1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to insurance; regulating agency terminations, 1.3 coverages, fees, forms, disclosures, reports, 1.4 information security, and premiums; amending Minnesota 1.5 Statutes 2004, sections 59A.12, subdivision 2; 60A.14, 1.6 subdivision 1; 60A.171, subdivision 11; 60A.23, 1.7 subdivision 8; 60A.966; 60A.969; 62A.136; 62A.31, 1.8 subdivision 1h; 62A.315; 62A.316; 62E.13, subdivision 1.9 2; 62Q.471; 65A.29, subdivision 11; 65B.48, 1.10 subdivision 3; 72A.20, subdivisions 13, 36; 79.211, by 1.11 adding a subdivision; 79.40; 79.56, subdivisions 1, 3; 1.12 79.62, subdivision 3; 79A.03, subdivision 9; 79A.04, 1.13 subdivisions 2, 10; 79A.06, subdivision 5; 79A.12, 1.14 subdivision 2; 79A.22, subdivision 11, by adding a 1.15 subdivision; 176.191, subdivision 3; proposing coding 1.16 for new law in Minnesota Statutes, chapters 60A; 60D; 1.17 repealing Minnesota Statutes 2004, sections 61A.072, 1.18 subdivision 2; 62E.03. 1.19 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.20 Section 1. Minnesota Statutes 2004, section 59A.12, 1.21 subdivision 2, is amended to read: 1.22 Subd. 2. In the event that a premium is subject to an 1.23 audit to determine the final premium amount, the gross unearned 1.24 premium will be calculated based upon thedepositaudited 1.25 premium and the insurer shall return whatever gross unearned 1.26 premiums are duebased upon the deposit rather than the actual1.27unearned premiumunder the contract to the finance company for 1.28 the account of the insured or insureds within 60 days after 1.29 receipt of the notice of cancellation. 1.30 Sec. 2. Minnesota Statutes 2004, section 60A.14, 1.31 subdivision 1, is amended to read: 1.32 Subdivision 1. [FEES OTHER THAN EXAMINATION FEES.] In 2.1 addition to the fees and charges provided for examinations, the 2.2 following fees must be paid to the commissioner for deposit in 2.3 the general fund: 2.4 (a) by township mutual fire insurance companies; 2.5 (1) for filing certificate of incorporation $25 and 2.6 amendments thereto, $10; 2.7 (2) for filing annual statements, $15; 2.8 (3) for each annual certificate of authority, $15; 2.9 (4) for filing bylaws $25 and amendments thereto, $10; 2.10 (b) by other domestic and foreign companies including 2.11 fraternals and reciprocal exchanges; 2.12 (1) for filing certified copy of certificate of articles of 2.13 incorporation, $100; 2.14 (2) for filing annual statement, $225; 2.15 (3) for filing certified copy of amendment to certificate 2.16 or articles of incorporation, $100; 2.17 (4) for filing bylaws, $75 or amendments thereto, $75; 2.18 (5) for each company's certificate of authority, $575, 2.19 annually; 2.20 (c) the following general fees apply: 2.21 (1) for each certificate, including certified copy of 2.22 certificate of authority, renewal, valuation of life policies, 2.23 corporate condition or qualification, $25; 2.24 (2) for each copy of paper on file in the commissioner's 2.25 office 50 cents per page, and $2.50 for certifying the same; 2.26 (3) for license to procure insurance in unadmitted foreign 2.27 companies, $575; 2.28 (4) for valuing the policies of life insurance companies, 2.29 one cent per $1,000 of insurance so valued, provided that the 2.30 fee shall not exceed $13,000 per year for any company. The 2.31 commissioner may, in lieu of a valuation of the policies of any 2.32 foreign life insurance company admitted, or applying for 2.33 admission, to do business in this state, accept a certificate of 2.34 valuation from the company's own actuary or from the 2.35 commissioner of insurance of the state or territory in which the 2.36 company is domiciled; 3.1 (5) for receiving and filing certificates of policies by 3.2 the company's actuary, or by the commissioner of insurance of 3.3 any other state or territory, $50; 3.4 (6) for each appointment of an agent filed with the 3.5 commissioner, $10; 3.6 (7) for filing forms and rates,$75$90 per filing, 3.7whichor $75 per filing when submitted via electronic filing 3.8 system. Filing fees may be paid on a quarterly basis in 3.9 response to an invoice. Billing and payment may be made 3.10 electronically; 3.11 (8) for annual renewal of surplus lines insurer license, 3.12 $300;3.13(9) $250 filing fee for a large risk alternative rating3.14option plan that meets the $250,000 threshold requirement. 3.15 The commissioner shall adopt rules to define filings that 3.16 are subject to a fee. 3.17 Sec. 3. Minnesota Statutes 2004, section 60A.171, 3.18 subdivision 11, is amended to read: 3.19 Subd. 11. Upon termination of an agency, a company is 3.20 prohibited from soliciting business in the notice of nonrenewal 3.21 required by section 60A.37. If termination of an agency 3.22 contract is the ground for nonrenewal of a policy of homeowner's 3.23 insurance, as defined in section 65A.27, subdivision 4, the 3.24 company must provide notice to the policyholder that the policy 3.25 is not being renewed due to the termination of the company's 3.26 contract with the agency. If the agency is unable to replace 3.27 the homeowner's insurance policy with a suitable policy from 3.28 another insurer, the agent must notify the policyholder of the 3.29 policyholder's right to renew with the company terminating the 3.30 agency contract. The company must renew the policy if the 3.31 insured or the insured's agent makes a written request for the 3.32 renewal before the renewal date. 3.33 Sec. 4. Minnesota Statutes 2004, section 60A.23, 3.34 subdivision 8, is amended to read: 3.35 Subd. 8. [SELF-INSURANCE OR INSURANCE PLAN ADMINISTRATORS 3.36 WHO ARE VENDORS OF RISK MANAGEMENT SERVICES.] (1) [SCOPE.] This 4.1 subdivision applies to any vendor of risk management services 4.2 and to any entity which administers, for compensation, a 4.3 self-insurance or insurance plan. This subdivision does not 4.4 apply (a) to an insurance company authorized to transact 4.5 insurance in this state, as defined by section 60A.06, 4.6 subdivision 1, clauses (4) and (5); (b) to a service plan 4.7 corporation, as defined by section 62C.02, subdivision 6; (c) to 4.8 a health maintenance organization, as defined by section 62D.02, 4.9 subdivision 4; (d) to an employer directly operating a 4.10 self-insurance plan for its employees' benefits; (e) to an 4.11 entity which administers a program of health benefits 4.12 established pursuant to a collective bargaining agreement 4.13 between an employer, or group or association of employers, and a 4.14 union or unions; or (f) to an entity which administers a 4.15 self-insurance or insurance plan if a licensed Minnesota insurer 4.16 is providing insurance to the plan and if the licensed insurer 4.17 has appointed the entity administering the plan as one of its 4.18 licensed agents within this state. 4.19 (2) [DEFINITIONS.] For purposes of this subdivision the 4.20 following terms have the meanings given them. 4.21 (a) "Administering a self-insurance or insurance plan" 4.22 means (i) processing, reviewing or paying claims, (ii) 4.23 establishing or operating funds and accounts, or (iii) otherwise 4.24 providing necessary administrative services in connection with 4.25 the operation of a self-insurance or insurance plan. 4.26 (b) "Employer" means an employer, as defined by section 4.27 62E.02, subdivision 2. 4.28 (c) "Entity" means any association, corporation, 4.29 partnership, sole proprietorship, trust, or other business 4.30 entity engaged in or transacting business in this state. 4.31 (d) "Self-insurance or insurance plan" means a plan 4.32 providing life, medical or hospital care, accident, sickness or 4.33 disability insurance for the benefit of employees or members of 4.34 an association, or a plan providing liability coverage for any 4.35 other risk or hazard, which is or is not directly insured or 4.36 provided by a licensed insurer, service plan corporation, or 5.1 health maintenance organization. 5.2 (e) "Vendor of risk management services" means an entity 5.3 providing for compensation actuarial, financial management, 5.4 accounting, legal or other services for the purpose of designing 5.5 and establishing a self-insurance or insurance plan for an 5.6 employer. 5.7 (3) [LICENSE.] No vendor of risk management services or 5.8 entity administering a self-insurance or insurance plan may 5.9 transact this business in this state unless it is licensed to do 5.10 so by the commissioner. An applicant for a license shall state 5.11 in writing the type of activities it seeks authorization to 5.12 engage in and the type of services it seeks authorization to 5.13 provide. The license may be granted only when the commissioner 5.14 is satisfied that the entity possesses the necessary 5.15 organization, background, expertise, and financial integrity to 5.16 supply the services sought to be offered. The commissioner may 5.17 issue a license subject to restrictions or limitations upon the 5.18 authorization, including the type of services which may be 5.19 supplied or the activities which may be engaged in. The license 5.20 fee is$1,000$1,500 for the initial application and 5.21$1,000$1,500 for eachtwo-yearthree-year renewal. All 5.22 licenses are for a period oftwothree years. 5.23 (4) [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.] 5.24 To assure that self-insurance or insurance plans are financially 5.25 solvent, are administered in a fair and equitable fashion, and 5.26 are processing claims and paying benefits in a prompt, fair, and 5.27 honest manner, vendors of risk management services and entities 5.28 administering insurance or self-insurance plans are subject to 5.29 the supervision and examination by the commissioner. Vendors of 5.30 risk management services, entities administering insurance or 5.31 self-insurance plans, and insurance or self-insurance plans 5.32 established or operated by them are subject to the trade 5.33 practice requirements of sections 72A.19 to 72A.30. In lieu of 5.34 an unlimited guarantee from a parent corporation for a vendor of 5.35 risk management services or an entity administering insurance or 5.36 self-insurance plans, the commissioner may accept a surety bond 6.1 in a form satisfactory to the commissioner in an amount equal to 6.2 120 percent of the total amount of claims handled by the 6.3 applicant in the prior year. If at any time the total amount of 6.4 claims handled during a year exceeds the amount upon which the 6.5 bond was calculated, the administrator shall immediately notify 6.6 the commissioner. The commissioner may require that the bond be 6.7 increased accordingly. 