HomeMy WebLinkAboutResolution 2683 Authorizing participation in MMIA Worker's Compensation: 11-02-87
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RESOLUTION NO. 2683
At the meeting of the City of Bozeman
(name of city or town) a, city or town, organized and existing
under the laws of the state of Montana held on the 2nd day
of November , 1987 , the quorum being present the following
resolution was adopted:---
WHEREAS, Article XI, section 7 of the Montana Constitution
provides that a political subdivision may a) cooperate in the
exercise of any function, power, or responsibility with, B) share
the services of any officer or facilities with, and c) transfer or
delegate any function, power responsibility, or duty of any
officer to one or more other local government units, school
districts, the state or the United states; and
WHEREAS, Title 7, Chapter 11, Part 1, Montana Code Annotated
(M.C.A.), (the Interlocal Cooperation Act) authorizes political
subdivisions to create interlocal agreements to jointly perform
any undertaking that each such political subdivision unit is
authorized by law to perform; and
WHEREAS, Section 2-9-211, MCA authorizes political subdivisions
of the state to procure insurance separately or jointly with
other subdivisions, and to use a deductible or self-insurance
plan, wholly or in part; and
WHEREAS, the City of Bozeman (name) has determined it
to be in its best interest to join with and has joined with
other political sUbdivisions in forming and creating the Montana
Municipal Insurance Authority ("Authority") through the Interlocal
Cooperation Act for the purposes of:
1. Developing effective risk management programs to reduce
the amount and frequency of their losses;
2. Sharing some portion, or all, of their losses;
3. Jointly purchasing insurance through a group program;
4. Jointly purchasing administrative and other services
through a group program when related to any of the
other purposes; and
WHEREAS, the Authority is a joint exercise of powers entity
established pursuant to the Interlocal Cooperation Act in accordance
with the provisions of the Interlocal Cooperation Act for the
purpose of providing group self-insurance and risk retention
programs for the City of Bozeman (name) and other political
subdivisions executing the Interlocal Agreement; and
WHEREAS, the Authority is authorized to exercise necessary
powers to implement the purposes of the Authority as established
by the Interlocal Agreement; and
WHEREAS, the Author i ty and the Ci ty of Bozeman ,
(name) in consultation with independent professional insurance
consultants, have formulated a Workers' Compensation Risk Retention
Program, the terms of which are set forth Workers' Compensation Risk
Retention Program Agreement, a true copy of which is attached to
this Resolution to be administered by the Authority to meet the
workers' compensation insurance needs of City of Bozeman
(name) and which provides for joint and several liability of
City of Bozeman (name) along with all other Members of
the Workers' Compensation Risk Retention Program for the full amount
of any and all known or unknown claims for each Member arising during
the Member's participation in the Program, will provide the
following advantages, among others, to the Members:
(a) mutual agreement by the Members to pay annual premium on
an experience-rated basis calculated actuarially to
spread and moderate the cost of claims loss to each Member,
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(b) relief from the burden of paying premiums to commercial
insurers at levels
reflecting the insurers' high costs
of underwriting,
administration and brokerage
fees
since the Authority's costs will be limited to reasonable
administrative costs,
(c) relief from commercial
insurers' rights
under excess
liability pOlicies to force claim settlements which are
payable primarily in each
case from the Member's self-
insurance funds,
(d) actuarially determined
premium payments calculated
to
provide amounts in each
year necessary to maintain the
workers'
compensation risk retention
program at an
actuarially sound
level and therefore
sufficient to
reserve against the incurred losses of the Member; and
WHEREAS, the Workers' Compensation Risk Retention
Program of
the Montana Municipal Insurance Authority
has sought permission
to self-insure workers' compensation
and occupational disease
liabilities in the state of Montana; and
WHEREAS, the
City of Bozeman
(name) will participate
in self-funding programs as
provided for in the Montana Code
Annotated, Section 39-71-403, and in consideration of the Workers'
Compensation Division of the
State of Montana
approving group
self-insurance; and
WHEREAS, the Workers' Compensation Risk Retention
Program of
the Montana Municipal Insurance Authority is in the public interest
and the specific interest of this city or town, it is recognized
that each individual Member
of the Workers' compensation
Risk
Retention Program of the Montana Municipal Insurance Authority is
jointly and severally liable for any and all obligations incurred
by the Workers' Compensation Risk Retention Program of the Montana
Municipal Insurance Authority as provided for in the Montana Code
Annotated, Section 39-71-2103.
NOW THEREFORE BE IT RESOLVED, and it is hereby resolved that
r.ity of Bozeman
(name)
is or will become a
member
of the Workers' compensation Risk Retention Program of the Montana
Municipal Insurance Authority and
hereby ratifies, confirms
and
approves all provisions of the Workers' compensation Risk Retention
Program and all applications
and agreements filed
on behalf of
the Workers' compensation Risk Retention Program
of the Montana
Municipal Insurance Authority with the state of Montana in connection
with its self-insuring the
programs workers' compensation
and
occupational disease liabilities;
BE IT FURTHER RESOLVED that
City of Bozeman
(name)
hereby authorized its designated representative or representatives
to execute the Workers'
Compensation Risk Retention
Program
Agreement attached as Exhibit A to this Resolution:
BE IT FURTHER RESOLVED that
City of Bozeman
(name) guarantees that the payment of all workers' compensation and
occupational disease liabilities
of the Workers'
Compensation
Risk Retention Program of the Authority and its predecessor, the
Insurance Trust of the Montana League of cities and Towns; and
BE IT FURTHER RESOLVED that
City Manager
(title of official) and Clerk of the Commission
(title
of
official) of City of Bozeman
(name) are severally
authorized to sign the
Workers' Compensation Risk
Retention
Program Agreement of
the Authority and the
State of Montana's
form entitled "Agreement of Assumption and Guarantee of Workers'
Compensation and Occupational
Disease Liabilities on
Behalf of
the Workers' Compensation Risk Retention Program of the
Montana
Municipal Insurance Authority".
