Montana LC LC0732
UNAPPROVED DRAFT BILL -- Subject to Change Without Notice!
BILL NO.
INTRODUCED BY
(Primary Sponsor)
A BILL FOR AN ACT ENTITLED: "AN ACT CHANGING THE NAME OF THE STATE COMPENSATION INSURANCE FUND TO COMPSOURCE MONTANA; AMENDING SECTIONS 2-15-1019, 2-15-2015, 2-18-103, 2-18-601, 2-18-701, 2-18-703, 2-18-711, 15-30-303, 18-4-132, 18-7-101, 19-3-1002, 33-1-1205, 33-16-1011, 39-51-604, 39-71-116, 39-71-201, 39-71-206, 39-71-211, 39-71-226, 39-71-308, 39-71-403, 39-71-433, 39-71-434, 39-71-435, 39-71-915, 39-71-1004, 39-71-2211, 39-71-2311, 39-71-2312, 39-71-2313, 39-71-2314, 39-71-2315, 39-71-2316, 39-71-2317, 39-71-2318, 39-71-2319, 39-71-2320, 39-71-2321, 39-71-2322, 39-71-2323, 39-71-2325, 39-71-2327, 39-71-2328, 39-71-2330, 39-71-2336, 39-71-2337, 39-71-2339, 39-71-2340, 39-71-2351, 39-71-2352, 39-71-2356, 39-71-2361, 39-71-2362, 39-71-2363, AND 39-72-310, MCA; AND PROVIDING A DELAYED EFFECTIVE DATE."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Section 2-15-1019, MCA, is amended to read:
"2-15-1019. Board of directors of state compensation insurance fund compsource Montana. (1) There is a board of directors of the state compensation insurance fund compsource Montana, as defined in 39-71-2313.
(2) The board is allocated to the department for administrative purposes only as prescribed in 2-15-121. However, the board may employ its own staff.
(3) The board may provide for its own office space and the office space of the state fund compsource Montana.
(4) The board consists of seven members appointed by the governor. The executive director of the state fund compsource Montana is an ex officio nonvoting member.
(5) At least four of the seven members must shall represent state fund compsource Montana policyholders and may be employees of state fund compsource Montana policyholders. At least four members of the board shall represent private, for-profit enterprises. One of the seven members may be a licensed insurance producer. A member of the board may not:
(a) except for the licensed insurance producer member, represent or be an employee of an insurance company that is licensed to transact workers' compensation insurance under compensation plan No. 2; or
(b) be an employee of a self-insured employer under compensation plan No. 1.
(6) A member is appointed for a term of 4 years. The terms of board members must be staggered. A member of the board may serve no more than two 4-year terms. A member shall hold office until a successor is appointed and qualified.
(7) The members must be appointed and compensated in the same manner as members of a quasi-judicial board as provided in 2-15-124, except that the requirement that at least one member be an attorney does not apply."
Section 2. Section 2-15-2015, MCA, is amended to read:
"2-15-2015. Workers' compensation fraud investigation and prosecution office. There is a workers' compensation fraud investigation and prosecution office in the department of justice. The office shall investigate and prosecute cases referred by the state compensation insurance fund compsource Montana or the department of labor and industry on behalf of the uninsured employers' fund. The office is under the supervision and control of the attorney general and consists of:
(1) one or more investigators qualified by education, training, experience, and high professional competence in investigative procedures who shall investigate violations of the provisions of Title 39, chapters 71 and 72, at the request of the state compensation insurance fund compsource Montana or the department of labor and industry on behalf of the uninsured employers' fund; and
(2) one or more attorneys licensed to practice law in Montana who shall prosecute violations of the provisions of Title 39, chapters 71 and 72. The attorneys may also assist county attorneys in prosecuting violations of Title 39, chapters 71 and 72, without charge to the county.
(3) The state compensation insurance fund Compsource Montana, the department of labor and industry, and the department of justice shall submit to the legislature for approval one proposed biennial budget for the workers' compensation fraud office. The proposed budget for staffing and related expenses must be based upon the needs of the state compensation insurance fund compsource Montana and the department of labor and industry on behalf of the uninsured employers' fund for investigating and prosecuting workers' compensation fraud."
Section 3. Section 2-18-103, MCA, is amended to read:
"2-18-103. Officers and employees excepted. Parts 1 through 3 and 10 do not apply to the following officers and employees in state government:
(1) elected officials;
(2) county assessors and their chief deputies;
(3) employees of the office of consumer counsel;
(4) judges and employees of the judicial branch;
(5) members of boards and commissions appointed by the governor, the legislature, or other elected state officials;
(6) officers or members of the militia;
(7) agency heads appointed by the governor;
(8) academic and professional administrative personnel with individual contracts under the authority of the board of regents of higher education;
(9) academic and professional administrative personnel and live-in houseparents who have entered into individual contracts with the state school for the deaf and blind under the authority of the state board of public education;
(10) investment officer, assistant investment officer, executive director, and five professional staff positions of the board of investments;
(11) four professional staff positions under the board of oil and gas conservation;
(12) assistant director for security of the Montana state lottery;
(13) executive director and employees of the state compensation insurance fund compsource Montana;
(14) state racing stewards employed by the executive secretary of the Montana board of horseracing;
(15) executive director of the Montana wheat and barley committee;
(16) commissioner of banking and financial institutions;
(17) training coordinator for county attorneys;
(18) employees of an entity of the legislative branch consolidated, as provided in 5-2-504;
(19) chief information officer in the department of administration;
(20) chief business development officer and six professional staff positions in the office of economic development provided for in 2-15-218."
Section 4. Section 2-18-601, MCA, is amended to read:
"2-18-601. Definitions. For the purpose of this part, except 2-18-620, the following definitions apply:
(1) (a) "Agency" means any legally constituted department, board, or commission of state, county, or city government or any political subdivision of the state.