6.8 No contract entered into after July 1, 2001, between a 6.9 licensed vendor of risk management services and a group 6.10 authorized to self-insure for workers' compensation liabilities 6.11 under section 79A.03, subdivision 6, may take effect until it 6.12 has been filed with the commissioner, and either (1) the 6.13 commissioner has approved it or (2) 60 days have elapsed and the 6.14 commissioner has not disapproved it as misleading or violative 6.15 of public policy. 6.16 (5) [RULEMAKING AUTHORITY.] To carry out the purposes of 6.17 this subdivision, the commissioner may adopt rules pursuant to 6.18 sections 14.001 to 14.69. These rules may: 6.19 (a) establish reporting requirements for administrators of 6.20 insurance or self-insurance plans; 6.21 (b) establish standards and guidelines to assure the 6.22 adequacy of financing, reinsuring, and administration of 6.23 insurance or self-insurance plans; 6.24 (c) establish bonding requirements or other provisions 6.25 assuring the financial integrity of entities administering 6.26 insurance or self-insurance plans; or 6.27 (d) establish other reasonable requirements to further the 6.28 purposes of this subdivision. 6.29 Sec. 5. Minnesota Statutes 2004, section 60A.966, is 6.30 amended to read: 6.31 60A.966 [APPROVAL OF VIATICAL SETTLEMENTS CONTRACT FORMS.] 6.32 A viatical settlement provider or broker may not use a 6.33 viatical settlement contract form in this state unless it has 6.34 been filed with and approved by the commissioner. A viatical 6.35 settlement contract form filed with the commissioner is 6.36 considered to have been approved if it has not been disapproved 7.1 within 60 days of the filing. The commissioner shall disapprove 7.2 a viatical settlement contract form if, in the commissioner's 7.3 opinion, the contract or contract provisions are unreasonable, 7.4 contrary to the interests of the public, or otherwise misleading 7.5 or unfair to the policy owner. 7.6 Sec. 6. Minnesota Statutes 2004, section 60A.969, is 7.7 amended to read: 7.8 60A.969 [DISCLOSURE.] 7.9 A viatical settlement provider or a broker shall disclose 7.10 the following information to the viator no later than the 7.11 datethe viatical settlement contract is signed by all7.12partiesan application is given to the viator: 7.13 (1) possible alternatives to viatical settlement contracts 7.14 for persons with catastrophic or life threatening illnesses, 7.15 including accelerated benefits offered by the issuer of the life 7.16 insurance policy; 7.17 (2) the fact that some or all of the proceeds of the 7.18 viatical settlement may be taxable and that assistance should be 7.19 sought from a personal tax advisor; 7.20 (3) the fact that the viatical settlement may be subject to 7.21 the claims of creditors; 7.22 (4) the fact that receipt of a viatical settlement may 7.23 adversely affect the recipients' eligibility for Medicaid or 7.24 other government benefits or entitlements and that advice should 7.25 be obtained from the appropriate agencies; 7.26 (5) the policy owner's right to rescind a viatical 7.27 settlement contract within 30 days of the date it is executed by 7.28 all parties or 15 days of the receipt of the viatical settlement 7.29 proceeds by the viator, whichever is less, as provided in 7.30 section 60A.970, subdivision 3; and 7.31 (6) the date by which the funds will be available to the 7.32 viator and the source of the funds. 7.33 Sec. 7. [60A.98] [DEFINITIONS.] 7.34 Subdivision 1. [SCOPE.] For purposes of sections 60A.98 7.35 and 60A.981, the terms defined in this section have the meanings 7.36 given them. 8.1 Subd. 2. [CUSTOMER.] "Customer" means a consumer who has a 8.2 continuing relationship with a licensee under which the licensee 8.3 provides one or more insurance products or services to the 8.4 consumer that are to be used primarily for personal, family, or 8.5 household purposes. 8.6 Subd. 3. [CUSTOMER INFORMATION.] "Customer information" 8.7 means nonpublic personal information about a customer, whether 8.8 in paper, electronic, or other form, that is maintained by or on 8.9 behalf of the licensee. 8.10 Subd. 4. [CUSTOMER INFORMATION SYSTEMS.] "Customer 8.11 information systems" means the electronic or physical methods 8.12 used to access, collect, store, use, transmit, protect, or 8.13 dispose of customer information. 8.14 Subd. 5. [LICENSEE.] "Licensee" means all licensed 8.15 insurers, producers, and other persons licensed or required to 8.16 be licensed, authorized or required to be authorized, or 8.17 registered or required to be registered pursuant to the 8.18 insurance laws of this state, except that "licensee" does not 8.19 include a purchasing group or an ineligible insurer in regard to 8.20 the surplus line insurance conducted pursuant to sections 8.21 60A.195 to 60A.209. 8.22 Subd. 6. [NONPUBLIC FINANCIAL INFORMATION.] "Nonpublic 8.23 financial information" means: 8.24 (1) personally identifiable financial information; and 8.25 (2) any list, description, or other grouping of consumers, 8.26 and publicly available information pertaining to them, that is 8.27 derived using any personally identifiable financial information 8.28 that is not publicly available. 8.29 Subd. 7. [NONPUBLIC PERSONAL HEALTH 8.30 INFORMATION.] "Nonpublic personal health information" means 8.31 health information: 8.32 (1) that identifies an individual who is the subject of the 8.33 information; or 8.34 (2) with respect to which there is a reasonable basis to 8.35 believe that the information could be used to identify an 8.36 individual. 9.1 Subd. 8. [NONPUBLIC PERSONAL INFORMATION.] "Nonpublic 9.2 personal information" means nonpublic financial information and 9.3 nonpublic personal health information. 9.4 Subd. 9. [PERSONALLY IDENTIFIABLE FINANCIAL 9.5 INFORMATION.] "Personally identifiable financial information" 9.6 means any information: 9.7 (1) a consumer provides to a licensee to obtain an 9.8 insurance product or service from the licensee; 9.9 (2) about a consumer resulting from a transaction involving 9.10 an insurance product or service between a licensee and a 9.11 consumer; or 9.12 (3) the licensee otherwise obtains about a consumer in 9.13 connection with providing an insurance product or service to 9.14 that consumer. 9.15 Subd. 10. [SERVICE PROVIDER.] "Service provider" means a 9.16 person that maintains, processes, or otherwise is permitted 9.17 access to customer information through its provision of services 9.18 directly to the licensee. 9.19 Sec. 8. [60A.981] [INFORMATION SECURITY PROGRAM.] 9.20 Subdivision 1. [GENERAL REQUIREMENTS.] Each licensee shall 9.21 implement a comprehensive written information security program 9.22 that includes administrative, technical, and physical safeguards 9.23 for the protection of customer information. The administrative, 9.24 technical, and physical safeguards included in the information 9.25 security program must be appropriate to the size and complexity 9.26 of the licensee and the nature and scope of its activities. 9.27 Subd. 2. [OBJECTIVES.] A licensee's information security 9.28 program must be designed to: 9.29 (1) ensure the security and confidentiality of customer 9.30 information; 9.31 (2) protect against any anticipated threats or hazards to 9.32 the security or integrity of the information; and 9.33 (3) protect against unauthorized access to or use of the 9.34 information that could result in substantial harm or 9.35 inconvenience to any customer. 9.36 Subd. 3. [EXAMPLES OF METHODS OF DEVELOPMENT AND 10.1 IMPLEMENTATION.] The following actions and procedures are 10.2 examples of methods of implementation of the requirements of 10.3 subdivisions 1 and 2. These examples are nonexclusive 10.4 illustrations of actions and procedures that licensees may 10.5 follow to implement subdivisions 1 and 2: 10.6 (1) the licensee: 10.7 (i) identifies reasonably foreseeable internal or external 10.8 threats that could result in unauthorized disclosure, misuse, 10.9 alteration, or destruction of customer information or customer 10.10 information systems; 10.11 (ii) assesses the likelihood and potential damage of these 10.12 threats, taking into consideration the sensitivity of customer 10.13 information; and 10.14 (iii) assesses the sufficiency of policies, procedures, 10.15 customer information systems, and other safeguards in place to 10.16 control risks; 10.17 (2) the licensee: 10.18 (i) designs its information security program to control the 10.19 identified risks, commensurate with the sensitivity of the 10.20 information, as well as the complexity and scope of the 10.21 licensee's activities; 10.22 (ii) trains staff, as appropriate, to implement the 10.23 licensee's information security program; and 10.24 (iii) regularly tests or otherwise regularly monitors the 10.25 key controls, systems, and procedures of the information 10.26 security program. The frequency and nature of these tests or 10.27 other monitoring practices are determined by the licensee's risk 10.28 assessment; 10.29 (3) the licensee: 10.30 (i) exercises appropriate due diligence in selecting its 10.31 service providers; and 10.32 (ii) requires its service providers to implement 10.33 appropriate measures designed to meet the objectives of this 10.34 regulation, and, where indicated by the licensee's risk 10.35 assessment, takes appropriate steps to confirm that its service 10.36 providers have satisfied these obligations; and 11.1 (4) the licensee monitors, evaluates, and adjusts, as 11.2 appropriate, the information security program in light of any 11.3 relevant changes in technology, the sensitivity of its customer 11.4 information, internal or external threats to information, and 11.5 the licensee's own changing business arrangements, such as 11.6 mergers and acquisitions, alliances and joint ventures, 11.7 outsourcing arrangements, and changes to customer information 11.8 systems. 11.9 Sec. 9. [60A.982] [UNFAIR TRADE PRACTICES.] 