Montana State Fund Policyholders Sue State Over Special Session

The Montana State Fund Justice Coalition, representing policyholders and injured workers, has filed suit against the State of Montana for breach of contract and violation of the U.S. and Montana Constitution.

State Representative Greg Hertz said the suit revolves around Senate Bill 4 proposed by Montana Governor Steve Bullock during the November 2017 special session of the legislature.

“It had to do with taking $30 million out of Montana State Fund reserves which are to be used for injured workers and to insure employers with Workers Compensation,” Hertz said. “I felt, along with businesspeople and legislators that the bill was unconstitutional, so we filed a lawsuit on Monday in Lake County asking to get a ruling on this.”

Hertz laid the responsibility of the action squarely at the feet of Governor Bullock.

“Unfortunately, the governor is always looking for pots of money that he can grab anywhere,” he said. “In November, we were looking at a $227 deficit in November, but now we’re down to probably only $125 million. Revenues are just starting to increase again. We’re seeing better property tax collections and we’re seeing some good estimated income tax payments here in January, and we’ll get a much more accurate picture after people file their taxes in April.”

Hertz said legislative leaders and the governor’s office were informed of the possible risk of litigation.

“Both on the senate and house floor and the legislative staff warned the governor that this bill has constitutional problems,” he said. “But as a lot of things get done in the legislature, people like to get in and get out and those who voted for it did realize the issue and some of them realized there was a pending lawsuit that would be filed.”

Hertz said another wrinkle to the situation occurred within the State Fund Board.

“The Montana State Fund board actually filed the lawsuit a few days after the special session,” he said. “The governor has the power and appointed two new members to the board then talked to those board members and a couple of others and had them pull the lawsuit. We filed a similar lawsuit on Monday, and we’re confident the lawsuit will succeed.”

The bill was supposed to raise $30 million over the next two years to help bring down the budget deficit.