(b) The term does not mean the state compensation insurance fund compsource Montana.
(2) "Break in service" means a period of time in excess of 5 working days when the person is not employed and that severs continuous employment.
(3) "Continuous employment" means working within the same jurisdiction without a break in service of more than 5 working days or without a continuous absence without pay of more than 15 working days.
(4) "Employee" means any person employed by an agency except elected state, county, and city officials, schoolteachers, and persons contracted as independent contractors or hired under personal services contracts.
(5) "Full-time employee" means an employee who normally works 40 hours a week.
(6) "Holiday" means a scheduled day off with pay to observe a legal holiday, as specified in 1-1-216 or 20-1-305, except Sundays.
(7) "Part-time employee" means an employee who normally works less than 40 hours a week.
(8) "Permanent employee" means a permanent employee as defined in 2-18-101.
(9) "Seasonal employee" means a seasonal employee as defined in 2-18-101.
(10) "Short-term worker" means a short-term worker as defined in 2-18-101.
(11) "Sick leave" means a leave of absence with pay for a sickness suffered by an employee or a member of the employee's immediate family or for a permanent state employee who is eligible for parental leave under the provisions of 2-18-606.
(12) "Temporary employee" means a temporary employee as defined in 2-18-101.
(13) "Transfer" means a change of employment from one agency to another agency in the same jurisdiction without a break in service.
(14) "Vacation leave" means a leave of absence with pay for the purpose of rest, relaxation, or personal business at the request of the employee and with the concurrence of the employer."
Section 5. Section 2-18-701, MCA, is amended to read:
"2-18-701. Definitions. In this part, as it applies to a person employed in the executive, judicial, or legislative branches of state government, "employee" means:
(1) a permanent full-time employee, as provided in 2-18-601;
(2) a permanent part-time employee, as provided in 2-18-601, who is regularly scheduled to work 20 hours or more a week;
(3) a seasonal full-time employee, as provided in 2-18-601, who is regularly scheduled to work 6 months or more a year or who works for a continuous period of more than 6 months a year although not regularly scheduled to do so;
(4) a seasonal part-time employee, as provided in 2-18-601, who is regularly scheduled to work 20 hours or more a week for 6 months or more a year or who works 20 hours or more a week for a continuous period of more than 6 months a year although not regularly scheduled to do so;
(5) elected officials;
(6) officers and permanent employees of the legislative branch;
(7) judges and permanent employees of the judicial branch;
(8) academic, professional, and administrative personnel having individual contracts under the authority of the board of regents of higher education or the state board of public education;
(9) a temporary full-time employee, as provided in 2-18-601:
(a) who is regularly scheduled to work more than 6 months a year;
(b) who works for a continuous period of more than 6 months a year although not regularly scheduled to do so; or
(c) whose temporary status is defined through collective bargaining;
(10) a temporary part-time employee, as provided in 2-18-601:
(a) who is regularly scheduled to work 20 hours or more a week for 6 months or more a year;
(b) who works 20 hours or more a week for a continuous period of more than 6 months a year although not regularly scheduled to do so; or
(c) whose temporary status is defined through collective bargaining; and
(11) a part-time or full-time employee of the state compensation insurance fund compsource Montana. As used in this subsection, "part-time or full-time employee of the state compensation insurance fund compsource Montana" means an employee eligible for inclusion in the state employee group benefit plans under the rules of the department of administration."
Section 6. Section 2-18-703, MCA, is amended to read:
"2-18-703. Contributions. (1) Each agency, as defined in 2-18-601, and the state compensation insurance fund compsource Montana shall contribute the amount specified in this section toward the group benefits cost.
(2) For employees defined in 2-18-701 and for members of the legislature, the employer contribution for group benefits is $295 a month for the period from July 2001 through December 2001, $325 a month for the period from January 2002 through December 2002, and $366 a month for January 2003 and for each succeeding month. For employees of the Montana university system, the employer contribution for group benefits is $325 a month for the period from July 2001 through June 2002 and $366 a month for the period from July 2002 through June 2003 and for each succeeding month. When a state employee is terminated to achieve a reduction in force, the continuation of contributions for group benefits beyond the termination date is subject to negotiation under 39-31-305. Permanent part-time, seasonal part-time, and temporary part-time employees who are regularly scheduled to work less than 20 hours a week are not eligible for the group benefit contribution. An employee who elects not to be covered by a state-sponsored group benefit plan may not receive the state contribution. A portion of the employer contribution for group benefits may be applied to an employee's costs for participation in Part B of medicare under Title XVIII of the Social Security Act, as amended, if the state group benefit plan is the secondary payer and medicare the primary payer.
(3) For employees of elementary and high school districts and of local government units, the employer's premium contributions may exceed but may not be less than $10 a month. Subject to the public hearing requirement provided in 2-9-212(2)(b), the increase in a local government's property tax levy for premium contributions for group benefits beyond the amount of contributions in effect on July 1, 1999, is not subject to the mill levy calculation limitation provided for in 15-10-420.
(4) Unused employer contributions for any state employee must be transferred to an account established for this purpose by the department of administration and upon transfer may be used to offset losses occurring to the group of which the employee is eligible to be a member.
(5) Unused employer contributions for any government employee may be transferred to an account established for this purpose by a self-insured government and upon transfer may be used to offset losses occurring to the group of which the employee is eligible to be a member or to increase the reserves of the group.
(6) The laws prohibiting discrimination on the basis of marital status in Title 49 do not prohibit bona fide group insurance plans from providing greater or additional contributions for insurance benefits to employees with dependents than to employees without dependents or with fewer dependents."