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I, Robin L. Sullivan , the undersigned,
clerk of
the City of Bozeman , a city or town, do hereby certify
that the
foregoing is a full, true and correct copy of the resolution duly
passed by the City Commission
at the meeting of said
City Commission
held on the day of November 2 ,
1987 and that said resolution has never been revoked, rescinded
or set aside and is now in full force and effect.
IN WITNESS WHEREOF, I set my hand and the seal
of said
City of Bozeman , a city
or town, this 2nd
day
of November , 1987.
CITY OF BOZEMAN
Name of Public Entity
Si~\ u=i .m~
Judith A. Mathre
Typed Name
Mavor
Title
Attest:
(~eX J~~
Signed
Robin L. Sullivan
Typed Name
Clerk of the Commission
Title
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AGREEMENT OF ASSUMPTION
AND GUARANTEE OF WORKERS'
COMPENSATION AND OCCUPATIONAL DISEASE
LIABILITIES ON BEHALF OF
THE WORKERS' COMPENSATION RISK RETENTION PROGRAM
OF THE MONTANA MUNICIPAL INSURANCE AUTHORITY
BOZEMAN, MONTANA
(city or town)
WHEREAS, the City of Bozeman, Montana
(city or town)
(hereinafter called the Undersigned or Member), has good and
sufficient reason for executing this Agreement; and
WHEREAS, the Workers' Compensation Risk Retention Program of
the Montana Municipal Insurance Authority, is, or has made application
to be, a self-insurer pursuant to Section 39-71-2101 through 39-
71-2109, MCA, inclusive of the Montana Workers' Compensation Act:
NOW, THEREFORE, IT IS UNDERSTOOD AND AGREED:
1. In consideration of the Division of Workers' Compensation
of the State of Montana issuing permission to Self-Insure to the
Workers' Compensation Risk Retention Program of the Montana
Municipal Insurance Authority, the Undersigned agrees to assume
and guarantee to pay, or otherwise discharge promptly, any and
all the liabilities and obligations which the Workers' Compensation
Risk Retention Program of the Montana Municipal Insurance Authority
may incur as a self-insurer of its Montana workers' compensation
and occupational disease liabilities.
2. This Agreement shall cover and extend to all potential
liability for workers' compensation and occupational disease
benefits as required by law of the Workers' Compensation Risk
Retention Program of the Montana Municipal Insurance Authority as
a self-insurer of its Montana workers' compensation and occupational
disease liabilities arising on or after the effective date of this
Member's participation in the Workers' Compensation Risk Retention
Program of the Montana Municipal Insurance Authority.
3. This agreements represents a direct financial guarantee
to the employees of all Members of the Workers' Compensation
Risk Retention Program of the Montana Municipal Insurance Authority
and dependents of deceased employees of all Members of the Workers'
Compensation Risk Retention Program of the Montana Municipal
Insurance Authority for the full amount of any and all liabilities
or obligations on amounts not limited to this Member's "pro-rata"
share. The Member understand and agrees that it shall be jointly
and severally liable with the other Members for the full amount
of any and all known and unknown claims of the Workers' Compensation
Risk Retention Program of the Montana Municipal Insurance Authority
arising during the membership of the Member with the Workers'
Compensation Risk Retention Program of the Montana Municipal
Insurance Authority.
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4. This Agreement shall not cover or extend to any workers'
compensation or occupational disease liabilities of the Workers'
Compensation Risk Retention Program of the Montana Municipal
Insurance Authority which are expressly insured by a carrier duly
authorized to write Montana workers' compensation and occupational
disease insurance. Provided that the liabilities assumed by an
excess insurance carrier shall also remain the primary liabilities
of the Workers' Compensation Risk Retention Program of the Montana
Municipal Insurance Authority and its Members.
5. This Agreement shall remain in full force and effect
unless terminated in the manner hereinafter provided.
6. This Agreement may be terminated at any time by the
Undersigned upon giving thirty (30) days written notice by registered
or certified mail to the Insurance Compliance Bureau of the
Division of Workers' Compensation, 5 South Last Chance Gulch,
Helena, Montana 59601. In this event, the liability of the
Undersigned, shall, at the expiration of thirty (30) days upon
receipt of said notice by said Division cease and terminate,
except as to such liability of the Workers' Compensation Risk
Retention Program of the Montana Municipal Insurance Authority
on account of any injury or disease suffered by any of its employees
prior to the expiration of said thirty (30) days; it being expressly
understood and agreed that the Undersigned shall be liable for
defaul t of the Workers' Compensation Risk Retention Program of
the Montana Municipal Insurance Authority in fully discharging
all existing and potential liability of the Workers' Compensation
Risk Retention Program of the Montana Municipal Insurance Authority
as a self-insurer as of the date of said termination.
7. In the event the Workers' Compensation Risk Retention
Program of the Montana Municipal Insurance Authority shall fail
to pay compensation, as compensation is defined in the Montana
Workers' Compensation and Occupational Disease Acts, when due,
the Undersigned will pay the same, and the payment may be enforced
against the Undersigned to the same extent as if payment was its
sole liability. The Member understand and agrees that it shall
be jointly and severally liable with the other Members for the
full amounts of any and all known and unknown claims of the
Workers' Compensation Risk Retention Program of the Montana
Municipal Insurance Authority arising during the membership of
the Member with the Workers' Compensation Risk Retention Program
of the Montana Municipal Insurance Authority.
8. This Agreement is enforceable by the Workers' Compensation
Risk Retention Program of the Montana Municipal Insurance Authority,
its Members, the employees of the Members, and/or the Division of
Workers' Compensation of the State of Montana. The undersigned is
held and firmly bound for the payment of all legal fees and costs
incurred by the State of Montana in any actions taken to enforce
this Agreement.
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9. The Undersigned
waives any notices as
to the current
condition of the Workers' Compensation Risk Retention Program of
the Montana Municipal Insurance
Authority, insurance plan, any
changes therein, and the
manner of conducting or
closing said
guaranteed plan or otherwise.
The Undersigned also
waives, in
the event of non-compliance
by the Workers'
Compensation Risk
Retention Program of the Montana Municipal
Insurance Authority,
any demand or notice in
respect thereof and any
requirement of
legal and equitable proceedings
or otherwise on the part of the
Division against the Workers' Compensation Risk Retention Program
of the Montana Municipal Insurance
Authority as a
condition
precedent to enforcing the obligations of the Undersigned hereunder.
