1.1                          A bill for an act 
  1.2             relating to workers' compensation; modifying 
  1.3             provisions relating to insurance, procedures and 
  1.4             benefits; providing penalties; appropriating money; 
  1.5             amending Minnesota Statutes 1994, sections 13.69, 
  1.6             subdivision 1; 13.82, subdivision 1; 79.074, 
  1.7             subdivision 2; 79.085; 79.211, subdivision 1; 79.251, 
  1.8             subdivision 2, and by adding a subdivision; 79.253, by 
  1.9             adding a subdivision; 79.34, subdivision 2; 79.35; 
  1.10            79.50; 79.51, subdivisions 1 and 3; 79.52, by adding 
  1.11            subdivisions; 79.53, subdivision 1; 79.55, 
  1.12            subdivisions 2, 5, and by adding subdivisions; 79.56, 
  1.13            subdivisions 1 and 3; 79.60, subdivision 1; 79A.01, 
  1.14            subdivisions 1, 4, and by adding a subdivision; 
  1.15            79A.02, subdivisions 1, 2, and 4; 79A.03, by adding a 
  1.16            subdivision; 79A.04, subdivisions 2 and 9; 79A.09, 
  1.17            subdivision 4; 79A.15; 168.012, subdivision 1; 175.16; 
  1.18            176.011, subdivisions 16 and 25; 176.021, subdivisions 
  1.19            3 and 3a; 176.061, subdivision 10; 176.081, 
  1.20            subdivisions 1, 7, 7a, 9, and by adding a subdivision; 
  1.21            176.101, subdivisions 1, 2, 4, 5, 6, 8, and by adding 
  1.22            a subdivision; 176.102, subdivisions 3a and 11; 
  1.23            176.103, subdivisions 2 and 3; 176.104, subdivision 1; 
  1.24            176.105, subdivision 4; 176.106; 176.129, subdivisions 
  1.25            9 and 10; 176.130, subdivision 9; 176.135, subdivision 
  1.26            1; 176.1351, subdivisions 1 and 5; 176.136, 
  1.27            subdivisions 1a, 1b, and 2; 176.138; 176.139, 
  1.28            subdivision 2; 176.178; 176.179; 176.181, subdivisions 
  1.29            7 and 8; 176.182; 176.183, subdivisions 1 and 2; 
  1.30            176.185, subdivision 5a; 176.191, subdivisions 1, 5, 
  1.31            8, and by adding a subdivision; 176.194, subdivision 
  1.32            4; 176.215, by adding a subdivision; 176.221, 
  1.33            subdivisions 1, 3, 3a, 6a, and 7; 176.225, 
  1.34            subdivisions 1 and 5; 176.231, subdivision 10; 
  1.35            176.238, subdivisions 6 and 10; 176.261; 176.2615, 
  1.36            subdivision 7; 176.275, subdivision 1; 176.281; 
  1.37            176.285; 176.291; 176.305, subdivision 1a; 176.645; 
  1.38            176.66, subdivision 11; 176.82; 176.83, subdivision 5; 
  1.39            176.84, subdivision 2; and 268.08, subdivision 3; Laws 
  1.40            1994, chapter 625, article 5, section 7; proposing 
  1.41            coding for new law in Minnesota Statutes, chapters 79; 
  1.42            79A; 176; and 182; repealing Minnesota Statutes 1994, 
  1.43            sections 79.53, subdivision 2; 79.54; 79.56, 
  1.44            subdivision 2; 79.57; 79.58; 176.011, subdivision 26; 
  1.45            176.081, subdivisions 2, 5, and 8; 176.101, 
  1.46            subdivisions 3a, 3b, 3c, 3d, 3e, 3f, 3g, 3h, 3i, 3j, 
  2.1             3k, 3l, 3m, 3n, 3o, 3p, 3q, 3r, 3s, 3t, and 3u; 
  2.2             176.103, subdivision 2a; 176.132; 176.133; 176.191, 
  2.3             subdivision 2; 176.232; and 176.86; Laws 1990, chapter 
  2.4             521, section 4. 
  2.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.6                              ARTICLE 1 
  2.7      Section 1.  Minnesota Statutes 1994, section 79.50, is 
  2.8   amended to read: 
  2.9      79.50 [PURPOSES.] 
  2.10     The purposes of chapter 79 are to:  
  2.11     (a) Promote public welfare by regulating insurance rates so 
  2.12  that premiums are not excessive, inadequate, or unfairly 
  2.13  discriminatory; 
  2.14     (b) Promote quality and integrity in the databases used in 
  2.15  workers' compensation insurance ratemaking; 
  2.16     (c) Prohibit price fixing agreements and anticompetitive 
  2.17  behavior by insurers; 
  2.18     (d) Promote price competition and provide rates that are 
  2.19  responsive to competitive market conditions; 
  2.20     (e) Provide a means of establishment of proper rates if 
  2.21  competition is not effective; 
  2.22     (f) Define the function and scope of activities of data 
  2.23  service organizations; 
  2.24     (g) Provide for an orderly transition from regulated rates 
  2.25  to competitive market conditions; and 
  2.26     (h) (e) Encourage insurers to provide alternative 
  2.27  innovative methods whereby employers can meet the requirements 
  2.28  imposed by section 176.181.  
  2.29     Sec. 2.  Minnesota Statutes 1994, section 79.51, 
  2.30  subdivision 1, is amended to read: 
  2.31     Subdivision 1.  [ADOPTION; WHEN.] The commissioner shall 
  2.32  adopt rules to implement provisions of this chapter.  The rules 
  2.33  shall be finally adopted after May 1, 1982.  By January 15, 
  2.34  1982, the commissioner shall provide the legislature a 
  2.35  description and explanation of the intent and anticipated effect 
  2.36  of the rules on the various factors of the rating system.  
  2.37     Sec. 3.  Minnesota Statutes 1994, section 79.51, 
  3.1   subdivision 3, is amended to read: 
  3.2      Subd. 3.  [RULES; SUBJECT MATTER.] (a) The commissioner in 
  3.3   issuing rules shall consider:  
  3.4      (1) data reporting requirements, including types of data 
  3.5   reported, such as loss and expense data; 
  3.6      (2) experience rating plans; 
  3.7      (3) retrospective rating plans; 
  3.8      (4) general expenses and related expense provisions; 
  3.9      (5) minimum premiums; 
  3.10     (6) classification systems and assignment of risks to 
  3.11  classifications; 
  3.12     (7) loss development and trend factors; 
  3.13     (8) the workers' compensation reinsurance association; 
  3.14     (9) requiring substantial compliance with the rules 
  3.15  mandated by this section as a condition of workers' compensation 
  3.16  carrier licensure; 
  3.17     (10) imposing limitations on the functions of workers' 
  3.18  compensation data service organizations consistent with the 
  3.19  introduction of competition; 
  3.20     (11) the rules contained in the workers' compensation 
  3.21  rating manual adopted by the workers' compensation insurers 
  3.22  rating association or other licensed data service organizations; 
  3.23  and 
  3.24     (12) the supporting data and information required in 
  3.25  filings under section 79.56, including but not limited to, the 
  3.26  experience of the filing insurer and the extent to which the 
  3.27  filing insurer relies upon data service organization loss 
  3.28  information, descriptions of the actuarial and statistical 
  3.29  methods employed in setting rates, and the filing insurers 
  3.30  interpretation of any statistical data relied upon; and 
  3.31     (13) any other factors that the commissioner deems relevant 
  3.32  to achieve the purposes of this chapter.  
  3.33     (b) The rules shall provide for the following:  
  3.34     (1) competition in workers' compensation insurance rates in 
  3.35  such a way that the advantages of competition are introduced 
  3.36  with a minimum of employer hardship; 
  4.1      (2) adequate safeguards against excessive or discriminatory 
  4.2   rates in workers' compensation; 
  4.3      (3) (2) encouragement of workers' compensation insurance 
  4.4   rates which are as low as reasonably necessary, but shall make 
  4.5   provision against inadequate rates, insolvencies and unpaid 
  4.6   benefits; 
  4.7      (4) (3) assurances that employers are not unfairly 
  4.8   relegated to the assigned risk pool; 
  4.9      (5) (4) requiring all appropriate data and other 
  4.10  information from insurers for the purpose of issuing rules, 
  4.11  making legislative recommendations pursuant to this section and 
  4.12  monitoring the effectiveness of competition; and 
  4.13     (6) (5) preserving a framework for risk classification, 
  4.14  data collection, and other appropriate joint insurer 
  4.15  services where these will not impede the introduction of 
  4.16  competition in premium rates.  
  4.17     Sec. 4.  Minnesota Statutes 1994, section 79.53, 
  4.18  subdivision 1, is amended to read: 
  4.19     Subdivision 1.  [METHOD OF CALCULATION.] Each insurer shall 
  4.20  establish premiums to be paid by an employer according to its 
  4.21  filed rates and rating plan as follows: 
  4.22     Rates shall be applied to an exposure base to yield a base 
  4.23  premium which may be further modified increased or decreased up 
  4.24  to 25 percent by merit rating, premium discounts, and other 
  4.25  appropriate factors contained in the rating plan of an insurer 
  4.26  to produce premium if the increase or decrease is not unfairly 
  4.27  discriminatory.  Nothing in this chapter shall be deemed to 
  4.28  prohibit the use of any premium, provided the premium is not 
  4.29  excessive, inadequate or unfairly discriminatory. 
  4.30     Sec. 5.  Minnesota Statutes 1994, section 79.55, 
  4.31  subdivision 2, is amended to read: 
  4.32     Subd. 2.  [EXCESSIVENESS.] No premium is excessive in a 
  4.33  competitive market.  In the absence of a competitive market, 
  4.34  premiums Rates and rating plans are excessive if the expected 
  4.35  underwriting profit, together with expected income from invested 
  4.36  reserves for the market in question, that would accrue to an 
  5.1   insurer under the rates and rating plans would be unreasonably 
  5.2   high in relation to the risk undertaken by the insurer in 
  5.3   transacting the business.  The burden is on the insurer to 
  5.4   establish that profit is not unreasonably high.  
  5.5      Sec. 6.  Minnesota Statutes 1994, section 79.55, 
  5.6   subdivision 5, is amended to read: 
  5.7      Subd. 5.  [DISCOUNTS PERMITTED.] An insurer may offer a 
  5.8   discount from scheduled credit or debit to a manual premium of 
  5.9   up to 25 percent if the premium otherwise complies with this 
  5.10  section.  The commissioner shall not by rule, or otherwise, 
  5.11  prohibit a credit or discount from a manual premium solely 
  5.12  because it is greater than a certain fixed percentage of the 
  5.13  premium. 
  5.14     Sec. 7.  Minnesota Statutes 1994, section 79.55, is amended 
  5.15  by adding a subdivision to read: 
  5.16     Subd. 6.  [RATING FACTORS.] In determining whether a rate 
  5.17  filing complies with this section, separate consideration shall 
  5.18  be given to:  (i) past and prospective loss experience within 
  5.19  this state and outside this state to the extent necessary to 
  5.20  develop credible rates; (ii) dividends, savings, or unabsorbed 
  5.21  premium deposits allowed or returned by insurers to their 
  5.22  policyholders, members, or subscribers; and (iii) a reasonable 
  5.23  allowance for expense and profit.  An allowance for expense 
  5.24  shall be presumed reasonable if it reflects expenses that are 
  5.25  22.5 percent greater or less than the average expense for all 
  5.26  insurers writing workers' compensation insurance in this state.  
  5.27  An allowance for after-tax profit shall consider anticipated 
  5.28  investment income from premium receipts net of disbursements and 
  5.29  from allocated surplus, based on the current five-year United 
  5.30  States Treasury note yield and an assumed premium to surplus 
  5.31  ratio of 2.25 to one.  The allowance for after-tax profit shall 
  5.32  be presumed reasonable if the corresponding return on equity 
  5.33  target is equal to or less than the sum of:  (i) the current 
  5.34  yield on five-year United States Treasury securities; and (ii) 
  5.35  an appropriate equity risk premium that reflects the risks of 
  5.36  writing workers' compensation insurance.  The risk premium shall 
  6.1   not be less than the average, since 1926, of the differences in 
  6.2   return between:  (i) the annual return, including dividend 
  6.3   income, for the Standards and Poors 500 common stock index or 
  6.4   predecessor index for each year; and (ii) the five-year United 
  6.5   States Treasury note yield as of the start of the corresponding 
  6.6   year.  Profit and expense allowances not presumed reasonable 
  6.7   under this subdivision, are reasonable if the circumstances of 
  6.8   an insurer, the market, or other factors justify them. 
  6.9      Sec. 8.  Minnesota Statutes 1994, section 79.55, is amended 
  6.10  by adding a subdivision to read: 
  6.11     Subd. 7.  [EXTERNAL FACTORS.] That portion of a rate or 
  6.12  rating plan related to assessments from the assigned risk plan, 
  6.13  reinsurance association, guarantee fund, special compensation 
  6.14  fund, agent commission, premium tax and any other state-mandated 
  6.15  surcharges shall not cause the rate or rating plan to be 
  6.16  considered excessive, inadequate, or unfairly discriminatory. 
  6.17     Sec. 9.  Minnesota Statutes 1994, section 79.56, 
  6.18  subdivision 1, is amended to read: 
  6.19     Subdivision 1.  [AFTER EFFECTIVE DATE PREFILING OF RATES.] 
  6.20  Each insurer shall file with the commissioner a complete copy of 
  6.21  its rates and rating plan, and all changes and amendments 
  6.22  thereto, within 15 days after their and such supporting data and 
  6.23  information that the commissioner may by rule require, at least 
  6.24  60 days prior to its effective dates date.  An insurer need not 
  6.25  file a rating plan if it uses a rating plan filed by a data 
  6.26  service organization.  If an insurer uses a rating plan of a 
  6.27  data service organization but deviates from it, then all 
  6.28  deviations must be filed by the insurer.  The commissioner shall 
  6.29  advise an insurer within 30 days of the filing if its submission 
  6.30  is not accompanied with such supporting data and information 
  6.31  that the commissioner by rule may require.  The commissioner may 
  6.32  extend the filing review period and effective date for an 
  6.33  additional 30 days if an insurer, after having been advised of 
  6.34  what supporting data and information is necessary to complete 
  6.35  its filing, does not provide such information within 15 days of 
  6.36  having been so notified.  If any rate or rating plan filing or 
  7.1   amendment thereto is not disapproved by the commissioner within 
  7.2   the filing review period, the insurer may implement it.  For the 
  7.3   period August 1, 1995 to December 31, 1995, the filing shall be 
  7.4   made at least 90 days prior to the effective date and the 
  7.5   department shall advise an insurer within 60 days of such filing 
  7.6   if the filing is insufficient under this section. 
  7.7      Sec. 10.  Minnesota Statutes 1994, section 79.56, 
  7.8   subdivision 3, is amended to read: 
  7.9      Subd. 3.  [PENALTIES.] Any insurer using a rate or a rating 
  7.10  plan which has not been filed shall be subject to a fine of up 
  7.11  to $100 for each day the failure to file continues.  The 
  7.12  commissioner may, after a hearing on the record, find that the 
  7.13  failure is willful.  A willful failure to meet filing 
  7.14  requirements shall be punishable by a fine of up to $500 for 
  7.15  each day during which a willful failure continues.  These 
  7.16  penalties shall be in addition to any other penalties provided 
  7.17  by law.  Notwithstanding this subdivision, an employer that 
  7.18  generates $500,000 in annual written workers' compensation 
  7.19  premium under the rates and rating plan of an insurer before the 
  7.20  application of any large deductible rating plans, may be written 
  7.21  by that insurer using rates or rating plans that are not subject 
  7.22  to disapproval but which have been filed.  The $500,000 
  7.23  threshold shall be increased on January 1, 1996, and on each 
  7.24  January 1 thereafter by the percentage increase in the statewide 
  7.25  average weekly wage, to the nearest $1,000.  The commissioner 
  7.26  shall advise insurers licensed to write workers' compensation 
  7.27  insurance in this state of the annual threshold adjustment. 
  7.28     Sec. 11.  [79.561] [DISAPPROVAL OF RATES OR RATING PLANS.] 
  7.29     Subdivision 1.  [DISAPPROVAL; TIME PERIOD.] The 
  7.30  commissioner may disapprove a rate and rating plan or amendment 
  7.31  thereto prior to its effective date, as provided under section 
  7.32  79.56, subdivision 1, if the commissioner determines that it is 
  7.33  excessive, inadequate, or unfairly discriminatory.  If the 
  7.34  commissioner disapproves any rate or rating plan filing or 
  7.35  amendment thereto, the commissioner shall advise the filing 
  7.36  insurer what rate and rating plan the commissioner has reason to 
  8.1   believe would be in compliance with section 79.55, and the 
  8.2   reasons for that determination.  An insurer may not implement a 
  8.3   rate and rating plan or amendment thereto which has been 
  8.4   disapproved under this subdivision.  If the commissioner 
  8.5   disapproves any rate and rating plan filing or amendment 
  8.6   thereto, an insurer may use its current rate and rating plan for 
  8.7   writing any workers' compensation insurance in this state.  
  8.8   Following any disapproval, the commissioner and insurer may 
  8.9   reach agreement on a rate or rating plan filing or amendment 
  8.10  thereto.  Notwithstanding any law to the contrary, in such 
  8.11  cases, the rate or rating plan filing or amendment thereto may 
  8.12  be implemented by the insurer immediately. 
  8.13     Subd. 2.  [HEARING.] If an insurer's rate or rating plan 
  8.14  filing or amendment thereto is disapproved under subdivision 1, 
  8.15  the insurer may request a contested case hearing under chapter 
  8.16  14.  The insurer shall have the burden of proof to justify that 
  8.17  its rate and rating plan or amendment thereto is in compliance 
  8.18  with section 79.55.  The hearing must be scheduled promptly and 
  8.19  in no case later than three months from the date of disapproval 
  8.20  or else the rate and rating plan or amendment thereto shall be 
  8.21  considered effective and may be implemented by the insurer.  A 
  8.22  determination pursuant to chapter 14 must be made within 90 days 
  8.23  following the closing of the hearing record. 