Section 7. Section 2-18-711, MCA, is amended to read:
"2-18-711. Cooperative purchasing of employee benefit services and insurance products -- procedures. (1) To provide employee group benefits, an agency, as defined in 2-18-601, and the state compensation insurance fund compsource Montana may participate with other agencies, nonprofit organizations, or business entities and in voluntary disability insurance purchasing pools provided for under 33-22-1815 if the agency or the state fund compsource Montana determines that cooperative purchasing is in the agency's or the state fund's compsource Montana's best interest.
(2) Cooperative purchases under this section may be conducted according to purchasing procedures developed by the participating parties if, for contracts valued at $20,000 a year or more, purchasing procedures, at a minimum, include:
(a) public notice in three major Montana newspapers of requirements for submitting bids or offers; and
(b) consideration of all submitted bids or offers.
(3) For purposes of this section, "employee" also means a schoolteacher."
Section 8. Section 15-30-303, MCA, is amended to read:
"15-30-303. Confidentiality of tax records. (1) Except as provided in subsections (7) and (8) or in accordance with a proper judicial order or as otherwise provided by law, it is unlawful to divulge or make known in any manner:
(a) the amount of income or any particulars set forth or disclosed in any individual report or individual return required under this chapter or any other information secured in the administration of this chapter; or
(b) any federal return or federal return information disclosed on any return or report required by rule of the department or under this chapter.
(2) (a) The officers charged with the custody of the reports and returns may not be required to produce them or evidence of anything contained in them in an action or proceeding in a court, except in an action or proceeding:
(i) to which the department is a party under the provisions of this chapter or any other taxing act; or
(ii) on behalf of a party to any action or proceedings under the provisions of this chapter or other taxes when the reports or facts shown by the reports are directly involved in the action or proceedings.
(b) The court may require the production of and may admit in evidence only as much of the reports or of the facts shown by the reports as are pertinent to the action or proceedings.
(3) This section does not prohibit:
(a) the delivery to a taxpayer or the taxpayer's authorized representative of a certified copy of any return or report filed in connection with the taxpayer's tax;
(b) the publication of statistics classified to prevent the identification of particular reports or returns and the items of particular reports or returns; or
(c) the inspection by the attorney general or other legal representative of the state of the report or return of any taxpayer who brings an action to set aside or review the tax based on the report or return or against whom an action or proceeding has been instituted in accordance with the provisions of 15-30-311.
(4) Reports and returns must be preserved for at least 3 years and may be preserved until the department orders them to be destroyed.
(5) Any offense against subsections (1) through (4) is punishable by a fine not exceeding $1,000 or by imprisonment in the county jail for a term not exceeding 1 year, or both. If the offender is an officer or employee of the state, the offender must be dismissed from office and may not hold any public office in this state for a period of 1 year after dismissal.
(6) This section may not be construed to prohibit the department from providing taxpayer return information and information from employers' payroll withholding reports to:
(a) the department of labor and industry to be used for the purpose of investigation and prevention of noncompliance, tax evasion, fraud, and abuse under the unemployment insurance laws; or
(b) the state fund compsource Montana to be used for the purpose of investigation and prevention of noncompliance, fraud, and abuse under the workers' compensation program.
(7) The department may permit the commissioner of internal revenue of the United States or the proper officer of any state imposing a tax upon the incomes of individuals or the authorized representative of either officer to inspect the return of income of any individual or may furnish to the officer or an authorized representative an abstract of the return of income of any individual or supply the officer with information concerning an item of income contained in a return or disclosed by the report of an investigation of the income or return of income of an individual, but the permission may be granted or information furnished only if the statutes of the United States or of the other state grant substantially similar privileges to the proper officer of this state charged with the administration of this chapter.
(8) The department shall furnish:
(a) to the department of justice all information necessary to identify those persons qualifying for the additional exemption for blindness pursuant to 15-30-112(4), for the purpose of enabling the department of justice to administer the provisions of 61-5-105;
(b) to the department of public health and human services information acquired under 15-30-301, pertaining to an applicant for public assistance, reasonably necessary for the prevention and detection of public assistance fraud and abuse, provided notice to the applicant has been given;
(c) to the department of labor and industry for the purpose of prevention and detection of fraud and abuse in and eligibility for benefits under the unemployment compensation and workers' compensation programs information on whether a taxpayer who is the subject of an ongoing investigation by the department of labor and industry is an employee, an independent contractor, or self-employed;
(d) to the department of fish, wildlife, and parks specific information that is available from income tax returns and required under 87-2-102 to establish the residency requirements of an applicant for hunting and fishing licenses;
(e) to the board of regents information required under 20-26-1111;
(f) to the legislative fiscal analyst and the office of budget and program planning individual income tax information as provided in 5-12-303. The information provided to the office of budget and program planning must be the same as the information provided to the legislative fiscal analyst.
(g) to the department of transportation farm income information based on the most recent income tax return filed by an applicant applying for a refund under 15-70-223 or 15-70-362, provided that notice to the applicant has been given as provided in 15-70-223 and 15-70-362. The information obtained by the department of transportation is subject to the same restrictions on disclosure as are individual income tax returns."
Section 9. Section 18-4-132, MCA, is amended to read:
"18-4-132. Application. (1) This chapter applies to the expenditure of public funds irrespective of their source, including federal assistance money, by this state acting through a governmental body under any contract, except a contract exempted from this chapter by this section or by a statute that provides that this chapter does not apply to the contract. This chapter applies to a procurement of supplies or services that is at no cost to the state and from which income may be derived by the vendor and to a procurement of supplies or services from which income or a more advantageous business position may be derived by the state. This chapter does not apply to either grants or contracts between the state and its political subdivisions or other governments, except as provided in part 4. This chapter also applies to the disposal of state supplies. This chapter or rules adopted pursuant to this chapter do not prevent any governmental body or political subdivision from complying with the terms and conditions of any grant, gift, bequest, or cooperative agreement.