10. This Agreement shall
be binding upon
the Undersigned,
its successors and assigns.
SUBSCRIBED AND SEALED at
Bozeman. Montana
this 2nd day of
November
, 1987.
CITY OF BOZEMAN. MONTANA
Name of Public
Entity
ATTEST:
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City Manager
~ J J:fL:-
Title
Signature
Clerk of the Commission
Title
[ SEAL]
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WORKERS' COMPENSATION RISK RETENTION PROGRAM
AGREEMENT
between the
MONTANA MUNICIPAL INSURANCE AUTHORITY
as Authority
and
CITY ~1IQ') OF BOZEHAN MONTANA
as Member
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WORKERS' COMPENSATION RISK RETENTION PROGRAM AGREEMENT
THIS WORKERS' COMPENSATION RISK RETENTION PROGRAM AGREEMENT,
by and among the MONTANA MUNICIPAL
INSURANCE AUTHORITY, a
joint
exercise of powers agency duly
organized and existing under the
laws of the State of
Montana, (the WAuthorityW) ,
and the CITY
(TOWN) OF BOZEMAN
, a municipal entity and
political
subdivision duly organized
and existing under
the Constitution
and laws of said State, (the "MemberW):
WIT N E SSE T H:
WHEREAS, Article XI,
Section 7 of
the Montana Constitution
provides that a political
subdivision may a)
cooperate in the
exercise of any function, power,
or responsibility with, B)
share
the services of any officer or facilities with, and c)
trans fer or
delegate any function, power
responsibility, or
duty of any
officer to one or
more other local
government units, school
districts, the state or the United States: and
WHEREAS, Title 7, Chapter 11,
Part 1, Montana Code Annotated
(M.C.A.), (the Interlocal Cooperation
Act) authorizes
political
sUbdivisions to create
interlocal agreements to
jointly perform
any undertaking that each
such political sUbdivision
unit is
authorized by law to perform: and
WHEREAS, Section 2-9-211, MCA authorizes political subdivisions
of the state to procure
insurance separately or
jointly with
other subdivisions, and to
use a
deductible or self-insurance
plan, wholly or in part: and
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WHEREAS, the Member
has determined it to
be in its best
interest to join with other political subdivisions in forming and
creating the Authority through the Interlocal cooperation Act for
the purposes of:
1- Developing effective risk management programs to reduce
the amount and frequency of their losses;
2. Sharing some portion, or
all, of their losses;
3 . Jointly purchasing insurance through a group program;
4. Jointly purchasing
administrative and other
services
through a group program when related to any of the other purposes;
and
WHEREAS, the Authority is a joint exercise
of powers entity
established pursuant to an Interlocal Cooperation Act in accordance
with the provisions of
the Interlocal Cooperation Act
for the
purpose of providing group
self-insurance and risk
retention
programs for the Member and other political subdivisions executing
the Interlocal Agreement; and
WHEREAS, the Authority
is authorized to exercise
necessary
powers to implement the purposes of the Authority as established
by the Interlocal Agreement; and
WHEREAS, the Authority and the Member,
in consultation with
independent professional insurance consultants, have formulated a
Workers' Compensation . Risk Retention
Program, the terms
and
conditions of. which are
set forth in this
Agreement, to be
administered by the Authority to meet
the workers' compensation
insurance needs of the
Member, and which provides for joint and
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several liability of the Member along with all other Members for
the full amount of any
and all known or unknown
claims of each
Member arising during the Member's participation in the Program,
will provide the following advantages, among others, to the Member:
(a) mutual agreement by the Members
to pay annual premium
on an experience-rated basis calculated actuarially to spread and
moderate the cost of claims loss to each Member,
(b) relief from the burden of paying premiums to commercial
insurers at levels reflecting
the insurers' high
costs of
underwriting, administration and brokerage fees since the Authority's
costs will be limited to reasonable administrative costs,
( c) relief from commerc
ial insurers' rights
under excess
liability policies to force
claim settlements which are payable
primarily in each case from the Member's self-insurance funds,
( d) actuarially determined
premium payments calculated
to
provide amounts in each year necessary
to maintain the workers'
compensation risk retention program at an actuarially sound level
and therefore sufficient to
reserve against the incurred
losses
of the Member; and
WHEREAS, the governing body
of the Member
has authorized
the execution of this Agreement
for the purpose
of providing
Coverage for the Member for the benefit of the Member's residents
and taxpayers and for the health and safety of its employees; and
WHEREAS, it is a
matter for the governing
board of the
Member to determine the amount
of premiums which
the Member
shall pay for proper workers' compensation insurance coverage; and
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WHEREAS, the Member has
heretofore determined and
does
hereby confirm that the premiums
to be required
hereunder are
reasonable and advantageous and
to the public
benefit of the
citizens of such Member;
NOW THEREFORE, in consideration of the above recitals and of
the mutual covenants hereinafter contained and for other good and
valuable consideration, the parties hereto agree as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 1.1 ReDresentations, Covenants
and Warranties of
the Member. The Member
represents, covenants and
warrants to
the Authority as follows:
(a) Due Orqanization and
Existence. Such
Member is a
municipal entity and political
subdivision of
the State, duly
organized and existing under
the Constitution and
laws of the
State.
(b) Authorization; Enforceability.
The Constitution and
laws of the State authorize the Member to enter into this Agreement
and the Interlocal Agreement and
to enter into the
transactions
contemplated by and to carry out its obligations under all of the
aforesaid agreements, and the
Member has duly
authorized and
executed all of the aforesaid agreements. This Agreement and the
Interlocal Agreement constitute
the legal, valid,
binding and
enforceable obligations of such Member
in accordance with their
respective terms, except to
the extent limited by
applicable
bankruptcy, insolvency, reorganization,
moratorium or similar
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laws or equitable principles affecting
the rights of
creditors
generally and except as to the limitations on remedies against public
agencies generally.
