-16-1023 may develop and file a deductible plan or plans on behalf of its members consistent with the standards contained in subsection (3).

     (3)  The commissioner of insurance shall approve a deductible plan that is in accordance with the following standards:

     (a)  Claimants' rights are properly protected and claimants' benefits are paid without regard to the deductible.

     (b)  Premium reductions reflect the type and level of the deductible, consistent with accepted actuarial standards.

     (c)  Premium reductions for deductibles are determined before application of any experience modification, premium surcharge, or premium discount.

     (d)  Recognition is given to policyholder characteristics, including but not limited to size, financial capabilities, nature of activities, and number of employees.

     (e)  The policyholder is liable to the insurer for the deductible amount in regard to benefits paid for compensable claims.

     (f)  The insurer pays all of the deductible amount applicable to a compensable claim to the person or provider entitled to benefits and then seeks reimbursement from the policyholder for the applicable deductible amount.

     (g)  Failure by the policyholder to reimburse deductible amounts to the insurer is treated under the policy as nonpayment of premium.

     (h)  Losses subject to the deductible must be reported and recorded as losses for purposes of calculating rates for a policyholder on the same basis as losses under policies providing first dollar coverage.

     (4)  The state compensation insurance fund, plan No. 3, may adopt the plan filed by the designated advisory organization or adopt an optional deductible plan that meets the requirements of this section.

     (5)  For purposes of 39-71-201 and 39-71-915, liability for assessments must be ascertained based on premiums collected, in the case of policies written under plan No. 2, or on the assessment levied, in the case of policies written under plan No. 3, for which the policyholder would have been obligated without the deductible without regard to application of any deductible, whether the employer or the insurer pays the losses. For all other taxes and assessments based on premium, the amount of premium or assessment must be determined after application of the deductible."



     Section 10.  Section 39-71-610, MCA, is amended to read:

     "39-71-610.  Termination of benefits by insurer -- department order to pay disputed benefits prior to hearing or mediation -- limitation on order -- right of reimbursement. If an insurer terminates biweekly compensation benefits and the termination of compensation benefits is disputed by the claimant, the department may, upon written request, order an insurer to pay additional biweekly compensation benefits prior to a hearing before the workers' compensation court or prior to mediation, but in no event may the biweekly compensation benefits may not be ordered to be paid under this section for a period exceeding 49 days or for any period subsequent to the date of the hearing or mediation. A party may appeal this order to the workers' compensation court. A proceeding in the workers' compensation court brought pursuant to this section is a new proceeding and is not subject to mediation. If after a hearing before the workers' compensation court it is held that the insurer was not liable for the compensation payments ordered by the department, the insurer has the right to be reimbursed for the payments by the claimant."



     Section 11.  Section 39-71-805, MCA, is amended to read:

     "39-71-805.  Determining percent of hearing loss. (1) The percent of hearing loss, for purposes of the determination of compensation claims for occupational deafness, shall must be calculated as the average in decibels of the thresholds of hearing for the frequencies of 500, 1,000, and 2,000 cycles per a second. Pure tone air conduction audiometric instruments, approved by nationally recognized authorities in this field, shall must be used for measuring hearing loss. If the losses of hearing average 25 decibels or less in the three frequencies, as measured under ISO Standard 1964 American national standards institute ANSI/S3.6, 1996, such the losses of hearing shall may not then constitute any compensable hearing disability. If the losses of hearing average 92 decibels or more in the three frequencies, as measured under ISO Standard 1964 ANSI/S3.6, 1996, then the same shall those losses constitute and be total or 100% compensable hearing loss.

     (2)  In measuring hearing impairment, the lowest measured losses in each of the three frequencies shall must be added together and divided by three to determine the average decibel loss. For every decibel of loss exceeding 25 decibels, an allowance of 1 1/2% shall must be made, up to the maximum of 100%, which is reached at 92 decibels.