(2) This chapter does not apply to construction contracts.
(3) This chapter does not apply to expenditures of or the authorized sale or disposal of equipment purchased with money raised by student activity fees designated for use by the student associations of the university system.
(4) This chapter does not apply to contracts entered into by the Montana state lottery that have an aggregate value of less than $250,000.
(5) This chapter does not apply to contracts entered into by the state compensation insurance fund compsource Montana to procure insurance-related services.
(6) This chapter does not apply to employment of:
(a) a registered professional engineer, surveyor, real estate appraiser, or registered architect;
(b) a physician, dentist, pharmacist, or other medical, dental, or health care provider;
(c) an expert witness hired for use in litigation, a hearings officer hired in rulemaking and contested case proceedings under the Montana Administrative Procedure Act, or an attorney as specified by executive order of the governor;
(d) consulting actuaries;
(e) a private consultant employed by the student associations of the university system with money raised from student activity fees designated for use by those student associations;
(f) a private consultant employed by the Montana state lottery;
(g) a private investigator licensed by any jurisdiction; or
(h) a claims adjuster.
(7) (a) This chapter does not apply to electrical energy purchase contracts by the university of Montana or Montana state university, as defined in 20-25-201.
(b) Any savings accrued by the university of Montana or Montana state university in the purchase or acquisition of energy must be retained by the board of regents of higher education for university allocation and expenditure."
Section 10. Section 18-7-101, MCA, is amended to read:
"18-7-101. Power to contract for printing -- exception. (1) Except as provided in 1-11-301, the department has exclusive power, subject to the approval of the governor, to contract for all printing for any purpose used by the state in any elective or appointive state office (elective or appointive), agency, or institution.
(2) The department shall supervise and attend to all public printing of the state as provided in this chapter and shall prevent duplication and unnecessary printing.
(3) Unless otherwise provided by law, the department, in letting contracts as provided in this chapter, for the printing, binding, and publishing of all laws, journals, and reports of the state agencies and institutions may determine the quantity, quality, style, and grade of all such printing, binding, and publishing.
(4) The provisions of this chapter do not apply to the state compensation insurance fund compsource Montana for purposes of external marketing or educational materials."
Section 11. Section 19-3-1002, MCA, is amended to read:
"19-3-1002. Eligibility for disability retirement. (1) Except as provided in subsections (2) and (3), a member entering service prior to February 24, 1991, who is not eligible for service or early retirement but has at least 5 years of membership service and has become disabled while an active member is eligible for disability retirement, as provided in 19-3-1008(1).
(2) An active member age 60 or older who has completed 5 years of membership service and has had a duty-related accident forcing the member to terminate employment but who has not received or is ineligible to receive workers' compensation benefits under Title 39, chapter 71, for the duty-related accident may conditionally waive the member's eligibility for a service retirement in order to be eligible for disability retirement. The waiver is effective only upon approval by the board of the member's written application for disability retirement. The board shall determine whether a member has become disabled. The board may request any information on file with the state compensation insurance fund compsource Montana concerning any duty-related accident. If information is not available, the board may request and the state fund compsource Montana shall then provide an investigative report on the disabling accident.
(3) (a) A member in service on February 24, 1991, has a one-time election to be covered for disability purposes under the provisions of 19-3-1008(2). This election is irrevocable and must be made in writing by the member no later than December 31, 1991. Coverage under the provisions of 19-3-1008(2) commences on the date the completed written election is received by the board or its designated representative. To be eligible for disability benefits under the provisions of this part, a member must have completed 5 years of membership service and must have become disabled while an active member.
(b) An individual becoming a member after February 24, 1991, who has completed 5 years of membership service and has become disabled while an active member is covered for disability purposes under the provisions of 19-3-1008(2) or (3)."
Section 12. Section 33-1-1205, MCA, is amended to read:
"33-1-1205. Duties of authorized insurers, adjusters, administrators, consultants, and producers -- notice exception. (1) Each insurer, independent adjuster, independent administrator, independent consultant, and independent producer shall cooperate fully with the commissioner with respect to the provisions of this part.
(2) Except as provided in subsection (4), an insurer, an officer, or an employee of the insurer, an independent adjuster, an independent administrator, an independent consultant, or an independent producer who has reason to believe that an insurance fraud has been or is being committed shall provide notice of the alleged insurance fraud to the commissioner within 60 days. A producer of an insurer who has reason to believe that an insurance fraud has been or is being committed shall report the alleged fraud to the insurer within 60 days of discovery of the alleged insurance fraud. The insurer shall review the report. If the insurer determines that there is reasonable likelihood that fraud has occurred, the insurer shall forward the report to the commissioner within 30 days of receipt of the report.
(3) Notice to the commissioner by an insurer who has reason to believe that an insurance fraud has been committed in connection with an insurance claim, application, or policy tolls any applicable time period, for the commissioner, in any applicable insurance statute, related insurance regulation, or applicable sections of the criminal code and tolls any time period arising under 33-18-232 or 33-18-242 regarding unfair claims settlement practices.
(4) Notice of an alleged insurance fraud involving an insurance claim or application submitted to the state compensation insurance fund compsource Montana or a policy issued by the state compensation insurance fund compsource Montana must be made within 60 days to the fraud detection and prevention unit established pursuant to 39-71-211."
Section 13. Section 33-16-1011, MCA, is amended to read:
"33-16-1011. Classification review committee -- membership -- term. (1) There is a classification review committee.
(2) The committee is composed of five voting members, consisting of:
(a) two representatives of private insurance carriers writing workers' compensation insurance in Montana. The members must be appointed by the Montana commissioner of insurance.