11.10 A violation of sections 60A.98 and 60A.981 is considered to 11.11 be a violation of sections 72A.17 to 72A.32. 11.12 Sec. 10. [60D.30] [ELIGIBILITY DETERMINATION.] 11.13 Section 302A.521, subdivision 3, applies to a corporation 11.14 that is a member of an insurance holding company system, except 11.15 if a determination for advancement is not made under section 11.16 302A.521, subdivision 6, clauses (1) to (4), the corporation 11.17 that is a member of an insurance holding company system may make 11.18 the determination that a person is entitled to payment or 11.19 reimbursement of expenses in advance of the final disposition of 11.20 a proceeding upon receipt of a written affirmation as provided 11.21 in section 302A.521, subdivision 3. 11.22 Sec. 11. Minnesota Statutes 2004, section 62A.136, is 11.23 amended to read: 11.24 62A.136 [DENTAL AND VISION PLAN COVERAGE.] 11.25 The following provisions do not apply to health plans as 11.26 defined in section 62A.011, subdivision 3, clause (6), providing 11.27 dental or vision coverage only: sections 62A.041; 62A.0411; 11.28 62A.047; 62A.149; 62A.151; 62A.152; 62A.154; 62A.155; 62A.17, 11.29 subdivision 6; 62A.21, subdivision 2b; 62A.26; 62A.28; 62A.285; 11.30 62A.30; 62A.304; 62A.3093; and 62E.16. 11.31 Sec. 12. Minnesota Statutes 2004, section 62A.31, 11.32 subdivision 1h, is amended to read: 11.33 Subd. 1h. [LIMITATIONS ON DENIALS, CONDITIONS, AND PRICING 11.34 OF COVERAGE.] No health carrier issuing Medicare-related 11.35 coverage in this state may impose preexisting condition 11.36 limitations or otherwise deny or condition the issuance or 12.1 effectiveness of any such coverage available for sale in this 12.2 state, nor may it discriminate in the pricing of such coverage, 12.3 because of the health status, claims experience, receipt of 12.4 health care, medical condition, or age of an applicant where an 12.5 application for such coverage is submitted prior to or during 12.6 the six-month period beginning with the first day of the month 12.7 in which an individual first enrolled for benefits under 12.8 Medicare Part B. This subdivision applies to each 12.9 Medicare-related coverage offered by a health carrier regardless 12.10 of whether the individual has attained the age of 65 years. If 12.11 an individual who is enrolled in Medicare Part B due to 12.12 disability status is involuntarily disenrolled due to loss of 12.13 disability status, the individual is eligible for another 12.14 six-month enrollment period provided under this subdivision 12.15 beginning the first day of the month in which the individual 12.16 later becomes eligible for and enrolls again in Medicare Part 12.17 B. An individual who is or was previously enrolled in Medicare 12.18 Part B due to disability status is eligible for another 12.19 six-month enrollment period under this subdivision beginning the 12.20 first day of the month in which the individual has attained the 12.21 age of 65 years and either maintains enrollment in, or enrolls 12.22 again in, Medicare Part B. If an individual enrolled in 12.23 Medicare Part B voluntarily disenrolls from Medicare Part B 12.24 because the individual becomesreemployed and isenrolled under 12.25 an employee welfare benefit plan, the individual is eligible for 12.26 another six-month enrollment period, as provided in this 12.27 subdivision, beginning the first day of the month in which the 12.28 individual later becomes eligible for and enrolls again in 12.29 Medicare Part B. 12.30 Sec. 13. Minnesota Statutes 2004, section 62A.315, is 12.31 amended to read: 12.32 62A.315 [EXTENDED BASIC MEDICARE SUPPLEMENT PLAN; 12.33 COVERAGE.] 12.34 The extended basic Medicare supplement plan must have a 12.35 level of coverage so that it will be certified as a qualified 12.36 plan pursuant to section 62E.07, and will provide: 13.1 (1) coverage for all of the Medicare Part A inpatient 13.2 hospital deductible and coinsurance amounts, and 100 percent of 13.3 all Medicare Part A eligible expenses for hospitalization not 13.4 covered by Medicare; 13.5 (2) coverage for the daily co-payment amount of Medicare 13.6 Part A eligible expenses for the calendar year incurred for 13.7 skilled nursing facility care; 13.8 (3) coverage for the coinsurance amount or in the case of 13.9 hospital outpatient department services paid under a prospective 13.10 payment system, the co-payment amount, of Medicare eligible 13.11 expenses under Medicare Part B regardless of hospital 13.12 confinement, and the Medicare Part B deductible amount; 13.13 (4) 80 percent of the usual and customary hospital and 13.14 medical expenses and supplies described in section 62E.06, 13.15 subdivision 1, not to exceed any charge limitation established 13.16 by the Medicare program or state law, the usual and customary 13.17 hospital and medical expenses and supplies, described in section 13.18 62E.06, subdivision 1, while in a foreign country, and 13.19 prescription drug expenses, not covered by Medicare; 13.20 (5) coverage for the reasonable cost of the first three 13.21 pints of blood, or equivalent quantities of packed red blood 13.22 cells as defined under federal regulations under Medicare parts 13.23 A and B, unless replaced in accordance with federal regulations; 13.24 (6) 100 percent of the cost of immunizations not otherwise 13.25 covered under Part D of the Medicare program and routine 13.26 screening procedures for cancer, including mammograms and pap 13.27 smears; 13.28 (7) preventive medical care benefit: coverage for the 13.29 following preventive health services not covered by Medicare: 13.30 (i) an annual clinical preventive medical history and 13.31 physical examination that may include tests and services from 13.32 clause (ii) and patient education to address preventive health 13.33 care measures; 13.34 (ii)any one or a combination of the followingpreventive 13.35 screening tests or preventive services, the selection and 13.36 frequency of which isconsidereddetermined to be medically 14.1 appropriate:by the attending physician. 14.2(A) fecal occult blood test and/or digital rectal14.3examination;14.4(B) dipstick urinalysis for hematuria, bacteriuria, and14.5proteinuria;14.6(C) pure tone (air only) hearing screening test14.7administered or ordered by a physician;14.8(D) serum cholesterol screening every five years;14.9(E) thyroid function test;14.10(F) diabetes screening;14.11(iii) any other tests or preventive measures determined14.12appropriate by the attending physician.14.13 Reimbursement shall be for the actual charges up to 100 14.14 percent of the Medicare-approved amount for each service as if 14.15 Medicare were to cover the service as identified in American 14.16 Medical Association current procedural terminology (AMA CPT) 14.17 codes to a maximum of $120 annually under this benefit. This 14.18 benefit shall not include payment for any procedure covered by 14.19 Medicare; 14.20 (8) at-home recovery benefit: coverage for services to 14.21 provide short-term at-home assistance with activities of daily 14.22 living for those recovering from an illness, injury, or surgery: 14.23 (i) for purposes of this benefit, the following definitions 14.24 shall apply: 14.25 (A) "activities of daily living" include, but are not 14.26 limited to, bathing, dressing, personal hygiene, transferring, 14.27 eating, ambulating, assistance with drugs that are normally 14.28 self-administered, and changing bandages or other dressings; 14.29 (B) "care provider" means a duly qualified or licensed home 14.30 health aide/homemaker, personal care aide, or nurse provided 14.31 through a licensed home health care agency or referred by a 14.32 licensed referral agency or licensed nurses registry; 14.33 (C) "home" means a place used by the insured as a place of 14.34 residence, provided that the place would qualify as a residence 14.35 for home health care services covered by Medicare. A hospital 14.36 or skilled nursing facility shall not be considered the 15.1 insured's place of residence; 15.2 (D) "at-home recovery visit" means the period of a visit 15.3 required to provide at-home recovery care, without limit on the 15.4 duration of the visit, except each consecutive four hours in a 15.5 24-hour period of services provided by a care provider is one 15.6 visit; 15.7 (ii) coverage requirements and limitations: 15.8 (A) at-home recovery services provided must be primarily 15.9 services that assist in activities of daily living; 15.10 (B) the insured's attending physician must certify that the 15.11 specific type and frequency of at-home recovery services are 15.12 necessary because of a condition for which a home care plan of 15.13 treatment was approved by Medicare; 15.14 (C) coverage is limited to: 15.15 (I) no more than the number and type of at-home recovery 15.16 visits certified as medically necessary by the insured's 15.17 attending physician. The total number of at-home recovery 15.18 visits shall not exceed the number of Medicare-approved home 15.19 health care visits under a Medicare-approved home care plan of 15.20 treatment; 15.21 (II) the actual charges for each visit up to a maximum 15.22 reimbursement of $100 per visit; 15.23 (III) $4,000 per calendar year; 15.24 (IV) seven visits in any one week; 15.25 (V) care furnished on a visiting basis in the insured's 15.26 home; 15.27 (VI) services provided by a care provider as defined in 15.28 this section; 15.29 (VII) at-home recovery visits while the insured is covered 15.30 under the policy or certificate and not otherwise excluded; 15.31 (VIII) at-home recovery visits received during the period 15.32 the insured is receiving Medicare-approved home care services or 15.33 no more than eight weeks after the service date of the last 15.34 Medicare-approved home health care visit; 15.35 (iii) coverage is excluded for: 15.36 (A) home care visits paid for by Medicare or other 16.1 government programs; and 16.2 (B) care provided by unpaid volunteers or providers who are 16.3 not care providers. 16.4 Sec. 14. Minnesota Statutes 2004, section 62A.316, is 16.5 amended to read: 16.6 62A.316 [BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.] 