     (3)  In determining the binaural percentage of loss, the percentage of impairment in the better ear shall must be multiplied by five. The resulting figure shall must be added to the percentage of impairment in the poorer ear and the sum of the two divided by six. The final percentage shall must be representative of the binaural hearing impairment.

     (4)  Before determining the percentage of hearing impairment, in order to allow for the average amount of hearing loss from nonoccupational causes found in the population at any given age, there shall be deducted from the total average decibel loss one-half decibel for each year of the employee's age over 40 at the time of last exposure to industrial noise must be deducted from the total average decibel loss.

     (5)  No consideration shall Consideration may not be given to the question of whether or not the ability of an employee to understand speech is improved by the use of a hearing aid."



     Section 12.  Section 39-71-906, MCA, is amended to read:

     "39-71-906.  Employer hiring or retaining certified person with a disability to file information with department -- effect of failure to file. Upon commencement of employment or retention in employment of a certified person with a disability, the employer shall submit to the department, on forms furnished by the department, all pertinent information requested by the department. The department shall acknowledge receipt of the information. Failure to file the required information with the department within 60 days after the first day of the person's employment or retention in employment within 60 days of a current employee's certification as an individual with a disability precludes the employer from the protection and benefits of this part unless the information is filed before an injury for which benefits are payable under this part."



     Section 13.  Section 39-71-915, MCA, is amended to read:

     "39-71-915.  Assessment of insurers insurer -- employers -- definition -- collection. (1) As used in this section, "paid losses" means the following benefits paid during the preceding calendar year for injuries covered by the Montana Workers' Compensation Act and the Occupational Disease Act of Montana without regard to the application of any deductible, regardless of whether the employer or the insurer pays the losses:

     (a)  total compensation benefits paid; and

     (b)  except for medical benefits in excess of $200,000 per for each occurrence that are exempt from assessment, total medical benefits paid for medical treatment rendered to an injured worker, including hospital treatment and prescription drugs.

     (2)  The fund must be maintained by assessing each plan No. 1 employer, each employer insured by a plan No. 2 insurer, plan No. 3, the state fund, with respect to claims arising before July 1, 1990, and each employer insured by plan No. 3, the state fund. The assessment amount is the total amount of paid losses reimbursed from the fund in the preceding calendar year and the expenses of administration less other income. The total assessment amount to be collected must be allocated among plan No. 1 employers, plan No. 2 insurers employers, and plan No. 3, the state fund, and plan No. 3 employers, based on a proportionate share of paid losses for the calendar year preceding the year in which the assessment is collected. The board of investments shall invest the money of the fund, and the investment income must be deposited in the fund.

     (3)  On or before March 31 April 30 each year, the department shall notify each plan No. 1 employer, plan No. 2 insurer, and plan No. 3, the state fund, of the amount to be assessed against the employer, plan No. 2 insurer, or the state fund for that calendar the ensuing fiscal year. The amount to be assessed against the state fund must separately identify the amount attributed to claims arising before July 1, 1990, and the amount attributable to state fund claims arising on or after July 1, 1990. On or before March 31 April 30 each year, the department, in consultation with the advisory organization designated under 33-16-1023, shall notify plan No. 2 insurers and plan No. 3 of the premium surcharge rate to be effective for policies written or renewed on and after July 1 in that year.

     (4)  The portion of the plan No. 1 assessment assessed against an individual plan No. 1 employer is a proportionate amount of total plan No. 1 paid losses during the preceding calendar year that is equal to the percentage that the total paid losses of the individual plan No. 1 employer bore to the total paid losses of all plan No. 1 employers during the preceding calendar year.

     (5)  The portion of the plan No. 2 assessment subject to premium surcharge for an individual plan No. 2 insured employer is a proportionate amount of total plan No. 2 paid losses during the preceding calendar year that is equal to the percentage that the total paid losses of the individual plan No. 2 insured employer bore to the total paid losses of all plan No. 2 insurers during the preceding calendar year.

