MONTANA SCHOOLS GROUP WORKERS' COMPENSATION RISK RETENTION PROGRAM Appellant
DEPARTMENT OF LABOR AND INDUSTRY/ EMPLOYMENT RELATIONS DIVISION Respondent.
Submitted: December 26, 1997
ORDER REGARDING ASSESSMENT RULES
In 1992, Montana Schools Group Workers' Compensation Risk
Retention Program (MSG) challenged the Department of
Labor's assessment of $162, 477.61 against it under
section 39-71-201, MCA (1991), a statute requiring allocation
of costs to the three workers' compensation plans
identified by statute. The assessment was upheld by a hearing
officer, but the WCC ruled that DOL's failure to adopt
rules establishing an assessment formula invalidated the
assessment formula it used. When the matter was remanded to
the DOL, the DOL took two years to adopt rules, but the
rulemaking process did not involve real consideration of
which costs could be directly allocated. MSG returned to the
WCC to challenge the amount of assessment.
Section 39-71-201, MCA (1991), and the Court's prior
opinion required the DOL to engage in real consideration of
which costs could be measured by plan and hence allocated
directly among the three plans. The DOL failed to do this.
The WCC rejects the DOL's argument that the Court should
defer to its interpretation of section 39-71-201, MCA (1991),
where the statute is not ambiguous and the DOL's
interpretation is not consistent with statutory language. The
rules adopted by the DOL are thus invalid. Since this matter
arose, however, the legislature has amended section
39-71-201, MCA (1991), establishing a different method of
cost allocation. Thus, further rule-making regarding the 1991
statutory system would be undertaken solely for this case.
Further, the history of this matter makes return of the
initial decision-making function on this case to the DOL
improper. The WCC orders that a court shall hold an
evidentiary hearing to determine cost allocation under
section 39-71-201, MCA (1991). The WCC recuses itself from
holding that hearing because its operation constitutes a
potential cost item at the hearing and given the history of
the Court's involvement in this litigation.
Administrative Agencies: Rules: Rule Making.
In this case involving insurer's challenge of assessment
levied against it by Department of Labor, WCC held DOL failed
to consider directive of section 39-71-201, MCA (1991), to
consider allocation of direct costs when making rules. The
rules were therefore invalid.
Courts: Recusal. In this case involving
insurer's challenge of assessment levied against it by
the Department of Labor, WCC held DOL failed to consider
directive of section 39-71-201, MCA (1991), to consider
allocation of direct costs when making rules. The rules were
therefore invalid. The WCC had once before sent the matter
back to the DOL for rule-making. Due to the fact that the
Court's own operation was a potential cost at issue, and
given the stance taken by the Court on the matter, the WCC
recused itself from handling an evidentiary hearing ordered
for determination of the method of assessment.
Statutes and Statutory Interpretation: Construing as
a Whole. If possible, a statute must be construed in
its entirety; words and phrases cannot be read in isolation.
Vita-Rich Dairy, Inc. v. Dept. of Business
Regulation, 170 Mont. 341, 348, 553 P.2d 980, 984
(1976); McClanathan v. Smith, 186 Mont. 56, 62, 606
P.2d 507, 510 (1980).
Statutes and Statutory Interpretation: No Meaningless
Provisions. In construing a statute, the Court must
give meaning and effect to all statutory provisions; a
construction which renders a provision meaningless is
disfavored. Groves v. Clark, 277 Mont. 179, 184, 920
P.2d 981, 984 (1986) ("It is well settled that this
Court must give meaning and effect to all statutory
provisions, and that a construction which renders a provision
meaningless is disfavored.")
Statutes and Statutory Interpretation: Plain
Meaning. The rule of deference to administrative
interpretations, see Christenot v. State Department of
Commerce, 272 Mont. 396, 401, 901 P.2d 545 (1995),
applies only where the statute is ambiguous. If a statute is
not ambiguous, it must be applied as written, even if an
agency proffers a contradictory interpretation. If the intent
of the legislature can be determined from the plain meaning
of the words used in the statute, that plain meaning is
controlling and the Court cannot nullify or modify it.
See, Hern Farms, Inc. v. Mutual Benefit Life Ins.
Co., 280 Mont. 436, 441, 930 P.2d 84, 87 (1996).
This case is a continuation of a complaint lodged by the
Montana Schools Group Workers' Compensation Risk
Retention Program (MSG) with respect to the workers'
compensation assessment levied on it in 1992. MSG was
assessed $162, 477.61. It paid the assessment under protest
and on June 16, 1992, initiated a contested case proceeding
before the Department of Labor and Industry (Department).
(DLI Record, June 16, 1992 letter of J. Dennis Moreen.)
MSG's challenge to the assessment was heard by a
Department hearing officer on January 21, 1993. The hearing
officer issued his decision on August 31, 1993, rejecting
MSG then appealed to this Court. The appeal was extensively
briefed and argued, and finally submitted for decision on
April 21, 1995. On June 16, 1995, this Court issued a
decision and judgment holding that the Department's
assessment formula was invalid because it had not been
adopted through rulemaking. (Order on Appeal, June 16, 1995
[1995 Decision].) The decision did not nullify the amount of
the assessment, rather it remanded the matter to the
Department for a rulemaking proceeding, following which the
Department was to compute MSG's assessment in compliance
with the rules it adopted. (Id.) This Court
expressly retained "continuing jurisdiction to resolve
any disputes which may arise in the carrying out of this
judgment." (Id. at 28.)
Neither party appealed the decision of this Court.
Following remand, the Department engaged in a rulemaking
proceeding. Ultimately, it adopted rules incorporating its
past assessment methodology. That process took over two
years, culminating on August 5, 1997, with the adoption of
rules. Under the adopted rules, MSG will be assessed the same
amount for 1992 as it was originally assessed.
On August 27, 1997, MSG sought this Court's further
review, alleging that the Department's rules did not
comply with the Court's decision or section 39-71-201,
In this Court's prior decision, I determined that the
Department must adopt an assessment methodology through
rulemaking. (1995 Decision at 24.) I further determined that
section 39-71-201, MCA (1991), which is the assessment
statute, contemplates "some effort to determine what
costs can be directly accounted for. At a minimum, the
section requires the Department to determine what direct
costs can be reasonably tracked." (Id. at 19.)
An initial stab at rulemaking was initiated on June 10, 1996
with a Notice of Public Hearing on the Proposed Adoption of
Five New Rules. That initial effort was abandoned and a new
proceeding was initiated on February 10, 1997, with the
publication of a Notice of Public Hearing on the Proposed
adoption of Eleven New Rules.
A hearing on the second set of proposed rules was held on
March 21, 1997. The testimony and comments made at the
hearing were brief. The transcript of the entire proceeding
is 15½ pages, of which the first five pages set out
the hearing officer's preliminary comments. Mr. Chuck
Hunter provided background information concerning the
proceedings themselves. Mr. Brian McCullough, who was
responsible for the Department's budgeting and planning,
also testified. In the most general of terms, Mr.
McCullough discussed cost allocation and gave an opinion that
the proposed rules efficiently and fairly allocated the
assessment among the three plans. He did not address what
costs meet or do not meet the definition of direct costs. ...