HF 417G

Conference Committee Report - 86th Legislature (2009 - 2010) Posted on 01/15/2013 08:25pm

1.1CONFERENCE COMMITTEE REPORT ON H. F. No. 417

1.2A bill for an act

1.3relating to commerce; prohibiting certain claims processing practices by
1.4third-party administrators of health coverage plans; regulating health claims
1.5clearinghouses; providing recovery of damages and attorney fees for breach of
1.6an insurance policy; permitting a deceased professional's surviving spouse to
1.7retain ownership of a professional firm that was solely owned by the decedent
1.8for up to one year after the death;amending Minnesota Statutes 2008, sections
1.960A.23, subdivision 8; 319B.02, by adding a subdivision; 319B.07, subdivision
1.101; 319B.08; 319B.09, subdivision 1; 471.982, subdivision 3; proposing coding
1.11for new law in Minnesota Statutes, chapters 60A; 62Q.
1.12May 16, 2009
1.13The Honorable Margaret Anderson Kelliher
1.14Speaker of the House of Representatives
1.15The Honorable James P. Metzen
1.16President of the Senate
1.17We, the undersigned conferees for H. F. No. 417 report that we have agreed upon the
1.18items in dispute and recommend as follows:
1.19That the Senate recede from its amendment and that H. F. No. 417 be further
1.20amended as follows:
1.21Delete everything after the enacting clause and insert:

1.22    "Section 1. [60A.0811] BREACH OF INSURANCE POLICY; RECOVERY OF
1.23INTEREST.
1.24    Subdivision 1. Definitions. For purposes of this section:
1.25(1) "insurance policy" means a commercial or professional insurance policy or
1.26contract other than:
1.27(i) a workers' compensation insurance policy or contract;
1.28(ii) a health insurance policy or contract issued, executed, renewed, maintained, or
1.29delivered in this state by a health carrier as defined in section 62A.011, subdivision 2;
1.30(iii) a life insurance or disability insurance policy or contract; or
2.1(iv) a policy or contract issued by a township mutual fire insurance company or
2.2farmers mutual fire insurance company operating under chapter 65A or 67A;
2.3(2) "insured" means any named insured, additional insured, or insured under an
2.4insurance policy; and
2.5(3) "insurer" means an insurer:
2.6(i) incorporated or organized in this state; or
2.7(ii) admitted, authorized, or licensed to do business or doing business in this state but
2.8not incorporated or organized in this state. Insurer does not include the joint underwriting
2.9association operating under chapter 62F or 62I; or a township mutual fire insurance
2.10company or farmers mutual fire insurance company operating under chapter 65A or 67A.
2.11    Subd. 2. Interest. (a) An insured who prevails in any claim against an insurer based
2.12on the insurer's breach or repudiation of, or failure to fulfill, a duty to provide services or
2.13make payments is entitled to recover 10 percent per annum interest on monetary amounts
2.14due under the insurance policy, calculated from the date the request for payment of those
2.15benefits was made to the insurer.
2.16(b) Punitive damages or damages for nonmonetary losses are not recoverable
2.17under this section.
2.18    Subd. 3. Application. This section applies to a court action or arbitration
2.19proceeding, including an action seeking declaratory judgment.
2.20EFFECTIVE DATE.This section is effective August 1, 2009, and applies to a
2.21cause of action existing on, or arising on or after that date.

2.22    Sec. 2. Minnesota Statutes 2008, section 319B.02, is amended by adding a subdivision
2.23to read:
2.24    Subd. 21a. Surviving spouse. "Surviving spouse" means a surviving spouse of a
2.25deceased professional as an individual, as the personal representative of the estate of the
2.26decedent, as the trustee of an inter vivos or testamentary trust created by the decedent, or
2.27as the sole heir or beneficiary of an estate or trust of which the personal representative or
2.28trustee is a bank or other institution that has trust powers.
2.29EFFECTIVE DATE.This section is effective the day following final enactment
2.30and applies to surviving spouses of professionals who die on or after that date.

2.31    Sec. 3. Minnesota Statutes 2008, section 319B.07, subdivision 1, is amended to read:
2.32    Subdivision 1. Ownership of interests restricted. Ownership interests in a
2.33professional firm may not be owned or held, either directly or indirectly, except by any of
2.34the following:
3.1(1) professionals who, with respect to at least one category of the pertinent
3.2professional services, are licensed and not disqualified;
3.3(2) general partnerships, other than limited liability partnerships, authorized to
3.4furnish at least one category of the professional firm's pertinent professional services;
3.5(3) other professional firms authorized to furnish at least one category of the
3.6professional firm's pertinent professional services;
3.7(4) a voting trust established with respect to some or all of the ownership interests
3.8in the professional firm, if (i) the professional firm's generally applicable governing law
3.9permits the establishment of voting trusts, and (ii) all the voting trustees and all the holders
3.10of beneficial interests in the trust are professionals licensed to furnish at least one category
3.11of the pertinent professional services; and
3.12(5) an employee stock ownership plan as defined in section 4975(e)(7) of the
3.13Internal Revenue Code of 1986, as amended, if (i) all the voting trustees of the plan are
3.14professionals licensed to furnish at least one category of the pertinent professional services,
3.15and (ii) the ownership interests are not directly issued to anyone other than professionals
3.16licensed to furnish at least one category of the pertinent professional services; and
3.17(6) sole ownership by a surviving spouse of a deceased professional who was the
3.18sole owner of the professional firm at the time of the professional's death, but only during
3.19the period of time ending one year after the death of the professional.
3.20EFFECTIVE DATE.This section is effective the day following final enactment
3.21and applies to surviving spouses of professionals who die on or after that date.