  8.24     Subd. 3.  [CONSULTANTS AND COSTS.] The commissioner may 
  8.25  retain consultants, including a consulting actuary or other 
  8.26  experts, that the commissioner determines necessary for purposes 
  8.27  of this chapter.  The salary limit set by section 43A.17 does 
  8.28  not apply to a consulting actuary retained under this 
  8.29  subdivision.  A consulting actuary shall be a fellow in the 
  8.30  casualty actuarial society and shall have demonstrated 
  8.31  experience in workers' compensation insurance ratemaking.  Any 
  8.32  individual not so qualified shall not render an opinion or 
  8.33  testify on actuarial aspects of a filing, including but not 
  8.34  limited to, data quality, loss development, and trending.  The 
  8.35  costs incurred in retaining any consulting actuaries and experts 
  8.36  shall be reimbursed by the special compensation fund. 
  9.1      Sec. 12.  Minnesota Statutes 1994, section 175.16, is 
  9.2   amended to read: 
  9.3      175.16 [DIVISIONS.] 
  9.4      Subdivision 1.  [ESTABLISHED.] The department of labor and 
  9.5   industry shall consist of the following divisions:  division of 
  9.6   workers' compensation, division of boiler inspection, division 
  9.7   of occupational safety and health, division of statistics, 
  9.8   division of steamfitting standards, division of voluntary 
  9.9   apprenticeship, division of labor standards, and such other 
  9.10  divisions as the commissioner of the department of labor and 
  9.11  industry may deem necessary and establish.  Each division of the 
  9.12  department and persons in charge thereof shall be subject to the 
  9.13  supervision of the commissioner of the department of labor and 
  9.14  industry and, in addition to such duties as are or may be 
  9.15  imposed on them by statute, shall perform such other duties as 
  9.16  may be assigned to them by said commissioner. 
  9.17     Subd. 2.  [FRAUD INVESTIGATION UNIT.] The department of 
  9.18  labor and industry shall contain a fraud investigation unit for 
  9.19  the purposes of investigating fraudulent or other illegal 
  9.20  practices of health care providers, employers, insurers, 
  9.21  attorneys, employees, and others related to workers' 
  9.22  compensation and to investigate other matters under the 
  9.23  jurisdiction of the department. 
  9.24     An investigator of the fraud investigation unit of the 
  9.25  department of labor and industry has the inspection authority of 
  9.26  the commissioner provided under section 182.659 and may apply 
  9.27  this authority to subjects of investigations under this 
  9.28  subdivision. 
  9.29     Sec. 13.  Minnesota Statutes 1994, section 176.011, 
  9.30  subdivision 25, is amended to read: 
  9.31     Subd. 25.  [MAXIMUM MEDICAL IMPROVEMENT.] "Maximum medical 
  9.32  improvement" means the date after which no further significant 
  9.33  recovery from or significant lasting improvement to a personal 
  9.34  injury can reasonably be anticipated, based upon reasonable 
  9.35  medical probability., irrespective and regardless of subjective 
  9.36  complaints of pain.  Except where an employee is medically 
 10.1   unable to continue working under section 176.101, subdivision 1, 
 10.2   paragraph (e), clause (2), once the date of maximum medical 
 10.3   improvement has been determined, no further determinations of 
 10.4   other dates of maximum medical improvement for that personal 
 10.5   injury is permitted.  The determination that an employee has 
 10.6   reached maximum medical improvement shall not be rendered 
 10.7   ineffective by the worsening of the employee's medical condition 
 10.8   and recovery therefrom. 
 10.9      Sec. 14.  Minnesota Statutes 1994, section 176.021, 
 10.10  subdivision 3, is amended to read: 
 10.11     Subd. 3.  [COMPENSATION, COMMENCEMENT OF PAYMENT.] All 
 10.12  employers shall commence payment of compensation at the time and 
 10.13  in the manner prescribed by this chapter without the necessity 
 10.14  of any agreement or any order of the division.  Except for 
 10.15  medical, burial, and other nonperiodic benefits, payments shall 
 10.16  be made as nearly as possible at the intervals when the wage was 
 10.17  payable, provided, however, that payments for permanent partial 
 10.18  disability shall be governed by section 176.101.  If doubt 
 10.19  exists as to the eventual permanent partial disability, payment 
 10.20  for the economic recovery compensation or impairment 
 10.21  compensation, whichever is due, pursuant to section 176.101, 
 10.22  shall be then made when due for the minimum permanent partial 
 10.23  disability ascertainable, and further payment shall be made upon 
 10.24  any later ascertainment of greater permanent partial 
 10.25  disability.  Prior to or at the time of commencement of the 
 10.26  payment of economic recovery compensation or lump sum or 
 10.27  periodic payment of impairment permanent partial compensation, 
 10.28  the employee and employer shall be furnished with a copy of the 
 10.29  medical report upon which the payment is based and all other 
 10.30  medical reports which the insurer has that indicate a permanent 
 10.31  partial disability rating, together with a statement by the 
 10.32  insurer as to whether the tendered payment is for minimum 
 10.33  permanent partial disability or final and eventual disability.  
 10.34  After receipt of all reports available to the insurer that 
 10.35  indicate a permanent partial disability rating, the employee 
 10.36  shall make available or permit the insurer to obtain any medical 
 11.1   report that the employee has or has knowledge of that contains a 
 11.2   permanent partial disability rating which the insurer does not 
 11.3   already have.  Economic recovery compensation or impairment 
 11.4   Permanent partial compensation pursuant to section 176.101 is 
 11.5   payable in addition to but not concurrently with compensation 
 11.6   for temporary total disability but is payable pursuant to 
 11.7   section 176.101.  Impairment compensation is payable 
 11.8   concurrently and in addition to compensation for permanent total 
 11.9   disability pursuant to section 176.101.  Economic recovery 
 11.10  compensation or impairment compensation Permanent partial 
 11.11  compensation pursuant to section 176.101 shall be withheld 
 11.12  pending completion of payment for temporary total disability, 
 11.13  and no credit shall be taken for payment of economic recovery 
 11.14  compensation or impairment permanent partial compensation 
 11.15  against liability for temporary total or future permanent total 
 11.16  disability.  Liability on the part of an employer or the insurer 
 11.17  for disability of a temporary total, temporary partial, and 
 11.18  permanent total nature shall be considered as a continuing 
 11.19  product and part of the employee's inability to earn or 
 11.20  reduction in earning capacity due to injury or occupational 
 11.21  disease and compensation is payable accordingly, subject to 
 11.22  section 176.101.  Economic recovery compensation or 
 11.23  impairment Permanent partial compensation is payable for 
 11.24  functional loss of use or impairment of function, permanent in 
 11.25  nature, and payment therefore shall be separate, distinct, and 
 11.26  in addition to payment for any other compensation, subject to 
 11.27  section 176.101.  The right to receive temporary total, 
 11.28  temporary partial, or permanent total disability payments vests 
 11.29  in the injured employee or the employee's dependents under this 
 11.30  chapter or, if none, in the employee's legal heirs at the time 
 11.31  the disability can be ascertained and the right is not abrogated 
 11.32  by the employee's death prior to the making of the payment. 
 11.33     The right to receive economic recovery permanent partial 
 11.34  compensation or impairment compensation vests in an injured 
 11.35  employee at the time the disability can be ascertained provided 
 11.36  that the employee lives for at least 30 days beyond the date of 
 12.1   the injury.  Upon the death of an employee who is receiving 
 12.2   economic recovery compensation or impairment compensation, 
 12.3   further compensation is payable pursuant to section 176.101.  
 12.4   Impairment compensation is payable under this paragraph if 
 12.5   vesting has occurred, the employee dies prior to reaching 
 12.6   maximum medical improvement, and the requirements and conditions 
 12.7   under section 176.101, subdivision 3e, are not met.  
 12.8      Disability ratings for permanent partial disability shall 
 12.9   be based on objective medical evidence.  
 12.10     Sec. 15.  Minnesota Statutes 1994, section 176.021, 
 12.11  subdivision 3a, is amended to read: 
 12.12     Subd. 3a.  [PERMANENT PARTIAL BENEFITS, PAYMENT.] Payments 
 12.13  for permanent partial disability as provided in section 176.101, 
 12.14  subdivision 3 2a, shall be made in the following manner:  
 12.15     (a) If the employee returns to work, payment shall be made 
 12.16  by lump sum at the same intervals as temporary total payments 
 12.17  were made; 
 12.18     (b) If temporary total payments have ceased, but the 
 12.19  employee has not returned to work, payment shall be made at the 
 12.20  same intervals as temporary total payments were made; 
 12.21     (c) If temporary total disability payments cease because 
 12.22  the employee is receiving payments for permanent total 
 12.23  disability or because the employee is retiring or has retired 
 12.24  from the work force, then payment shall be made by lump sum at 
 12.25  the same intervals as temporary total payments were made; 
 12.26     (d) If the employee completes a rehabilitation plan 
 12.27  pursuant to section 176.102, but the employer does not furnish 
 12.28  the employee with work the employee can do in a permanently 
 12.29  partially disabled condition, and the employee is unable to 
 12.30  procure such work with another employer, then payment shall be 
 12.31  made by lump sum at the same intervals as temporary total 
 12.32  payments were made. 
 12.33     Sec. 16.  Minnesota Statutes 1994, section 176.061, 
 12.34  subdivision 10, is amended to read: 
 12.35     Subd. 10.  [INDEMNITY.] Notwithstanding the provisions of 
 12.36  chapter 65B or any other law to the contrary, an employer has a 
 13.1   right of indemnity for any compensation paid or payable pursuant 
 13.2   to this chapter, including temporary total compensation, 
 13.3   temporary partial compensation, permanent partial disability, 
 13.4   economic recovery compensation, impairment compensation, medical 
 13.5   compensation, rehabilitation, death, and permanent total 
 13.6   compensation.  
 13.7      Sec. 17.  Minnesota Statutes 1994, section 176.101, 
 13.8   subdivision 1, is amended to read: 
 13.9      Subdivision 1.  [TEMPORARY TOTAL DISABILITY.] (a) For 
 13.10  injury producing temporary total disability, the compensation is 
 13.11  66-2/3 percent of the weekly wage at the time of injury. 
 13.12     (b)  During the year (1) Commencing on October 1, 1992 
 13.13  1995, and each year thereafter, the maximum weekly compensation 
 13.14  payable is 105 percent of the statewide average weekly wage for 
 13.15  the period ending December 31 of the preceding year $615 per 
 13.16  week. 
 13.17     (2) The workers' compensation advisory council may consider 
 13.18  adjustment increases and make recommendations to the legislature.
 13.19     (c) The minimum weekly compensation payable is 20 percent 
 13.20  of the statewide average weekly wage for the period ending 
 13.21  December 31 of the preceding year $104 per week or the injured 
 13.22  employee's actual weekly wage, whichever is less.  
 13.23     (d) Subject to subdivisions 3a to 3u this Temporary total 
 13.24  compensation shall be paid during the period of disability, 
 13.25  payment to be made at the intervals when the wage was payable, 
 13.26  as nearly as may be subject to the cessation and recommencement 
 13.27  conditions in paragraphs (e) to (l). 
 13.28     (e) Temporary total disability compensation shall cease 
 13.29  when the employee returns to work.  Except as otherwise provided 
 13.30  in section 176.102, subdivision 11, temporary total disability 
 13.31  compensation may only be recommenced following cessation under 
 13.32  this paragraph, paragraph (h), or paragraph (j) prior to payment 
 13.33  of 104 weeks of temporary total disability compensation and only 
 13.34  as follows: 
 13.35     (1) if temporary total disability compensation ceased 
 13.36  because the employee returned to work, it may be recommenced if 
 14.1   the employee is laid off or terminated for reasons other than 
 14.2   misconduct within one year after returning to work if the layoff 
 14.3   or termination occurs prior to 90 days after the employee has 
 14.4   reached maximum medical improvement.  Recommenced temporary 
 14.5   total disability compensation under this clause ceases when any 
 14.6   of the cessation events in paragraphs (e) to (l) occurs; or 
 14.7      (2) if temporary total disability compensation ceased 
 14.8   because the employee returned to work or ceased under paragraph 
 14.9   (h) or (j), it may be recommenced if the employee is medically 
 14.10  unable to continue at a job due to the injury.  Where the 
 14.11  employee is medically unable to continue working due to the 
 14.12  injury, temporary total disability compensation may continue 
 14.13  until any of the cessation events in paragraphs (e) to (l) 
 14.14  occurs following recommencement.  If an employee who has not yet 
 14.15  received temporary total disability compensation becomes 
 14.16  medically unable to continue working due to the injury after 
 14.17  reaching maximum medical improvement, temporary total disability 
 14.18  compensation shall commence and shall continue until any of the 
 14.19  events in paragraphs (e) to (l) occurs following commencement.  
 14.20  For purposes of commencement or recommencement under this clause 
 14.21  only, a new period of maximum medical improvement under 
 14.22  paragraph (j) begins when the employee becomes medically unable 
 14.23  to continue working due to the injury.  Temporary total 
 14.24  disability compensation may not be recommenced under this clause 
 14.25  and a new period of maximum medical improvement does not begin 
 14.26  if the employee is not actively employed when the employee 
 14.27  becomes medically unable to work.  All periods of initial and 
 14.28  recommenced temporary total disability compensation are included 
 14.29  in the 104-week limitation specified in paragraph (k).  
 14.30     (f) Temporary total disability compensation shall cease if 
 14.31  the employee withdraws from the labor market.  Temporary total 
 14.32  disability compensation may be recommenced following cessation 
 14.33  under this paragraph only if the employee reenters the labor 
 14.34  market prior to 90 days after the employee reached maximum 
 14.35  medical improvement and prior to payment of 104 weeks of 
 14.36  temporary total disability compensation.  Once recommenced, 
 15.1   temporary total disability ceases when any of the cessation 
 15.2   events in paragraphs (e) to (l) occurs. 
 15.3      (g) Temporary total disability compensation shall cease if 
 15.4   the total disability ends and the employee fails to diligently 
 15.5   search for appropriate work within the employee's physical 
 15.6   restrictions.  Temporary total disability compensation may be 
 15.7   recommenced following cessation under this paragraph only if the 
 15.8   employee begins diligently searching for appropriate work within 
 15.9   the employee's physical restrictions prior to 90 days after 
 15.10  maximum medical improvement and prior to payment of 104 weeks of 
 15.11  temporary total disability compensation.  Once recommenced, 
 15.12  temporary total disability compensation ceases when any of the 
 15.13  cessation events in paragraphs (e) to (l) occurs. 
 15.14     (h) Temporary total disability compensation shall cease if 
 15.15  the employee has been released to work without any physical 
 15.16  restrictions caused by the work injury. 
 15.17     (i) Temporary total disability compensation shall cease if 
 15.18  the employee refuses an offer of work that is consistent with a 
 15.19  plan of rehabilitation filed with the commissioner which meets 
 15.20  the requirements of section 176.102, subdivision 4, or, if no 
 15.21  plan has been filed, the employee refuses an offer of gainful 
 15.22  employment that the employee can do in the employee's physical 
 15.23  condition.  Once temporary total disability compensation has 
 15.24  ceased under this paragraph, it may not be recommenced. 
 15.25     (j) Temporary total disability compensation shall cease 90 
 15.26  days after the employee has reached maximum medical improvement, 
 15.27  except as provided in section 176.102, subdivision 11, paragraph 
 15.28  (b).  For purposes of this subdivision, the 90-day period after 
 15.29  maximum medical improvement commences on the earlier of:  (1) 
 15.30  the date that the employee receives a written medical report 
 15.31  indicating that the employee has reached maximum medical 
 15.32  improvement; or (2) the date that the employer or insurer serves 
 15.33  the report on the employee and the employee's attorney, if any.  
 15.34  Once temporary total disability compensation has ceased under 
 15.35  this paragraph, it may not be recommenced except if the employee 
 15.36  returns to work and is subsequently medically unable to continue 
 16.1   working as provided in paragraph (e), clause (2). 
 16.2      (k) Temporary total disability compensation shall cease 
 16.3   entirely when 104 weeks of temporary total disability 
 16.4   compensation have been paid, except as provided in section 
 16.5   176.102, subdivision 11, paragraph (b).  Notwithstanding 
 16.6   anything in this section to the contrary, initial and 
 16.7   recommenced temporary total disability compensation combined 
 16.8   shall not be paid for more than 104 weeks, regardless of the 
 16.9   number of weeks that have elapsed since the injury, except that 
 16.10  if the employee is in a retraining plan approved under section 
 16.11  176.102, subdivision 11, the 104 week limitation shall not apply 
 16.12  during the retraining, but is subject to the limitation before 
 16.13  the plan begins and after the plan ends. 
 16.14     (l) Paragraphs (e) to (k) do not limit other grounds under 
 16.15  law to suspend or discontinue temporary total disability 
 16.16  compensation provided under chapter 176. 
 16.17     Sec. 18.  Minnesota Statutes 1994, section 176.101, 
 16.18  subdivision 2, is amended to read: 
 16.19     Subd. 2.  [TEMPORARY PARTIAL DISABILITY.] (a) In all cases 
 16.20  of temporary partial disability the compensation shall be 66-2/3 
 16.21  percent of the difference between the weekly wage of the 
 16.22  employee at the time of injury and the wage the employee is able 
 16.23  to earn in the employee's partially disabled condition.  This 
 16.24  compensation shall be paid during the period of disability 
 16.25  except as provided in this section, payment to be made at the 
 16.26  intervals when the wage was payable, as nearly as may be, and 
 16.27  subject to the maximum rate for temporary total compensation.  
 16.28     (b) Except as provided under subdivision 3k, Temporary 
 16.29  partial compensation may be paid only while the employee is 
 16.30  employed, earning less than the employee's weekly wage at the 
 16.31  time of the injury, and the reduced wage the employee is able to 
 16.32  earn in the employee's partially disabled condition is due to 
 16.33  the injury.  Except as provided in section 176.102, subdivision 
 16.34  11, paragraph paragraphs (b) and (c), temporary partial 
 16.35  compensation may not be paid for more than 225 weeks, or after 
 16.36  450 weeks after the date of injury, whichever occurs first.  