16.7 (a) The basic Medicare supplement plan must have a level of 16.8 coverage that will provide: 16.9 (1) coverage for all of the Medicare part A inpatient 16.10 hospital coinsurance amounts, and 100 percent of all Medicare 16.11 part A eligible expenses for hospitalization not covered by 16.12 Medicare, after satisfying the Medicare part A deductible; 16.13 (2) coverage for the daily co-payment amount of Medicare 16.14 part A eligible expenses for the calendar year incurred for 16.15 skilled nursing facility care; 16.16 (3) coverage for the coinsurance amount, or in the case of 16.17 outpatient department services paid under a prospective payment 16.18 system, the co-payment amount, of Medicare eligible expenses 16.19 under Medicare part B regardless of hospital confinement, 16.20 subject to the Medicare part B deductible amount; 16.21 (4) 80 percent of the hospital and medical expenses and 16.22 supplies incurred during travel outside the United States as a 16.23 result of a medical emergency; 16.24 (5) coverage for the reasonable cost of the first three 16.25 pints of blood, or equivalent quantities of packed red blood 16.26 cells as defined under federal regulations under Medicare parts 16.27 A and B, unless replaced in accordance with federal regulations; 16.28 (6) 100 percent of the cost of immunizations not otherwise 16.29 covered under Part D of the Medicare program and routine 16.30 screening procedures for cancer screening including mammograms 16.31 and pap smears; and 16.32 (7) 80 percent of coverage for all physician prescribed 16.33 medically appropriate and necessary equipment and supplies used 16.34 in the management and treatment of diabetes not otherwise 16.35 covered under Part D of the Medicare program. Coverage must 16.36 include persons with gestational, type I, or type II diabetes. 17.1 (b) Only the following optional benefit riders may be added 17.2 to this plan: 17.3 (1) coverage for all of the Medicare part A inpatient 17.4 hospital deductible amount; 17.5 (2) a minimum of 80 percent of eligible medical expenses 17.6 and supplies not covered by Medicare part B, not to exceed any 17.7 charge limitation established by the Medicare program or state 17.8 law; 17.9 (3) coverage for all of the Medicare part B annual 17.10 deductible; 17.11 (4) coverage for at least 50 percent, or the equivalent of 17.12 50 percent, of usual and customary prescription drug expenses; 17.13 (5)coverage for the followingpreventivehealth services17.14 medical care benefit coverage for the following preventative 17.15 health services not covered by Medicare: 17.16 (i) an annual clinical preventive medical history and 17.17 physical examination that may include tests and services from 17.18 clause (ii) and patient education to address preventive health 17.19 care measures; 17.20 (ii)any one or a combination of the followingpreventive 17.21 screening tests or preventive services, the selection and 17.22 frequency of which isconsidereddetermined to be medically 17.23 appropriate:by the attending physician. 17.24(A) fecal occult blood test and/or digital rectal17.25examination;17.26(B) dipstick urinalysis for hematuria, bacteriuria, and17.27proteinuria;17.28(C) pure tone (air only) hearing screening test,17.29administered or ordered by a physician;17.30(D) serum cholesterol screening every five years;17.31(E) thyroid function test;17.32(F) diabetes screening;17.33(iii) any other tests or preventive measures determined17.34appropriate by the attending physician.17.35 Reimbursement shall be for the actual charges up to 100 17.36 percent of the Medicare-approved amount for each service, as if 18.1 Medicare were to cover the service as identified in American 18.2 Medical Association current procedural terminology (AMA CPT) 18.3 codes, to a maximum of $120 annually under this benefit. This 18.4 benefit shall not include payment for a procedure covered by 18.5 Medicare; 18.6 (6) coverage for services to provide short-term at-home 18.7 assistance with activities of daily living for those recovering 18.8 from an illness, injury, or surgery: 18.9 (i) For purposes of this benefit, the following definitions 18.10 apply: 18.11 (A) "activities of daily living" include, but are not 18.12 limited to, bathing, dressing, personal hygiene, transferring, 18.13 eating, ambulating, assistance with drugs that are normally 18.14 self-administered, and changing bandages or other dressings; 18.15 (B) "care provider" means a duly qualified or licensed home 18.16 health aide/homemaker, personal care aid, or nurse provided 18.17 through a licensed home health care agency or referred by a 18.18 licensed referral agency or licensed nurses registry; 18.19 (C) "home" means a place used by the insured as a place of 18.20 residence, provided that the place would qualify as a residence 18.21 for home health care services covered by Medicare. A hospital 18.22 or skilled nursing facility shall not be considered the 18.23 insured's place of residence; 18.24 (D) "at-home recovery visit" means the period of a visit 18.25 required to provide at-home recovery care, without limit on the 18.26 duration of the visit, except each consecutive four hours in a 18.27 24-hour period of services provided by a care provider is one 18.28 visit; 18.29 (ii) Coverage requirements and limitations: 18.30 (A) at-home recovery services provided must be primarily 18.31 services that assist in activities of daily living; 18.32 (B) the insured's attending physician must certify that the 18.33 specific type and frequency of at-home recovery services are 18.34 necessary because of a condition for which a home care plan of 18.35 treatment was approved by Medicare; 18.36 (C) coverage is limited to: 19.1 (I) no more than the number and type of at-home recovery 19.2 visits certified as necessary by the insured's attending 19.3 physician. The total number of at-home recovery visits shall 19.4 not exceed the number of Medicare-approved home care visits 19.5 under a Medicare-approved home care plan of treatment; 19.6 (II) the actual charges for each visit up to a maximum 19.7 reimbursement of $40 per visit; 19.8 (III) $1,600 per calendar year; 19.9 (IV) seven visits in any one week; 19.10 (V) care furnished on a visiting basis in the insured's 19.11 home; 19.12 (VI) services provided by a care provider as defined in 19.13 this section; 19.14 (VII) at-home recovery visits while the insured is covered 19.15 under the policy or certificate and not otherwise excluded; 19.16 (VIII) at-home recovery visits received during the period 19.17 the insured is receiving Medicare-approved home care services or 19.18 no more than eight weeks after the service date of the last 19.19 Medicare-approved home health care visit; 19.20 (iii) Coverage is excluded for: 19.21 (A) home care visits paid for by Medicare or other 19.22 government programs; and 19.23 (B) care provided by family members, unpaid volunteers, or 19.24 providers who are not care providers; 19.25 (7) coverage for at least 50 percent, or the equivalent of 19.26 50 percent, of usual and customary prescription drug expenses to 19.27 a maximum of $1,200 paid by the issuer annually under this 19.28 benefit. An issuer of Medicare supplement insurance policies 19.29 that elects to offer this benefit rider shall also make 19.30 available coverage that contains the rider specified in clause 19.31 (4). 19.32 Sec. 15. Minnesota Statutes 2004, section 62E.13, 19.33 subdivision 2, is amended to read: 19.34 Subd. 2. [SELECTION OF WRITING CARRIER.] The association 19.35 may select policies and contracts, or parts thereof, submitted 19.36 by a member or members of the association, or by the association 20.1 or others, to develop specifications for bids from any entity 20.2 which wishes to be selected as a writing carrier to administer 20.3 the state plan. The selection of the writing carrier shall be 20.4 based upon criteria established by the board of directors of the 20.5 association and approved by the commissioner. The criteria 20.6 shall outline specific qualifications that an entity must 20.7 satisfy in order to be selected and, at a minimum, shall include 20.8 the entity's proven ability to handle large group accident and 20.9 health insurance cases, efficient claim paying capacity, and the 20.10 estimate of total charges for administering the plan. The 20.11 association may select separate writing carriers for the two 20.12 types of qualified plans and the $2,000, $5,000, and $10,000 20.13 deductible plans, thequalifiedMedicare supplementplanplans, 20.14 and the health maintenance organization contract. 20.15 Sec. 16. Minnesota Statutes 2004, section 62Q.471, is 20.16 amended to read: 20.17 62Q.471 [EXCLUSION FOR SUICIDE ATTEMPTS PROHIBITED.] 20.18 (a) No health plan may exclude or reduce coverage for 20.19 health care for an enrollee who is otherwise covered under the 20.20 health plan on the basis that the need for the health care arose 20.21 out of a suicide or suicide attempt by the enrollee. 20.22 (b) For purposes of this section, "health plan" has the 20.23 meaning given in section 62Q.01, subdivision 3, but includes the 20.24 coverages described in section 62A.011, clauses (4), (6), 20.25 and (7)andthrough (10). 20.26 Sec. 17. Minnesota Statutes 2004, section 65A.29, 20.27 subdivision 11, is amended to read: 20.28 Subd. 11. [NONRENEWAL.] Every insurer shall establish a 20.29 plan that sets out the minimum number and amount of claims 20.30 during an experience period that may result in a 20.31 nonrenewal. For purposes of the plan, the insurer may not 20.32 consider as a claim the insured's inquiry about a hypothetical 20.33 claim, or the insured's inquiry to the insured's agent regarding 20.34 a potential claim. 20.35 No homeowner's insurance policy may be nonrenewed based on 20.36 the insured's loss experience unless the insurer has sent a 21.1 written notice that any future losses may result in nonrenewal 21.2 due to loss experience. 21.3 Any nonrenewal of a homeowner's insurance policy must, at a 21.4 minimum, comply with the requirements of subdivision 8 and the 21.5 rules adopted by the commissioner. 