3.22    Sec. 4. Minnesota Statutes 2008, section 319B.08, is amended to read:
3.23319B.08 EFFECT OF DEATH OR DISQUALIFICATION OF OWNER.
3.24    Subdivision 1. Acquisition of interests or automatic loss of professional
3.25firm status. (a) If an owner dies or becomes disqualified to practice all the pertinent
3.26professional services, then either:
3.27(1) within 90 days after the death or the beginning of the disqualification, all of
3.28that owner's ownership interest must be acquired by the professional firm, by persons
3.29permitted by section 319B.07 to own the ownership interest, or by some combination; or
3.30(2) at the end of the 90-day period, the firm's election under section 319B.03,
3.31subdivision 2 , or 319B.04, subdivision 2, is automatically rescinded, the firm loses
3.32its status as a professional firm, and the authority created by that election and status
3.33terminates.
3.34An acquisition satisfies clause (1) if all right and title to the deceased or disqualified
3.35owner's interest are acquired before the end of the 90-day period, even if some or all of
4.1the consideration is paid after the end of the 90-day period. However, payment cannot be
4.2secured in any way that violates sections 319B.01 to 319B.12.
4.3(b) If automatic rescission does occur under paragraph (a), the firm must immediately
4.4and accordingly update its organizational document, certificate of authority, or statement
4.5of foreign qualification. Even without that updating, however, the rescission, loss of
4.6status, and termination of authority provided by paragraph (a) occur automatically at the
4.7end of the 90-day period.
4.8    Subd. 2. Terms of acquisition. (a) If:
4.9(1) an owner dies or becomes disqualified to practice all the pertinent professional
4.10services;
4.11(2) the professional firm has in effect a mechanism, valid according to the
4.12professional firm's generally applicable governing law, to effect a purchase of the deceased
4.13or disqualified owner's ownership interest so as to satisfy subdivision 1, paragraph (a),
4.14clause (1); and
4.15(3) the professional firm does not agree with the disqualified owner or the
4.16representative of the deceased owner to set aside the mechanism,
4.17then that mechanism applies.
4.18(b) If:
4.19(1) an owner dies or becomes disqualified to practice all the pertinent professional
4.20services;
4.21(2) the professional firm has in effect no mechanism as described in paragraph (a), or
4.22has agreed as mentioned in paragraph (a), clause (3), to set aside that mechanism; and
4.23(3) consistent with its generally applicable governing law, the professional firm
4.24agrees with the disqualified owner or the representative of the deceased owner, before
4.25the end of the 90-day period, to an arrangement to effect a purchase of the deceased
4.26or disqualified owner's ownership interest so as to satisfy subdivision 1, paragraph (a),
4.27clause (1),
4.28then that arrangement applies.
4.29(c) If:
4.30(1) an owner of a Minnesota professional firm dies or becomes disqualified to
4.31practice all the pertinent professional services;
4.32(2) the Minnesota professional firm does not have in effect a mechanism as described
4.33in paragraph (a);
4.34(3) the Minnesota professional firm does not make an arrangement as described in
4.35paragraph (b); and
5.1(4) no provision or tenet of the Minnesota professional firm's generally applicable
5.2governing law and no provision of any document or agreement authorized by the
5.3Minnesota professional firm's generally applicable governing law expressly precludes an
5.4acquisition under this paragraph,
5.5then the firm may acquire the deceased or disqualified owner's ownership interest as
5.6stated in this paragraph. To act under this paragraph, the Minnesota professional firm
5.7must within 90 days after the death or beginning of the disqualification tender to the
5.8representative of the deceased owner's estate or to the disqualified owner the fair value
5.9of the owner's ownership interest, as determined by the Minnesota professional firm's
5.10governance authority. That price must be at least the book value, as determined in
5.11accordance with the Minnesota professional firm's regular method of accounting, as of the
5.12end of the month immediately preceding the death or loss of license. The tender must be
5.13unconditional and may not attempt to have the recipient waive any rights provided in this
5.14section. If the Minnesota professional firm tenders a price under this paragraph within
5.15the 90-day period, the deceased or disqualified owner's ownership interest immediately
5.16transfers to the Minnesota professional firm regardless of any dispute as to the fairness
5.17of the price. A disqualified owner or representative of the deceased owner's estate who
5.18disputes the fairness of the tendered price may take the tendered price and bring suit
5.19in district court seeking additional payment. The suit must be commenced within one
5.20year after the payment is tendered. A Minnesota professional firm may agree with a
5.21disqualified owner or the representative of a deceased owner's estate to delay all or part
5.22of the payment due under this paragraph, but all right and title to the owner's ownership
5.23interests must be acquired before the end of the 90-day period and payment may not be
5.24secured in any way that violates sections 319B.01 to 319B.12.
5.25    Subd. 3. Expiration of firm-issued option on death or disqualification of holder.
5.26If the holder of an option issued under section 319B.07, subdivision 3, paragraph (a),
5.27clause (1), dies or becomes disqualified, the option automatically expires.
5.28    Subd. 4. One-year period for surviving spouse of sole owner. For purposes
5.29of this section, each mention of "90 days," "90-day period," or similar term shall be
5.30interpreted as one year after the death of a professional who was the sole owner of the
5.31professional firm if the surviving spouse of the deceased professional owns and controls
5.32the firm after the death.
5.33EFFECTIVE DATE.This section is effective the day following final enactment
5.34and applies to surviving spouses of professionals who die on or after that date.

