1.1                          A bill for an act 
  1.2             relating to health care; regulating benefits, practice 
  1.3             guidelines, and health care provider actions; amending 
  1.4             Minnesota Statutes 2003 Supplement, sections 62J.26, 
  1.5             by adding a subdivision; 290.01, subdivision 19; 
  1.6             proposing coding for new law in Minnesota Statutes, 
  1.7             chapters 62L; 147; 604. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 2003 Supplement, section 
  1.10  62J.26, is amended by adding a subdivision to read: 
  1.11     Subd. 6.  [MANDATED BENEFITS MORATORIUM.] (a) No new 
  1.12  mandated health benefit proposal, as defined in subdivision 1, 
  1.13  shall be enacted. 
  1.14     (b) This subdivision expires January 1, 2007. 
  1.15     Sec. 2.  [62L.056] [SMALL EMPLOYER ALTERNATIVE BENEFIT 
  1.16  PLANS.] 
  1.17     (a) Notwithstanding any provision of this chapter, chapter 
  1.18  363A, or any other law to the contrary, the commissioner of 
  1.19  commerce shall, by January 1, 2005, permit health carriers to 
  1.20  offer alternative health benefit plans to small employers if the 
  1.21  following requirements are satisfied: 
  1.22     (1) the health carrier is assessed less than ten percent of 
  1.23  the total amount assessed by the Minnesota Comprehensive Health 
  1.24  Association; 
  1.25     (2) the health plans must be offered in compliance with 
  1.26  this chapter, except as otherwise permitted in this section; 
  2.1      (3) the health plans to be offered must be designed to 
  2.2   enable employers and covered persons to better manage costs and 
  2.3   coverage options through the use of co-pays, deductibles, and 
  2.4   other cost-sharing arrangements; 
  2.5      (4) the health plans must be issued and administered in 
  2.6   compliance with sections 62E.141; 62L.03, subdivision 6; and 
  2.7   62L.12, subdivisions 3 and 4, relating to prohibitions against 
  2.8   enrolling persons eligible for employer group coverage in the 
  2.9   Minnesota Comprehensive Health Association; 
  2.10     (5) loss ratio requirements do not apply to health plans 
  2.11  issued under this section; 
  2.12     (6) the health plans may alter or eliminate coverages that 
  2.13  would otherwise be required by law; 
  2.14     (7) each health plan must be approved by the commissioner 
  2.15  of commerce; and 
  2.16     (8) the commissioner may limit the types and numbers of 
  2.17  health plan forms permitted under this section, but must permit, 
  2.18  as one option, a health plan form in which a health carrier may 
  2.19  exclude or alter coverage of any or all benefits otherwise 
  2.20  mandated by state law. 
  2.21     (b) The definitions in section 62L.02 apply to this section 
  2.22  as modified by this section. 
  2.23     (c) An employer may provide health plans permitted under 
  2.24  this section to its employees, the employees' dependents, and 
  2.25  other persons eligible for coverage under the employer's plan, 
  2.26  notwithstanding chapter 363A or any other law to the contrary.  
  2.27     Sec. 3.  [147.37] [BEST PRACTICE GUIDELINES; USE IN MEDICAL 
  2.28  MALPRACTICE CASES.] 
  2.29     (a) In an action against a provider for malpractice, error, 
  2.30  mistake, or failure to cure, whether based in contract or tort, 
  2.31  adherence to a best practice guideline approved by either a 
  2.32  recognized specialty organization or an organization established 
  2.33  for the purpose of developing community-based clinical practice 
  2.34  guidelines is an absolute defense against an allegation that the 
  2.35  provider did not comply with accepted standards of practice in 
  2.36  the community. 
  3.1      (b) Evidence of a departure from a best practice guideline 
  3.2   is admissible only on the issue of whether the provider is 
  3.3   entitled to an absolute defense under paragraph (a). 
  3.4      (c) Paragraphs (a) and (b) apply to claims arising on or 
  3.5   after August 1, 2004. 
  3.6      (d) Nothing in this section changes the standard or burden 
  3.7   of proof in an action alleging a delay in diagnosis, a 
  3.8   misdiagnosis, inappropriate application of a best practice 
  3.9   guideline, failure to obtain informed consent, battery or other 
  3.10  intentional tort, or product liability. 
  3.11     Sec. 4.  Minnesota Statutes 2003 Supplement, section 
  3.12  290.01, subdivision 19, is amended to read: 
  3.13     Subd. 19.  [NET INCOME.] The term "net income" means the 
  3.14  federal taxable income, as defined in section 63 of the Internal 
  3.15  Revenue Code of 1986, as amended through the date named in this 
  3.16  subdivision, incorporating any elections made by the taxpayer in 
  3.17  accordance with the Internal Revenue Code in determining federal 
  3.18  taxable income for federal income tax purposes, and with the 
  3.19  modifications provided in subdivisions 19a to 19f. 