21.6 Sec. 18. Minnesota Statutes 2004, section 65B.48, 21.7 subdivision 3, is amended to read: 21.8 Subd. 3. Self-insurance, subject to approval of the 21.9 commissioner, is effected by filing with the commissioner in 21.10 satisfactory form: 21.11 (1) a continuing undertaking by the owner or other 21.12 appropriate person to pay tort liabilities or basic economic 21.13 loss benefits, or both, and to perform all other obligations 21.14 imposed by sections 65B.41 to 65B.71; 21.15 (2) evidence that appropriate provision exists for prompt 21.16 administration of all claims, benefits, and obligations provided 21.17 by sections 65B.41 to 65B.71; 21.18 (3) evidence that reliable financial arrangements, 21.19 deposits, or commitments exist providing assurance, 21.20 substantially equivalent to that afforded by a policy of 21.21 insurance complying with sections 65B.41 to 65B.71, for payment 21.22 of tort liabilities, basic economic loss benefits, and all other 21.23 obligations imposed by sections 65B.41 to 65B.71; and 21.24 (4) a nonrefundable initial application fee 21.25 of$1,500$2,500 andan annuala renewal fee of$400$1,200 21.26 for political subdivisions and$500$1,500 for nonpolitical 21.27 entities every three years. 21.28 Sec. 19. Minnesota Statutes 2004, section 72A.20, 21.29 subdivision 13, is amended to read: 21.30 Subd. 13. [REFUSAL TO RENEW.] Refusing to renew, declining 21.31 to offer or write, or charging differential rates for an 21.32 equivalent amount of homeowner's insurance coverage, as defined 21.33 by section 65A.27, for property located in a town or statutory 21.34 or home rule charter city, in which the insurer offers to sell 21.35 or writes homeowner's insurance, solely because: 21.36 (a) of the geographic area in which the property is 22.1 located; 22.2 (b) of the age of the primary structure sought to be 22.3 insured; 22.4 (c) the insured or prospective insured was denied coverage 22.5 of the property by another insurer, whether by cancellation, 22.6 nonrenewal or declination to offer coverage, for a reason other 22.7 than those specified in section 65A.01, subdivision 3a, clauses 22.8 (a) to (e);or22.9 (d) the property of the insured or prospective insured has 22.10 been insured under the Minnesota FAIR Plan Act, shall constitute 22.11 an unfair method of competition and an unfair and deceptive act 22.12 or practice; or 22.13 (e) the insured has inquired about coverage for a 22.14 hypothetical claim or has made an inquiry to the insured's agent 22.15 regarding a potential claim. 22.16 This subdivision prohibits an insurer from filing or 22.17 charging different rates for different zip code areas within the 22.18 same town or statutory or home rule charter city. 22.19 This subdivision shall not prohibit the insurer from 22.20 applying underwriting or rating standards which the insurer 22.21 applies generally in all other locations in the state and which 22.22 are not specifically prohibited by clauses (a) to(d)(e). Such 22.23 underwriting or rating standards shall specifically include but 22.24 not be limited to standards based upon the proximity of the 22.25 insured property to an extraordinary hazard or based upon the 22.26 quality or availability of fire protection services or based 22.27 upon the density or concentration of the insurer's risks. 22.28 Clause (b) shall not prohibit the use of rating standards based 22.29 upon the age of the insured structure's plumbing, electrical, 22.30 heating or cooling system or other part of the structure, the 22.31 age of which affects the risk of loss. Any insurer's failure to 22.32 comply with section 65A.29, subdivisions 2 to 4, either (1) by 22.33 failing to give an insured or applicant the required notice or 22.34 statement or (2) by failing to state specifically a bona fide 22.35 underwriting or other reason for the refusal to write shall 22.36 create a presumption that the insurer has violated this 23.1 subdivision. 23.2 Sec. 20. Minnesota Statutes 2004, section 72A.20, 23.3 subdivision 36, is amended to read: 23.4 Subd. 36. [LIMITATIONS ON THE USE OF CREDIT INFORMATION.] 23.5 (a) No insurer or group of affiliated insurers may reject, 23.6 cancel, or nonrenew a policy of private passenger motor vehicle 23.7 insurance as defined under section 65B.01 or a policy of 23.8 homeowner's insurance as defined under section 65A.27, for any 23.9 person in whole or in part on the basis of credit information, 23.10 including a credit reporting product known as a "credit score" 23.11 or "insurance score," without consideration and inclusion of any 23.12 other applicable underwriting factor. 23.13 (b) If credit information, credit scoring, or insurance 23.14 scoring is to be used in underwriting, the insurer must disclose 23.15 to the consumer that credit information will be obtained and 23.16 used as part of the insurance underwriting process. 23.17 (c) Insurance inquiries and non-consumer-initiated 23.18 inquiries must not be used as part of the credit scoring or 23.19 insurance scoring process. 23.20 (d) If a credit score, insurance score, or other credit 23.21 information relating to a consumer, with respect to the types of 23.22 insurance referred to in paragraph (a), is adversely impacted or 23.23 cannot be generated because of the absence of a credit history, 23.24 the insurer must exclude the use of credit as a factor in the 23.25 decision to reject, cancel, or nonrenew. 23.26 (e) Insurers must upon the request of a policyholder 23.27 reevaluate the policyholder's score. Any change in premium 23.28 resulting from the reevaluation must be effective upon the 23.29 renewal of the policy. An insurer is not required to reevaluate 23.30 a policyholder's score pursuant to this paragraph more than 23.31 twice in any given calendar year. 23.32 (f) Insurers must upon request of the applicant or 23.33 policyholder provide reasonable underwriting exceptions based 23.34 upon prior credit histories for persons whose credit information 23.35 is unduly influenced by expenses related to a catastrophic 23.36 injury or illness, temporary loss of employment, or the death of 24.1 an immediate family member. The insurer may require reasonable 24.2 documentation of these events prior to granting an exception. 24.3(f)(g) A credit scoring or insurance scoring methodology 24.4 must not be used by an insurer if the credit scoring or 24.5 insurance scoring methodology incorporates the gender, race, 24.6 nationality, or religion of an insured or applicant. 24.7(g)(h) Insurers that employ a credit scoring or insurance 24.8 scoring system in underwriting of coverage described in 24.9 paragraph (a) must have on file with the commissioner: 24.10 (1) the insurer's credit scoring or insurance scoring 24.11 methodology; and 24.12 (2) information that supports the insurer's use of a credit 24.13 score or insurance score as an underwriting criterion. 24.14(h)(i) Insurers described in paragraph (g) shall file the 24.15 required information with the commissioner within 120 days of 24.16 August 1, 2002, or prior to implementation of a credit scoring 24.17 or insurance scoring system by the insurer, if that date is 24.18 later. 24.19(i)(j) Information provided by, or on behalf of, an 24.20 insurer to the commissioner under this subdivision is trade 24.21 secret information under section 13.37. 24.22 Sec. 21. Minnesota Statutes 2004, section 79.211, is 24.23 amended by adding a subdivision to read: 24.24 Subd. 4. [EXPERIENCE MODIFICATION FACTOR REVISION FOR 24.25 CERTAIN CLOSED CLAIMS.] An insurer or an employer insured under 24.26 a workers' compensation policy subject to an experience rating 24.27 plan may request in writing of the data service organization 24.28 computing the policy's experience modification factor that the 24.29 most recent factor be revised if each of the following criteria 24.30 is met: 24.31 (1) a workers' compensation claim under that policy is 24.32 closed between the normal valuation date for that claim and the 24.33 next time that valuation is used in experience modification 24.34 factor on the policy; 24.35 (2) the data service organization receives a revised unit 24.36 statistical report containing data on the closed claim in a form 25.1 consistent with its filed unit statistical plan; and 25.2 (3) inclusion of the closed claim in the experience 25.3 modification factor calculation would impact that factor by five 25.4 percentage points or more. 25.5 Sec. 22. Minnesota Statutes 2004, section 79.40, is 25.6 amended to read: 25.7 79.40 [PREMIUM INCLUSION IN RATEMAKING.] 25.8 Premiums charged members by the reinsurance association 25.9 shall be recognized in the ratemaking procedures for insurance 25.10 ratesin the same manner as assessments for the special25.11compensation fund. 25.12 Sec. 23. Minnesota Statutes 2004, section 79.56, 25.13 subdivision 1, is amended to read: 25.14 Subdivision 1. [PREFILING OF RATES.] (a) Each insurer 25.15 shall file with the commissioner a complete copy of its rates 25.16 and rating plan, and all changes and amendments thereto, and 25.17 such supporting data and information that the commissioner may 25.18 by rule require, at least 60 days prior to its effective date. 25.19 The commissioner shall advise an insurer within 30 days of the 25.20 filing if its submission is not accompanied with such supporting 25.21 data and information that the commissioner by rule may require. 25.22 The commissioner may extend the filing review period and 25.23 effective date for an additional 30 days if an insurer, after 25.24 having been advised of what supporting data and information is 25.25 necessary to complete its filing, does not provide such 25.26 information within 15 days of having been so notified. If any 25.27 rate or rating plan filing or amendment thereto is not 25.28 disapproved by the commissioner within the filing review period, 25.29 the insurer may implement it. For the period August 1, 1995, to 25.30 December 31, 1995, the filing shall be made at least 90 days 25.31 prior to the effective date and the department shall advise an 25.32 insurer within 60 days of such filing if the filing is 25.33 insufficient under this section. 25.34 (b) A rating plan or rates are not subject to the 25.35 requirements of paragraph (a), where the insurer files a 25.36 certification verifying that it will use the mutually agreed 26.1 upon rating plan or rates only to write a specific employer that 26.2 generates $250,000 in annual written workers' compensation 26.3 premiums before the application of any large deductible rating 26.4 plan. The certification must be refiled upon each renewal of 26.5 the employer's policy. The $250,000 threshold includes premiums 26.6 generated in any state. The designation and certification must 26.7 be submitted in substantially the following form: 26.8 Name and address of insurer:................................. 