The State of Montana is being sued by the Montana State Fund (MSF) Justice Coalition because the MSF alleges a breach of contract and violation of the United States and the Montana Constitutions. There are ten plaintiffs in the suit, including several Montana businesses and the National Federation of Independent Business.

Senate Bill 4 was passed by the state senate last November and it places a three percent management fee on MSF funds. This fee is intended to make up for a $227 million budget shortfall and is expected to generate around $15 million a year over the next two years. MSF manages almost $1.5 billion in assets.

The suit claims that this fee takes away money from policyholders and insurers and uses the funds for things other than what was outlined in the contract. Every policyholder with MSF has a contract and their policy says the funds are only to be used for workers’ compensation costs.

State representative Greg Hertz said that legislature that is passed by either the Montana Legislature or the United States Congress cannot violate an existing contract. The suit asks the court to declare unconstitutional the statue which “authorizes” taking of private assets. Hertz estimates about 26,000 businesses obtain their workers’ compensation insurance through MSF, and many of those businesses are small companies or farmers who may not be able to get insurance through private insurance companies who are hesitant to insure them.

This month the state Board of Investments approved a transfer of $14.7 million from the MSF to the Montana Fire Suppression fund. The suit requests that this transfer, or transfers to other state funds, be prevented.

MSF policyholder and former MSF board member Wayne Dysktra explained that when there had been a surplus in the fund, it was returned to policyholders to reduce premiums.

From the Sidney Herald and the Great Falls Tribune