     (6)  The portion of the state fund assessment subject to premium surcharge for a state fund insured employer is a proportionate amount of total state fund paid losses during the preceding calendar year that is equal to the percentage that the total paid losses of the individual state fund insured employer bore to the total paid losses of state fund insured employers during the preceding calendar year.

      (5) The portion of the assessment attributable to state fund claims arising before July 1, 1990, is the proportionate amount that is equal to the percentage that total paid losses for those claims during the preceding calendar year bore to the total paid losses for all plans in the preceding calendar year. As required by 39-71-2352, the state fund may not pass along to insured employers the cost of the subsequent injury fund assessment that is attributable to claims arising before July 1, 1990.

     (6) The remaining portion of the assessment must be paid by way of a surcharge on premiums paid by employers being insured by a plan No. 2 insurer or plan No. 3, the state fund, for policies written or renewed annually on or after July 1. The surcharge rate must be computed by dividing the remaining portion of the assessment by the total amount of premiums paid by employers insured under plan No. 2 or plan No. 3 in the previous calendar year. The numerator for the calculation must be adjusted as provided by subsection (9).

     (7)  Payment of assessments due must be made to the department semiannually on June 30 and December 31 of the year following the calendar year on which the assessment is based.

     (8)(7)  Each plan No. 2 insurer providing workers' compensation insurance and plan No. 3, the state fund, shall collect from its policyholders the assessment premium surcharge provided for in subsection (2) (6). When collected, assessments the assessment premium surcharge may not constitute an element of loss for the purpose of establishing rates for workers' compensation insurance but, for the purpose of collection, must be treated as separate costs imposed upon insured employers. The total of this assessment premium surcharge must be stated as a separate cost on an insured employer's policy or on a separate document submitted by the insured employer and must be identified as "workers' compensation subsequent injury fund surcharge". Each assessment premium surcharge must be shown as a percentage of the total workers' compensation policyholder premium. This assessment premium surcharge must be collected at the same time and in the same manner that the premium for the coverage is collected. The assessment premium surcharge must be excluded from the definition of premiums for all purposes, including computation of insurance producers' commissions or premium taxes, except that an insurer may cancel a workers' compensation policy for nonpayment of the assessment premium surcharge. Cancellation must be in accordance with the procedures applicable to the nonpayment of premium. If an employer fails to remit to an insurer the total amount due for the premium and assessment premium surcharge, the amount received by the insurer must be applied to the assessment premium surcharge first and the remaining amount applied to the premium due.

     (9)(8) (a) All assessments paid to the department must be deposited in the fund.

     (b) Each plan No. 1 employer shall pay its assessment by July 1.

     (c) Each plan No. 2 insurer and plan No. 3, the state fund, shall remit to the department all assessment premium surcharges collected during a calendar quarter by not later than 20 days following the end of the quarter.

     (d) The state fund shall pay the portion of the assessment attributable to claims arising before July 1, 1990, by July 1.

     (e) If a plan No. 1 employer, a plan No. 2 insurer, or plan No. 3, the state fund, fails to timely pay to the department the assessment or assessment premium surcharge under this section, the department may impose on the plan No. 1 employer, the plan No. 2 insurer, or plan No. 3, the state fund, an administrative fine of $100 plus interest on the delinquent amount at the annual interest rate of 12%. Administrative fines and interest must be deposited in the fund.

     (9) The amount of the assessment premium surcharge actually collected pursuant to subsection (7) must be compared each year to the amount assessed and upon which the premium surcharge was calculated. The amount undercollected or overcollected in any given year must be used as an adjustment to the numerator provided for by subsection (6) for the following year's assessment premium surcharge."



     Section 14.  Section 39-71-2204, MCA, is amended to read:

     "39-71-2204.  Insurer to submit notice of coverage within thirty days -- penalty for failure. (1) The insurer shall, within 30 days after the issuance of the policy of workers' compensation insurance, submit to the department the notice of coverage stating the effective date of the policy insuring the employer and other information that may be required by the department.