26.9 Name and address of insured employer:........................ 26.10 Policy period:............................................... 26.11 I certify that the employer named above generates $250,000 or 26.12 more in annual countrywide written workers' compensation 26.13 premiums, and that the calculation of this threshold is based on 26.14 the rates and rating plans that have been approved by the 26.15 appropriate state regulatory authority. The filing of this 26.16 certification authorizes the use of this rate or rating plan 26.17 only for the named employer. 26.18 Name of responsible officer:................................. 26.19 Title:....................................................... 26.20 Signature:................................................... 26.21 Sec. 24. Minnesota Statutes 2004, section 79.56, 26.22 subdivision 3, is amended to read: 26.23 Subd. 3. [PENALTIES.](a)Any insurer using a rate or a 26.24 rating plan which has not been filed or certified under 26.25 subdivision 1 shall be subject to a fine of up to $100 for each 26.26 day the failure to file continues. The commissioner may, after 26.27 a hearing on the record, find that the failure is willful. A 26.28 willful failure to meet filing requirements shall be punishable 26.29 by a fine of up to $500 for each day during which a willful 26.30 failure continues. These penalties shall be in addition to any 26.31 other penalties provided by law. 26.32(b) Notwithstanding this subdivision, an employer that26.33generates $250,000 in annual written workers' compensation26.34premium under the rates and rating plan of an insurer before the26.35application of any large deductible rating plans, may be written26.36by that insurer using rates or rating plans that are not subject27.1to disapproval but which have been filed. For the purposes of27.2this paragraph, written workers' compensation premiums generated27.3from states other than Minnesota are included in calculating the27.4$250,000 threshold for large risk alternative rating option27.5plans.27.6 Sec. 25. Minnesota Statutes 2004, section 79.62, 27.7 subdivision 3, is amended to read: 27.8 Subd. 3. [ISSUANCE.] The commissioner, upon finding that 27.9 the applicant organization is qualified to provide the services 27.10 required and proposed, or has contracted with a licensed data 27.11 service organization to purchase these services which are 27.12 required by this chapter but are not provided directly by the 27.13 applicant, and that all requirements of law are met, shall issue 27.14 a license. Each license is subject to annual renewal effective 27.15 June 30. Each new or renewal license application must be 27.16 accompanied by a fee of$50$1,000. 27.17 Sec. 26. Minnesota Statutes 2004, section 79A.03, 27.18 subdivision 9, is amended to read: 27.19 Subd. 9. [FILING REPORTS.] (a) Incurred losses, paid and 27.20 unpaid, specifying indemnity and medical losses by 27.21 classification, payroll by classification, and current estimated 27.22 outstanding liability for workers' compensation shall be 27.23 reported to the commissioner by each self-insurer on a calendar 27.24 year basis, in a manner and on forms available from the 27.25 commissioner. Payroll information must be filed by April 1 of 27.26 the following year. 27.27 (b) Each self-insurer shall, under oath, attest to the 27.28 accuracy of each report submitted pursuant to paragraph (a). 27.29 Upon sufficient cause, the commissioner shall require the 27.30 self-insurer to submit a certified audit of payroll and claim 27.31 records conducted by an independent auditor approved by the 27.32 commissioner, based on generally accepted accounting principles 27.33 and generally accepted auditing standards, and supported by an 27.34 actuarial review and opinion of the future contingent 27.35 liabilities. The basis for sufficient cause shall include the 27.36 following factors: where the losses reported appear 28.1 significantly different from similar types of businesses; where 28.2 major changes in the reports exist from year to year, which are 28.3 not solely attributable to economic factors; or where the 28.4 commissioner has reason to believe that the losses and payroll 28.5 in the report do not accurately reflect the losses and payroll 28.6 of that employer. If any discrepancy is found, the commissioner 28.7 shall require changes in the self-insurer's or workers' 28.8 compensation service company record-keeping practices. 28.9 (c) An annual status report due August 1 by each 28.10 self-insurer shall be filed in a manner and on forms prescribed 28.11 by the commissioner. 28.12 (d) Each individual self-insurer shall, within four months 28.13 after the end of its fiscal year, annually file with the 28.14 commissioner its latest 10K report required by the Securities 28.15 and Exchange Commission. If an individual self-insurer does not 28.16 prepare a 10K report, it shall file an annual certified 28.17 financial statement, together with such other financial 28.18 information as the commissioner may require to substantiate data 28.19 in the financial statement. 28.20 (e) Each member of the group shall, withinsevensix months 28.21 after the end of each fiscal year for that group,filesubmit to 28.22 a certified public accountant designated by the group, the most 28.23 recent annual financial statement, reviewed by a certified 28.24 public accountant in accordance with the Statements on Standards 28.25 for Accounting and Review Services, Volume 2, the American 28.26 Institute of Certified Public Accountants Professional 28.27 Standards, or audited in accordance with generally accepted 28.28 auditing standards, together with such other financial 28.29 information the commissioner may require. In addition, the 28.30 group shall file with the commissioner, within seven months 28.31 after the end of each fiscal year for that group, combining 28.32 financial statements of the group members, compiled by a 28.33 certified public accountant in accordance with the Statements on 28.34 Standards for Accounting and Review Services, Volume 2, the 28.35 American Institute of Certified Public Accountants Professional 28.36 Standards. The combining financial statements shall include, 29.1 but not be limited to, a balance sheet, income statement, 29.2 statement of changes in net worth, and statement of cash flow. 29.3 Each combining financial statement shall include a column for 29.4 each individual group member along with a total column. Each 29.5 combined statement shall have a statement from the certified 29.6 public accountant confirming that each member has submitted the 29.7 required financial statement as defined in this section. The 29.8 certified public accountant shall notify the commissioner if any 29.9 statement is qualified or otherwise conditional. The 29.10 commissioner may require additional financial information from 29.11 any group member. 29.12 Where a group has 50 or more members, the group shall file, 29.13 in lieu of the combining financial statements, a combined 29.14 financial statement showing only the total column for the entire 29.15 group's balance sheet, income statement, statement of changes in 29.16 net worth, and statement of cash flow. Additionally, the group 29.17 shall disclose, for each member, the total assets, net worth, 29.18 revenue, and income for the most recent fiscal year. The 29.19 combining and combined financial statements may omit all 29.20 footnote disclosures. 29.21 (f) In addition to the financial statements required by 29.22 paragraphs (d) and (e), interim financial statements or 10Q 29.23 reports required by the Securities and Exchange Commission may 29.24 be required by the commissioner upon an indication that there 29.25 has been deterioration in the self-insurer's financial 29.26 condition, including a worsening of current ratio, lessening of 29.27 net worth, net loss of income, the downgrading of the company's 29.28 bond rating, or any other significant change that may adversely 29.29 affect the self-insurer's ability to pay expected losses. Any 29.30 self-insurer that files an 8K report with the Securities and 29.31 Exchange Commission shall also file a copy of the report with 29.32 the commissioner within 30 days of the filing with the 29.33 Securities and Exchange Commission. 29.34 Sec. 27. Minnesota Statutes 2004, section 79A.04, 29.35 subdivision 2, is amended to read: 29.36 Subd. 2. [MINIMUM DEPOSIT.] The minimum deposit is 110 30.1 percent of the private self-insurer's estimated future 30.2 liability. The deposit may be used to secure payment of all 30.3 administrative and legal costs, and unpaid assessments required 30.4 by section 79A.12, subdivision 2, relating to or arising from 30.5 its or other employers' self-insuring. As used in this section, 30.6 "private self-insurer" includes both current and former members 30.7 of the self-insurers' security fund; and "private self-insurers' 30.8 estimated future liability" means the private self-insurers' 30.9 total of estimated future liability as determined by an 30.10 Associate or Fellow of the Casualty Actuarial Society every year 30.11 for group member private self-insurers and, for a nongroup 30.12 member private self-insurer's authority to self-insure, every 30.13 year for the first five years. After the first five years, the 30.14 nongroup member's total shall be as determined by an Associate 30.15 or Fellow of the Casualty Actuarial Society at least every two 30.16 years, and each such actuarial study shall include a projection 30.17 of future losses during the period until the next scheduled 30.18 actuarial study, less payments anticipated to be made during 30.19 that time. 30.20 All data and information furnished by a private 30.21 self-insurer to an Associate or Fellow of the Casualty Actuarial 30.22 Society for purposes of determining private self-insurers' 30.23 estimated future liability must be certified by an officer of 30.24 the private self-insurer to be true and correct with respect to 30.25 payroll and paid losses, and must be certified, upon information 30.26 and belief, to be true and correct with respect to reserves. 