 17.1      (c) Temporary partial compensation must be reduced to the 
 17.2   extent that the wage the employee is able to earn in the 
 17.3   employee's partially disabled condition plus the temporary 
 17.4   partial disability payment otherwise payable under this 
 17.5   subdivision exceeds 500 percent of the statewide average weekly 
 17.6   wage. 
 17.7      Sec. 19.  Minnesota Statutes 1994, section 176.101, is 
 17.8   amended by adding a subdivision to read: 
 17.9      Subd. 2a.  [PERMANENT PARTIAL DISABILITY.] (a) Compensation 
 17.10  for permanent partial disability is as provided in this 
 17.11  subdivision.  Permanent partial disability must be rated as a 
 17.12  percentage of the whole body in accordance with rules adopted by 
 17.13  the commissioner under section 176.105.  The percentage 
 17.14  determined pursuant to the rules must be multiplied by the 
 17.15  corresponding amount in the following table: 
 17.16        Impairment rating                 Amount
 17.17            (percent)
 17.18              0-25                        $ 75,000
 17.19             26-30                          80,000
 17.20             31-35                          85,000
 17.21             36-40                          90,000
 17.22             41-45                          95,000
 17.23             46-50                         100,000
 17.24             51-55                         120,000
 17.25             56-60                         140,000
 17.26             61-65                         160,000
 17.27             66-70                         180,000
 17.28             71-75                         200,000
 17.29             76-80                         240,000
 17.30             81-85                         280,000
 17.31             86-90                         320,000
 17.32             91-95                         360,000
 17.33             96-100                        400,000
 17.34  An employee may not receive compensation for more than a 100 
 17.35  percent disability of the whole body, even if the employee 
 17.36  sustains disability to two or more body parts. 
 18.1      (b) Permanent partial disability is payable upon cessation 
 18.2   of temporary total disability under subdivision 1.  The 
 18.3   compensation is payable in installments at the same intervals 
 18.4   and in the same amount as the employee's temporary total 
 18.5   disability rate on the date of injury.  Permanent partial 
 18.6   disability is not payable while temporary total compensation is 
 18.7   being paid. 
 18.8      Sec. 20.  Minnesota Statutes 1994, section 176.101, 
 18.9   subdivision 4, is amended to read: 
 18.10     Subd. 4.  [PERMANENT TOTAL DISABILITY.] For permanent total 
 18.11  disability, as defined in subdivision 5, the compensation shall 
 18.12  be 66-2/3 percent of the daily wage at the time of the injury, 
 18.13  subject to a maximum weekly compensation equal to the maximum 
 18.14  weekly compensation for a temporary total disability and a 
 18.15  minimum weekly compensation equal to the minimum weekly 
 18.16  compensation for a temporary total disability 65 percent of the 
 18.17  statewide average weekly wage.  This compensation shall be paid 
 18.18  during the permanent total disability of the injured employee 
 18.19  but after a total of $25,000 of weekly compensation has been 
 18.20  paid, the amount of the weekly compensation benefits being paid 
 18.21  by the employer shall be reduced by the amount of any disability 
 18.22  benefits being paid by any government disability benefit program 
 18.23  if the disability benefits are occasioned by the same injury or 
 18.24  injuries which give rise to payments under this subdivision.  
 18.25  This reduction shall also apply to any old age and survivor 
 18.26  insurance benefits.  Payments shall be made at the intervals 
 18.27  when the wage was payable, as nearly as may be.  In case an 
 18.28  employee who is permanently and totally disabled becomes an 
 18.29  inmate of a public institution, no compensation shall be payable 
 18.30  during the period of confinement in the institution, unless 
 18.31  there is wholly dependent on the employee for support some 
 18.32  person named in section 176.111, subdivision 1, 2 or 3, in which 
 18.33  case the compensation provided for in section 176.111, during 
 18.34  the period of confinement, shall be paid for the benefit of the 
 18.35  dependent person during dependency.  The dependency of this 
 18.36  person shall be determined as though the employee were deceased. 
 19.1   Permanent total disability shall cease at age 67 because the 
 19.2   employee is presumed retired from the labor market.  This 
 19.3   presumption is rebuttable by the employee.  The subjective 
 19.4   statement the employee is not retired is not sufficient in 
 19.5   itself to rebut the presumptive evidence of retirement but may 
 19.6   be considered along with other evidence. 
 19.7      Sec. 21.  Minnesota Statutes 1994, section 176.101, 
 19.8   subdivision 5, is amended to read: 
 19.9      Subd. 5.  [DEFINITION.] (a) For purposes of subdivision 4, 
 19.10  permanent total disability means only:  
 19.11     (1) the total and permanent loss of the sight of both eyes, 
 19.12  the loss of both arms at the shoulder, the loss of both legs so 
 19.13  close to the hips that no effective artificial members can be 
 19.14  used, complete and permanent paralysis, total and permanent loss 
 19.15  of mental faculties; or 
 19.16     (2) any other injury which totally and permanently 
 19.17  incapacitates the employee from working at an occupation which 
 19.18  brings the employee an income., provided that the employee must 
 19.19  also meet the criteria of one of the following clauses: 
 19.20     (a) the employee has at least a 17 percent permanent 
 19.21  partial disability rating of the whole body; 
 19.22     (b) the employee has a permanent partial disability rating 
 19.23  of the whole body of at least 15 percent and the employee is at 
 19.24  least 50 years old at the time of injury; or 
 19.25     (c) the employee has a permanent partial disability rating 
 19.26  of the whole body of at least 13 percent and the employee is at 
 19.27  least 55 years old at the time of the injury, and has not 
 19.28  completed grade 12 or obtained a GED certificate. 
 19.29     For purposes of this clause, "totally and permanently 
 19.30  incapacitated" means that the employee's physical disability in 
 19.31  combination with any one of clauses (a), (b), or (c) causes the 
 19.32  employee to be unable to secure anything more than sporadic 
 19.33  employment resulting in an insubstantial income.  Other factors 
 19.34  not specified in clause (a), (b), or (c), including the 
 19.35  employee's age, education, training and experience, may only be 
 19.36  considered in determining whether an employee is totally and 
 20.1   permanently incapacitated after the employee meets the threshold 
 20.2   criteria of clause (a), (b), or (c).  The employee's age, level 
 20.3   of physical disability, or education may not be considered to 
 20.4   the extent the factor is inconsistent with the disability, age, 
 20.5   and education factors specified in clause (a), (b), or (c). 
 20.6      (b) For purposes of paragraph (a), clause (2), "totally and 
 20.7   permanently incapacitated" means that the employee's physical 
 20.8   disability, in combination with the employee's age, education, 
 20.9   training, and experience, causes the employee to be unable to 
 20.10  secure anything more than sporadic employment resulting in an 
 20.11  insubstantial income.  
 20.12     Sec. 22.  Minnesota Statutes 1994, section 176.101, 
 20.13  subdivision 6, is amended to read: 
 20.14     Subd. 6.  [MINORS; APPRENTICES.] (a) If any employee 
 20.15  entitled to the benefits of this chapter is an apprentice of any 
 20.16  age and sustains a personal injury arising out of and in the 
 20.17  course of employment resulting in permanent total or a 
 20.18  compensable permanent partial disability, for the purpose of 
 20.19  computing the compensation to which the employee is entitled for 
 20.20  the injury, the compensation rate for temporary total, temporary 
 20.21  partial, a or permanent total disability or economic recovery 
 20.22  compensation shall be the maximum rate for temporary total 
 20.23  disability under subdivision 1. 
 20.24     (b) If any employee entitled to the benefits of this 
 20.25  chapter is a minor and sustains a personal injury arising out of 
 20.26  and in the course of employment resulting in permanent total 
 20.27  disability, for the purpose of computing the compensation to 
 20.28  which the employee is entitled for the injury, the compensation 
 20.29  rate for a permanent total disability shall be the maximum rate 
 20.30  for temporary total disability under subdivision 1. 
 20.31     Sec. 23.  Minnesota Statutes 1994, section 176.101, 
 20.32  subdivision 8, is amended to read: 
 20.33     Subd. 8.  [RETIREMENT CESSATION OF BENEFITS.] Temporary 
 20.34  total disability payments shall cease at retirement.  
 20.35  "Retirement" means that a preponderance of the evidence supports 
 20.36  a conclusion that an employee has retired.  The subjective 
 21.1   statement of an employee that the employee is not retired is not 
 21.2   sufficient in itself to rebut objective evidence of retirement 
 21.3   but may be considered along with other evidence.  
 21.4      For injuries occurring after January 1, 1984, an employee 
 21.5   who receives social security old age and survivors insurance 
 21.6   retirement benefits under the Social Security Act, Public Law 
 21.7   Number 98-21, as amended, is presumed retired from the labor 
 21.8   market.  This presumption is rebuttable by a preponderance of 
 21.9   the evidence. 
 21.10     Sec. 24.  Minnesota Statutes 1994, section 176.105, 
 21.11  subdivision 4, is amended to read: 
 21.12     Subd. 4.  [LEGISLATIVE INTENT; RULES; LOSS OF MORE THAN ONE 
 21.13  BODY PART.] (a) For the purpose of establishing a disability 
 21.14  schedule pursuant to clause (b), the legislature declares its 
 21.15  intent that the commissioner establish a disability schedule 
 21.16  which, assuming the same number and distribution of severity of 
 21.17  injuries, the aggregate total of impairment compensation and 
 21.18  economic recovery compensation benefits under section 176.101, 
 21.19  subdivisions 3a to 3u be approximately equal to the total 
 21.20  aggregate amount payable for permanent partial disabilities 
 21.21  under section 176.101, subdivision 3, provided, however, that 
 21.22  awards for specific injuries under the proposed schedule need 
 21.23  not be the same as they were for the same injuries under the 
 21.24  schedule pursuant to section 176.101, subdivision 3.  The 
 21.25  schedule shall be determined by sound actuarial evaluation and 
 21.26  shall be based on the benefit level which exists on January 1, 
 21.27  1983.  
 21.28     (b) The commissioner shall by rulemaking adopt procedures 
 21.29  setting forth rules for the evaluation and rating of functional 
 21.30  disability and the schedule for permanent partial disability and 
 21.31  to determine the percentage of loss of function of a part of the 
 21.32  body based on the body as a whole, including internal organs, 
 21.33  described in section 176.101, subdivision 3, and any other body 
 21.34  part not listed in section 176.101, subdivision 3, which the 
 21.35  commissioner deems appropriate.  
 21.36     The rules shall promote objectivity and consistency in the 
 22.1   evaluation of permanent functional impairment due to personal 
 22.2   injury and in the assignment of a numerical rating to the 
 22.3   functional impairment.  
 22.4      Prior to adoption of rules the commissioner shall conduct 
 22.5   an analysis of the current permanent partial disability schedule 
 22.6   for the purpose of determining the number and distribution of 
 22.7   permanent partial disabilities and the average compensation for 
 22.8   various permanent partial disabilities.  The commissioner shall 
 22.9   consider setting the compensation under the proposed schedule 
 22.10  for the most serious conditions higher in comparison to the 
 22.11  current schedule and shall consider decreasing awards for minor 
 22.12  conditions in comparison to the current schedule.  
 22.13     The commissioner may consider, among other factors, and 
 22.14  shall not be limited to the following factors in developing 
 22.15  rules for the evaluation and rating of functional disability and 
 22.16  the schedule for permanent partial disability benefits:  
 22.17     (1) the workability and simplicity of the procedures with 
 22.18  respect to the evaluation of functional disability; 
 22.19     (2) the consistency of the procedures with accepted medical 
 22.20  standards; 
 22.21     (3) rules, guidelines, and schedules that exist in other 
 22.22  states that are related to the evaluation of permanent partial 
 22.23  disability or to a schedule of benefits for functional 
 22.24  disability provided that the commissioner is not bound by the 
 22.25  degree of disability in these sources but shall adjust the 
 22.26  relative degree of disability to conform to the expressed intent 
 22.27  of clause (a) this section; 
 22.28     (4) rules, guidelines, and schedules that have been 
 22.29  developed by associations of health care providers or 
 22.30  organizations provided that the commissioner is not bound by the 
 22.31  degree of disability in these sources but shall adjust the 
 22.32  relative degree of disability to conform to the expressed intent 
 22.33  of clause (a) this section; 
 22.34     (5) the effect the rules may have on reducing litigation; 
 22.35     (6) the treatment of preexisting disabilities with respect 
 22.36  to the evaluation of permanent functional disability provided 
 23.1   that any preexisting disabilities must be objectively determined 
 23.2   by medical evidence; and 
 23.3      (7) symptomatology and loss of function and use of the 
 23.4   injured member.  
 23.5      The factors in paragraphs (1) to (7) shall not be used in 
 23.6   any individual or specific workers' compensation claim under 
 23.7   this chapter but shall be used only in the adoption of rules 
 23.8   pursuant to this section.  
 23.9      Nothing listed in paragraphs (1) to (7) shall be used to 
 23.10  dispute or challenge a disability rating given to a part of the 
 23.11  body so long as the whole schedule conforms with the expressed 
 23.12  intent of clause (a) this section. 
 23.13     (c) If an employee suffers a permanent functional 
 23.14  disability of more than one body part due to a personal injury 
 23.15  incurred in a single occurrence, the percent of the whole body 
 23.16  which is permanently partially disabled shall be determined by 
 23.17  the following formula so as to ensure that the percentage for 
 23.18  all functional disability combined does not exceed the total for 
 23.19  the whole body:  
 23.20                           A + B (1 - A) 
 23.21     where:  A is the greater percentage whole body loss of the 
 23.22  first body part; and B is the lesser percentage whole body loss 
 23.23  otherwise payable for the second body part.  A + B (1-A) is 
 23.24  equivalent to A + B - AB.  
 23.25     For permanent partial disabilities to three body parts due 
 23.26  to a single occurrence or as the result of an occupational 
 23.27  disease, the above formula shall be applied, providing that A 
 23.28  equals the result obtained from application of the formula to 
 23.29  the first two body parts and B equals the percentage for the 
 23.30  third body part.  For permanent partial disability to four or 
 23.31  more body parts incurred as described above, A equals the result 
 23.32  obtained from the prior application of the formula, and B equals 
 23.33  the percentage for the fourth body part or more in arithmetic 
 23.34  progressions. 
 23.35     Sec. 25.  Minnesota Statutes 1994, section 176.178, is 
 23.36  amended to read: 
 24.1      176.178 [FRAUD.] 
 24.2      Subdivision 1.  [INTENT.] Any person who, with intent to 
 24.3   defraud, receives workers' compensation benefits to which the 
 24.4   person is not entitled by knowingly misrepresenting, misstating, 
 24.5   or failing to disclose any material fact is guilty of theft and 
 24.6   shall be sentenced pursuant to section 609.52, subdivision 3. 
 24.7      Subd. 2.  [FORMS.] The text of subdivision 1 shall be 
 24.8   placed on all forms prescribed by the commissioner for claims or 
 24.9   responses to claims for workers' compensation benefits under 
 24.10  this chapter.  The absence of the text does not constitute a 
 24.11  defense against prosecution under subdivision 1.  
 24.12     Sec. 26.  Minnesota Statutes 1994, section 176.179, is 
 24.13  amended to read: 
 24.14     176.179 [RECOVERY OF OVERPAYMENTS.] 
 24.15     Notwithstanding section 176.521, subdivision 3, or any 
 24.16  other provision of this chapter to the contrary, except as 
 24.17  provided in this section, no lump sum or weekly payment, or 
 24.18  settlement, which is voluntarily paid to an injured employee or 
 24.19  the survivors of a deceased employee in apparent or seeming 
 24.20  accordance with the provisions of this chapter by an employer or 
 24.21  insurer, or is paid pursuant to an order of the workers' 
 24.22  compensation division, a compensation judge, or court of appeals 
 24.23  relative to a claim by an injured employee or the employee's 
 24.24  survivors, and received in good faith by the employee or the 
 24.25  employee's survivors shall be refunded to the paying employer or 
 24.26  insurer in the event that it is subsequently determined that the 
 24.27  payment was made under a mistake in fact or law by the employer 
 24.28  or insurer.  When the payments have been made to a person who is 
 24.29  entitled to receive further payments of compensation for the 
 24.30  same injury, the mistaken compensation may be taken as a full 
 24.31  credit against future lump sum benefit entitlement and as a 
 24.32  partial credit against future weekly periodic benefits.  The 
 24.33  credit applied against further payments of temporary total 
 24.34  disability, temporary partial disability, permanent partial 
 24.35  disability, permanent total disability, retraining benefits, 
 24.36  death benefits, or weekly payments of economic recovery or 
 25.1   impairment compensation shall not exceed 20 percent of the 
 25.2   amount that would otherwise be payable. 
 25.3      A credit may not be applied against medical expenses due or 
 25.4   payable.  
 25.5      Where the commissioner or compensation judge determines 
 25.6   that the mistaken compensation was not received in good faith, 
 25.7   the commissioner or compensation judge may order reimbursement 
 25.8   of the compensation.  For purposes of this section, a payment is 
 25.9   not received in good faith if it is obtained through fraud, or 
 25.10  if the employee knew that the compensation was paid under 
 25.11  mistake of fact or law, and the employee has not refunded the 
 25.12  mistaken compensation. 
 25.13     Sec. 27.  Minnesota Statutes 1994, section 176.221, 
 25.14  subdivision 6a, is amended to read: 
 25.15     Subd. 6a.  [MEDICAL, REHABILITATION, ECONOMIC RECOVERY, AND 
 25.16  IMPAIRMENT AND PERMANENT PARTIAL COMPENSATION.] The penalties 
 25.17  provided by this section apply in cases where payment for 
 25.18  treatment under section 176.135, rehabilitation expenses under 
 25.19  section 176.102, subdivisions 9 and 11, economic recovery 
 25.20  compensation or impairment compensation or permanent partial 
 25.21  compensation are not made in a timely manner as required by law 
 25.22  or by rule adopted by the commissioner.  