     (2)  The department may:

     (a)  may recognize the advisory organization designated under 33-16-1023 or recognize other organizations as an agent agents for authorized workers' compensation insurers in Montana; and

     (b)  shall, under terms and conditions acceptable to the department, accept notice of coverage received from the advisory organization designated under 33-16-1023 agents recognized under subsection (2)(a) as the insurer's notice of coverage.

     (3)  The department may, in its discretion, assess a penalty of no more than $200 against an insurer that as a general business practice does not comply with the 30-day notice requirement set forth in subsection (1)."



     Section 15.  Section 39-71-2205, MCA, is amended to read:

     "39-71-2205.  Policy in effect until canceled or replaced -- twenty-day notification of cancellation required -- penalty. (1) The policy remains in effect until canceled, and cancellation may take effect only by written notice to the named insured and to the department at least 20 days prior to the date of cancellation. However, the policy terminates on the effective date of a replacement or succeeding workers' compensation insurance policy issued to the insured. Nothing in this section prevents an insurer from canceling a policy of workers' compensation insurance before a replacement policy is issued to the insured.

     (2)  The department may:

     (a)  may recognize the advisory organization designated under 33-16-1023 or recognize other organizations as an agent agents for authorized workers' compensation insurers in Montana; and

     (b)  shall, under terms and conditions acceptable to the department, accept notice of cancellation received from the advisory organization designated under 33-16-1023 agents recognized under subsection (2)(a) as the insurer's notice of cancellation.

     (3)  (a)  The department may assess a penalty of up to $200 against an insurer that does not comply with the notice requirement in subsection (1).

     (b)  An insurer may contest the penalty assessment in a hearing conducted according to department rules."



     Section 16.  Section 39-71-2337, MCA, is amended to read:

     "39-71-2337.  State fund to submit notice of coverage within thirty days -- penalty for failure. (1) The state fund shall, within 30 days after the issuance of an insurance policy, submit to the department the notice of coverage stating the effective date of the policy insuring the employer and other information the department requires.

     (2) The department:

     (a) may recognize the advisory organization designated under 33-16-1023 or recognize other organizations as agents for the state fund; and

     (b) shall, under terms and conditions acceptable to the department, accept notice of coverage received from the agents recognized under subsection (2)(a) as the state fund's notice of coverage.

     (2)(3)  The department may assess a penalty of no more than $200 against the state fund if, as a general business practice, the state fund does not comply with the 30-day notice requirement."



     Section 17.  Section 39-71-2339, MCA, is amended to read:

     "39-71-2339.  Cancellation of coverage -- twenty days' notice required. (1) The state fund may cancel an employer's coverage under this part for failure to report payroll or pay the premiums due or for another cause provided in the insurance policy. Cancellation may take effect only by written notice to the named insured and the department at least 20 days prior to the date of cancellation or, in cases of nonreporting of payroll or nonpayment of a premium, by failure of the employer to submit payroll reports or pay a premium within 20 days after the due date. The state fund shall notify the department of the names and effective dates of all policies canceled. However, the policy terminates on the effective date of a replacement or succeeding insurance policy issued to the insured. This section does not prevent the state fund from canceling an insurance policy before a replacement policy is issued to the insured. After the cancellation date, the employer has the same status as an employer who is not enrolled under the Workers' Compensation Act unless a replacement or succeeding insurance policy has been issued.

     (2) The department:

     (a) may recognize the advisory organization designated under 33-16-1023 or recognize other organizations as agents for the state fund; and

     (b) shall, under terms and conditions acceptable to the department, accept notice of cancellation received from the agents recognized under subsection (2)(a) as the state fund's notice of cancellation.

     (3) (a) The department may assess a penalty of up to $200 against the state fund if it does not comply with the notice requirement in subsection (1).