(b) one licensed independent insurance producer who resides in Montana, appointed by the commissioner of insurance;
(c) one representative of the state compensation insurance fund compsource Montana who is an employee of the state fund compsource Montana and who is appointed by the executive director of the state fund compsource Montana; and
(d) one representative of an employer who is insured by either a private insurance carrier or the state compensation insurance fund compsource Montana, appointed by the commissioner of insurance.
(3) Each member shall hold office for a period of 3 years. An appointee who fills the vacancy of a member whose term has not expired shall fill only the remaining term and may be reappointed for a full term.
(4) Before appointments are to be made by the commissioner of insurance under subsections (2)(a), (2)(b), and (2)(d), established private organizations representing insurance carriers, independent insurance producers, and employers may submit names of individuals they recommend for appointments. The commissioner of insurance shall consider the names submitted before appointments are made. However, the commissioner of insurance is not required to appoint any person from the names submitted.
(5) The committee must be staffed by the advisory organization designated under 33-16-1023 and be funded by the advisory organization. Committee members may, if they request, be paid their actual and necessary travel expenses.
(6) Documents and other information concerning the committee's actions must be made available for public review in the office of the commissioner of insurance."
Section 14. Section 39-51-604, MCA, is amended to read:
"39-51-604. Exemption. An exemption granted under 39-71-401(3) by the department that a particular employee is an independent contractor or that a particular employment is exempt from the provisions of this chapter must be reported to the state compensation insurance fund compsource Montana."
Section 15. Section 39-71-116, MCA, is amended to read:
"39-71-116. Definitions. Unless the context otherwise requires, in this chapter, the following definitions apply:
(1) "Actual wage loss" means that the wages that a worker earns or is qualified to earn after the worker reaches maximum healing are less than the actual wages the worker received at the time of the injury.
(2) "Administer and pay" includes all actions by the state fund compsource Montana under the Workers' Compensation Act and the Occupational Disease Act of Montana necessary to:
(a) investigation, review, and settlement of claims;
(b) payment of benefits;
(c) setting of reserves;
(d) furnishing of services and facilities; and
(e) use of actuarial, audit, accounting, vocational rehabilitation, and legal services.
(3) "Aid or sustenance" means a public or private subsidy made to provide a means of support, maintenance, or subsistence for the recipient.
(4) "Average weekly wage" means the mean weekly earnings of all employees under covered employment, as defined and established annually by the department. It is established at the nearest whole dollar number and must be adopted by the department before July 1 of each year.
(5) "Beneficiary" means:
(a) a surviving spouse living with or legally entitled to be supported by the deceased at the time of injury;
(b) an unmarried child under 18 years of age;
(c) an unmarried child under 22 years of age who is a full-time student in an accredited school or is enrolled in an accredited apprenticeship program;
(d) an invalid child over 18 years of age who is dependent, as defined in 26 U.S.C. 152, upon the decedent for support at the time of injury;
(e) a parent who is dependent, as defined in 26 U.S.C. 152, upon the decedent for support at the time of the injury if a beneficiary, as defined in subsections (5)(a) through (5)(d), does not exist; and
(f) a brother or sister under 18 years of age if dependent, as defined in 26 U.S.C. 152, upon the decedent for support at the time of the injury but only until the age of 18 years and only when a beneficiary, as defined in subsections (5)(a) through (5)(e), does not exist.
(6) "Business partner" means the community, governmental entity, or business organization that provides the premises for work-based learning activities for students.
(7) "Casual employment" means employment not in the usual course of the trade, business, profession, or occupation of the employer.
(8) "Child" includes a posthumous child, a dependent stepchild, and a child legally adopted prior to the injury.
(9) (a) "Construction industry" means the major group of general contractors and operative builders, heavy construction (other than building construction) contractors, and special trade contractors, listed in major group 23 in the North American Industry Classification System Manual.
(b) The term does not include office workers, design professionals, salespersons, estimators, or any other related employment that is not directly involved on a regular basis in the provision of physical labor at a construction or renovation site.
(10) "Days" means calendar days, unless otherwise specified.
(11) "Department" means the department of labor and industry.
(12) "Fiscal year" means the period of time between July 1 and the succeeding June 30.
(13) "Household or domestic employment" means employment of persons other than members of the household for the purpose of tending to the aid and comfort of the employer or members of the employer's family, including but not limited to housecleaning and yard work, but does not include employment beyond the scope of normal household or domestic duties, such as home health care or domiciliary care.
(14) "Insurer" means an employer bound by compensation plan No. 1, an insurance company transacting business under compensation plan No. 2, or the state fund compsource Montana under compensation plan No. 3.
(15) "Invalid" means one who is physically or mentally incapacitated.
(16) "Limited liability company" is as defined in 35-8-102.
(17) "Maintenance care" means treatment designed to provide the optimum state of health while minimizing recurrence of the clinical status.
(18) "Medical stability", "maximum healing", or "maximum medical healing" means a point in the healing process when further material improvement would not be reasonably expected from primary medical treatment.
(19) "Objective medical findings" means medical evidence, including range of motion, atrophy, muscle strength, muscle spasm, or other diagnostic evidence, substantiated by clinical findings.
(20) "Order" means any decision, rule, direction, requirement, or standard of the department or any other determination arrived at or decision made by the department.
(21) "Palliative care" means treatment designed to reduce or ease symptoms without curing the underlying cause of the symptoms.
(22) "Payroll", "annual payroll", or "annual payroll for the preceding year" means the average annual payroll of the employer for the preceding calendar year or, if the employer has not operated a sufficient or any length of time during the calendar year, 12 times the average monthly payroll for the current year. However, an estimate may be made by the department for any employer starting in business if average payrolls are not available. This estimate must be adjusted by additional payment by the employer or refund by the department, as the case may actually be, on December 31 of the current year. An employer's payroll must be computed by calculating all wages, as defined in 39-71-123, that are paid by an employer.