 25.23     Sec. 28.  Minnesota Statutes 1994, section 176.645, is 
 25.24  amended to read: 
 25.25     176.645 [ADJUSTMENT OF BENEFITS.] 
 25.26     Subdivision 1.  [AMOUNT.] For injuries occurring after 
 25.27  October 1, 1975 for which benefits are payable under section 
 25.28  176.101, subdivisions 1, 2 and 4, and section 176.111, 
 25.29  subdivision 5, the total benefits due the employee or any 
 25.30  dependents shall be adjusted in accordance with this section.  
 25.31  On October 1, 1981, and thereafter on the anniversary of the 
 25.32  date of the employee's injury the total benefits due shall be 
 25.33  adjusted by multiplying the total benefits due prior to each 
 25.34  adjustment by a fraction, the denominator of which is the 
 25.35  statewide average weekly wage for December 31, of the year two 
 25.36  years previous to the adjustment and the numerator of which is 
 26.1   the statewide average weekly wage for December 31, of the year 
 26.2   previous to the adjustment.  For injuries occurring after 
 26.3   October 1, 1975, all adjustments provided for in this section 
 26.4   shall be included in computing any benefit due under this 
 26.5   section.  Any limitations of amounts due for daily or weekly 
 26.6   compensation under this chapter shall not apply to adjustments 
 26.7   made under this section.  No adjustment increase made on or 
 26.8   after October 1, 1977, but prior to October 1, 1992, under this 
 26.9   section shall exceed six percent a year; in those instances 
 26.10  where the adjustment under the formula of this section would 
 26.11  exceed this maximum, the increase shall be deemed to be six 
 26.12  percent.  No adjustment increase made on or after October 1, 
 26.13  1992, under this section shall exceed four percent a year; in 
 26.14  those instances where the adjustment under the formula of this 
 26.15  section would exceed this maximum, the increase shall be deemed 
 26.16  to be four percent.  For injuries occurring on and after October 
 26.17  1, 1995, no adjustment increase made on or after October 1, 
 26.18  1995, shall exceed two percent a year; in those instances where 
 26.19  the adjustment under the formula of this section would exceed 
 26.20  this maximum, the increase shall be deemed to be two percent.  
 26.21  The workers' compensation advisory council may consider 
 26.22  adjustment or other further increases and make recommendations 
 26.23  to the legislature. 
 26.24     Subd. 2.  [TIME OF FIRST ADJUSTMENT.] For injuries 
 26.25  occurring on or after October 1, 1981, the initial adjustment 
 26.26  made pursuant to subdivision 1 is deferred until the first 
 26.27  anniversary of the date of the injury.  For injuries occurring 
 26.28  on or after October 1, 1992, the initial adjustment under 
 26.29  subdivision 1 is deferred until the second anniversary of the 
 26.30  date of the injury.  The adjustment made at that time shall be 
 26.31  that of the last year only.  For injuries occurring on or after 
 26.32  October 1, 1995, the initial adjustment under subdivision 1 is 
 26.33  deferred until the fourth anniversary of the date of injury.  
 26.34  The adjustment at that time shall be that of the last year only. 
 26.35     Sec. 29.  Minnesota Statutes 1994, section 176.66, 
 26.36  subdivision 11, is amended to read: 
 27.1      Subd. 11.  [AMOUNT OF COMPENSATION.] The compensation for 
 27.2   an occupational disease is 66-2/3 percent of the employee's 
 27.3   weekly wage on the date of injury subject to a maximum 
 27.4   compensation equal to the maximum compensation in effect on the 
 27.5   date of last exposure.  The employee shall be eligible for 
 27.6   supplementary benefits notwithstanding the provisions of section 
 27.7   176.132, after four years have elapsed since the date of last 
 27.8   significant exposure to the hazard of the occupational disease 
 27.9   if that employee's weekly compensation rate is less than the 
 27.10  current supplementary benefit rate.  
 27.11     Sec. 30.  Minnesota Statutes 1994, section 176.82, is 
 27.12  amended to read: 
 27.13     176.82 [ACTION FOR CIVIL DAMAGES FOR OBSTRUCTING EMPLOYEE 
 27.14  SEEKING BENEFITS.] 
 27.15     Subdivision 1.  [RETALIATORY DISCHARGE.] Any person 
 27.16  discharging or threatening to discharge an employee for seeking 
 27.17  workers' compensation benefits or in any manner intentionally 
 27.18  obstructing an employee seeking workers' compensation benefits 
 27.19  is liable in a civil action for damages incurred by the employee 
 27.20  including any diminution in workers' compensation benefits 
 27.21  caused by a violation of this section including costs and 
 27.22  reasonable attorney fees, and for punitive damages not to exceed 
 27.23  three times the amount of any compensation benefit to which the 
 27.24  employee is entitled.  Damages awarded under this section shall 
 27.25  not be offset by any workers' compensation benefits to which the 
 27.26  employee is entitled. 
 27.27     Subd. 2.  [REFUSAL TO OFFER CONTINUED EMPLOYMENT.] An 
 27.28  employer who, without reasonable cause, refuses to offer 
 27.29  continued employment to its employee when employment is 
 27.30  available within the employee's physical limitations shall be 
 27.31  liable in a civil action for one year's wages.  The wages are 
 27.32  payable from the date of the refusal to offer continued 
 27.33  employment, and at the same time and at the same rate as the 
 27.34  employee's preinjury wage, to continue during the period of the 
 27.35  refusal up to a maximum of $15,000.  These payments shall be in 
 27.36  addition to any other payments provided by this chapter.  In 
 28.1   determining the availability of employment, the continuance in 
 28.2   business of the employer shall be considered and written rules 
 28.3   promulgated by the employer with respect to seniority or the 
 28.4   provisions or any collective bargaining agreement shall govern.  
 28.5   These payments shall not be covered by a contract of insurance.  
 28.6   The employer shall be served directly and be a party to the 
 28.7   claim.  This subdivision shall not apply to employers who employ 
 28.8   15 or fewer full-time equivalent employees. 
 28.9      Sec. 31.  [176.861] [DISCLOSURE OF INFORMATION.] 
 28.10     Subdivision 1.  [INSURANCE INFORMATION.] The commissioner 
 28.11  may, in writing, require an insurance company to release to the 
 28.12  commissioner any or all relevant information or evidence the 
 28.13  commissioner deems important which the company may have in its 
 28.14  possession relating to a workers' compensation claim including 
 28.15  material relating to the investigation of the claim; statements 
 28.16  of any person, and any other evidence relevant to the 
 28.17  investigation.  The writing from the commissioner requiring 
 28.18  release of the information shall contain a statement that the 
 28.19  commissioner has reason to believe a crime or civil fraud has 
 28.20  been committed with respect to an insurance claim, payment, or 
 28.21  application. 
 28.22     Subd. 2.  [INFORMATION RELEASED TO AUTHORIZED PERSONS.] If 
 28.23  an insurance company has evidence that a claim may be 
 28.24  fraudulent, the company shall, in writing, notify the 
 28.25  commissioner and provide the commissioner with all relevant 
 28.26  material related to the company's inquiry into the claim. 
 28.27     Subd. 3.  [GOOD FAITH IMMUNITY.] An insurance company or 
 28.28  its agent acting in its behalf and in good faith who releases 
 28.29  oral or written information under subdivisions 1 and 2 is immune 
 28.30  from civil or criminal liability that might otherwise be 
 28.31  incurred or imposed. 
 28.32     Subd. 4.  [SELF-INSURER; ASSIGNED RISK PLAN.] For the 
 28.33  purposes of this section "insurance company" includes a 
 28.34  self-insurer and the assigned risk plan and their agents. 
 28.35     Sec. 32.  Minnesota Statutes 1994, section 268.08, 
 28.36  subdivision 3, is amended to read: 
 29.1      Subd. 3.  [NOT ELIGIBLE.] An individual shall not be 
 29.2   eligible to receive benefits for any week with respect to which 
 29.3   the individual is receiving, has received, or has filed a claim 
 29.4   for remuneration in an amount equal to or in excess of the 
 29.5   individual's weekly benefit amount in the form of: 
 29.6      (1) termination, severance, or dismissal payment or wages 
 29.7   in lieu of notice whether legally required or not; provided that 
 29.8   if a termination, severance, or dismissal payment is made in a 
 29.9   lump sum, such lump sum payment shall be allocated over a period 
 29.10  equal to the lump sum divided by the employee's regular pay 
 29.11  while employed by such employer; provided such payment shall be 
 29.12  applied for a period immediately following the last day of 
 29.13  employment but not to exceed 28 calendar days provided that 50 
 29.14  percent of the total of any such payments in excess of eight 
 29.15  weeks shall be similarly allocated to the period immediately 
 29.16  following the 28 days; or 
 29.17     (2) vacation allowance paid directly by the employer for a 
 29.18  period of requested vacation, including vacation periods 
 29.19  assigned by the employer under the provisions of a collective 
 29.20  bargaining agreement, or uniform vacation shutdown; or 
 29.21     (3) compensation for loss of wages under the workers' 
 29.22  compensation law of this state or any other state or under a 
 29.23  similar law of the United States, or under other insurance or 
 29.24  fund established and paid for by the employer except that this 
 29.25  does not apply to an individual who is receiving temporary 
 29.26  partial compensation pursuant to section 176.101, subdivision 
 29.27  3k; or 
 29.28     (4) 50 percent of the pension payments from any fund, 
 29.29  annuity or insurance maintained or contributed to by a base 
 29.30  period employer including the armed forces of the United States 
 29.31  if the employee contributed to the fund, annuity or insurance 
 29.32  and all of the pension payments if the employee did not 
 29.33  contribute to the fund, annuity or insurance; or 
 29.34     (5) 50 percent of a primary insurance benefit under title 
 29.35  II of the Social Security Act, as amended, or similar old age 
 29.36  benefits under any act of Congress or this state or any other 
 30.1   state. 
 30.2      Provided, that if such remuneration is less than the 
 30.3   benefits which would otherwise be due under sections 268.03 to 
 30.4   268.231, the individual shall be entitled to receive for such 
 30.5   week, if otherwise eligible, benefits reduced by the amount of 
 30.6   such remuneration; provided, further, that if the appropriate 
 30.7   agency of such other state or the federal government finally 
 30.8   determines that the individual is not entitled to such benefits, 
 30.9   this provision shall not apply.  If the computation of reduced 
 30.10  benefits, required by this subdivision, is not a whole dollar 
 30.11  amount, it shall be rounded down to the next lower dollar amount.
 30.12     Sec. 33.  [APPROPRIATION.] 
 30.13     $900,000 is appropriated from the special compensation fund 
 30.14  for the biennium ending June 30, 1997, to the department of 
 30.15  commerce for the purposes of rate regulation.  The complement of 
 30.16  the department of commerce is increased by 13 positions for the 
 30.17  purposes of rate regulation. 
 30.18     Sec. 34.  [APPROPRIATION.] 
 30.19     $110,000 is appropriated from the special compensation fund 
 30.20  to the department of labor and industry for the biennium ending 
 30.21  June 30, 1997, for the purposes of this act.  
 30.22     Sec. 35.  [REPEALER.] 
 30.23     Minnesota Statutes 1994, section 176.132, is repealed. 
 30.24     Sec. 36.  [REPEALER.] 
 30.25     (a) Minnesota Statutes 1994, sections 79.53, subdivision 2; 
 30.26  79.54; 79.56, subdivision 2; 79.57; and 79.58, are repealed. 
 30.27     (b) Minnesota Statutes 1994, sections 176.011, subdivision 
 30.28  26; and 176.101, subdivisions 3a, 3b, 3c, 3d, 3e, 3f, 3g, 3h, 
 30.29  3i, 3j, 3k, 3l, 3m, 3n, 3o, 3p, 3q, 3r, 3s, 3t, and 3u, are 
 30.30  repealed. 
 30.31     (c) Minnesota Statutes 1994, section 176.86, is repealed.  
 30.32     (d) Laws 1990, chapter 521, section 4, is repealed. 
 30.33     Sec. 37.  [EFFECTIVE DATE.] 
 30.34     Sections 1 to 11 and 36, paragraph (a), are effective 
 30.35  January 1, 1996.  Rates and rating plans in use as of January 1, 
 30.36  1996, may continue to be used until such time as an amendment 
 31.1   thereto or a new rate or rating plan is filed, at which time the 
 31.2   filing is subject to sections 1 to 11. 
 31.3      Sections 23, 24, 26, 27, and 36, paragraph (b), are 
 31.4   effective October 1, 1995. 
 31.5      Sections 13 to 22, 28, 29, 30, and 32 are effective October 
 31.6   1, 1995, and apply to personal injuries occurring on and after 
 31.7   that date. 
 31.8                              ARTICLE 2
 31.9      Section 1.  Minnesota Statutes 1994, section 13.69, 
 31.10  subdivision 1, is amended to read: 
 31.11     Subdivision 1.  [CLASSIFICATIONS.] (a) The following 
 31.12  government data of the department of public safety are private 
 31.13  data:  
 31.14     (1) medical data on driving instructors, licensed drivers, 
 31.15  and applicants for parking certificates and special license 
 31.16  plates issued to physically handicapped persons; and 
 31.17     (2) social security numbers in driver's license and motor 
 31.18  vehicle registration records, except that social security 
 31.19  numbers must be provided to the department of revenue for 
 31.20  purposes of tax administration and the department of labor and 
 31.21  industry for purposes of workers' compensation administration 
 31.22  and enforcement.  
 31.23     (b) The following government data of the department of 
 31.24  public safety are confidential data:  data concerning an 
 31.25  individual's driving ability when that data is received from a 
 31.26  member of the individual's family. 
 31.27     Sec. 2.  Minnesota Statutes 1994, section 13.82, 
 31.28  subdivision 1, is amended to read: 
 31.29     Subdivision 1.  [APPLICATION.] This section shall apply to 
 31.30  agencies which carry on a law enforcement function, including 
 31.31  but not limited to municipal police departments, county sheriff 
 31.32  departments, fire departments, the bureau of criminal 
 31.33  apprehension, the Minnesota state patrol, the board of peace 
 31.34  officer standards and training, and the department of commerce, 
 31.35  and the department of labor and industry fraud investigation 
 31.36  unit.  
 32.1      Sec. 3.  Minnesota Statutes 1994, section 79.074, 
 32.2   subdivision 2, is amended to read: 
 32.3      Subd. 2.  [DIVIDENDS.] Dividend plans are not unfairly 
 32.4   discriminatory where different premiums result for different 
 32.5   policyholders with similar loss exposures but different expense 
 32.6   factors, or where different premiums result for different 
 32.7   policyholders with similar expense factors but different loss 
 32.8   exposures, so long as the respective premiums reflect the 
 32.9   differences with reasonable accuracy.  Every insurer referred to 
 32.10  in section 79.20 who issues participating policies shall file 
 32.11  with the commissioner a true copy or summary as the commissioner 
 32.12  shall direct of its participating dividend rates as to 
 32.13  policyholders.  The commissioner may study the participating 
 32.14  dividend rates and make recommendations to the legislature 
 32.15  concerning possible bases for unfair discrimination.  
 32.16     Sec. 4.  Minnesota Statutes 1994, section 79.085, is 
 32.17  amended to read: 
 32.18     79.085 [SAFETY PROGRAMS.] 
 32.19     All insurers writing workers' compensation insurance in 
 32.20  this state shall provide safety and occupational health loss 
 32.21  control consultation services to each of their policyholders 
 32.22  requesting the services in writing.  Insurers must annually 
 32.23  notify their policyholders of their right under this section to 
 32.24  safety and occupational health loss consultation services.  The 
 32.25  services must include the conduct of workplace surveys to 
 32.26  identify health and safety problems, review of employer injury 
 32.27  records with appropriate personnel, and development of plans to 
 32.28  improve employer occupational health and safety loss records.  
 32.29  Insurers shall notify each policyholder of the availability of 
 32.30  those services and the telephone number and address where such 
 32.31  services can be requested.  The notification may be delivered 
 32.32  with the policy of workers' compensation insurance. 
 32.33     Sec. 5.  Minnesota Statutes 1994, section 79.211, 
 32.34  subdivision 1, is amended to read: 
 32.35     Subdivision 1.  [CERTAIN WAGES EXCLUDED INCLUDED FOR 
 32.36  RATEMAKING.] The rating association or an insurer shall not 
 33.1   include wages paid for a vacation, holiday, or sick leave in the 
 33.2   determination of a workers' compensation insurance premium. 
 33.3      An insurer, including the assigned risk plan, shall not 
 33.4   include wages paid for work performed in an adjacent state in 
 33.5   the determination of a workers' compensation premium if the 
 33.6   employer paid a workers' compensation insurance premium to the 
 33.7   exclusive state fund of the adjacent state on the wages earned 
 33.8   in the adjacent state. 
 33.9      Within 30 days of the effective date of this section, a 
 33.10  licensed data service organization on behalf of its members 
 33.11  shall file an amendment to its charged class premium rates to 
 33.12  reflect the inclusion of vacation, holiday, and sick leave wages 
 33.13  in the determination of premium.  Within 30 days of the filing 
 33.14  of those pure premium rates each insurer shall amend its filed 
 33.15  schedule of rates to reflect the inclusion of vacation, holiday, 
 33.16  and sick leave wages in the determination of premium.  
 33.17     Sec. 6.  Minnesota Statutes 1994, section 79.251, 
 33.18  subdivision 2, is amended to read: 
 33.19     Subd. 2.  [APPROPRIATE MERIT RATING PLAN.] The commissioner 
 33.20  shall develop an appropriate merit rating plan which shall be 
 33.21  applicable to all insureds holding policies or contracts of 
 33.22  coverage issued pursuant to subdivision 4 and to the insurers or 
 33.23  self-insurance administrators issuing those policies or 
 33.24  contracts.  The plan shall provide a maximum merit adjustment 
 33.25  equal to ten percent of earned premium.  The actual adjustment 
 33.26  may vary with insured's loss experience.  To assist small 
 33.27  businesses with good safety records, the commissioner shall 
 33.28  develop a merit rating plan applicable to all employers holding 
 33.29  policies issued pursuant to subdivision 4.  The plan shall 
 33.30  provide that nonexperience rated employers, with no lost time 
 33.31  claims for the last three policy years, shall receive 33 percent 
 33.32  credit.  The credit must be applied directly to the premium 
 33.33  charged for the policy.  Nonexperience rated employers with two 
 33.34  or more lost time claims for the last three policy years may 
 33.35  receive a debit.  Experience rated employers shall receive a 
 33.36  maximum credit or debit of ten percent of premium.  The merit 
 34.1   rating plan shall be subject to adjustment by the commissioner 
 34.2   as necessary to fulfill the commissioner's assigned risk plan 
 34.3   responsibilities. 