(c) No Violations. Neither
the execution and delivery
of
this Agreement or the Interlocal Agreement,
nor the fulfillment
of or compliance with the terms and conditions hereof or thereof,
nor the consummation of the transactions
contemplated hereby or
thereby, conflicts with or
results in a breach
of the terms,
conditions or provisions of
any restriction or any agreement or
instrument to which such Member
is now a party or by which
the
Member is bound, or constitutes a default under any of the foregoing.
Section 1.2 ReDresentations.
Covenants and Warranties of
the Authority. The Authority represents, covenants and warrants
to each Member as follows:
(a) Recitals Correct. The
recitals to this Agreement
are
true and correct.
(b) Due Orqanization and
Existence; Enforceability. The
Authority is a joint exercise of powers authority duly organized,
existing and in good standing under and by virtue of the laws of
the State of Montana; has the power to enter into this Agreement;
possesses by virtue of the
Interlocal Agreement full
power to
provide a risk retention program to parties signator to the Interlocal
Agreement; and has duly authorized the execution and delivery of
all of the aforesaid agreements. This Agreement and the
Interlocal
Agreement constitute the legal,
valid, binding and
enforceable
obligations of the Authority in accordance with their terms, except
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to the extent limited by
applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles
affecting the rights of creditors generally and except as to the
limitations on remedies against public agencies generally.
(c) No Encumbrances. The
Authority will not pledge
the
Premium or its rights under
this Agreement except as
provided
under the terms of this Agreement.
(d) EauitableExercise of ResDonsibilities. The Authority
will exercise all rights and responsibilities hereunder reasonably
and equitably for the benefit
of all Members without preference
or discrimination among Members.
(e) No violations. Neither the
execution and delivery
of
this Agreement, nor the fulfillment
of or compliance
with the
terms and conditions hereof or thereby, conflicts with or results
in a breach of the terms, conditions or provisions of the Bylaws
of the Authority or any restriction or any agreement or instrument
to which the Authority is now a party or by which the Authority is
bound, or constitutes a default under any of the foregoing.
ARTICLE II
COVERAGE, PAYMENT OF CLAIMS AND AWARDS,
PURCHASE OF COMMERCIAL
INSURANCE
2.1 Coveraqe. The Authority through the Workers' Compensation
Risk Retention Program hereby provides the Coverage to the Member,
and the Member hereby agrees
to accept the Coverage,
upon the
terms and conditions set forth in this Agreement and the Memorandum
attached hereto as Exhibit A.
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2.2 PaYment of Claims and Awards.
A. All claims will
be investigated by
the designated
claims adjusting service company. The service company is authorized
to settle claims up to
a designated amount established
by the
Board of Directors without advance
notice or approval
of the
Board. In such cases, the service company will
file a subsequent
report to the General Manager and Board of Directors. On claims
in excess of this amount, the
service company shall present the
claim to the Board of Directors for settlement authorization.
In
those cases where timely action is necessary prior to a scheduled
meeting of the Board of Directors, a five-member committee designated
by the Board of Directors is authorized
to act on behalf of the
Board of Directors to authorize settlements or take other appropriate
action. Settled claims made pursuant to the Workers' Compensation
and Occupational Disease Acts of Montana
shall be paid from the
Workers' Compensation Risk Retention Program assets.
B. With respect to
all claims that are
not settled, the
Authority shall pay from the Workers' Compensation Risk Retention
Program assets all lawful awards
by the Workers'
Compensation
Court, or other court of competent
jurisdiction if the award
is
appealed, against any Member predicated on a claim by an employee
of any Member, arising out of and in the course of such claimant's
employment.
C. Any lawful award
entered against a Member
shall be a
liability of the Workers' Compensation Risk Retention Program of
the Authority and a joint and several liability of each Member as
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provided in this Agreement.
D. If the Workers'
Compensation Risk Retention
Program
assets are insufficient to
pay the award, the
Authority shall
individually assess each Member
to the extent
necessary to pay
the award, and the assessment charged each Member shall be determined
on a proportionate basis in
accordance with each
Member's net
contribution to the Workers' Compensation Risk Retention Program
of the Authority. An assessment shall be a contractual obligation
of the Member. Provided that nothing contained in this subparagraph
shall be construed as a
limitation upon the
joint and several
liability of each Member.
E. The liability of the Workers' Compensation Risk Retention
Program of the Authority is specifically limited to such obligations
as are imposed by the Workers' Compensation Act and the Occupational
Disease Act of the state of Montana.
2.3 Subroqation. Each Member
agrees that in the
event of
the payment of any loss by the Workers' Compensation Risk Retention
Program of the Authority
under this contract,
the Workers'
Compensation Risk Retention
Program of the Authority
shall be
subrogated to the extent of such payment to all the rights of the
Member against any person or other entity legally responsible for
damages for said loss, and in such event the Member hereby agrees
to render all reasonable assistance,
other than
pecuniary, to
effect recovery.
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2.4 Purchase of Commercial
Insurance or Reinsurance. The
Authority may provide a
portion of Coverage to
the Members by
purchase of specific and/or aggregate excess insurance with such
self-insurance retentions as at the time are in the best interests
of the Workers' Compensation Risk Retention Program of the Authority
and the Members.
ARTICLE III
NEW MEMBER APPLICATIONS, PREMIUM CONTRIBUTIONS
PAYMENT, DELINQUENT PREMIUM PAYMENTS,
COMMINGLING OF
FUNDS PROHIBITED
3.1 New Member A~p1ications. Applications
for memberships
in the Workers' Compensation Risk Retention Program are submitted
on an approved form to
the Insurance Coordinator or
General
Manager. The Board of Directors will consider and act upon each
application. Concurrence by a
majority of the
Board and the
Authority's excess insurance carrier is required
in order for an
applicant to be admitted as a Member.
3.2 Premium Contributions. For members who join the Workers'
Compensation Risk Retention Program
during calendar year
1986,
the premium will be 95%
of the premium which
would have been
payable to the Montana State Compensation Insurance Fund (SCIF) .
These premiums shall be computed by multiplying the SCIF rates in
effect on January 1, 1986,
less 5%, times the estimated payroll
for the appropriate rating
classifications. The premium
so
computed will then be modified by the city or town's experience
modification in effect at the time of entry.