(23) "Permanent partial disability" means a physical condition in which a worker, after reaching maximum medical healing:
(a) has a permanent impairment established by objective medical findings;
(b) is able to return to work in some capacity but the permanent impairment impairs the worker's ability to work; and
(c) has an actual wage loss as a result of the injury.
(24) "Permanent total disability" means a physical condition resulting from injury as defined in this chapter, after a worker reaches maximum medical healing, in which a worker does not have a reasonable prospect of physically performing regular employment. Regular employment means work on a recurring basis performed for remuneration in a trade, business, profession, or other occupation in this state. Lack of immediate job openings is not a factor to be considered in determining if a worker is permanently totally disabled.
(25) The "plant of the employer" includes the place of business of a third person while the employer has access to or control over the place of business for the purpose of carrying on the employer's usual trade, business, or occupation.
(26) "Primary medical services" means treatment prescribed by a treating physician, for conditions resulting from the injury, necessary for achieving medical stability.
(27) "Public corporation" means the state or a county, municipal corporation, school district, city, city under a commission form of government or special charter, town, or village.
(28) "Reasonably safe place to work" means that the place of employment has been made as free from danger to the life or safety of the employee as the nature of the employment will reasonably permit.
(29) "Reasonably safe tools and appliances" are tools and appliances that are adapted to and that are reasonably safe for use for the particular purpose for which they are furnished.
(30) (a) "Secondary medical services" means those medical services or appliances that are considered not medically necessary for medical stability. The services and appliances include but are not limited to spas or hot tubs, work hardening, physical restoration programs and other restoration programs designed to address disability and not impairment, or equipment offered by individuals, clinics, groups, hospitals, or rehabilitation facilities.
(b) (i) As used in this subsection (30), "disability" means a condition in which a worker's ability to engage in gainful employment is diminished as a result of physical restrictions resulting from an injury. The restrictions may be combined with factors, such as the worker's age, education, work history, and other factors that affect the worker's ability to engage in gainful employment.
(ii) Disability does not mean a purely medical condition.
(31) "Sole proprietor" means the person who has the exclusive legal right or title to or ownership of a business enterprise.
(32) "Temporary partial disability" means a physical condition resulting from an injury, as defined in 39-71-119, in which a worker, prior to maximum healing:
(a) is temporarily unable to return to the position held at the time of injury because of a medically determined physical restriction;
(b) returns to work in a modified or alternative employment; and
(c) suffers a partial wage loss.
(33) "Temporary service contractor" means a person, firm, association, partnership, limited liability company, or corporation conducting business that hires its own employees and assigns them to clients to fill a work assignment with a finite ending date to support or supplement the client's workforce in situations resulting from employee absences, skill shortages, seasonal workloads, and special assignments and projects.
(34) "Temporary total disability" means a physical condition resulting from an injury, as defined in this chapter, that results in total loss of wages and exists until the injured worker reaches maximum medical healing.
(35) "Temporary worker" means a worker whose services are furnished to another on a part-time or temporary basis to fill a work assignment with a finite ending date to support or supplement a workforce in situations resulting from employee absences, skill shortages, seasonal workloads, and special assignments and projects.
(36) "Treating physician" means a person who is primarily responsible for the treatment of a worker's compensable injury and is:
(a) a physician licensed by the state of Montana under Title 37, chapter 3, and has admitting privileges to practice in one or more hospitals, if any, in the area where the physician is located;
(b) a chiropractor licensed by the state of Montana under Title 37, chapter 12;
(c) a physician assistant-certified licensed by the state of Montana under Title 37, chapter 20, if there is not a treating physician, as provided for in subsection (36)(a), in the area where the physician assistant-certified is located;
(d) an osteopath licensed by the state of Montana under Title 37, chapter 5;
(e) a dentist licensed by the state of Montana under Title 37, chapter 4;
(f) for a claimant residing out of state or upon approval of the insurer, a treating physician defined in subsections (36)(a) through (36)(e) who is licensed or certified in another state; or
(g) an advanced practice registered nurse licensed by the state of Montana under Title 37, chapter 8, recognized by the board of nursing as a nurse practitioner or a clinical nurse specialist, and practicing in consultation with a physician licensed under Title 37, chapter 3, if there is not a treating physician, as provided for in subsection (36)(a), in the area in which the advanced practice registered nurse is located.
(37) "Work-based learning activities" means job training and work experience conducted on the premises of a business partner as a component of school-based learning activities authorized by an elementary, secondary, or postsecondary educational institution.
(38) "Year", unless otherwise specified, means calendar year."
Section 16. 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 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 of 3% of paid losses, plus administrative fines and interest provided by this section.
(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:
(a) total compensation benefits paid; and
(b) except for medical benefits in excess of $200,000 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.
(3) Each plan No. 1 employer, plan No. 2 insurer subject to the provisions of this section, and plan No. 3, the state fund compsource Montana, 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 (2).
(4) Each employer enrolled under compensation plan No. 1, compensation plan No. 2, or compensation plan No. 3, the state fund compsource Montana, 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 compsource Montana, 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 compsource Montana, 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 compsource Montana 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 compsource Montana fails to timely pay to the department the assessment under this section, the department may impose on the state fund compsource Montana 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 compsource Montana, 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 compsource Montana, 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 compsource Montana, 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 compsource Montana, 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.
(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, incurred while on the business of the department either within or without the state.