 34.4      Sec. 7.  Minnesota Statutes 1994, section 79.251, is 
 34.5   amended by adding a subdivision to read: 
 34.6      Subd. 8.  [DISSOLUTION.] Upon the dissolution of the 
 34.7   assigned risk plan, the commissioner shall proceed to wind up 
 34.8   the affairs of the plan, settle its accounts, and dispose of its 
 34.9   assets.  The assets and property of the assigned risk plan must 
 34.10  be applied and distributed in the following order of priority: 
 34.11     (1) to the establishment of reserves for claims under 
 34.12  policies and contracts of coverage issued by the assigned risk 
 34.13  plan before termination; 
 34.14     (2) to the payment of all debts and liabilities of the 
 34.15  assigned risk plan, including the repayment of loans and 
 34.16  assessments; 
 34.17     (3) to the establishment of reserves considered necessary 
 34.18  by the commissioner for contingent liabilities or obligations of 
 34.19  the assigned risk plan other than claims arising under policies 
 34.20  and contracts of coverage; and 
 34.21     (4) to the state of Minnesota. 
 34.22     If the commissioner determines that the assets of the 
 34.23  assigned risk plan are insufficient to meet its obligations 
 34.24  under clauses (1) to (3), excluding the repayment of 
 34.25  assessments, the commissioner shall assess all insurers licensed 
 34.26  pursuant to section 60A.06, subdivision 1, clause (5), paragraph 
 34.27  (b), an amount sufficient to fully fund these obligations. 
 34.28     Sec. 8.  Minnesota Statutes 1994, section 79.253, is 
 34.29  amended by adding a subdivision to read: 
 34.30     Subd. 2a.  [ELIGIBLE APPLICANTS.] An employer is eligible 
 34.31  to apply for a grant or loan under this section if the employer 
 34.32  meets the following requirements: 
 34.33     (1) the employer's workers' compensation insurance is 
 34.34  provided by the assigned risk plan, is provided by an insurer 
 34.35  subject to penalties under chapter 176, or the employer is 
 34.36  self-insured; 
 35.1      (2) the employer has had an on-site safety survey conducted 
 35.2   by a Minnesota occupational safety and health investigator, a 
 35.3   Minnesota department of labor and industry workplace safety and 
 35.4   health consultant, an in-house employee safety and health 
 35.5   committee, a workers' compensation underwriter, a private safety 
 35.6   consultant, or a person under contract with the assigned risk 
 35.7   plan; and 
 35.8      (3) the on-site safety survey recommends specific safety 
 35.9   practices or equipment designed to reduce the risk of illness or 
 35.10  injury to employees. 
 35.11     Sec. 9.  Minnesota Statutes 1994, section 79.34, 
 35.12  subdivision 2, is amended to read: 
 35.13     Subd. 2.  [LOSSES; RETENTION LIMITS.] The reinsurance 
 35.14  association shall provide and each member shall accept 
 35.15  indemnification for 100 percent of the amount of ultimate loss 
 35.16  sustained in each loss occurrence relating to one or more claims 
 35.17  arising out of a single compensable event, including aggregate 
 35.18  losses related to a single event or occurrence which constitutes 
 35.19  a single loss occurrence, under chapter 176 on and after October 
 35.20  1, 1979, in excess of $300,000 or $100,000 a low, a high, or a 
 35.21  super retention limit, at the option of the member.  In case of 
 35.22  occupational disease causing disablement on and after October 1, 
 35.23  1979, each person suffering disablement due to occupational 
 35.24  disease is considered to be involved in a separate loss 
 35.25  occurrence.  The lower retention limit shall be increased to the 
 35.26  nearest $10,000, on January 1, 1982 and on each January 1 
 35.27  thereafter by the percentage increase in the statewide average 
 35.28  weekly wage, as determined in accordance with section 176.011, 
 35.29  subdivision 20.  On January 1, 1982 and on each January 1 
 35.30  thereafter, the higher retention limit shall be increased by the 
 35.31  amount necessary to retain a $200,000 difference between the two 
 35.32  retention limits.  On January 1, 1995, the lower retention limit 
 35.33  is $250,000, which shall also be known as the 1995 base 
 35.34  retention limit.  On each January 1 thereafter, the cumulative 
 35.35  annual percentage changes in the statewide average weekly wage 
 35.36  after October 1, 1994, as determined in accordance with section 
 36.1   176.011, subdivision 20, shall first be multiplied by the 1995 
 36.2   base retention limit, the result of which shall then be added to 
 36.3   the 1995 base retention limit.  The resulting figure shall be 
 36.4   rounded to the nearest $10,000, yielding the low retention limit 
 36.5   for that year, provided that the low retention limit shall not 
 36.6   be reduced in any year.  The high retention limit shall be two 
 36.7   times the low retention limit and shall be adjusted when the low 
 36.8   retention limit is adjusted.  The super retention limit shall be 
 36.9   four times the low retention limit and shall be adjusted when 
 36.10  the low retention limit is adjusted.  Ultimate loss as used in 
 36.11  this section means the actual loss amount which a member is 
 36.12  obligated to pay and which is paid by the member for workers' 
 36.13  compensation benefits payable under chapter 176 and shall not 
 36.14  include claim expenses, assessments, damages or penalties.  For 
 36.15  losses incurred on or after January 1, 1979, any amounts paid by 
 36.16  a member pursuant to sections 176.183, 176.221, 176.225, and 
 36.17  176.82 shall not be included in ultimate loss and shall not be 
 36.18  indemnified by the reinsurance association.  A loss is incurred 
 36.19  by the reinsurance association on the date on which the accident 
 36.20  or other compensable event giving rise to the loss occurs, and a 
 36.21  member is liable for a loss up to its retention limit in effect 
 36.22  at the time that the loss was incurred, except that members 
 36.23  which are determined by the reinsurance association to be 
 36.24  controlled by or under common control with another member, and 
 36.25  which are liable for claims from one or more employees entitled 
 36.26  to compensation for a single compensable event, including 
 36.27  aggregate losses relating to a single loss occurrence, may 
 36.28  aggregate their losses and obtain indemnification from the 
 36.29  reinsurance association for the aggregate losses in excess of 
 36.30  the higher highest retention limit selected by any of the 
 36.31  members in effect at the time the loss was incurred.  Each 
 36.32  member is liable for payment of its ultimate loss and shall be 
 36.33  entitled to indemnification from the reinsurance association for 
 36.34  the ultimate loss in excess of the member's retention limit in 
 36.35  effect at the time of the loss occurrence. 
 36.36     A member that chooses the higher high or super retention 
 37.1   limit shall retain the liability for all losses below the higher 
 37.2   chosen retention limit itself and shall not transfer the 
 37.3   liability to any other entity or reinsure or otherwise contract 
 37.4   for reimbursement or indemnification for losses below its 
 37.5   retention limit, except in the following cases:  (a) when the 
 37.6   reinsurance or contract is with another member which, directly 
 37.7   or indirectly, through one or more intermediaries, control or 
 37.8   are controlled by or are under common control with the member; 
 37.9   (b) when the reinsurance or contract provides for reimbursement 
 37.10  or indemnification of a member if and only if the total of all 
 37.11  claims which the member pays or incurs, but which are not 
 37.12  reimbursable or subject to indemnification by the reinsurance 
 37.13  association for a given period of time, exceeds a dollar value 
 37.14  or percentage of premium written or earned and stated in the 
 37.15  reinsurance agreement or contract; (c) when the reinsurance or 
 37.16  contract is a pooling arrangement with other insurers where 
 37.17  liability of the member to pay claims pursuant to chapter 176 is 
 37.18  incidental to participation in the pool and not as a result of 
 37.19  providing workers' compensation insurance to employers on a 
 37.20  direct basis under chapter 176; (d) when the reinsurance or 
 37.21  contract is limited to all the claims of a specific insured of a 
 37.22  member which are reimbursed or indemnified by a reinsurer which, 
 37.23  directly or indirectly, through one or more intermediaries, 
 37.24  controls or is controlled by or is under common control with the 
 37.25  insured of the member so long as any subsequent contract or 
 37.26  reinsurance of the reinsurer relating to the claims of the 
 37.27  insured of a member is not inconsistent with the bases of 
 37.28  exception provided under clauses (a), (b) and (c); or (e) when 
 37.29  the reinsurance or contract is limited to all claims of a 
 37.30  specific self-insurer member which are reimbursed or indemnified 
 37.31  by a reinsurer which, directly or indirectly, through one or 
 37.32  more intermediaries, controls or is controlled by or is under 
 37.33  common control with the self-insurer member so long as any 
 37.34  subsequent contract or reinsurance of the reinsurer relating to 
 37.35  the claims of the self-insurer member are not inconsistent with 
 37.36  the bases for exception provided under clauses (a), (b) and (c). 
 38.1      Whenever it appears to the commissioner of labor and 
 38.2   industry that any member that chooses the higher high or super 
 38.3   retention limit has participated in the transfer of liability to 
 38.4   any other entity or reinsured or otherwise contracted for 
 38.5   reimbursement or indemnification of losses below its retention 
 38.6   limit in a manner inconsistent with the bases for exception 
 38.7   provided under clauses (a), (b), (c), (d), and (e), the 
 38.8   commissioner may, after giving notice and an opportunity to be 
 38.9   heard, order the member to pay to the state of Minnesota an 
 38.10  amount not to exceed twice the difference between the 
 38.11  reinsurance premium for the higher and lower high or super 
 38.12  retention limit, as appropriate, and the low retention limit 
 38.13  applicable to the member for each year in which the prohibited 
 38.14  reinsurance or contract was in effect.  Any member subject to 
 38.15  this penalty provision shall continue to be bound by its 
 38.16  selection of the higher high or super retention limit for 
 38.17  purposes of membership in the reinsurance association.  
 38.18     Sec. 10.  Minnesota Statutes 1994, section 79.35, is 
 38.19  amended to read: 
 38.20     79.35 [DUTIES; RESPONSIBILITIES; POWERS.] 
 38.21     The reinsurance association shall do the following on 
 38.22  behalf of its members: 
 38.23     (a) Assume 100 percent of the liability as provided in 
 38.24  section 79.34; 
 38.25     (b) Establish procedures by which members shall promptly 
 38.26  report to the reinsurance association each claim which, on the 
 38.27  basis of the injury sustained, may reasonably be anticipated to 
 38.28  involve liability to the reinsurance association if the member 
 38.29  is held liable under chapter 176.  Solely for the purpose of 
 38.30  reporting claims, the member shall in all instances consider 
 38.31  itself legally liable for the injury.  The member shall advise 
 38.32  the reinsurance association of subsequent developments likely to 
 38.33  materially affect the interest of the reinsurance association in 
 38.34  the claim; 
 38.35     (c) Maintain relevant loss and expense data relative to all 
 38.36  liabilities of the reinsurance association and require each 
 39.1   member to furnish statistics in connection with liabilities of 
 39.2   the reinsurance association at the times and in the form and 
 39.3   detail as may be required by the plan of operation; 
 39.4      (d) Calculate and charge to members a total premium 
 39.5   sufficient to cover the expected liability which the reinsurance 
 39.6   association will incur in excess of the higher retention limit 
 39.7   but less than the prefunded limit, together with incurred or 
 39.8   estimated to be incurred operating and administrative expenses 
 39.9   for the period to which this premium applies and actual claim 
 39.10  payments to be made by members, during the period to which this 
 39.11  premium applies, for claims in excess of the prefunded limit in 
 39.12  effect at the time the loss was incurred.  Each member shall be 
 39.13  charged a premium established by the board as sufficient to 
 39.14  cover the reinsurance association's incurred liabilities and 
 39.15  expenses between the member's selected retention limit and the 
 39.16  prefunded limit.  The prefunded limit shall be $2,500,000 on and 
 39.17  after October 1, 1979, provided that the prefunded limit shall 
 39.18  be increased on January 1, 1983 and on each January 1 thereafter 
 39.19  by the percentage increase in the statewide average weekly wage, 
 39.20  to the nearest $100,000, as determined in accordance with 
 39.21  section 176.011, subdivision 20 times the lower retention limit 
 39.22  established in section 79.34, subdivision 2.  Each member shall 
 39.23  be charged a proportion of the total premium calculated for its 
 39.24  selected retention limit in an amount equal to its proportion of 
 39.25  the exposure base of all members during the period to which the 
 39.26  reinsurance association premium will apply.  The exposure base 
 39.27  shall be determined by the board and is subject to the approval 
 39.28  of the commissioner of labor and industry.  In determining the 
 39.29  exposure base, the board shall consider, among other things, 
 39.30  equity, administrative convenience, records maintained by 
 39.31  members, amenability to audit, and degree of risk 
 39.32  refinement.  Each member exercising the lower retention option 
 39.33  shall also be charged a premium established by the board as 
 39.34  sufficient to cover incurred or estimated to be incurred claims 
 39.35  for the liability the reinsurance association is likely to incur 
 39.36  between the lower and higher retention limits for the period to 
 40.1   which the premium applies.  Each member shall also be charged a 
 40.2   premium determined by the board to equitably distribute excess 
 40.3   or deficient premiums from previous periods including any excess 
 40.4   or deficient premiums resulting from a retroactive change in the 
 40.5   prefunded limit.  The premiums charged to members shall not be 
 40.6   unfairly discriminatory as defined in section 79.074.  All 
 40.7   premiums shall be approved by the commissioner of labor and 
 40.8   industry; 
 40.9      (e) Require and accept the payment of premiums from members 
 40.10  of the reinsurance association; 
 40.11     (f) Receive and distribute all sums required by the 
 40.12  operation of the reinsurance association; 
 40.13     (g) Establish procedures for reviewing claims procedures 
 40.14  and practices of members of the reinsurance association.  If the 
 40.15  claims procedures or practices of a member are considered 
 40.16  inadequate to properly service the liabilities of the 
 40.17  reinsurance association, the reinsurance association may 
 40.18  undertake, or may contract with another person, including 
 40.19  another member, to adjust or assist in the adjustment of claims 
 40.20  which create a potential liability to the association.  The 
 40.21  reinsurance association may charge the cost of the adjustment 
 40.22  under this paragraph to the member, except that any penalties or 
 40.23  interest incurred under sections 176.183, 176.221, 176.225, and 
 40.24  176.82 as a result of actions by the reinsurance association 
 40.25  after it has undertaken adjustment of the claim shall not be 
 40.26  charged to the member but shall be included in the ultimate loss 
 40.27  and listed as a separate item; and 
 40.28     (h) Provide each member of the reinsurance association with 
 40.29  an annual report of the operations of the reinsurance 
 40.30  association in a form the board of directors may specify. 
 40.31     Sec. 11.  Minnesota Statutes 1994, section 79.52, is 
 40.32  amended by adding a subdivision to read: 
 40.33     Subd. 17.  [ASSOCIATION OR RATING ASSOCIATION.] 
 40.34  "Association" or "rating association" means the Minnesota 
 40.35  Workers' Compensation Insurers Association, Inc. 
 40.36     Sec. 12.  Minnesota Statutes 1994, section 79.52, is 
 41.1   amended by adding a subdivision to read: 
 41.2      Subd. 18.  [RATE OVERSIGHT COMMISSION.] "Rate oversight 
 41.3   commission" means the workers' compensation advisory council 
 41.4   established in chapter 175.  
 41.5      Sec. 13.  Minnesota Statutes 1994, section 79.55, is 
 41.6   amended by adding a subdivision to read: 
 41.7      Subd. 8.  [ANNUAL FILINGS.] Not later than October 1 of 
 41.8   each year, the rating association shall file with the 
 41.9   commissioner and the rate oversight commission the following 
 41.10  information used and related to the calculation and cost of 
 41.11  workers' compensation insurance premiums: 
 41.12     (1) all statistical plans, including classification 
 41.13  definitions used to assign each compensation risk written by its 
 41.14  members to its approved classification for reporting purposes; 
 41.15     (2) all development factors and alternative derivations; 
 41.16     (3) a description and summary of each data reporting and 
 41.17  monitoring method used to collect and monitor the database for 
 41.18  workers' compensation insurance; 
 41.19     (4) trend factors and alternative derivations and 
 41.20  applications; 
 41.21     (5) pure premium relativities for the approved 
 41.22  classification system for which data are reported; 
 41.23     (6) an evaluation of the effects of changes in law on loss 
 41.24  data; 
 41.25     (7) an explicit discussion and explanation of all 
 41.26  methodology, alternatives examined, assumptions adopted, and 
 41.27  areas of judgment and reasoning supporting judgments entered 
 41.28  into, and the effect of various combinations of these elements 
 41.29  on indications for modification of an overall pure premium rate 
 41.30  level change; and 
 41.31     (8) all merit rating plans and the calculation of any 
 41.32  variable factors necessary for utilization of the plan. 
 41.33     Sec. 14.  Minnesota Statutes 1994, section 79.55, is 
 41.34  amended by adding a subdivision to read: 
 41.35     Subd. 9.  [ANALYSIS BY RATE OVERSIGHT COMMISSION.] Not 
 41.36  later than November 1 of each year, the rate oversight 
 42.1   commission may submit to the commissioner a report concerning 
 42.2   the completeness of the filing and compliance of the filing with 
 42.3   the standards for excessiveness, inadequacy, and unfair 
 42.4   discrimination set forth in this chapter. 