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For the second program year, and each year thereafter,
rates
for the appropriate SCIF classification
categories shall be
adopted by the Board of
Directors on a fiscal
year basis to be
effective July 1, provided that the Board of Directors
may make
such mid-term adjustments to rates
as is appropriate and
in the
best interests of the Workers' Compensation Risk Retention Program
of the Authority and the Members to accomplish the goals of the
Workers' Compensation Risk Retention
Program in accordance with
the Workers' Compensation and Occupational Disease Acts of Montana.
The Board of Directors shall
set such rates utilizing
commonly
accepted actuarial principles developed by a qualified actuary or
actuaries. These rates shall
then be applied to
each Member's
estimated payroll by rating
classification and further adjusted
by an experience rating modification.
In addition to premium charges to the Members, the Workers'
Compensation Risk Retention Program of the Authority will realize
investment income which shall be treated as income to the Workers'
Compensation Risk Retention Program of the Authority. In establishing
the premiums to be charged
the Members, the actuary
will be
instructed to give appropriate credit for anticipated
investment
income.
3.3 Administrative Costs As Part of Premium.
The premiums
charged members will be sufficient
to secure and
pay for the
following services:
a. General administrative
b. Loss prevention
c. Claims adjusting and legal defense
d. Investment
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e. Legal
f. Accounting
g. Actuarial
h. Risk management consulting
i. Brokerage
3.4 Premium PaYments and Special Assessments.
Upon joining
or renewal of a Member whose membership in the Workers' Compensation
Risk Retention Program of
the Authority has
lapsed, the new or
renewing Member shall pay
one-fourth of the
projected annual
premium in advance upon
joining or renewal;
the balance of the
annual premium shall be
due in three successive
installments of
25%, each payable quarterly
or as the
Board of Directors may
otherwise direct.
The obligation of
any Member to pay
Premium under this
Agreement will terminate upon the earliest of the following events:
(a) the payment by
such Member of all Premium required to
be paid as the same shall become due and payable.
(b) withdrawal of
such Member from the
Coverage pursuant
to Section 4.2 hereof;
(c) expulsion of
such Member from Coverage
pursuant to
Section 4.3 hereof.
Provided however, that no such expulsion or withdrawal shall
extinguish (i) the obligations of such Member to pay Premium with
respect to Coverage Periods of such Member prior to such withdrawal
or expulsion, ( ii) the obligations of such Member to pay Special
Assessments as provided in
Section 3.10
with hereof respect to
Coverage Periods of each Member, whether such Special Assessments
are imposed either prior
or subsequent to
such withdrawal or
11
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expulsion, or (iii) the
right to receive the
benefits of such
Coverage with respect to coverage Periods of such Member prior to
such withdrawal or expulsion.
Section 3.5 Budqet and Appropriation
of premium
PaYments.
The Member covenants to take such action as may be necessary to
include Premium payments payable hereunder in its annual budget.
The covenants on the part of the Member herein contained shall be
deemed to be and shall be construed to be duties
imposed by law
and it shall be the duty of each and every public official of the
Member to take such action and do such things as are required by
law in the performance of the official
duty of such official to
enable each Member to take such action and do such things as are
required by law in the performance of the
official duty of such
officials to enable each
Member to carry out
and perform the
covenants and agreements in
this Agreement agreed to be carried
out and performed by such Member.
3.6 Obliqation to Pay
Premiums. (a) No
Withholdinq.
Subject to the provisions of
Article V hereof,
notwithstanding
any dispute between the Workers'
Compensation Risk Retention
Program of the Authority and a Member, including a dispute as to
the scope or nature of Coverage provided by the Workers' Compensation
Risk Retention Program of
the Authority or the
availability of
funds to pay Claims made against any Member, or any other reason
(other than the termination of
the obligation to
pay Premium
pursuant to Section 3.3 hereof), the Member shall appropriate
to
pay and make all Premium payments when due and shall not withhold
12
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any Premium payments pending the final resolution of such dispute.
(b) Rate on Overdue Payments.
In the event a Member fails
to make any of the payments required in this Article, the payment
in default shall continue as
an obligation of the Member
until
the amount in default shall have been fully paid, and in addition
to any remedies available with
respect to such
default, the
Member agrees to pay the same with interest thereon, at the rate
of 1% per month until paid, from the date such amount was overdue.
(c) Abatement. There shall
be no abatement
of Premium
payments except as provided in Article V hereof.
3.7 Continqencv Reserve.
A Contingency Reserve
will be
established in order to
assure that losses
can be paid for any
year in which premium income is
inadequate to cover all losses.
This Contingency Reserve will be funded
from premiums after all
expenses have been paid and reserves established for incurred and
incurred-but-not-reported claims.
When, in the opinion
of the Board, the
total Contingency
Reserve is large enough that
it need not be
increased further,
neither profits nor investment income on the funds will be added
to this reserve.
3.8 Individual Member Accounts.
An
Individual Member
Account in the name of
each Member will be
established. Such
Member Account will be
used to identify the
current financial
condition of each Members' participation in the Workers' Compensation
Risk Retention Program of the Authority. The Member Account will
contain the premium contribution, investment income,
expenses and
13
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':
charges for claims. The Individual Member Accounts will
not be
used to segregate funds but, rather,
all funds including premium
contributions, investment income, profits, payments to the Contingency
Reserve and all other assets shall be co-mingled into a single Fund.
The Individual Member Accounts are for the purpose of determining
each Member's share of funds which:
a) may be credited against future premium contributions or
payable as dividends;
b) shall be payable to each Member who withdraws from the
Workers' Compensation Risk
Retention Program of
the
Authority or whose membership is terminated;
c) may be charged against each Member to create or restore
the Contingency Reserve;
d) may be payable to
each Member on termination
of the
Workers' Compensation Risk
Retention Program of
the
Authority.
The Individual Member Accounts will represent each Member's share
of premiums less claims and expenses which have been made against
the Account.