(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 17. Section 39-71-206, MCA, is amended to read:
"39-71-206. Legal advisers of department and state fund compsource Montana -- investigative and prosecution services. (1) The attorney general is the legal adviser of the department and the state fund compsource Montana and shall represent either entity in all proceedings if requested by the department or state fund compsource Montana. The department and state fund compsource Montana may employ other attorneys or legal advisers as they consider necessary.
(2) As provided in 2-15-2015, the attorney general shall provide investigative and prosecution services to the state fund compsource Montana with respect to violations of Title 39, chapters 71 and 72."
Section 18. Section 39-71-211, MCA, is amended to read:
"39-71-211. Fraud detection and prevention unit -- expenditure accounting. (1) The state fund Compsource Montana shall establish a fraud prevention and detection unit. The unit is responsible for developing detection and prevention procedures, providing detection services, and providing training in the prevention and detection of fraudulent conduct under Title 39, chapters 71 and 72, that is subject to prosecution under Title 45. The unit shall refer all cases of suspected fraudulent conduct to the workers' compensation fraud investigation and prosecution office established in 2-15-2015.
(2) The state fund Compsource Montana shall expend money to investigate fraud pursuant to this section and shall separately account for money expended."
Section 19. Section 39-71-226, MCA, is amended to read:
"39-71-226. Claims expenditures codes. The state fund Compsource Montana shall continually review its claims expenditure coding structure to separately account for claims and administrative expenses. If a review demonstrates a compelling need for expenditure information that is not available, the state fund compsource Montana shall expand or modify its claims expenditure coding structure."
Section 20. Section 39-71-308, MCA, is amended to read:
"39-71-308. Neglect or refusal of public corporation to file payroll reports -- arbitrary assessment by department. If a public corporation insured by the state fund compsource Montana neglects or refuses to file prescribed payroll reports of its employees, the department may levy an arbitrary assessment upon the public corporation in an amount of $75 for each assessment. The assessment must be collected in the manner provided in this chapter for the collection of assessments."
Section 21. Section 39-71-403, MCA, is amended to read:
"39-71-403. Plan three exclusive for state agencies -- election of plan by public corporations -- financing of self-insurance fund -- exemption for university system -- definition. (1) Except as provided in subsection (5), if a state agency is the employer, the terms, conditions, and provisions of compensation plan No. 3, state fund compsource Montana, are exclusive, compulsory, and obligatory upon both employer and employee. Any sums necessary to be paid under the provisions of this chapter by a state agency are considered to be ordinary and necessary expenses of the agency. The agency shall make appropriation of and pay the sums into the state fund compsource Montana at the time and in the manner provided for in this chapter, notwithstanding that the state agency may have failed to anticipate the ordinary and necessary expense in a budget, estimate of expenses, appropriations, ordinances, or otherwise.
(2) A public corporation, other than a state agency, may elect coverage under compensation plan No. 1, plan No. 2, or plan No. 3, separately or jointly with any other public corporation, other than a state agency. A public corporation electing compensation plan No. 1 may purchase reinsurance or issue bonds or notes pursuant to subsection (3)(b). A public corporation electing compensation plan No. 1 is subject to the same provisions as a private employer electing compensation plan No. 1.
(3) (a) A public corporation, other than a state agency, that elects plan No. 1 may establish a fund sufficient to pay the compensation and benefits provided for in chapter 72 and this chapter and to discharge all liabilities that are reasonably incurred during the fiscal year for which the election is effective. Proceeds from the fund must be used only to pay claims covered by chapter 72 and this chapter and for actual and necessary expenses required for the efficient administration of the fund, including debt service on any bonds and notes issued pursuant to subsection (3)(b).
(b) (i) A public corporation, other than a state agency, separately or jointly with another public corporation, other than a state agency, may issue and sell its bonds and notes for the purpose of establishing, in whole or in part, the self-insurance workers' compensation fund provided for in subsection (3)(a) and to pay the costs associated with the sale and issuance of the bonds. Bonds and notes may be issued in an amount not exceeding 0.18% of the total assessed value of taxable property, determined as provided in 15-8-111, of the public corporation as of the date of issue. The bonds and notes must be authorized by resolution of the governing body of the public corporation and are payable from an annual property tax levied in the amount necessary to pay principal and interest on the bonds or notes. This authority to levy an annual property tax exists despite any provision of law or maximum levy limitation, including 15-10-420, to the contrary. The revenue derived from the sale of the bonds and notes may not be used for any other purpose.
(ii) The bonds and notes:
(A) may be sold at public or private sale;
(B) do not constitute debt within the meaning of any statutory debt limitation; and
(C) may contain other terms and provisions that the governing body determines.
(iii) Two or more public corporations, other than state agencies, may agree to exercise their respective borrowing powers jointly under this subsection (3)(b) or may authorize a joint board to exercise the powers on their behalf.
(iv) The fund established from the proceeds of bonds and notes issued and sold under this subsection (3)(b) may, if sufficient, be used in lieu of a surety bond, reinsurance, specific and aggregate excess insurance, or any other form of additional security necessary to demonstrate the public corporation's ability to discharge all liabilities as provided in subsection (3)(a). Subject to the total assessed value limitation in subsection (3)(b)(i), a public corporation may issue bonds and notes to establish a fund sufficient to discharge liabilities for periods greater than 1 year.
(4) All money in the fund established under subsection (3)(a) not needed to meet immediate expenditures must be invested by the governing body of the public corporation or the joint board created by two or more public corporations as provided in subsection (3)(b)(iii), and all proceeds of the investment must be credited to the fund.
(5) The provisions of subsection (1) do not apply to the Montana university system.
(6) As used in subsections (2) through (4), "public corporation" includes the Montana university system."
Section 22. Section 39-71-433, MCA, is amended to read:
"39-71-433. Group purchase of workers' compensation insurance. (1) Two or more business entities may join together to form a group to purchase individual workers' compensation insurance policies covering each member of the group.