  3.20     In the case of a regulated investment company or a fund 
  3.21  thereof, as defined in section 851(a) or 851(g) of the Internal 
  3.22  Revenue Code, federal taxable income means investment company 
  3.23  taxable income as defined in section 852(b)(2) of the Internal 
  3.24  Revenue Code, except that:  
  3.25     (1) the exclusion of net capital gain provided in section 
  3.26  852(b)(2)(A) of the Internal Revenue Code does not apply; 
  3.27     (2) the deduction for dividends paid under section 
  3.28  852(b)(2)(D) of the Internal Revenue Code must be applied by 
  3.29  allowing a deduction for capital gain dividends and 
  3.30  exempt-interest dividends as defined in sections 852(b)(3)(C) 
  3.31  and 852(b)(5) of the Internal Revenue Code; and 
  3.32     (3) the deduction for dividends paid must also be applied 
  3.33  in the amount of any undistributed capital gains which the 
  3.34  regulated investment company elects to have treated as provided 
  3.35  in section 852(b)(3)(D) of the Internal Revenue Code.  
  3.36     The net income of a real estate investment trust as defined 
  4.1   and limited by section 856(a), (b), and (c) of the Internal 
  4.2   Revenue Code means the real estate investment trust taxable 
  4.3   income as defined in section 857(b)(2) of the Internal Revenue 
  4.4   Code.  
  4.5      The net income of a designated settlement fund as defined 
  4.6   in section 468B(d) of the Internal Revenue Code means the gross 
  4.7   income as defined in section 468B(b) of the Internal Revenue 
  4.8   Code. 
  4.9      The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
  4.10  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
  4.11  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
  4.12  Protection Act, Public Law 104-188, the provisions of Public Law 
  4.13  104-117, the provisions of sections 313(a) and (b)(1), 602(a), 
  4.14  913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 
  4.15  1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) 
  4.16  and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 
  4.17  1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law 
  4.18  105-34, the provisions of section 6010 of the Internal Revenue 
  4.19  Service Restructuring and Reform Act of 1998, Public Law 
  4.20  105-206, the provisions of section 4003 of the Omnibus 
  4.21  Consolidated and Emergency Supplemental Appropriations Act, 
  4.22  1999, Public Law 105-277, and the provisions of section 318 of 
  4.23  the Consolidated Appropriation Act of 2001, Public Law 106-554, 
  4.24  shall become effective at the time they become effective for 
  4.25  federal purposes. 
  4.26     The Internal Revenue Code of 1986, as amended through 
  4.27  December 31, 1996, shall be in effect for taxable years 
  4.28  beginning after December 31, 1996. 
  4.29     The provisions of sections 202(a) and (b), 221(a), 225, 
  4.30  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
  4.31  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
  4.32  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
  4.33  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
  4.34  of the Taxpayer Relief Act of 1997, Public Law 105-34, the 
  4.35  provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, 
  4.36  and 7003 of the Internal Revenue Service Restructuring and 
  5.1   Reform Act of 1998, Public Law 105-206, the provisions of 
  5.2   section 3001 of the Omnibus Consolidated and Emergency 
  5.3   Supplemental Appropriations Act, 1999, Public Law 105-277, the 
  5.4   provisions of section 3001 of the Miscellaneous Trade and 
  5.5   Technical Corrections Act of 1999, Public Law 106-36, and the 
  5.6   provisions of section 316 of the Consolidated Appropriation Act 
  5.7   of 2001, Public Law 106-554, shall become effective at the time 
  5.8   they become effective for federal purposes. 
  5.9      The Internal Revenue Code of 1986, as amended through 
  5.10  December 31, 1997, shall be in effect for taxable years 
  5.11  beginning after December 31, 1997. 
  5.12     The provisions of sections 5002, 6009, 6011, and 7001 of 
  5.13  the Internal Revenue Service Restructuring and Reform Act of 
  5.14  1998, Public Law 105-206, the provisions of section 9010 of the 
  5.15  Transportation Equity Act for the 21st Century, Public Law 
  5.16  105-178, the provisions of sections 1004, 4002, and 5301 of the 
  5.17  Omnibus Consolidation and Emergency Supplemental Appropriations 
  5.18  Act, 1999, Public Law 105-277, the provision of section 303 of 
  5.19  the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law 
  5.20  105-369, the provisions of sections 532, 534, 536, 537, and 538 
  5.21  of the Ticket to Work and Work Incentives Improvement Act of 
  5.22  1999, Public Law 106-170, the provisions of the Installment Tax 
  5.23  Correction Act of 2000, Public Law 106-573, and the provisions 
  5.24  of section 309 of the Consolidated Appropriation Act of 2001, 
  5.25  Public Law 106-554, shall become effective at the time they 
  5.26  become effective for federal purposes. 