30.27 The certification must be made by sworn affidavit. In addition 30.28 to any other remedies provided by law, the certification of 30.29 false data or information pursuant to this subdivision may 30.30 result in a fine imposed by the commissioner of commerce on the 30.31 private self-insurer up to the amount of $5,000, and termination 30.32 of the private self-insurers' authority to self-insure. The 30.33 determination of private self-insurers' estimated future 30.34 liability by an Associate or Fellow of the Casualty Actuarial 30.35 Society shall be conducted in accordance with standards and 30.36 principles for establishing loss and loss adjustment expense 31.1 reserves by the Actuarial Standards Board, an affiliate of the 31.2 American Academy of Actuaries. The commissioner may reject an 31.3 actuarial report that does not meet the standards and principles 31.4 of the Actuarial Standards Board, and may further disqualify the 31.5 actuary who prepared the report from submitting any future 31.6 actuarial reports pursuant to this chapter. Within 30 days 31.7 after the actuary has been served by the commissioner with a 31.8 notice of disqualification, an actuary who is aggrieved by the 31.9 disqualification may request a hearing to be conducted in 31.10 accordance with chapter 14. Based on a review of the actuarial 31.11 report, the commissioner of commerce may require an increase in 31.12 the minimum security deposit in an amount the commissioner 31.13 considers sufficient. 31.14 Estimated future liability is determined by first taking 31.15 the total amount of the self-insured's future liability of 31.16 workers' compensation claims and then deducting the total amount 31.17 which is estimated to be returned to the self-insurer from any 31.18 specific excess insurance coverage, aggregate excess insurance 31.19 coverage, and any supplementary benefits or second injury 31.20 benefits which are estimated to be reimbursed by the special 31.21 compensation fund. However, in the determination of estimated 31.22 future liability, the actuary for the self-insurer shall not 31.23 take a credit for any excess insurance or reinsurance which is 31.24 provided by a captive insurance company which is wholly owned by 31.25 the self-insurer. Supplementary benefits or second injury 31.26 benefits will not be reimbursed by the special compensation fund 31.27 unless the special compensation fund assessment pursuant to 31.28 section 176.129 is paid and the reports required thereunder are 31.29 filed with the special compensation fund. In the case of surety 31.30 bonds, bonds shall secure administrative and legal costs in 31.31 addition to the liability for payment of compensation reflected 31.32 on the face of the bond. In no event shall the security be less 31.33 than the last retention limit selected by the self-insurer with 31.34 the Workers' Compensation Reinsurance Association, provided that 31.35 the commissioner may allow former members to post less than the 31.36 Workers' Compensation Reinsurance Association retention level if 32.1 that amount is adequate to secure payment of the self-insurers' 32.2 estimated future liability, as defined in this subdivision, 32.3 including payment of claims, administrative and legal costs, and 32.4 unpaid assessments required by section 79A.12, subdivision 2. 32.5 The posting or depositing of security pursuant to this section 32.6 shall release all previously posted or deposited security from 32.7 any obligations under the posting or depositing and any surety 32.8 bond so released shall be returned to the surety. Any other 32.9 security shall be returned to the depositor or the person 32.10 posting the bond. 32.11 As a condition for the granting or renewing of a 32.12 certificate to self-insure, the commissioner may require a 32.13 private self-insurer to furnish any additional security the 32.14 commissioner considers sufficient to insure payment of all 32.15 claims under chapter 176. 32.16 Sec. 28. Minnesota Statutes 2004, section 79A.04, 32.17 subdivision 10, is amended to read: 32.18 Subd. 10. [NOTICE; OBLIGATION OF FUND.] In the event of 32.19 bankruptcy, insolvency, or certificate of default, the 32.20 commissioner shall immediately notify by certified mail the 32.21 commissioner of finance, the surety, the issuer of an 32.22 irrevocable letter of credit, and any custodian of the security 32.23 required in this chapter. At the time of notification, the 32.24 commissioner shall also call the security and transfer and 32.25 assign it to the self-insurers' security fund. The commissioner 32.26 shall also immediately notify by certified mail the 32.27 self-insurers' security fund, and order the security fund to 32.28 assume the insolvent self-insurers' obligations for which it is 32.29 liable under chapter 176. The security fund shall commence 32.30 payment of these obligations within 14 days of receipt of this 32.31 notification and order. Payments shall be made to claimants 32.32 whose entitlement to benefits can be ascertained by the security 32.33 fund, with or without proceedings before the Department of Labor 32.34 and Industry, the Office of Administrative Hearings, the 32.35 Workers' Compensation Court of Appeals, or the Minnesota Supreme 32.36 Court. Upon the assumption of obligations by the security fund 33.1 pursuant to the commissioner's notification and order, the 33.2 security fund has the right to immediate possession of any 33.3 posted or deposited security and the custodian, surety, or 33.4 issuer of any irrevocable letter of credit or the commissioner, 33.5 if in possession of it, shall turn over the security, proceeds 33.6 of the surety bond, or letter of credit to the security fund 33.7 together with the interest that has accrued since the date of 33.8 the self-insured employer's insolvency. The security fund has 33.9 the right to the immediate possession of all relevant worker's 33.10 compensation claim files and data of the self-insurer, and the 33.11 possessor of the files and data must turn the files and data, or 33.12 complete copies of them, over to the security fund within five 33.13 days of the notification provided under this subdivision. If 33.14 the possessor of the files and data fails to timely turn over 33.15 the files and data to the security fund, it is liable to the 33.16 security fund for a penalty of $500 per day for each day after 33.17 the five-day period has expired. The security fund is entitled 33.18 to recover its reasonable attorney fees and costs in any action 33.19 brought to obtain possession of the worker's compensation claim 33.20 files and data of the self-insurer, and for any action to 33.21 recover the penalties provided by this subdivision. The 33.22 self-insurers' security fund may administer payment of benefits 33.23 or it may retain a third-party administrator to do so. 33.24 Sec. 29. Minnesota Statutes 2004, section 79A.06, 33.25 subdivision 5, is amended to read: 33.26 Subd. 5. [PRIVATE EMPLOYERS WHO HAVE CEASED TO BE 33.27 SELF-INSURED.] (a) Private employers who have ceased to be 33.28 private self-insurers shall discharge their continuing 33.29 obligations to secure the payment of compensation which is 33.30 accrued during the period of self-insurance, for purposes of 33.31 Laws 1988, chapter 674, sections 1 to 21, by compliance with all 33.32 of the following obligations of current certificate holders: 33.33 (1) Filing reports with the commissioner to carry out the 33.34 requirements of this chapter; 33.35 (2) Depositing and maintaining a security deposit for 33.36 accrued liability for the payment of any compensation which may 34.1 become due, pursuant to chapter 176. However, if a private 34.2 employer who has ceased to be a private self-insurer purchases 34.3 an insurance policy from an insurer authorized to transact 34.4 workers' compensation insurance in this state which provides 34.5 coverage of all claims for compensation arising out of injuries 34.6 occurring during the entire period the employer was 34.7 self-insured, whether or not reported during that period, the 34.8 policy will: 34.9 (i) discharge the obligation of the employer to maintain a 34.10 security deposit for the payment of the claims covered under the 34.11 policy; 34.12 (ii) discharge any obligation which the self-insurers' 34.13 security fund has or may have for payment of all claims for 34.14 compensation arising out of injuries occurring during the period 34.15 the employer was self-insured, whether or not reported during 34.16 that period; and 34.17 (iii) discharge the obligations of the employer to pay any 34.18 future assessments to the self-insurers' security fund. 34.19 A private employer who has ceased to be a private 34.20 self-insurer may instead buy an insurance policy described 34.21 above, except that it covers only a portion of the period of 34.22 time during which the private employer was self-insured; 34.23 purchase of such a policy discharges any obligation that the 34.24 self-insurers' security fund has or may have for payment of all 34.25 claims for compensation arising out of injuries occurring during 34.26 the period for which the policy provides coverage, whether or 34.27 not reported during that period. 34.28 A policy described in this clause may not be issued by an 34.29 insurer unless it has previously been approved as to form and 34.30 substance by the commissioner; and 34.31 (3) Paying within 30 days all assessments of which notice 34.32 is sent by the security fund, for a period of seven years from 34.33 the last day its certificate of self-insurance was in effect. 34.34 Thereafter, the private employer who has ceased to be a private 34.35 self-insurer may either: (i) continue to pay within 30 days all 34.36 assessments of which notice is sent by the security fund until 35.1 it has no incurred liabilities for the payment of compensation 35.2 arising out of injuries during the period of self-insurance; or 35.3 (ii) pay the security fund a cash payment equal to four percent 35.4 of the net present value of all remaining incurred liabilities 35.5 for the payment of compensation under sections 176.101 and 35.6 176.111 as certified by a member of the casualty actuarial 35.7 society. Assessments shall be based on the benefits paid by the 35.8 employer during the calendar year immediately preceding the 35.9 calendar year in which the employer's right to self-insure is 35.10 terminated or withdrawn. 