3.9 Annual Computation. within 120 days of the end of each
fiscal year, the financial operations of the Workers' Compensation
Risk Retention Program of the Authority for the preceding fiscal
year shall be computed to
determine any profit or loss
for the
year in order to adjust the
Individual Member Accounts and
the
Contingency Reserve, as well
as for those purposes
usual to an
audit required by the Board of Directors.
14
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In the event the income
of the Workers' Compensation
Risk
Retention Program for the fiscal
year exceeds the expenses, the
difference (profit) shall be apportioned as follows:
a) One-half (50%) shall be credited to the Contingency Reserve.
b) One-fourth (25% ) shall be credited on a pro rata basis
to all Members.
c) One-fourth (25%) shall
be credited to the
Individual
Member Accounts with favorable loss experience.
The term pro rata as used in (b)
above means each Member's
proportionate contribution of income in relationship to the total
income of the Workers' Compensation Risk Retention Program of the
Authority without regard to the expenses of the Workers' Compensation
Risk Retention Program of the Authority. Income shall include all
revenues. However, in the allocation of investment income
among
the Members, the ratio shall consist of the relationship between
each Member's workers' compensation premium contribution for the
current year plus the average balance in each Member's Individual
Account during the year in relationship to the total of all
such
premium contributions and the total average Member Account balances.
Provided, however, that during
the first three full
fiscal
years, commencing with the fiscal year 1986-1987, the
difference
(profit) identified herein shall be allocated in its entirety to
the Contingency Reserve.
15
3.10 Assessments In The
Event of Losses
and Expenses In
Excess of the Workers' Compensation Risk Retention Proqram of the
Authority Funds. In the
event the Workers' Compensation
Risk
Retention Program expenses for the fiscal year exceed premium and
interest income, the difference shall be charged to the Contingency
Reserve, if funds are available. If funds are not available,
the
Board of Directors, after receiving
the advice of
a qualified
actuary, may impose a Special
Assessment. The total
amount of
such Special Assessment shall
be determined after
review by a
qualified actuary.
Should funds be
sUbsequently obtained by
the Workers'
Compensation Risk Retention Program of the Authority from borrowing
or from any other appropriate
source for the next
fiscal year,
then such funds shall be used to pay Claims. In the event of such
borrowing of funds by
the Workers' Compensation
Risk Retention
Program of the Authority, the Workers' Compensation Risk Retention
Program of the Authority shall
advise the Workers' Compensation
Division of the Montana Department of Labor and Industry.
Any sums expended by the Member in the interim to pay Claims
covered by the Workers'
Compensation Risk Retention
Program
shall be reimbursed, if they
would otherwise be
covered by the
Workers' Compensation Risk Retention Program.
Provided that nothing in this Section 3.10 shall be construed
to limit the joint and several liability of individual members.
16
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3.11 Comminqlinq of Funds Prohibited. Premium contributions,
investment income, special assessments,
profits or other income
paid to or derived from the Workers' Compensation Risk Retention
Program of the Authority shall not be commingled
with the funds
of any other risk retention program which is or may be sponsored,
operated, or controlled by the Authority.
ARTICLE IV
ADMISSION TO, WITHDRAWAL FROM AND EXPULSION FROM
THE WORKERS' COMPENSATION RISK RETENTION PROGRAM
4.1 Conditions for providinq Coverage to a New Member.
The
Authority may provide Coverage to
a new Member of
the Workers'
Compensation Risk Retention Program
which is not currently
a
Member under this Agreement, subject to the following conditions:
( a) such new Member shall be a municipal entity and political
subdivision of the state;
(b) such new Member shall
be signatory to
the Interlocal
Agreement and member of the Authority;
(c) such new Member shall have submitted a completed application
for admission to the Workers' Compensation Risk Retention Program
of the Authority as may be required by the Board of Directors;
4.2 Riqhts Ueon withdrawal From or Termination of Membershie.
Any Member may withdraw from
the Workers' Compensation
Risk
Retention Program of the Authority by giving at least sixty (60)
days notice in writing to the Board of Directors of its desire to
withdraw, provided the Member has met the three (3)
year minimum
participation requirement.
17
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In the event a Member withdraws from the Workers' Compensation
Risk Retention Program of
the Authority in
good standing, the
Member's account will be
calculated as
of that date and
10% of
the Individual Member's Account
will be paid
to the Member
at
that time. At the
end of each of
the next three years,
the
Member's Account will be recomputed based upon changes in incurred
losses and investment income during
the year and
at the end of
the first year, one-quarter (25% )
of the adjusted balance in the
Individual Member's Account
will be paid
to the Member plus
interest on that amount
for one year
and computed at the
then
rate of one-year U.S. Treasury Notes.
At the end of the second
year, the Member shall
be paid one-half (50%)
of the remaining
balance in the Individual Member's Account plus
interest on that
amount for two years and computed for each of those two years at
the rate of one-year U.s. Treasury Notes at the end of each such
year. At the end of the third year, the Member shall be paid the
remaining adjusted balance
in the Individual Member's
Account
plus interest on that
balance for three years computed
for each
of those three years at the rate of one-year U.s. Treasury Notes
at the end of such
year. During the
three-year period, the
remaining balance in
the withdrawn members'
account shall be
subject to the risk of being needed to participate in funding or
paying liabilities of the
Workers' Compensation Risk
Retention
Program of the Authority.
18
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.
:
.
Any Member which
withdraws from the Workers'
Compensation
Risk Retention Program of
the Authority or whose
membership in
the Workers' Compensation Risk Retention Program of the Authority
is terminated and is not in good
standing shall not be eligible
to receive any return
from the surplus funds
of the Workers'
Compensation Risk Retention
Program of the
Authority until the
applicable statutes of
limitation shall expire
on all open or
potential claims for each
fiscal year in which the Member was a
participant in the Workers'
Compensation Risk Retention Program
of the Authority. Open
claims for this purpose
shall mean any
situation where notice of injury was given to the Member, whether
or not the Member shall have reported the injury.
Upon the expiration
of the statute of
limitations on all
open or potential claims for the fiscal year involved, the withdrawing
or terminated Member shall then be entitled to receive distributions
from its Individual Member's
Account according to
the schedule
provided above.
Unearned premium shall
be returned to
the withdrawing or
terminated Member on a short-rate basis.