(2) A group formed under this section may purchase individual workers' compensation insurance policies covering each member of the group from any insurer authorized to write workers' compensation insurance in this state, except that the state fund compsource Montana, as defined in 39-71-2312, has the right to refuse coverage of a group and its plan of operation but may not refuse coverage to an individual employer. Under an individual policy, the group is entitled to a premium or volume discount that would be applicable to a policy of the combined premium amount of the individual policies.
(3) A group shall apportion any discount or policyholder dividend received on workers' compensation insurance coverage among the members of the group according to a formula adopted in the plan of operation for the group.
(4) A group shall adopt a plan of operation that must include the composition and selection of a governing board, the methods for administering the group, the eligibility requirements to join the group, and guidelines for the workers' compensation insurance coverage obtained by the group, including the payment of premiums, the distribution of discounts, and the method for providing risk management."
Section 23. Section 39-71-434, MCA, is amended to read:
"39-71-434. Deductible insurance policy provision for medical benefits. (1) In order to lower the amount an employer is required to pay to obtain workers' compensation insurance coverage under this chapter, a workers' compensation policy issued by the state compensation insurance fund compsource Montana under plan No. 3 or by a private insurer under plan No. 2 must offer a deductible for the medical, hospital, and related services allowed under 39-71-704. The medical deductible must be offered in amounts of at least $500.
(2) If the insured employer chooses to accept a medical deductible, the insured employer is liable for the amount of the deductible for the medical benefits paid for each otherwise compensable claim of work injury suffered by an employee.
(3) The insured employer shall contract with the insurer to have the insurer pay the entire cost of the covered medical benefits directly to the provider of medical or related services and then seek reimbursement from the insured employer for the deductible amount. The insurer is entitled to reimbursement only for medical, hospital, and related services allowed under 39-71-704, up to the amount of the deductible.
(4) If an insured employer who has contracted with an insurer for a medical deductible does not pay the medical deductible amount to the insurer through reimbursement, the amount paid by the insurer on the claim may be included as benefits paid in a determination of the insured employer's rate.
(5) If an insured employer chooses to accept a medical deductible, then for purposes of computing rates and rating plans, all medical losses incurred must be reported to the insurer without regard to the application of any medical deductible regardless of whether the employer or the insurer pays the losses."
Section 24. 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 Compsource Montana, 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 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 25. Section 39-71-915, MCA, is amended to read:
"39-71-915. Assessment of 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 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 compsource Montana, with respect to claims arising before July 1, 1990, and each employer insured by plan No. 3, the state fund compsource Montana. 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 employers, plan No. 3, the state fund compsource Montana, 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 April 30 each year, the department shall notify each plan No. 1 employer, plan No. 2 insurer, and plan No. 3, the state fund compsource Montana, of the amount to be assessed for the ensuing fiscal year. The amount to be assessed against the state fund compsource Montana must separately identify the amount attributed to claims arising before July 1, 1990, and the amount attributable to state fund compsource Montana claims arising on or after July 1, 1990. On or before 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 assessment attributable to state fund compsource Montana 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 compsource Montana 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 compsource Montana, 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) Each plan No. 2 insurer providing workers' compensation insurance and plan No. 3, the state fund compsource Montana, shall collect from its policyholders the assessment premium surcharge provided for in subsection (6). When collected, 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.
(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 compsource Montana, 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 Compsource Montana 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 compsource Montana, 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 compsource Montana, 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 26. Section 39-71-1004, MCA, is amended to read:
"39-71-1004. Industrial accident rehabilitation account. (1) The payments provided in 39-71-1003 must be made from the industrial accident rehabilitation account in the state special revenue fund. Payments to the account must be made each year upon an assessment by the department as follows:
(a) by each employer operating under the provisions of plan No. 1 of the Workers' Compensation Act, an amount to be assessed by the department, not exceeding 1% of the compensation paid to the employer's injured employees in Montana for the preceding calendar year;
(b) by each insurer insuring employers under the provisions of plan No. 2 of the Workers' Compensation Act, an amount to be assessed by the department, not exceeding 1% of the compensation paid to injured employees of its insured in Montana during the preceding calendar year;
(c) by the state fund compsource Montana, an amount to be assessed by the department, not exceeding 1% of the compensation paid by the state fund compsource Montana to injured employees in Montana during the preceding calendar year.
(2) Separate accounts of the amounts that were collected and disbursements that were made from the industrial accident rehabilitation account in the state special revenue fund must be kept for each of the plans. If in any fiscal year the amount that was collected from the employers under any plan exceeds the amount of payments for employees of the employers under the plan, the assessment against the employers under the plan for the following year must be reduced.
(3) The payments provided for in this section must be made to the department, which shall credit the sums paid to the industrial accident rehabilitation account in the custody of the state treasurer. Disbursements from the account must be made after approval by the department.
(4) The funds allocated or contributed as provided in this section may not be used for payment of administrative expenses of the department.
(5) The methods and processes used to disburse rehabilitation expense payments to eligible disabled workers are procedural and do not affect the substantive rights of those disabled workers."
Section 27. Section 39-71-2211, MCA, is amended to read:
"39-71-2211. Premium rates for construction industry -- filing required. (1) With respect to each classification of risk in the construction industry under plan No. 2, the advisory organization designated under 33-16-1023 shall file with the commissioner of insurance a method of computing premiums that does not impose a higher insurance premium solely because of an employer's higher rate of wages paid.
(2) The commissioner shall accept a filing under subsection (1) that includes a reasonable method of recognizing differences in rates of pay. This method must use a credit scale with the starting point set at 1.168 times the Montana average weekly wage as reported by the department.