35.11 (b) With respect to a self-insurer who terminates its 35.12 self-insurance authority after April 1, 1998, that member shall 35.13 obtain and file with the commissioner an actuarial opinion of 35.14 its outstanding liabilities as determined by an associate or 35.15 fellow of the Casualty Actuarial Society within 120 days of the 35.16 date of its termination. If the actuarial opinion is not timely 35.17 filed, the self-insurers' security fund may, at its discretion, 35.18 engage the services of an actuary for this purpose. The expense 35.19 of this actuarial opinion must be assessed against and be the 35.20 obligation of the self-insurer. The commissioner may issue a 35.21 certificate of default against the self-insurer for failure to 35.22 pay this assessment to the self-insurers' security fund as 35.23 provided by section 79A.04, subdivision 9. The opinion must 35.24 separate liability for indemnity benefits from liability from 35.25 medical benefits, and must discount each up to four percent per 35.26 annum to net present value. Within 30 days after notification 35.27 of approval of the actuarial opinion by the commissioner, the 35.28 member shall pay to the security fund an amount equal to 120 35.29 percent of that discounted outstanding indemnity liability, 35.30 multiplied by the greater of the average annualized assessment 35.31 rate since inception of the security fund or the annual rate at 35.32 the time of the most recent assessment before termination. If 35.33 the payment is not made within 30 days of the notification, 35.34 interest on it at the rate prescribed by section 549.09 must be 35.35 paid by the former member to the security fund until the 35.36 principal amount is paid in full. 36.1 (c) A former member who terminated its self-insurance 36.2 authority before April 1, 1998, who has paid assessments to the 36.3 self-insurers' security fund for seven years, and whose 36.4 annualized assessment is $500 or less, may buy out of its 36.5 outstanding liabilities to the self-insurers' security fund by 36.6 an amount calculated as follows: 1.35 multiplied by the 36.7 indemnity case reserves at the time of the calculation, 36.8 multiplied by the then current self-insurers' security fund 36.9 annualized assessment rate. 36.10 (d) A former member who terminated its self-insurance 36.11 authority before April 1, 1998, and who is paying assessments 36.12 within the first seven years after ceasing to be self-insured 36.13 under paragraph (a), clause (3), may elect to buy out its 36.14 outstanding liabilities to the self-insurers' security fund by 36.15 obtaining and filing with the commissioner an actuarial opinion 36.16 of its outstanding liabilities as determined by an associate or 36.17 fellow of the Casualty Actuarial Society. The opinion must 36.18 separate liability for indemnity benefits from liability for 36.19 medical benefits, and must discount each up to four percent per 36.20 annum to net present value. Within 30 days after notification 36.21 of approval of the actuarial opinion by the commissioner, the 36.22 member shall pay to the security fund an amount equal to 120 36.23 percent of that discounted outstanding indemnity liability, 36.24 multiplied by the greater of the average annualized assessment 36.25 rate since inception of the security fund or the annual rate at 36.26 the time of the most recent assessment. 36.27 (e) A former member who has paid the security fund 36.28 according to paragraphs (b) to (d) and subsequently receives 36.29 authority from the commissioner to again self-insure shall be 36.30 assessed under section 79A.12, subdivision 2, only on indemnity 36.31 benefits paid on injuries that occurred after the former member 36.32 received authority to self-insure again; provided that the 36.33 member furnishes verified data regarding those benefits to the 36.34 security fund. 36.35 (f) In addition to proceedings to establish liabilities and 36.36 penalties otherwise provided, a failure to comply may be the 37.1 subject of a proceeding before the commissioner. An appeal from 37.2 the commissioner's determination may be taken pursuant to the 37.3 contested case procedures of chapter 14 within 30 days of the 37.4 commissioner's written determination. 37.5 Any current or past member of the self-insurers' security 37.6 fund is subject to service of process on any claim arising out 37.7 of chapter 176 or this chapter in the manner provided by section 37.8 5.25, or as otherwise provided by law. The issuance of a 37.9 certificate to self-insure to the private self-insured employer 37.10 shall be deemed to be the agreement that any process which is 37.11 served in accordance with this section shall be of the same 37.12 legal force and effect as if served personally within this state. 37.13 Sec. 30. Minnesota Statutes 2004, section 79A.12, 37.14 subdivision 2, is amended to read: 37.15 Subd. 2. [ASSESSMENT.] The security fund may assess each 37.16 of its members a pro rata share of the funding necessary to 37.17 carry out its obligation and the purposes of this chapter. 37.18 Total annual assessments in any calendar year shall not exceed 37.19 ten percent ofthe workers' compensation benefits paid under37.20sections 176.101 and 176.111 during the previouspaid indemnity 37.21 losses, as defined in section 176.129, made by the self-insured 37.22 employer during the preceding calendar year. The annual 37.23 assessment calculation shall not include supplementary benefits 37.24 paid which will be reimbursed by the special compensation fund. 37.25 Funds obtained by assessments pursuant to this subdivision may 37.26 only be used for the purposes of this chapter. The trustees 37.27 shall certify to the commissioner the collection and receipt of 37.28 all money from assessments, noting any delinquencies. The 37.29 trustees shall take any action deemed appropriate to collect any 37.30 delinquent assessments. 37.31 Sec. 31. Minnesota Statutes 2004, section 79A.22, 37.32 subdivision 11, is amended to read: 37.33 Subd. 11. [DISBURSEMENT OF FUND SURPLUS.] (a)One37.34hundredExcept as otherwise provided in paragraphs (b) and (c), 37.35 100 percent of any surplus money for a fund year in excess of 37.36 125 percent of the amount necessary to fulfill all obligations 38.1 under the Workers' Compensation Act, chapter 176, for that fund 38.2 year may be declared refundable toa membereligible members at 38.3 any time.The date shall be no earlier than 18 months following38.4the end of such fund year. The first disbursement of fund38.5surplus may not be made prior to the written approval of the38.6commissioner. There can be no more than one refund made in any38.712-month period.38.8 (b) Except as otherwise provided in paragraph (c), for 38.9 groups that have been in existence for five years or more, 100 38.10 percent of any surplus money for a fund year in excess of 110 38.11 percent of the amount necessary to fulfill all obligations under 38.12 the Workers' Compensation Act, chapter 176, for that fund year 38.13 may be declared refundable to eligible members at any time. 38.14 (c) Excess surplus distributions under paragraphs (a) and 38.15 (b) may not be greater than the combined surplus of the group at 38.16 the time of the distribution. 38.17 (d) When all the claims of any one fund year have been 38.18 fully paid, as certified by an actuary, all surplus money from 38.19 that fund year may be declared refundable. 38.20(b)(e) The commercial self-insurance group shall give ten 38.21 days' prior notice to the commissioner of any refund.SaidThe 38.22 noticeshallmust be accompanied by a statement from the 38.23 commercial self-insurer group's certified public accountant 38.24 certifying that the proposed refund is in compliance 38.25 withparagraph (a)this subdivision. 38.26 Sec. 32. Minnesota Statutes 2004, section 79A.22, is 38.27 amended by adding a subdivision to read: 38.28 Subd. 14. [ALL STATES COVERAGE.] Policies issued by 38.29 commercial self-insurance groups pursuant to this chapter may 38.30 also provide workers' compensation coverage required under the 38.31 laws of states other than Minnesota, commonly known as "all 38.32 states coverage." The coverage must be provided to members of 38.33 the group which are temporarily performing work in another state. 38.34 Sec. 33. Minnesota Statutes 2004, section 176.191, 38.35 subdivision 3, is amended to read: 38.36 Subd. 3. [INSURER PAYMENT.] If a dispute exists as to 39.1 whether an employee's injury is compensable under this chapter 39.2 and the employee is otherwise covered by an insurer or entity 39.3 pursuant to chapters 62A, 62Cand, 62D, 62E, 62R, and 62T, that 39.4 insurer or entity shall pay any medical costs incurred by the 39.5 employee for the injury up to the limits of the applicable 39.6 coverage and shall make any disability payments otherwise 39.7 payable by that insurer or entity in the absence of or in 39.8 addition to workers' compensation liability. If the injury is 39.9 subsequently determined to be compensable pursuant to this 39.10 chapter, the workers' compensation insurer shall be ordered to 39.11 reimburse the insurer or entity that made the payments for all 39.12 payments made under this subdivision by the insurer or entity, 39.13 including interest at a rate of 12 percent a year. If a payment 39.14 pursuant to this subdivision exceeds the reasonable value as 39.15 permitted by sections 176.135 and 176.136, the provider shall 39.16 reimburse the workers' compensation insurer for all the excess 39.17 as provided by rules promulgated by the commissioner. 39.18 Sec. 34. [REPEALER.] 39.19 Minnesota Statutes 2004, sections 61A.072, subdivision 2; 39.20 and 62E.03 are repealed. 39.21 Sec. 35. [EFFECTIVE DATES.] 39.22 Sections 11, 15, 17, 19, 20, 22, and 28 to 33 are effective 39.23 the day following final enactment. Sections 2, 4, 18, and 23 to 39.24 25 are effective July 1, 2005. The remaining sections are 39.25 effective August 1, 2005.