More drops in WC costs reported but retirement-age, injured workers in Montana lose Supreme Court case; Tennesee sole proprietors get a break in AG ruling on ‘ambiguous’ 2008 law

Employers’ workers comp rates continue to fall in some states (9.6% in North Carolina; 9.7% in Colorado, ), while group-rate discounts are taking a hit in Ohio, and plans to take its system private are near final recommendation in Oklahoma.

But in Montana, elderly, injured workers are getting whacked by a state supreme court ruling that upholds a law allowing insurance companies to continue to stop workers comp payments for permanently disabled workers once they become eligible for Social Security retirement benefits.

In a Nov. 4 report, the Associated Press writes of the Nov. 3 5-2 ruling that the court finds that “workers’ compensation benefits for permanently and totally disabled workers are meant to assist them for their ‘work life,’ [but] not into retirement.”

According to the AP, “Officials with the Montana State Fund, which writes workers’ compensation insurance for about 27,000 businesses, said a decision in favor of the workers could have cost the fund as much as $300 million for current and future claims, leading to a rate increase.”

Laurence Hubbard, president of the state fund, was quoted as being “relieved,” saying the decision brings “closure” to an issue that “had a very large potential cost, not only to current insurance rates, but also for claims that remain open.”

Not everyone was relieved, however.

Jim Hunt, attorney for the three injured plaintiffs,  “said the court order ignores constitutional protections for aging, permanently disabled workers.”

Explaining the majority’s rationale for upholding the state law, Justice William Leaphart wrote: “While this may not always seem fair, it is not unconstitutional. By acting to terminate benefits as it does, [the law] rationally advances the governmental purpose of providing wage-loss benefits that bear a reasonable relationship to actual wages lost.”

The two dissenting justices were Brian Morris and James Nelson; Morris had harsh words for the majority opinion:

” ‘The court … employs a toothless analysis that permits the legislature to advance the perfectly legitimate task of protecting the economic viability of the workers’ compensation system through the illegitimate means of penalizing injured workers who have qualified for (Social Security),’ Morris wrote. He said he could accept some coordination of benefits similar to how Montana law reduces workers’ compensation benefits by one-half of the amount of Social Security disability benefits a person receives.”

Beginning at the end of the year, sole proprietors in Tennessee get a break, particularly those who work for residential clients.

According to The Commercial Appeal, the rule change was instigated in 2008 but was “ambiguous” and has only recently been clarified by the state Attorney General. Basically, the interpretation says that ” ‘a sole proprietor who contracts directly with a homeowner’ to perform work on the home ‘is not required to carry worker’s compensation coverage on himself but must carry workers’ compensation insurance for any subcontractor, employee, or worker who is not otherwise covered by a workers’ compensation policy.’ ”

Apparently, the original intent of the 2008 legislation was to ensure that employees and sub-contractors were covered by workers comp and to prevent a crew working at a home to skirt the law by each declaring themselves as sole propreietors. “But the change was not intended to ‘overburden true sole proprietors who work directly for homeowners by requiring them to carry workers’ compensation coverage on themselves.’ “