  5.27     The Internal Revenue Code of 1986, as amended through 
  5.28  December 31, 1998, shall be in effect for taxable years 
  5.29  beginning after December 31, 1998.  
  5.30     The provisions of the FSC Repeal and Extraterritorial 
  5.31  Income Exclusion Act of 2000, Public Law 106-519, and the 
  5.32  provision of section 412 of the Job Creation and Worker 
  5.33  Assistance Act of 2002, Public Law 107-147, shall become 
  5.34  effective at the time it became effective for federal purposes. 
  5.35     The Internal Revenue Code of 1986, as amended through 
  5.36  December 31, 1999, shall be in effect for taxable years 
  6.1   beginning after December 31, 1999.  The provisions of sections 
  6.2   306 and 401 of the Consolidated Appropriation Act of 2001, 
  6.3   Public Law 106-554, and the provision of section 632(b)(2)(A) of 
  6.4   the Economic Growth and Tax Relief Reconciliation Act of 2001, 
  6.5   Public Law 107-16, and provisions of sections 101 and 402 of the 
  6.6   Job Creation and Worker Assistance Act of 2002, Public Law 
  6.7   107-147, shall become effective at the same time it became 
  6.8   effective for federal purposes. 
  6.9      The Internal Revenue Code of 1986, as amended through 
  6.10  December 31, 2000, shall be in effect for taxable years 
  6.11  beginning after December 31, 2000.  The provisions of sections 
  6.12  659a and 671 of the Economic Growth and Tax Relief 
  6.13  Reconciliation Act of 2001, Public Law 107-16, the provisions of 
  6.14  sections 104, 105, and 111 of the Victims of Terrorism Tax 
  6.15  Relief Act of 2001, Public Law 107-134, and the provisions of 
  6.16  sections 201, 403, 413, and 606 of the Job Creation and Worker 
  6.17  Assistance Act of 2002, Public Law 107-147, shall become 
  6.18  effective at the same time it became effective for federal 
  6.19  purposes. 
  6.20     The Internal Revenue Code of 1986, as amended through March 
  6.21  15, 2002, shall be in effect for taxable years beginning after 
  6.22  December 31, 2001. 
  6.23     The provisions of sections 101 and 102 of the Victims of 
  6.24  Terrorism Tax Relief Act of 2001, Public Law 107-134, shall 
  6.25  become effective at the same time it becomes effective for 
  6.26  federal purposes. 
  6.27     The Internal Revenue Code of 1986, as amended through June 
  6.28  15, 2003, shall be in effect for taxable years beginning after 
  6.29  December 31, 2002.  The provisions of section 201 of the Jobs 
  6.30  and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if 
  6.31  it is enacted into law, are effective at the same time it became 
  6.32  effective for federal purposes. 
  6.33     Section 1201 of the Medicare Prescription Drug, 
  6.34  Improvement, and Modernization Act of 2003, Public Law 108-173, 
  6.35  is effective at the same time it becomes effective for federal 
  6.36  purposes. 
  7.1      Except as otherwise provided, references to the Internal 
  7.2   Revenue Code in subdivisions 19a to 19g mean the code in effect 
  7.3   for purposes of determining net income for the applicable year. 
  7.4      Sec. 5.  [604.111] [HEALTH CARE PROVIDER ACTIONS; LIMITS ON 
  7.5   DAMAGES AND ATTORNEY FEES.] 
  7.6      Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
  7.7   section, the terms in paragraphs (b) to (d) have the meanings 
  7.8   given them. 
  7.9      (b) "Economic loss" means all harm for which damages are 
  7.10  recoverable, other than noneconomic losses. 
  7.11     (c) "Health care provider" has the meaning given in section 
  7.12  541.076, paragraph (a), except that health care provider also 
  7.13  includes a physician assistant registered under chapter 147A and 
  7.14  ambulance services, medical directors, and personnel regulated 
  7.15  under chapter 144E. 
  7.16     (d) "Noneconomic loss" means all nonpecuniary harm for 
  7.17  which damages are recoverable, including, but not limited to, 
  7.18  pain, disability, disfigurement, embarrassment, emotional 
  7.19  distress, and loss of consortium.  
