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Businesses file lawsuit to invalidate $30M work-comp funds trans - KXLH.com | Helena, Montana

Businesses file lawsuit to invalidate $30M work-comp funds transfer

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The Montana state work-comp fund's Helena HQ The Montana state work-comp fund's Helena HQ
HELENA -

A group of businesses filed suit Monday to invalidate and block the transfer of nearly $30 million in state workers’ compensation funds meant to help balance the Montana state budget.

The lawsuit, filed in state District Court at Polson, says the law directing the transfer is an unconstitutional taking of work-comp funds, which are solely for the use of the Montana State Fund and its business policyholders.

The law was passed by a November special session of the Legislature, as part of a package of bills to fill a $227 million shortfall in the state budget.

“This is an outright seizure of private assets that would set a precedent and put our workers’ compensation system in jeopardy,” said Wayne Dykstra, a policyholder, former State Fund director and plaintiff in the suit.

The suit comes less than two months after the State Fund withdrew its own lawsuit challenging the transfer. After Gov. Steve Bullock pressured the State Fund board to reverse course on the suit filed Nov. 17, the board voted Nov. 29 to drop its legal action.

In fact, Monday’s lawsuit names the State Fund as a defendant, saying its board “discarded its legal obligations” and breached its fiduciary duty by withdrawing the Nov. 17 suit.

The State Fund is a quasi-governmental entity that writes work-comp coverage for 26,000 businesses in Montana, insuring them against on-the-job injuries.

The lawsuit asks a state District Court to declare the transfer unconstitutional, block any transfer of the money and order the return of any money that’s already been transferred.

The law passed by the Legislature directs the state Board of Investments to impose a “management fee” on State Fund reserves invested by the board, totaling $29.7 million over the next two years.

The lawsuit said that last year, Montana State Fund paid the board about $334,000 in management fees, for investing the State Fund’s assets.

The newly imposed fee, however, has nothing to do with actual management of State Fund’s assets and “is simply a pretext, an improper taking of Montana State Fund assets by the state of Montana,” the suit said.

The suit also names the state Board of Investments as a defendant, saying it should not be transferring the funds.

The suit was filed by nine separate businesses and the National Federation of Independent Business. One of the businesses is Moody’s Market Inc., owned by state Rep. Greg Hertz, R-Polson.

Hertz has been one of the more vocal critics of the transfer, saying it’s an improper use of State Fund money that’s meant to benefit policyholders, and not the state.

About Mike Dennison

MTN Chief Political Reporter Mike Dennison joined MTN News in August 2015 after a 23-year career as a newspaper reporter covering Montana politics and state government. While some may believe that politics are boring, Mike firmly believes that's not the case if you tell the story with pizzazz and let people know why the story is important.
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