 42.5      Sec. 15.  Minnesota Statutes 1994, section 79.55, is 
 42.6   amended by adding a subdivision to read: 
 42.7      Subd. 10.  [DUTIES OF COMMISSIONER.] The commissioner shall 
 42.8   issue a report by January 1 of each year, comparing the average 
 42.9   rates charged by workers' compensation insurers in the state to 
 42.10  the pure premium base rates filed by the association, as 
 42.11  reviewed by the rate oversight commission.  The rate oversight 
 42.12  commission shall review the commissioner's report and if the 
 42.13  experience indicates that rates have not reasonably reflected 
 42.14  changes in pure premiums, the rate oversight commission shall 
 42.15  recommend to the legislature appropriate legislative changes to 
 42.16  this chapter. 
 42.17     Sec. 16.  Minnesota Statutes 1994, section 79.60, 
 42.18  subdivision 1, is amended to read: 
 42.19     Subdivision 1.  [REQUIRED ACTIVITY.] Each insurer shall 
 42.20  perform the following activities:  
 42.21     (a) Maintain membership in and report loss experience data 
 42.22  to a licensed data service organization in accordance with the 
 42.23  statistical plan and rules of the organization as approved by 
 42.24  the commissioner; 
 42.25     (b) Establish a plan for merit rating which shall be 
 42.26  consistently applied to all insureds, provided that members of a 
 42.27  data service organization may use merit rating plans developed 
 42.28  by that data service organization; 
 42.29     (c) Provide an annual report to the commissioner containing 
 42.30  the information and prepared in the form required by the 
 42.31  commissioner; and 
 42.32     (d) Keep a record of the premiums and losses paid under 
 42.33  each workers' compensation policy written in Minnesota in the 
 42.34  form required by the commissioner; 
 42.35     (e) Provide to the association, upon request, information 
 42.36  about its insurance premiums, losses, and operations which the 
 43.1   association shall request in order to prepare and file with the 
 43.2   commissioner and the rate oversight commission the filings 
 43.3   required by this chapter; and 
 43.4      (f) Pay to the association its equitable share of the costs 
 43.5   of preparing the filing with the commissioner and the rate 
 43.6   oversight commission required by this chapter. 
 43.7      Sec. 17.  Minnesota Statutes 1994, section 79A.01, 
 43.8   subdivision 1, is amended to read: 
 43.9      Subdivision 1.  [SCOPE.] For the purposes of sections 
 43.10  79A.01 to 79A.17 this chapter, the terms defined in this section 
 43.11  have the meaning given them. 
 43.12     Sec. 18.  Minnesota Statutes 1994, section 79A.01, 
 43.13  subdivision 4, is amended to read: 
 43.14     Subd. 4.  [INSOLVENT SELF-INSURER.] "Insolvent 
 43.15  self-insurer" means either:  (1) a member private self-insurer 
 43.16  who has failed to pay compensation as a result of a declaration 
 43.17  of bankruptcy or insolvency by a court of competent jurisdiction 
 43.18  and whose security deposit has been called by the commissioner 
 43.19  pursuant to chapter 176, or; (2) a member self-insurer who has 
 43.20  failed to pay compensation and who has been issued a certificate 
 43.21  of default by the commissioner and whose security deposit has 
 43.22  been called by the commissioner pursuant to chapter 176; or (3) 
 43.23  a member or former member private self-insurer who has failed to 
 43.24  pay an assessment required by section 79A.12, subdivision 2, and 
 43.25  who has been issued a certificate of default by the commissioner 
 43.26  and whose security deposit has been called by the commissioner. 
 43.27     Sec. 19.  Minnesota Statutes 1994, section 79A.01, is 
 43.28  amended by adding a subdivision to read: 
 43.29     Subd. 10.  [COMMON CLAIMS FUND.] "Common claims fund" means 
 43.30  the cash, cash equivalents, or investment accounts maintained by 
 43.31  the mutual self-insurance group to pay its workers' compensation 
 43.32  liabilities. 
 43.33     Sec. 20.  Minnesota Statutes 1994, section 79A.02, 
 43.34  subdivision 1, is amended to read: 
 43.35     Subdivision 1.  [MEMBERSHIP.] For the purposes of assisting 
 43.36  the commissioner, there is established a workers' compensation 
 44.1   self-insurers' advisory committee of five members that are 
 44.2   employers authorized to self-insure in Minnesota.  Three of the 
 44.3   members and three alternates shall be elected by the members of 
 44.4   the self-insurers' security fund board of trustees and two 
 44.5   alternates shall be appointed by the commissioner.  
 44.6      Sec. 21.  Minnesota Statutes 1994, section 79A.02, 
 44.7   subdivision 2, is amended to read: 
 44.8      Subd. 2.  [ADVICE TO COMMISSIONER.] At the request of the 
 44.9   commissioner, the committee shall meet and shall advise the 
 44.10  commissioner with respect to whether or not an applicant to 
 44.11  become a private self-insurer in the state of Minnesota has met 
 44.12  the statutory requirements to self-insure.  The department of 
 44.13  commerce may furnish the committee with any financial data which 
 44.14  it has, but a member of the advisory committee who may have a 
 44.15  conflict of interest in reviewing the financial data shall not 
 44.16  have access to the data nor participate in the discussions 
 44.17  concerning the applicant.  Financial data received from the 
 44.18  commissioner is nonpublic data.  The committee shall advise the 
 44.19  commissioner if it has any information that any private 
 44.20  self-insurer may become insolvent.  
 44.21     Sec. 22.  Minnesota Statutes 1994, section 79A.02, 
 44.22  subdivision 4, is amended to read: 
 44.23     Subd. 4.  [RECOMMENDATIONS TO COMMISSIONER REGARDING 
 44.24  REVOCATION.] After each fifth anniversary from the date each 
 44.25  individual and group self-insurer becomes certified to 
 44.26  self-insure, the committee shall review all relevant financial 
 44.27  data filed with the department of commerce that is otherwise 
 44.28  available to the public and make a recommendation to the 
 44.29  commissioner about whether each self-insurer's certificate 
 44.30  should be revoked.  For group self-insurers who have been in 
 44.31  existence for five years or more and have been granted renewal 
 44.32  authority, a level of funding in the common claims fund must be 
 44.33  maintained at not less than the greater of either:  (1) one 
 44.34  year's claim losses paid in the most recent year; or (2) 
 44.35  one-third of the security deposit posted with the department of 
 44.36  commerce according to section 79A.04, subdivision 2. 
 45.1      Sec. 23.  Minnesota Statutes 1994, section 79A.03, is 
 45.2   amended by adding a subdivision to read: 
 45.3      Subd. 4a.  [EXCEPTIONS.] Notwithstanding the requirements 
 45.4   of subdivisions 3 and 4, the commissioner, pursuant to a review 
 45.5   of an existing self-insurer's financial data, may continue a 
 45.6   self-insurer's authority to self-insure for one year if, in the 
 45.7   commissioner's judgment based on all factors relevant to the 
 45.8   self-insurer's financial status, the self-insurer will be able 
 45.9   to meet its obligations under this chapter for the following 
 45.10  year.  The relevant factors to be considered must include, but 
 45.11  must not be limited to, the liquidity ratios, leverage ratios, 
 45.12  and profitability ratios of the self-insurer.  Where a 
 45.13  self-insurer's authority to self-insure is continued under this 
 45.14  subdivision, the self-insurer may be required to post security 
 45.15  in the amount equal to two times the amount of security required 
 45.16  under section 79A.04, subdivision 2. 
 45.17     Sec. 24.  Minnesota Statutes 1994, section 79A.04, 
 45.18  subdivision 2, is amended to read: 
 45.19     Subd. 2.  [MINIMUM DEPOSIT.] The minimum deposit is 110 
 45.20  percent of the private self-insurer's estimated future liability.
 45.21  Up to ten percent of that deposit may be used to secure payment 
 45.22  of all administrative and legal costs, and unpaid assessments 
 45.23  required by section 79A.12, subdivision 2, relating to or 
 45.24  arising from the employer's self-insuring.  As used in this 
 45.25  section, "private self-insurer" includes both current and former 
 45.26  members of the self-insurers' security fund; and "private 
 45.27  self-insurers' estimated future liability" means the private 
 45.28  self-insurers' total of estimated future liability as determined 
 45.29  by an Associate or Fellow of the Casualty Actuarial Society 
 45.30  every year for group member private self-insurers and, for a 
 45.31  nongroup member private self-insurer's authority to self-insure, 
 45.32  every year for the first five years.  After the first five 
 45.33  years, the nongroup member's total shall be as determined by an 
 45.34  Associate or Fellow of the Casualty Actuarial Society at least 
 45.35  every two years, and each such actuarial study shall include a 
 45.36  projection of future losses during the two-year period until the 
 46.1   next scheduled actuarial study, less payments anticipated to be 
 46.2   made during that time.  
 46.3      All data and information furnished by a private 
 46.4   self-insurer to an Associate or Fellow of the Casualty Actuarial 
 46.5   Society for purposes of determining private self-insurers' 
 46.6   estimated future liability must be certified by an officer of 
 46.7   the private self-insurer to be true and correct with respect to 
 46.8   payroll and paid losses, and must be certified, upon information 
 46.9   and belief, to be true and correct with respect to reserves.  
 46.10  The certification must be made by sworn affidavit.  In addition 
 46.11  to any other remedies provided by law, the certification of 
 46.12  false data or information pursuant to this subdivision may 
 46.13  result in a fine imposed by the commissioner of commerce on the 
 46.14  private self-insurer up to the amount of $5,000, and termination 
 46.15  of the private self-insurers' authority to self-insure.  The 
 46.16  determination of private self-insurers' estimated future 
 46.17  liability by an Associate or Fellow of the Casualty Actuarial 
 46.18  Society shall be conducted in accordance with standards and 
 46.19  principles for establishing loss and loss adjustment expense 
 46.20  reserves by the Actuarial Standards Board, an affiliate of the 
 46.21  American Academy of Actuaries.  The commissioner may reject an 
 46.22  actuarial report that does not meet the standards and principles 
 46.23  of the Actuarial Standards Board, and may further disqualify the 
 46.24  actuary who prepared the report from submitting any future 
 46.25  actuarial reports pursuant to this chapter.  Within 30 days 
 46.26  after the actuary has been served by the commissioner with a 
 46.27  notice of disqualification, an actuary who is aggrieved by the 
 46.28  disqualification may request a hearing to be conducted in 
 46.29  accordance with chapter 14.  Based on a review of the actuarial 
 46.30  report, the commissioner of commerce may require an increase in 
 46.31  the minimum security deposit in an amount the commissioner 
 46.32  considers sufficient. 
 46.33     Estimated future liability is determined by first taking 
 46.34  the total amount of the self-insured's future liability of 
 46.35  workers' compensation claims and then deducting the total amount 
 46.36  which is estimated to be returned to the self-insurer from any 
 47.1   specific excess insurance coverage, aggregate excess insurance 
 47.2   coverage, and any supplementary benefits or second injury 
 47.3   benefits which are estimated to be reimbursed by the special 
 47.4   compensation fund. Supplementary benefits or second injury 
 47.5   benefits will not be reimbursed by the special compensation fund 
 47.6   unless the special compensation fund assessment pursuant to 
 47.7   section 176.129 is paid and the reports required thereunder are 
 47.8   filed with the special compensation fund.  In the case of surety 
 47.9   bonds, bonds shall secure administrative and legal costs in 
 47.10  addition to the liability for payment of compensation reflected 
 47.11  on the face of the bond.  In no event shall the security be less 
 47.12  than the last retention limit selected by the self-insurer with 
 47.13  the workers' compensation reinsurance association.  The posting 
 47.14  or depositing of security pursuant to this section shall release 
 47.15  all previously posted or deposited security from any obligations 
 47.16  under the posting or depositing and any surety bond so released 
 47.17  shall be returned to the surety.  Any other security shall be 
 47.18  returned to the depositor or the person posting the bond. 
 47.19     As a condition for the granting or renewing of a 
 47.20  certificate to self-insure, the commissioner may require a 
 47.21  private self-insurer to furnish any additional security the 
 47.22  commissioner considers sufficient to insure payment of all 
 47.23  claims under chapter 176. 
 47.24     Sec. 25.  Minnesota Statutes 1994, section 79A.04, 
 47.25  subdivision 9, is amended to read: 
 47.26     Subd. 9.  [INSOLVENCY, BANKRUPTCY, OR DEFAULT; UTILIZATION 
 47.27  OF SECURITY DEPOSIT.] The commissioner of labor and industry 
 47.28  shall notify the commissioner and the security fund if the 
 47.29  commissioner of labor and industry has knowledge that any 
 47.30  private self-insurer has failed to pay workers' compensation 
 47.31  benefits as required by chapter 176.  If the commissioner 
 47.32  determines that a court of competent jurisdiction has declared 
 47.33  the private self-insurer to be bankrupt or insolvent, and the 
 47.34  private self-insurer has failed to pay workers' compensation as 
 47.35  required by chapter 176 or, if the commissioner issues a 
 47.36  certificate of default against a private self-insurer for 
 48.1   failure to pay workers' compensation as required by chapter 176, 
 48.2   or failure to pay an assessment to the self-insurers' security 
 48.3   fund when due, then the security deposit shall be utilized to 
 48.4   administer and pay the private self-insurers' workers' 
 48.5   compensation or assessment obligations. 
 48.6      Sec. 26.  Minnesota Statutes 1994, section 79A.09, 
 48.7   subdivision 4, is amended to read: 
 48.8      Subd. 4.  [CONFIDENTIAL INFORMATION.] The security fund may 
 48.9   receive private data concerning the financial condition of 
 48.10  private self-insurers whose liabilities to pay compensation have 
 48.11  become its responsibility and shall adopt bylaws to prevent 
 48.12  dissemination of that information.  The data shall become public 
 48.13  data upon its receipt by the security fund.  
 48.14     Sec. 27.  Minnesota Statutes 1994, section 79A.15, is 
 48.15  amended to read: 
 48.16     79A.15 [SURETY BOND FORM.] 
 48.17     The form for the surety bond under this chapter shall be: 
 48.18                         STATE OF MINNESOTA 
 48.19                       DEPARTMENT OF COMMERCE 
 48.20        SURETY BOND OF SELF-INSURER OF WORKERS' COMPENSATION 
 48.21   
 48.22  IN THE MATTER OF THE CERTIFICATE OF      )
 48.23                                           )
 48.24                                           )    SURETY BOND 
 48.25                                           )    NO. .............
 48.26                                           )    PREMIUM: ........
 48.27                                           )
 48.28  Employer, Certificate No: .............. )
 48.29  KNOW ALL PERSONS BY THESE PRESENTS:
 48.30       That ..................................................... 
 48.31                            (Employer)
 48.32  whose address is ..............................................
 48.33  as Principal, and .............................................
 48.34                            (Surety) 
 48.35  a corporation organized under the laws of ..................... 
 48.36  and authorized to transact a general surety business in the 
 48.37  State of Minnesota, as Surety, are held and firmly bound to the 
 48.38  State of Minnesota in the penal sum of 
 48.39  ...........................dollars ($..........) for which 
 48.40  payment we bind ourselves, our heirs, executors, administrators, 
 49.1   successors, and assigns, jointly and severally, firmly by these 
 49.2   presents. 
 49.3      WHEREAS in accordance with Minnesota Statutes, chapter 176, 
 49.4   the principal elected to self-insure, and made application for, 
 49.5   or received from the commissioner of commerce of the state of 
 49.6   Minnesota, a certificate to self-insure, upon furnishing of 
 49.7   proof satisfactory to the commissioner of commerce of ability to 
 49.8   self-insure and to compensate any or all employees of said 
 49.9   principal for injury or disability, and their dependents for 
 49.10  death incurred or sustained by said employees pursuant to the 
 49.11  terms, provisions, and limitations of said statute; 
 49.12     NOW THEREFORE, the conditions of this bond or obligation 
 49.13  are such that if principal shall pay and furnish compensation, 
 49.14  pursuant to the terms, provisions, and limitations of said 
 49.15  statute to its employees for injury or disability, and to the 
 49.16  dependents of its employees, then this bond or obligation shall 
 49.17  be null and void; otherwise to remain in full force and effect.  
 49.18     FURTHERMORE, it is understood and agreed that: 
 49.19     1.  This bond may be amended, by agreement between the 
 49.20  parties hereto and the commissioner of commerce as to the 
 49.21  identity of the principal herein named; and, by agreement of the 
 49.22  parties hereto, as to the premium or rate of premium.  Such 
 49.23  amendment must be by endorsement upon, or rider to, this bond, 
 49.24  executed by the surety and delivered to or filed with the 
 49.25  commissioner. 
 49.26     2.  The surety does, by these presents, undertake and agree 
 49.27  that the obligation of this bond shall cover and extend to all 
 49.28  past, present, existing, and potential liability of said 
 49.29  principal, as a self-insurer, to the extent of the penal sum 
 49.30  herein named without regard to specific injuries, date or dates 
 49.31  of injuries, happenings or events.  
 49.32     3.  The penal sum of this bond may be increased or 
 49.33  decreased, by agreement between the parties hereto and the 
 49.34  commissioner of commerce, without impairing the obligation 
 49.35  incurred under this bond for the overall coverage of the said 
 49.36  principal, for all past, present, existing, and potential 
 50.1   liability, as a self-insurer, without regard to specific 
 50.2   injuries, date or dates of injuries, happenings or events, to 
 50.3   the extent, in the aggregate, of the penal sum as increased or 
 50.4   decreased.  Such amendment must be by endorsement. 
 50.5      4.  The aggregate liability of the surety hereunder on all 
 50.6   claims whatsoever shall not exceed the penal sum of this bond in 
 50.7   any event. 
 50.8      5.  This bond shall be continuous in form and shall remain 
 50.9   in full force and effect unless terminated as follows: 
 50.10     (a) The obligation of this bond shall terminate upon 
 50.11  written notice of cancellation from the surety, given by 
 50.12  registered or certified mail to the commissioner of commerce, 
 50.13  state of Minnesota, save and except as to all past, present, 
 50.14  existing, and potential liability of the principal incurred, 
 50.15  including obligations resulting from claims which are incurred 
 50.16  but not yet reported, as a self-insurer prior to effective date 
 50.17  of termination.  This termination is effective 60 days after 
 50.18  receipt of notice of cancellation by the commissioner of 
 50.19  commerce, state of Minnesota. 