     (b) The state fund may contest the penalty assessment in a hearing conducted according to department rules."



     Section 18.  Section 39-72-606, MCA, is amended to read:

     "39-72-606.  Autopsy. Upon the filing of a claim for compensation for death caused by an occupational disease if an autopsy is necessary to determine the cause of death, an autopsy shall must be ordered by the department. The autopsy shall must be made under the supervision of the county coroner or a medical examiner. The department may designate a duly licensed physician who is a specialist in such these examinations to perform or attend the autopsies and to certify his findings thereon on the autopsies. The findings shall must be examined by the physicians evaluator submitting a report under 39-72-605 39-72-602 before the final report under that section is submitted to the department."



     Section 19.  Section 39-72-608, MCA, is amended to read:

     "39-72-608.  Payment of medical examination, report, and autopsy expenses. The expense of the medical examination and report, as provided in 39-72-602, must be paid by the insurer. The expense of the periodic medical examinations and reports, as provided in 39-72-607, must be paid by the party requesting the periodic medical examination. The expense of the autopsy, as provided for in 39-72-606, must be paid by the party requesting the autopsy. The expense of any examinations and reports, as provided in 39-72-605, must be paid by the party requesting the examination."



     Section 20.  Section 39-73-103, MCA, is amended to read:

     "39-73-103.  Conformity with acts of federal government. If and when the government of the United States makes grants to states in aid of and allowing payments to persons having silicosis, as herein defined, the department of labor and industry is hereby authorized to administer in the state of Montana such the grants-in-aid and payments in addition to grants made by this chapter. The total payments to any individual under this chapter shall may not exceed $200 $250 per a month, exclusive of any grants made by congress."



     Section 21.  Section 39-73-107, MCA, is amended to read:

     "39-73-107.  Amount of payments. Subject to the provisions of this chapter and the deductions herein provided in this chapter, any person who has silicosis, as defined in this chapter, and who has, subject to the regulations and standards of the department of labor and industry, been determined by the department to be entitled payment under this chapter for silicosis shall must be granted a payment by the department of $200 $250 per a month, subject to such any additional appropriations as may from time to time be made. If he the person is receiving payments under The the Occupational Disease Act of Montana, as provided by chapter 72 of this title, which that are less in the aggregate than $200, then he the person is entitled to a payment under this chapter of the difference between the amount received under The the Occupational Disease Act of Montana, as provided by chapter 72 of this title, and $200 $250 per a month. The legislature shall authorize such additional appropriations as that may be necessary to make the increased monthly payments provided herein in this section."



     Section 22.  Section 39-73-109, MCA, is amended to read:

     "39-73-109.  Payment of benefits to surviving spouse. (1) Upon the death of a person receiving payments for silicosis under 39-73-104 or 39-73-108, the surviving spouse, as long as such the spouse remains unmarried, is entitled to receive the payments granted the deceased spouse.

     (2)  A person who otherwise is qualified to receive payments under subsection (1) of this section but whose spouse died prior to March 14, 1974, is hereby made eligible to begin receiving one-half of those payments; provided, however, $150 a month. However, a person is not eligible for these payments if such the spouse's taxable income is $6,800 or more per a year."



     Section 23.  Repealer. Section 39-72-605, MCA, is repealed.



     Section 24.  Codification instruction. [Section 1] is intended to be codified as an integral part of Title 39, chapter 71, part 5, and the provisions of Title 39, chapter 71, part 5, apply to [section 1].



     Section 25.  Severability. If a part of [this act] is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.



     Section 26.  Effective date -- retroactive applicability. (1) [This act] is effective July 1, 2001.

     (2) [Sections 5(7)(c) and (8) and 13(3)] apply retroactively, within the meaning of 1-2-109, to assessments and assessment premium surcharges calculated by the department of labor and industry before March 30, 2001.

- END -




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