5.35    Sec. 5. Minnesota Statutes 2008, section 319B.09, subdivision 1, is amended to read:
6.1    Subdivision 1. Governance authority. (a) Except as stated in paragraph (b), a
6.2professional firm's governance authority must rest with:
6.3(1) one or more professionals, each of whom is licensed to furnish at least one
6.4category of the pertinent professional services; or
6.5(2) a surviving spouse of a deceased professional who was the sole owner of the
6.6professional firm, while the surviving spouse owns and controls the firm, but only during
6.7the period of time ending one year after the death of the professional.
6.8(b) In a Minnesota professional firm organized under chapter 317A and in a foreign
6.9professional firm organized under the nonprofit corporation statute of another state, at least
6.10one individual possessing governance authority must be a professional licensed to furnish
6.11at least one category of the pertinent professional services.
6.12(c) Individuals who possess governance authority within a professional firm may
6.13delegate administrative and operational matters to others. No decision entailing the
6.14exercise of professional judgment may be delegated or assigned to anyone who is not a
6.15professional licensed to practice the professional services involved in the decision.
6.16(d) An individual whose license to practice any pertinent professional services is
6.17revoked or suspended may not, during the time the revocation or suspension is in effect,
6.18possess or exercise governance authority, hold a position with governance authority,
6.19or take part in any decision or other action constituting an exercise of governance
6.20authority. Nothing in this chapter prevents a board from further terminating, restricting,
6.21limiting, qualifying, or imposing conditions on an individual's governance role as board
6.22disciplinary action.
6.23(e) A professional firm owned and controlled by a surviving spouse must comply
6.24with all requirements of this chapter, except those clearly inapplicable to a firm owned
6.25and governed by a surviving spouse who is not a professional of the same type as the
6.26surviving spouse's decedent.
6.27EFFECTIVE DATE.This section is effective the day following final enactment
6.28and applies to surviving spouses of professionals who die on or after that date.

6.29    Sec. 6. Minnesota Statutes 2008, section 471.982, subdivision 3, is amended to read:
6.30    Subd. 3. Exemptions. Self-insurance pools established and open for enrollment
6.31on a statewide basis by the Minnesota League of Cities Insurance Trust, the Minnesota
6.32School Boards Association Insurance Trust, the Minnesota Association of Townships
6.33Insurance and Bond Trust, or the Minnesota Association of Counties Insurance Trust
6.34and the political subdivisions that belong to them are exempt from the requirements of
6.35this section and section sections 65B.48, subdivision 3, and 60A.0811. In addition, the
7.1Minnesota Association of Townships Insurance and Bond Trust and the townships that
7.2belong to it are exempt from the requirement to hold the certificate of surety authorization
7.3issued by the commissioner of commerce as provided in section 574.15."
7.4Delete the title and insert:

7.5"A bill for an act

7.6relating to commerce; providing recovery of damages and attorney fees for
7.7breach of an insurance policy; permitting a deceased professional's surviving
7.8spouse to retain ownership of a professional firm that was solely owned by the
7.9decedent for up to one year after the death;amending Minnesota Statutes 2008,
7.10sections 319B.02, by adding a subdivision; 319B.07, subdivision 1; 319B.08;
7.11319B.09, subdivision 1; 471.982, subdivision 3; proposing coding for new law
7.12in Minnesota Statutes, chapter 60A."
We request the adoption of this report and repassage of the bill.House Conferees: (Signed) Joe Atkins, Sheldon Johnson, Steve SmithSenate Conferees: (Signed) Thomas Bakk, Ray Vandeveer, Linda Scheid

	We request the adoption of this report and repassage of the bill.
	House Conferees:(Signed)
	.....		.....
	Joe Atkins		Sheldon Johnson
	.....
	Steve Smith
	Senate Conferees:(Signed)
	.....		.....
	Thomas Bakk		Ray Vandeveer
	.....
	Linda Scheid