 50.20     (b) This bond shall also terminate upon the revocation of 
 50.21  the certificate to self-insure, save and except as to all past, 
 50.22  present, existing, and potential liability of the principal 
 50.23  incurred, including obligations resulting from claims which are 
 50.24  incurred but not yet reported, as a self-insurer prior to 
 50.25  effective date of termination.  The principal and the surety, 
 50.26  herein named, shall be immediately notified in writing by said 
 50.27  commissioner, in the event of such revocation. 
 50.28     6.  Where the principal posts with the commissioner of 
 50.29  commerce, state of Minnesota, or the state treasurer, state of 
 50.30  Minnesota, a replacement security deposit, in the form of a 
 50.31  surety bond, irrevocable letter of credit, cash, securities, or 
 50.32  any combination thereof, in the full amount as may be required 
 50.33  by the commissioner of commerce, state of Minnesota, to secure 
 50.34  all incurred liabilities for the payment of compensation of said 
 50.35  principal under Minnesota Statutes, chapter 176, the surety is 
 50.36  released from obligations under the surety bond upon the date of 
 51.1   acceptance by the commissioner of commerce, state of Minnesota, 
 51.2   of said replacement security deposit. 
 51.3      7.  If the said principal shall suspend payment of workers' 
 51.4   compensation benefits or shall become insolvent or a receiver 
 51.5   shall be appointed for its business, or the commissioner of 
 51.6   commerce, state of Minnesota, issues a certificate of default, 
 51.7   the undersigned surety will become liable for the workers' 
 51.8   compensation obligations of the principal on the date benefits 
 51.9   are suspended.  The surety shall begin payments within 14 days 
 51.10  under paragraph 8, or 30 days under paragraph 10, after receipt 
 51.11  of written notification by certified mail from the commissioner 
 51.12  of commerce, state of Minnesota, to begin payments under the 
 51.13  terms of this bond. 
 51.14     8.  If the surety exercises its option to administer 
 51.15  claims, it shall pay benefits due to the principal's injured 
 51.16  workers within 14 days of the receipt of the notification by the 
 51.17  commissioner of commerce, state of Minnesota, pursuant to 
 51.18  paragraph 7, without a formal award of a compensation judge, the 
 51.19  commissioner of labor and industry, any intermediate appellate 
 51.20  court, or the Minnesota supreme court and such payment will be a 
 51.21  charge against the penal sum of the bond.  Administrative and 
 51.22  legal costs and payment of assessments incurred by the surety in 
 51.23  discharging its obligations and payment of the principal's 
 51.24  obligations for administration and legal expenses and payment of 
 51.25  assessments under Minnesota Statutes, chapter chapters 79A and 
 51.26  176, and sections 79A.01 to 79A.17 and Laws 1988, chapter 674, 
 51.27  section 23, shall also be a charge against the penal sum of the 
 51.28  bond; however, the total amount of this surety bond set aside 
 51.29  for the payment of said administrative and legal expenses and 
 51.30  payment of assessments shall be limited to a maximum ten percent 
 51.31  of the total penal sum of the bond unless otherwise authorized 
 51.32  by the security fund. 
 51.33     9.  If any part or provision of this bond shall be declared 
 51.34  unenforceable or held to be invalid by a court of proper 
 51.35  jurisdiction, such determination shall not affect the validity 
 51.36  or enforceability of the other provisions or parts of this bond. 
 52.1      10.  If the surety does not give notice to the 
 52.2   (self-insurer's security fund) (commercial self-insurance group 
 52.3   security fund) and the commissioner of commerce, state of 
 52.4   Minnesota, within two business days of receipt of written 
 52.5   notification from the commissioner of commerce, state of 
 52.6   Minnesota, pursuant to paragraph 7, to exercise its option to 
 52.7   administer claims pursuant to paragraph 8, then 
 52.8   the (self-insurer's security fund) (commercial self-insurance 
 52.9   security fund) will assume the payments of the workers' 
 52.10  compensation obligations of the principal pursuant to Minnesota 
 52.11  Statutes, chapter 176.  The surety shall pay, within 30 days of 
 52.12  the receipt of the notification by the commissioner of commerce, 
 52.13  state of Minnesota, pursuant to paragraph 7, to the 
 52.14  self-insurer's security fund) (commercial self-insurance group 
 52.15  (security fund) as an initial deposit an amount equal to ten 
 52.16  percent of the penal sum of the bond, and shall thereafter, upon 
 52.17  notification from the (self-insurer's security fund) (commercial 
 52.18  self-insurance group security fund) that the balance of the 
 52.19  initial deposit had fallen to one percent of the penal sum of 
 52.20  the bond, remit to the (self-insurer's security fund) 
 52.21  (commercial self-insurance group security fund) an amount equal 
 52.22  to the payments made by the (self-insurer's security fund) 
 52.23  (commercial self-insurance group security fund) in the three 
 52.24  calendar months immediately preceding said notification.  All 
 52.25  such payments will be a charge against the penal sum of the bond.
 52.26     11.  Disputes concerning the posting, renewal, termination, 
 52.27  exoneration, or return of all or any portion of the principal's 
 52.28  security deposit or any liability arising out of the posting or 
 52.29  failure to post security, or the adequacy of the security or the 
 52.30  reasonableness of administrative costs, including legal costs, 
 52.31  arising between or among a surety, the issuer of an agreement of 
 52.32  assumption and guarantee of workers' compensation liabilities, 
 52.33  the issuer of a letter of credit, any custodian of the security 
 52.34  deposit, the principal, or the self-insurers' (self-insurer's 
 52.35  security fund) (commercial self-insurance group security fund) 
 52.36  shall be resolved by the commissioner of commerce pursuant to 
 53.1   Minnesota Statutes, chapter chapters 79A and 176 and sections 
 53.2   79A.01 to 79A.17 and Laws 1988, chapter 674, section 23.  
 53.3      12.  Written notification to the surety required by this 
 53.4   bond shall be sent to: 
 53.5                                    .........................
 53.6                                    Name of Surety 
 53.7                                    .........................
 53.8                                    To the attention of Person or
 53.9                                      Position
 53.10                                   ......................... 
 53.11                                   Address 
 53.12                                   ......................... 
 53.13                                   City, State, Zip 
 53.14     Written notification to the principal required by this bond 
 53.15  shall be sent to: 
 53.16                                   ........................
 53.17                                   Name of Principal
 53.18                                   ........................
 53.19                                   To the attention of Person or
 53.20                                     Position
 53.21                                   ........................
 53.22                                   Address
 53.23                                   ........................
 53.24                                   City, State, Zip
 53.25     13.  This bond is executed by the surety to comply with 
 53.26  Minnesota Statutes, chapter 176, and said bond shall be subject 
 53.27  to all terms and provisions thereof. 
 53.28                                   ........................
 53.29                                   Name of Surety
 53.30                                   ........................
 53.31                                   Address
 53.32                                   ........................
 53.33                                   City, State, Zip
 53.34     THIS bond is executed under an unrevoked appointment or 
 53.35  power of attorney.  
 53.36     I certify (or declare) under penalty of perjury under the 
 53.37  laws of the state of Minnesota that the foregoing is true and 
 53.38  correct.  
 53.39     
 53.40  ..............                   .............................
 53.41  Date                             Signature of Attorney-In-Fact 
 53.43                                   .............................
 53.44                                   Printed or Typed Name of  
 54.1                                    Attorney-In-Fact 
 54.2      A copy of the transcript or record of the unrevoked 
 54.3   appointment, power of attorney, bylaws, or other instrument, 
 54.4   duly certified by the proper authority and attested by the seal 
 54.5   of the insurer entitling or authorizing the person who executed 
 54.6   the bond to do so for and in behalf of the insurer, must be 
 54.7   filed in the office of the commissioner of commerce or must be 
 54.8   included with this bond for such filing. 
 54.9      Sec. 28.  [79A.19] [COMMERCIAL SELF-INSURANCE GROUPS; 
 54.10  DEFINITIONS.] 
 54.11     Subdivision 1.  [SCOPE.] For the purposes of sections 
 54.12  79A.19 to 79A.32, the terms defined in this section have the 
 54.13  meanings given them.  If there is any inconsistency between this 
 54.14  section and section 79A.01, the provisions of this section shall 
 54.15  govern.  
 54.16     Subd. 2.  [ACCOUNTANT.] "Accountant" means a certified 
 54.17  public accountant who is not an employee of any member of the 
 54.18  commercial self-insurance group and is not affiliated with any 
 54.19  individual or organization providing services other than 
 54.20  accounting services to the group. 
 54.21     Subd. 3.  [ACTUARY.] "Actuary" means an individual who has 
 54.22  attained the status of associate or fellow of the casualty 
 54.23  actuarial society who is not an employee of any member of the 
 54.24  commercial self-insurance group and is not affiliated with any 
 54.25  individual or organization providing services other than 
 54.26  actuarial services to the group. 
 54.27     Subd. 4.  [COMMON CLAIMS FUND.] "Common claims fund" means 
 54.28  the cash, cash equivalents, or investment accounts maintained by 
 54.29  the commercial self-insurance group to pay its workers' 
 54.30  compensation liabilities. 
 54.31     Subd. 5.  [MEMBER.] "Member" means an employer that 
 54.32  participates in a commercial self-insurance group. 
 54.33     Subd. 6.  [COMMERCIAL SELF-INSURANCE GROUP.] "Commercial 
 54.34  self-insurance group" means a group of employers that are 
 54.35  self-insured for workers' compensation under chapter 176 and 
 54.36  elects to operate under sections 79A.19 to 79A.32 rather than 
 55.1   sections 79A.01 to 79A.18. 
 55.2      Subd. 7.  [COMMERCIAL SELF-INSURANCE GROUP SECURITY 
 55.3   FUND.] "Commercial self-insurance group security fund" means the 
 55.4   commercial self-insurance group security fund established 
 55.5   pursuant to this chapter. 
 55.6      Subd. 8.  [TRUSTEES.] "Trustees" means the board of 
 55.7   trustees of the commercial self-insurance group security fund. 
 55.8      Sec. 29.  [79A.20] [ELIGIBILITY REQUIREMENTS FOR COMMERCIAL 
 55.9   SELF-INSURANCE GROUPS.] 
 55.10     Subdivision 1.  [GROUP ELIGIBILITY.] A commercial 
 55.11  self-insurance group consists of two or more employers in 
 55.12  similar industries.  The commercial self-insurance group shall 
 55.13  not incorporate or form a business trust pursuant to chapter 318.
 55.14     Subd. 2.  [MEMBERSHIP ELIGIBILITY.] A commercial 
 55.15  self-insurance group may only admit employers who meet the 
 55.16  eligibility requirements established by the group including 
 55.17  financial criteria, underwriting guidelines, risk profile, and 
 55.18  any other requirements stated in the commercial self-insurance 
 55.19  group's bylaws or plan of operation. 
 55.20     Sec. 30.  [79A.21] [COMMERCIAL SELF-INSURANCE GROUP 
 55.21  APPLICATION.] 
 55.22     Subdivision 1.  [PROCEDURE.] (a) Groups proposing to become 
 55.23  licensed as commercial self-insurance groups must complete and 
 55.24  submit an application on a form or forms prescribed by the 
 55.25  commissioner. 
 55.26     (b) The commissioner shall grant or deny the group's 
 55.27  application to self-insure within 60 days after a complete 
 55.28  application has been filed, provided that the time may be 
 55.29  extended for an additional 30 days upon 15 days' prior notice to 
 55.30  the applicant. 
 55.31     Subd. 2.  [REQUIRED DOCUMENTS.] All applications must be 
 55.32  accompanied by the following: 
 55.33     (a) A detailed business plan including the risk profile of 
 55.34  the proposed membership, underwriting guidelines, marketing 
 55.35  plan, minimum financial criteria for each member, and financial 
 55.36  projections for the first year of operation.  
 56.1      (b) A plan describing the method in which premiums are to 
 56.2   be charged to the employer members.  The plan shall be 
 56.3   accompanied by copies of the member's workers' compensation 
 56.4   insurance policies in force at the time of application.  In 
 56.5   developing the premium for the group, the commercial 
 56.6   self-insurance group shall base its premium on the Minnesota 
 56.7   workers' compensation insurers association's manual of rules, 
 56.8   loss costs, and classifications approved for use in Minnesota by 
 56.9   the commissioner.  Each member applicant shall, on a form 
 56.10  approved by the commissioner, complete estimated payrolls for 
 56.11  the first 12-month period that the applicant will be 
 56.12  self-insured.  Premium volume discounts per the plan will be 
 56.13  permitted if they can be shown to be consistent with actuarial 
 56.14  standards.  
 56.15     (c) A schedule indicating actual or anticipated operational 
 56.16  expenses of the commercial self-insurance group.  No authority 
 56.17  to self-insure will be granted unless, over the term of the 
 56.18  policy year, at least 65 percent of total revenues from all 
 56.19  sources for the year are available for the payment of its claim 
 56.20  and assessment obligations.  For purposes of this calculation, 
 56.21  claim and assessment obligations include the cost of allocated 
 56.22  loss expenses as well as special compensation fund and 
 56.23  commercial self-insurance group security fund assessments but 
 56.24  exclude the cost of unallocated loss expenses. 
 56.25     (d) An indemnity agreement from each member who will 
 56.26  participate in the commercial self-insurance group, signed by an 
 56.27  officer of each member, providing for joint and several 
 56.28  liability for all claims and expenses of all of the members of 
 56.29  the commercial self-insurance group arising in any fund year in 
 56.30  which the member was a participant on a form approved by the 
 56.31  commissioner.  The indemnity agreement shall provide for 
 56.32  assessments according to the group's bylaws on an individual and 
 56.33  proportionate basis. 
 56.34     (e) A copy of the commercial self-insurance group bylaws. 
 56.35     (f) Evidence of the security deposit required under section 
 56.36  79A.24, accompanied by the actuarial certification study for the 
 57.1   minimum security deposit as required under section 79A.24.  
 57.2      (g) Each initial member of the commercial self-insurance 
 57.3   group shall submit to the commercial self-insurance group 
 57.4   accountant its most recent annual financial statement.  
 57.5   Financial statements for a period ending more than six months 
 57.6   prior to the date of the application must be accompanied by an 
 57.7   affidavit, signed by a company officer under oath, stating that 
 57.8   there has been no material lessening of the net worth nor other 
 57.9   adverse changes in its financial condition since the end of the 
 57.10  period.  Individual group members constituting at least 75 
 57.11  percent of the group's annual premium shall submit reviewed or 
 57.12  audited financial statements.  The remaining members may submit 
 57.13  compilation level statements.  Statements for a period ending 
 57.14  more than 12 months prior to the date of application cannot be 
 57.15  accepted. 
 57.16     (h) A compiled combined financial statement of all group 
 57.17  members prepared by the commercial self-insurance group's 
 57.18  accountant and a list of members included in such statements.  
 57.19     (i) A copy of each member's accountant's report letter from 
 57.20  the reports used in compiling the combined financial statements. 
 57.21     (j) A list of all members and the percentage of premium 
 57.22  each represents to the total group's annual premium for the 
 57.23  policy year.  
 57.24     Subd. 3.  [APPROVAL.] The commissioner shall approve an 
 57.25  application for self-insurance upon a determination that all of 
 57.26  the following conditions are met: 
 57.27     (1) a completed application and all required documents have 
 57.28  been submitted to the commissioner; 
 57.29     (2) the financial ability of the commercial self-insurance 
 57.30  group is sufficient to fulfill all obligations that may arise 
 57.31  under this chapter or chapter 176; 
 57.32     (3) the annual premium of the commercial self-insurance 
 57.33  group to be charged to initial members is at least $500,000; 
 57.34     (4) the commercial self-insurance group has contracted with 
 57.35  a service company to administer its program; and 
 57.36     (5) the required securities or surety bond shall be on 
 58.1   deposit prior to the effective date of coverage for the 
 58.2   commercial self-insurance group. 
 58.3      Sec. 31.  [79A.22] [COMMERCIAL SELF-INSURANCE GROUP 
 58.4   OPERATING REQUIREMENTS.] 
 58.5      Subdivision 1.  [BOARD OF DIRECTORS.] (a) A commercial 
 58.6   self-insurance group shall elect a board of directors who shall 
 58.7   have complete authority over and control of the assets of the 
 58.8   commercial self-insurance group.  The board of directors will 
 58.9   also be responsible for all of the operations of the commercial 
 58.10  self-insurance group. 
 58.11     (b) The majority of the board of directors shall be owners, 
 58.12  officers, directors, partners, or employees of members of the 
 58.13  commercial self-insurance group.  No third-party administrator 
 58.14  or vendor of risk management services shall serve as a director 
 58.15  of the commercial self-insurance group. 
 58.16     (c) The directors shall approve applications for membership 
 58.17  in the commercial self-insurance group. 
 58.18     Subd. 2.  [FINANCIAL STANDARDS.] Commercial self-insurance 
 58.19  groups shall have and maintain: 
 58.20     (1) combined net worth of all of the members in an amount 
 58.21  at least equal to 15 times the group's selected retention level 
 58.22  of the workers' compensation reinsurance association; 
 58.23     (2) sufficient assets and liquidity in the group's common 
 58.24  claims fund to promptly and completely meet all obligations of 
 58.25  its members under this chapter and chapter 176. 
 58.26     Subd. 3.  [NEW MEMBERSHIP.] The commercial self-insurance 
 58.27  group shall file with the commissioner the name of any new 
 58.28  employer that has been accepted in the group prior to the 
 58.29  initiation date of membership along with the member's signed 
 58.30  indemnity agreement and evidence the member has deposited 
 58.31  sufficient premiums with the group as required by the commercial 
 58.32  self-insurance group's bylaws or plan of operation.  The 
 58.33  security deposit of the group will be increased to an amount 
 58.34  equal to 50 percent of the new member's premium.  The department 
 58.35  of commerce may, at its option, review the financial statement 
 58.36  of any applicant whose premium equals 25 percent or more of the 
 59.1   group's total premium. 