In no event shall withdrawal from Coverage or termination of
a Member's participation in the Workers' Compensation Risk Retention
Program of the Authority release a Member from its obligation to
pay damages resulting from default under the terms of this Agreement,
nor shall such withdrawal
or termination release
a Member from
its obligation to pay Premiums or Special Assessments as provided
in Section 3.4 hereof.
Notice to withdraw
shall be revocable
19
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:
only at the option of the Authority.
4.3 Membership Review and Termination Procedure.
When, in
the determination of the General
Manager, a Member
has engaged
in conduct, other than non-payment
of premiums, that
warrants
review of that Member's membership
status, the General
Manager
shall file a written report with the
Board of Directors.
Said
report shall contain a summary of the facts and the recommendations
regarding continued membership status.
A copy of the report shall
be served by mail to the Member
along with a Notice of Meeting of the Board of Directors.
Said
Notice of Meeting shall include the place,
date and time of the
meeting. At its discretion,
the Board of Directors
may submit
written questions to the
Member, written answers to
which must
be mailed to the General Manager no later than seven (7)
calendar
days prior to the date of the hearing. A Member objecting to the
report and recommendations of the General Manager shall submit a
written statement to the Board of Directors setting out in detail
the basis for the objection and any other information the member
desires to submit. Said statement must be mailed to the General
Manager no later than seven (7) calendar days prior to the meeting.
The Board of Directors
shall meet at
the time and place
designated in the Notice of Meeting. The member shall be entitled
to be represented at the
hearing and present an oral
statement
and other information.
20
~"r
"..,............~............................-........
~..~_..".~~", ,..._.~_~..~_.._..~...._'M'.",_,"~...
:
.
FOllowing the hearing, the Board of Directors shall affirm,
modify, or reject the recommendation of the General Manager.
The
Board of Directors shall have the authority to place a Member on
probation, the terms and duration of which it shall determine.
A
copy of the Board of Directors' decision shall be served by mail
on the Member.
In the event that the Board of Directors votes to terminate
membership, such termination
shall not take
place for at least
thirty (30) days after
the Member has received
notice of the
termination. The duration of the notice period shall be determined
by the Board.
When a Member has
failed to pay its premium when due, said
Member will be terminated
from the Authority without a meeting.
Said termination shall be effective at 12:01 a.m. on the 30th day
after notice of termination has been received by the Member.
The action of the
Board of Directors
shall be final and
binding.
In no event shall
expulsion of Coverage
release a Member
from its obligation to
pay Premiums with respect
to Coverage
Periods.
4.4 Obliqation to
Notify Workers' Compensation
Division
upon withdrawal or Termination. Upon withdrawal
or termination
of a Member, the Authority and the Member shall promptly notify
the Workers' Compensation Division
of the Montana Department
of
Labor and Industry.
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ARTICLE V
ABATEMENT
5.1 Abatement of Participation
Premium in
the Event of
Failure to Pay Settlements.
In the event
that the Workers'
Compensation Risk Retention Program of the Authority fails to pay
a Settlement of a Member pursuant to the terms of this Agreement,
other than by reason of
good faith dispute as
to the scope of
Coverage, the obligation of the Member to pay any Premium hereunder
shall be abated in full.
The Obligation of
a Member to pay
Premium shall otherwise be discharged only in the event of withdrawal
of such Member from Coverage pursuant to Section
4.2 hereof,
or
expulsion of such Member pursuant to section 4.3 hereof.
ARTICLE VI
JOINT AND SEVERAL LIABILITY
6.1 The Member agrees
to assume and guarantee
to pay, or
otherwise discharge promptly, any
and all the
liabilities and
obligations which the Workers' Compensation Risk Retention Program
of the Authority may incur pursuant to the terms of this Agreement
and the Workers' Compensation and Occupational Disease Acts of the
State of Montana.
6.2 This Agreement represents a direct financial
guarantee
to the employees of all Members of the Workers' Compensation Risk
Retention Program of the Authority and dependents of the deceased
employees of all Members of the Workers' Compensation Risk Retention
Program of the Authority for
the full amount
of any and all
liabilities or obligations on amounts not limited to this Member's
22
~
.
ARTICLE VII
INSPECTION OF FACILITIES AND EQUIPMENT;
SAFETY CONSIDERATIONS AND NOTIFICATION OF ACCIDENT
7.1 Inspection of Fa
cilities. Equipment and Records.
The
Board of Directors and any of their agents, employees or attorneys
shall be permitted at all
reasonable times to
inspect the work
places, plants, works, machinery
and appliances covered by
this
Agreement and shall be
permitted at all reasonable
times to
examine Members' payroll, personnel, injury and
accident records,
and Members' books, vouchers,
contracts, documents and records of
any and every kind which
show or tend to
show or verify the
premium which is payable under the terms hereof. This
right to
inspect or examine shall continue after termination of membership
with respect to all claims or matters arising during or relating
to membership status.
7.2 Safety Considerations.
Each Member must
follow the
safety recommendations of the Board of Directors and the service
company or any other agent of the Authority
in order to provide
safe and sanitary working conditions.
7.3 Notification of Accident and Reimbursement to Authoritv
for Penalty. Each Member must
give immediate notification
to
the claims adjuster on the prescribed
forms of any accident and
reported claim for any
benefits whatsoever payable
under the
Workers' Compensation and Occupational Disease Acts.
24
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.. m _ _..... _____._.__
_ ._.__... .nn_. .-- - -. ------ . --.---..------------.-..
.
:
.
Any penalty levied for failure to pay compensation benefits,
medical expenses or travel allowances
resulting from a Member's
failure to give timely notice to the claims adjuster of an accident
or claim for any benefits as heretofore described may, by a vote
of a majority of the Board of Directors, be assessed against the
Member.