  7.20     Subd. 2.  [LIMITATIONS.] (a) In an action for injury or 
  7.21  death against a health care provider alleging malpractice, 
  7.22  error, mistake, or failure to cure, whether based in contract or 
  7.23  tort, the amount of damages awarded for noneconomic losses must 
  7.24  not exceed $300,000, regardless of the number of parties against 
  7.25  whom the action is brought or the number of separate claims or 
  7.26  actions brought with respect to the same occurrence. 
  7.27     (b) The limitation imposed by this subdivision must not be 
  7.28  disclosed to the trier of fact by any person at trial. 
  7.29     Subd. 3.  [FINDINGS.] (a) A court in an action tried 
  7.30  without a jury shall make a finding as to noneconomic loss 
  7.31  without regard to the limit under subdivision 2.  If noneconomic 
  7.32  loss in excess of the limit is found, the court shall make any 
  7.33  reduction required under this section and shall award as damages 
  7.34  for noneconomic loss the lesser of the reduced amount or the 
  7.35  limit.  
  7.36     (b) If an action is before a jury, the jury shall make a 
  8.1   finding as to noneconomic loss without regard to the limit under 
  8.2   subdivision 2.  If the jury finds that noneconomic loss exceeds 
  8.3   the limit, the court shall make any reduction required under 
  8.4   this section and shall award as damages for noneconomic loss the 
  8.5   lesser of the reduced amount or the limit. 
  8.6      Subd. 4.  [PUNITIVE DAMAGES LIMITED.] (a) Punitive, 
  8.7   exemplary, and similar damages recoverable against a health care 
  8.8   provider in a cause of action described in subdivision 2 must 
  8.9   not exceed $300,000.  The jury must not be informed of this 
  8.10  limitation. 
  8.11     (b) All damages described in paragraph (a) must be paid 
  8.12  directly to the Minnesota Comprehensive Health Association 
  8.13  created under section 62E.10, subdivision 1, to be used for the 
  8.14  purpose of reducing its assessments on its members.  
  8.15     Subd. 5.  [EXCESSIVE ATTORNEY FEES PROHIBITED.] (a) 
  8.16  Attorney fees payable by a plaintiff in any cause of action 
  8.17  referred to in subdivision 2 must not exceed the following 
  8.18  percentage of damages: 
  8.19     (1) 40 percent of the first $50,000; 
  8.20     (2) 33-1/3 percent of the next $50,000; 
  8.21     (3) 25 percent of the next $500,000; plus 
  8.22     (4) 15 percent of that portion of damages that exceeds 
  8.23  $600,000. 
  8.24     (b) This subdivision applies to the net damages actually 
  8.25  recovered by that plaintiff under the cause of action, whether 
  8.26  through settlement, alternative dispute resolution, court 
  8.27  judgment, or otherwise.  "Net damages actually recovered" means 
  8.28  the net sum recovered after deducting any disbursements or costs 
  8.29  incurred in connection with prosecution or settlement of the 
  8.30  claim, including all costs paid or advanced by any person.  
  8.31  Costs of health care incurred by the plaintiff and the 
  8.32  attorney's office overhead costs or charges for legal services 
  8.33  are not deductible disbursements of costs for such purpose. 
  8.34     (c) A fee agreement that violates this subdivision is void 
  8.35  and unenforceable, to the extent of the violation. 
  8.36     Subd. 6.  [NONPROFIT HOSPITALS; DAMAGES LIMIT.] (a) With 
  9.1   respect to a cause of action described in subdivision 2, the 
  9.2   limitations on damages provided in section 466.04 apply to 
  9.3   damages recoverable from any private, nonprofit hospital 
  9.4   licensed under sections 144.50 to 144.56 that is incorporated 
  9.5   under chapter 317A. 
  9.6      (b) All other provisions of this section apply with respect 
  9.7   to hospitals described in paragraph (a), except as otherwise 
  9.8   provided in section 466.04. 
  9.9      Sec. 6.  [EVALUATION OF CURRENT MANDATED HEALTH BENEFITS.] 
  9.10     (a) The commissioner of commerce, in consultation with the 
  9.11  commissioners of health and employee relations, must evaluate 
  9.12  existing statutorily mandated health benefits.  The evaluation 
  9.13  must include the same information required for evaluation of a 
  9.14  mandated health benefit proposal under Minnesota Statutes, 
  9.15  section 62J.26, subdivision 2. 
  9.16     (b) The commissioner must submit a written report on the 
  9.17  evaluation to the legislature by February 1, 2005. 
  9.18     Sec. 7.  [EFFECTIVE DATE; APPLICATION.] 
  9.19     Section 4 is effective the day following final enactment.  
  9.20  Section 5 is effective August 1, 2004, and applies to causes of 
  9.21  actions arising from incidents occurring on or after that date.