ARTICLE VIII
PROHIBITION OF UNAUTHORIZED PAYMENTS;
PENALTY FOR EMPLOYMENT WITHOUT WORKERS' COMPENSATION COVERAGE
8.1 Prohibition of Unauthorized
Payments By Members. No
Member shall make voluntary payment of weekly benefits or medical
expenses or enter into any
agreement with any employee
or his
agent committing payment or admitting liability for any workers'
compensation benefits as provided
in the Workers' Compensation
and Occupational Disease Acts without
the prior approval of the
Board of Directors or its designated service company. Any Member
making such voluntary payments or entering into such an agreement
may, by a vote of a majority of the Board of Directors, be held
individually and separately liable
for reimbursement to the
Workers' Compensation Risk Retention Program of the Authority for
all benefits and medical expenses paid or committed.
8.2 Penalty for EmDlovment
of Persons without Workers'
Compensation Coveraqe. No Member shall contract with any person,
including contractors or subcontractors,
who has not produced
evidence of current workers' compensation insurance according
to
the provisions of the
Workers' Compensation and Occupational
25
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,
Disease Acts. Any Member who contracts with any person who does
not have current workers' compensation insurance will be charged
an additional non-discounted premium based upon
the full amount
of the contract.
ARTICLE IX
9.1 Aqreements with Service Providers. The Board of
Directors
have approved agreements with various service companies to provide
the following services:
A) Assist the Authority in securing specific and aggregate
excess insurance.
B) Inspect the
work places, operations,
machinery and
equipment owned or operated
by the participating Members of the
Workers' Compensation Risk Retention Program of the Authority.
C) Compile and file notices and reports required under
the
Workers' Compensation and Occupational Disease Acts upon receipt
of initial report from either the Authority or any participating
Member; conduct any necessary investigation in order to determine
the liability of the participating
Member under the
Workers'
Compensation and Occupational Disease Acts; and,
process any and
all lawful claims under rules established by the Division and the
Board of Directors.
D) Furnish the Authority and participating Members
in the
Workers' Compensation Risk Retention Program with periodic reports
of all accidents and occupational
disease, and of
all payments
made and reserves set up for benefits and expenses on account of
liability and/or reasonably anticipated liability for accidental
26
_"."~~~.'~_",'___m~~... _. ~.,,'.._' '~. . ~~."._._, ,._, "_~__,"'. ~',~._
. .
.
.
injuries and occupational diseases sustained by employees.
E) Adjust the normal
premium payable by participating
Members in the Workers'
Compensation Risk Retention
Program by
allowing for favorable or unfavorable experience so as to determine
and assign premium modifications for each Member in the Workers'
Compensation Risk Retention Program
annually in accordance
with
rules established by the Montana
Workers' Compensation Division
and with policies established by the Board of Directors.
F) Bill for and maintain
records of all premium payments
to the Workers' Compensation Risk Retention Program of the Authority
in accordance with such rules as the Board of Directors adopt.
G) Make annual payroll audits
of participating Members in
the Workers' Compensation Risk Retention Program.
H) Prepare on behalf of the Authority and the participating
Members in the Workers' Compensation Risk Retention
Program for
all scheduled hearings and generally administer all other details
pertaining to participating Members' obligations to their employees
under the Workers' Compensation and Occupational Disease Acts.
L) Perform such other related services as may be reasonably
necessary for the operation
of the Workers' Compensation
Risk
Retention Program of the Authority.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All
notices, bonds or other comm
unications
hereunder shall he sufficiently given and shall be deemed to have
been received five business days
after deposit in
the united
27
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. .
I
states mail in certified form,
postage prepaid, to the Members,
the Authority at the following addresses:
If to the Member: City of
Bozeman
P.O. Box 640
Bozeman. Montana 59715
If to the Authority: Montana Municipal Insurance Authority
Attn: Workers'
Compensation Risk
Retention Program
P.O. Box 1704
Helena, Montana
59624
The Authority and Members, by notice given hereunder, may designate
different addresses to which subsequent
notices, bonds or
other
communications will be sent.
10.2 Bindinq Effect. This
Agreement shall inure
to the
benefit of and shall be binding upon the Authority and the Members
and their respective successors and assigns.
10.3 Enforceabilitv. This Agreement
is enforceable by
the
Authority, Members of the
Workers' Compensation Risk
Retention
Program, the employees of
such Members, and/or the
Division of
Workers' Compensation of the
state of Montana. The undersigned
is held and firmly bound
for the payment of all
legal fees and
costs incurred by the state
of Montana in any actions
taken to
enforce this Agreement.
10.4 Severability. In the
event any provision
of this
Agreement shall be held
invalid or unenforceable by a
court of
competent jurisdiction, such holding
shall not invalidate
or
render unenforceable any other provision hereof.
28
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.
.
10.5 Further Assurances and
Corrective Instruments.
The
Authority and the Members
agree that they will,
from time to
time, execute, acknowledge and deliver, or
cause to be executed,
acknowledged and delivered, such
supplements hereto and
such
further instruments as may reasonably be required for correcting
any inadequate or incorrect
description of the Coverage
hereby
provided or intended so to be or for carrying
out the expressed
intention of this Agreement.
10.6 waiver of Notice as to Current Condition of Authoritv.
The Member waives any notices as to the current condition of said
Authority, insurance plan, any changes therein,
and the manner of
conducting or closing said
guaranteed plan or otherwise.
The
Undersigned also waives, in
the event of non-compliance
by the
Authority, any demand or notice in respect thereof and any requirement
of legal or equitable proceedings or otherwise on the part of the
Division against the Authority as a condition precedent to enforcing
the obligations of the Member hereunder.
10.7 Execution in counterparts.
This Agreement may
be
executed in any number of counterparts, each of which shall be an
original and all of which shall constitute but one and the
same
instrument.
10.8 Applicable Law. This
Agreement shall be
governed by
and construed in accordance with the laws of the State.
29
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"- .
)
IN WITNESS WHEREOF, The Authority has caused this Agreement
to be executed in its name by its duly authorized officers; and
the Members have caused this Agreement to be executed in its name
by its duly authorized officers, as of the date first above written.
MONTANA MUNICIPAL INSURANCE AUTHORITY,
as Authority J
By ~4-~;r,:~ ..../.
INSURANCE COORDINATOR
,
CITY OF BOZEMAN, MONTANA
as er L. l,J
/
B~-- .
"-
ATTEST:
r?~ J ~
Clerk of the Commission
30
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