 59.2      Subd. 4.  [COMMERCIAL SELF-INSURANCE GROUP COMMON CLAIMS 
 59.3   FUND.] (a) Each commercial self-insurance group shall establish 
 59.4   a common claims fund. 
 59.5      (b) Each commercial self-insurance group shall, not less 
 59.6   than ten days prior to the proposed effective date of the group, 
 59.7   collect cash premiums from each member equal to not less than 20 
 59.8   percent of the member's annual workers' compensation premium to 
 59.9   be paid into a common claims fund, maintained by the group in a 
 59.10  designated depository.  The remaining balance of the member's 
 59.11  premium shall be paid to the group in a reasonable manner over 
 59.12  the remainder of the year.  Payments in subsequent years shall 
 59.13  be made according to the business plan. 
 59.14     (c) Each commercial self-insurance group shall initiate 
 59.15  proceedings against a member when that member becomes more than 
 59.16  15 days delinquent in any payment of premium to the fund. 
 59.17     (d) There shall be no commingling of any assets of the 
 59.18  common claims fund with the assets of any individual member or 
 59.19  with any other account of the service company or fiscal agent 
 59.20  unrelated to the payment of workers' compensation liabilities 
 59.21  incurred by the group. 
 59.22     Subd. 5.  [JOINT AND SEVERAL LIABILITY.] Each member of a 
 59.23  commercial self-insurance group shall be jointly and severally 
 59.24  liable for the obligations incurred by any member of the same 
 59.25  group under chapter 176 for any fund year in which the member 
 59.26  was a participant of the commercial self-insurance group. 
 59.27     Subd. 6.  [ANNUAL AUDIT.] The accounts and records of the 
 59.28  common claims fund shall be audited in the manner required under 
 59.29  section 79A.03, subdivision 10.  
 59.30     Subd. 7.  [INVESTMENTS.] (a) Any securities purchased by 
 59.31  the common claims fund shall be in such denominations and with 
 59.32  dates of maturity to ensure securities may be redeemable at 
 59.33  sufficient time and in sufficient amounts to meet the fund's 
 59.34  current and long-term liabilities. 
 59.35     (b) Cash assets of the common claims fund may be invested 
 59.36  in the following securities: 
 60.1      (1) direct obligations of the United States government, 
 60.2   except mortgage-backed securities of the Government National 
 60.3   Mortgage Association; 
 60.4      (2) bonds, notes, debentures, and other instruments which 
 60.5   are obligations of agencies and instrumentalities of the United 
 60.6   States including, but not limited to, the federal National 
 60.7   Mortgage Association, the federal Home Loan Mortgage 
 60.8   Corporation, the federal Home Loan Bank, the Student Loan 
 60.9   Marketing Association, and the Farm Credit System, and their 
 60.10  successors, but not including collateralized mortgage 
 60.11  obligations or mortgage pass-through instruments; 
 60.12     (3) bonds or securities that are issued by the state of 
 60.13  Minnesota and that are secured by the full faith and credit of 
 60.14  the state; 
 60.15     (4) certificates of deposit which are insured by the 
 60.16  federal Deposit Insurance Corporation and are issued by a 
 60.17  Minnesota depository institution; 
 60.18     (5) obligations of, or instruments unconditionally 
 60.19  guaranteed by, Minnesota depository institutions whose long-term 
 60.20  debt rating is at least AA-, or Aa3, or their equivalent by at 
 60.21  least two nationally recognized rating agencies. 
 60.22     Subd. 8.  [ADMINISTRATION.] (a) The commercial 
 60.23  self-insurance group shall be required to secure administrative 
 60.24  services through a service company which maintains an office in 
 60.25  the state of Minnesota.  Services provided by the service 
 60.26  company or its subcontractor should at a minimum include claim 
 60.27  handling, safety and loss control, and submission of all 
 60.28  required regulatory reports. 
 60.29     (b) The service company must demonstrate it has the 
 60.30  capability to provide, through its employees or by contract, 
 60.31  services which are necessary to administer the self-insurance 
 60.32  group and it must employ or have under contract a claims 
 60.33  adjuster with at least three years of Minnesota specific 
 60.34  workers' compensation claim handling experience. 
 60.35     (c) The service company retained by a commercial 
 60.36  self-insurance group to administer workers' compensation claims 
 61.1   shall estimate the total accrued liability of the group for the 
 61.2   payment of compensation for the commercial self-insurance 
 61.3   group's annual report to the commissioner and shall make the 
 61.4   estimate both in good faith and with the exercise of a 
 61.5   reasonable degree of care. 
 61.6      Subd. 9.  [MARKETING AND COMMUNICATIONS.] A commercial 
 61.7   self-insurance group's applications, coverage documents, 
 61.8   quotations, and all marketing materials must prominently display 
 61.9   information indicating that the commercial self-insurance group 
 61.10  is a self-insured program, that members are jointly and 
 61.11  severally liable for the obligations of the commercial 
 61.12  self-insurance group, and that members will be assessed on an 
 61.13  individual and proportionate basis for any deficits created by 
 61.14  the commercial self-insurance group. 
 61.15     Subd. 10.  [REINSURANCE.] (a) A commercial self-insurance 
 61.16  group shall be required to purchase specific excess coverage 
 61.17  with the workers' compensation reinsurance association at the 
 61.18  lower retention level for its first three years of operation.  
 61.19  After that time it may select the higher or super retention 
 61.20  level with prior notice given to and approval of the 
 61.21  commissioner. 
 61.22     (b) The commissioner may require a commercial 
 61.23  self-insurance group to purchase aggregate excess coverage.  Any 
 61.24  reinsurance or excess coverage purchased other than that of the 
 61.25  workers' compensation reinsurance association must be secured 
 61.26  with an insurance company or reinsurer licensed to underwrite 
 61.27  such coverage in Minnesota and maintains at least an "A" rating 
 61.28  with the A.M. Best rating organization. 
 61.29     Subd. 11.  [DISBURSEMENT OF FUND SURPLUS.] (a) One hundred 
 61.30  percent of any surplus money for a fund year in excess of 125 
 61.31  percent of the amount necessary to fulfill all obligations under 
 61.32  the workers' compensation act, chapter 176, for that fund year 
 61.33  may be declared refundable to a member at any time.  The date 
 61.34  shall be no earlier than 18 months following the end of such 
 61.35  fund year.  The first disbursement of fund surplus may not be 
 61.36  made prior to the completion of an operational audit by the 
 62.1   commissioner.  There can be no more than one refund made in any 
 62.2   12-month period.  When all the claims of any one fund year have 
 62.3   been fully paid, as certified by an actuary, all surplus money 
 62.4   from that fund year may be declared refundable. 
 62.5      (b) The commercial self-insurance group shall give notice 
 62.6   to the commissioner of any refund.  Said notice shall be 
 62.7   accompanied by a statement from the commercial self-insurer 
 62.8   group's certified public accountant certifying that the proposed 
 62.9   refund is in compliance with paragraph (a). 
 62.10     Subd. 12.  [SATISFACTION OF FUND DEFICIT.] In the event of 
 62.11  a deficit in any fund year, such deficit shall be paid up 
 62.12  immediately, either from surplus from a fund year other than the 
 62.13  current fund year, or by assessment of the membership.  The 
 62.14  commissioner shall be notified within ten days of any transfer 
 62.15  of surplus funds.  The commissioner, upon finding that a deficit 
 62.16  in a fund year has not been satisfied by a transfer of surplus 
 62.17  from another fund year, shall order an assessment to be levied 
 62.18  on a proportionate basis against the members of the commercial 
 62.19  self-insurance group during that fund year sufficient to make up 
 62.20  any deficit. 
 62.21     Sec. 32.  [79A.23] [COMMERCIAL SELF-INSURANCE GROUP 
 62.22  REPORTING REQUIREMENTS.] 
 62.23     Subdivision 1.  [REQUIRED REPORTS TO COMMISSIONER.] Each 
 62.24  commercial self-insurance group shall submit the following 
 62.25  documents to the commissioner.  
 62.26     (a) An annual report shall be submitted by April 1 showing 
 62.27  the incurred losses, paid and unpaid, specifying indemnity and 
 62.28  medical losses by classification, payroll by classification, and 
 62.29  current estimated outstanding liability for workers' 
 62.30  compensation on a calendar year basis, in a manner and on forms 
 62.31  available from the commissioner.  In addition each group will 
 62.32  submit a quarterly interim loss report showing incurred losses 
 62.33  for all its membership. 
 62.34     (b) Each commercial self-insurance group shall submit 
 62.35  within 45 days of the end of each quarter:  
 62.36     (1) a schedule showing all the members who participate in 
 63.1   the group, their date of inception, and date of withdrawal, if 
 63.2   applicable; 
 63.3      (2) a separate section identifying which members were added 
 63.4   or withdrawn during that quarter; and 
 63.5      (3) an internal financial statement and copies of the 
 63.6   fiscal agent's statements supporting the balances in the common 
 63.7   claims fund. 
 63.8      (c) The commercial self-insurance group shall submit an 
 63.9   annual certified financial audit report of the commercial 
 63.10  self-insurance group fund by April 1 of the following year.  The 
 63.11  report must be accompanied by an expense schedule showing the 
 63.12  commercial self-insurance group's operational costs for the same 
 63.13  year including service company charges, accounting and actuarial 
 63.14  fees, fund administration charges, reinsurance premiums, 
 63.15  commissions, and any other costs associated with the 
 63.16  administration of the group program. 
 63.17     (d) An officer of the commercial self-insurance group 
 63.18  shall, under oath, attest to the accuracy of each report 
 63.19  submitted under paragraphs (a), (b), and (c).  Upon sufficient 
 63.20  cause, the commissioner shall require the commercial 
 63.21  self-insurance group to submit a certified audit of payroll and 
 63.22  claim records conducted by an independent auditor approved by 
 63.23  the commissioner, based on generally accepted accounting 
 63.24  principles and generally accepted auditing standards, and 
 63.25  supported by an actuarial review and opinion of the future 
 63.26  contingent liabilities.  The basis for sufficient cause shall 
 63.27  include the following factors: 
 63.28     (1) where the losses reported appear significantly 
 63.29  different from similar types of groups; 
 63.30     (2) where major changes in the reports exist from year to 
 63.31  year, which are not solely attributable to economic factors; or 
 63.32     (3) where the commissioner has reason to believe that the 
 63.33  losses and payroll in the report do not accurately reflect the 
 63.34  losses and payroll of the commercial self-insurance group.  
 63.35  If any discrepancy is found, the commissioner shall require 
 63.36  changes in the commercial self-insurance group's business plan 
 64.1   or service company recordkeeping practices. 
 64.2      (e) Each commercial self-insurance group shall submit by 
 64.3   August 15 a copy of the group's annual federal and state income 
 64.4   tax returns or provide proof that it has received an exemption 
 64.5   from these filings. 
 64.6      (f) With the annual loss report each commercial 
 64.7   self-insurance group shall report to the commissioner any 
 64.8   worker's compensation claim where the full, undiscounted value 
 64.9   is estimated to exceed $50,000, in a manner and on forms 
 64.10  prescribed by the commissioner. 
 64.11     (g) Each commercial self-insurance group shall submit by 
 64.12  May 1 a list of all members and the percentage of premium each 
 64.13  represents to the total group's premium for the previous 
 64.14  calendar year.  
 64.15     (h) Each commercial self-insurance group shall submit by 
 64.16  May 1 the following documents prepared by the group's certified 
 64.17  public accountant:  
 64.18     (1) a compiled combined financial statement of group 
 64.19  members and a list of members included in this statement; and 
 64.20     (2) a report that the statements which were combined have 
 64.21  met the requirements of subdivision 2.  
 64.22     (i) If any group member comprises over 25 percent of total 
 64.23  group premium, that member's statement must be reviewed or 
 64.24  audited and must be submitted to the commissioner by May 1 of 
 64.25  the following year. 
 64.26     (j) Each commercial self-insurance group shall submit a 
 64.27  copy of each member's accountant's report letter from the 
 64.28  reports used in compiling the combined financial statements.  
 64.29     Subd. 2.  [REQUIRED REPORTS FROM MEMBERS TO GROUP.] Each 
 64.30  member of the commercial self-insurance group shall, by April 1, 
 64.31  submit to the group its most recent annual financial statement, 
 64.32  together with other financial information the group may 
 64.33  require.  These financial statements submitted must not have a 
 64.34  fiscal year end date older than January 15 of the group's 
 64.35  calendar year end.  Individual group members constituting at 
 64.36  least 75 percent of the group's annual premium shall submit to 
 65.1   the group reviewed or audited financial statements.  The 
 65.2   remaining members may submit compilation level statements. 
 65.3      Subd. 3.  [OPERATIONAL AUDIT.] (a) The commissioner, prior 
 65.4   to authorizing surplus distribution of a commercial 
 65.5   self-insurance group's first fund year or no later than after 
 65.6   the third anniversary of the group's authority to self-insure, 
 65.7   shall conduct an operational audit of the commercial 
 65.8   self-insurance group's claim handling and reserve practices as 
 65.9   well as its underwriting procedures to determine if they adhere 
 65.10  to the group's business plan.  The commissioner may select 
 65.11  outside consultants to assist in conducting the audit.  After 
 65.12  completion of the audit, the commissioner shall either renew or 
 65.13  revoke the commercial self-insurance group's authority to 
 65.14  self-insure.  The commissioner may also order any changes deemed 
 65.15  necessary in the claims handling, reserving practices, or 
 65.16  underwriting procedures of the group. 
 65.17     (b) The cost of the operational audit shall be borne by the 
 65.18  commercial self-insurance group. 
 65.19     Subd. 4.  [UNIT STATISTICAL REPORT.] Each commercial 
 65.20  self-insurance group will annually file a unit statistical 
 65.21  report to the Minnesota workers' compensation insurers 
 65.22  association. 
 65.23     Sec. 33.  [79A.24] [COMMERCIAL SELF-INSURANCE GROUP 
 65.24  SECURITY DEPOSIT.] 
 65.25     Subdivision 1.  [ANNUAL SECURING OF LIABILITY.] Each year 
 65.26  every commercial self-insurance group shall secure future 
 65.27  incurred liabilities for the payment of compensation and the 
 65.28  performance of the obligations of its membership imposed under 
 65.29  chapter 176.  A new deposit must be posted within 30 days of the 
 65.30  filing of the commercial self-insurance group's annual actuarial 
 65.31  report with the commissioner. 
 65.32     Subd. 2.  [MINIMUM DEPOSIT.] The minimum deposit is 150 
 65.33  percent of the commercial self-insurance group's future incurred 
 65.34  liabilities for the payment of compensation as determined by an 
 65.35  actuary.  If all the members of the commercial self-insurance 
 65.36  group have submitted reviewed or audited financial statements to 
 66.1   the group's accountant, this minimum deposit shall be 110 
 66.2   percent of the commercial self-insurance group's future incurred 
 66.3   liabilities for the payment of workers' compensation as 
 66.4   determined by an actuary.  The group must file a letter with the 
 66.5   commissioner from the group's accountant which confirms that the 
 66.6   compiled combined financial statements were prepared from 
 66.7   members reviewed or audited financial statements only before the 
 66.8   lower security deposit is allowed.  Each actuarial study shall 
 66.9   include a projection of future losses during a one-year period 
 66.10  until the next scheduled actuarial study, less payments 
 66.11  anticipated to be made during that time.  Deduction should be 
 66.12  made for the total amount which is estimated to be returned to 
 66.13  the commercial self-insurance group from any specific excess 
 66.14  insurance coverage, aggregate excess insurance coverage, and any 
 66.15  supplementary benefits which are estimated to be reimbursed by 
 66.16  the special compensation fund. Supplementary benefits will not 
 66.17  be reimbursed by the special compensation fund unless the 
 66.18  special compensation fund assessment pursuant to section 176.129 
 66.19  is paid and the required reports are filed with the special 
 66.20  compensation fund.  In the case of surety bonds, bonds shall 
 66.21  secure administrative and legal costs in addition to the 
 66.22  liability for payment of compensation reflected on the face of 
 66.23  the bond.  In no event shall the security be less than the 
 66.24  group's selected retention limit of the workers' compensation 
 66.25  reinsurance association.  The posting or depositing of security 
 66.26  under this section shall release all previously posted or 
 66.27  deposited security from any obligations under the posting or 
 66.28  depositing and any surety bond so released shall be returned to 
 66.29  the surety.  Any other security shall be returned to the 
 66.30  depositor or the person posting the bond. 
 66.31     Subd. 3.  [TYPE OF ACCEPTABLE SECURITY.] The commissioner 
 66.32  may only accept as security, and the commercial self-insurance 
 66.33  group shall deposit as security, cash, approved government 
 66.34  securities as set forth in section 176.181, subdivision 2b, 
 66.35  surety bonds or irrevocable letters of credit in any combination 
 66.36  in accordance with the requirements under section 79A.04, 
 67.1   subdivision 3.  
 67.2      Subd. 4.  [CUSTODIAL ACCOUNTS.] (a) All surety bonds, 
 67.3   irrevocable letters of credit, and documents showing issuance of 
 67.4   any irrevocable letter of credit shall be deposited in 
 67.5   accordance with the provisions of section 79A.071.  
 67.6      (b) Upon the commissioner sending a request to renew, 
 67.7   request to post, or request to increase a security deposit, a 
 67.8   perfected security interest is created in the commercial 
 67.9   self-insurance group's and member's assets in favor of the 
 67.10  commissioner to the extent of any then unsecured portion of the 
 67.11  commercial self-insurance group's incurred liabilities.  The 
 67.12  perfected security interest is transferred to any cash or 
 67.13  securities thereafter posted by the commercial self-insurance 
 67.14  group with the state treasurer and is released only upon either 
 67.15  of the following: 
 67.16     (1) the acceptance by the commissioner of a surety bond or 
 67.17  irrevocable letter of credit for the full amount of the incurred 
 67.18  liabilities for the payment of compensation; or 
 67.19     (2) the return of cash or securities by the commissioner.  
 67.20  The commercial self-insurance group loses all right, title, and 
 67.21  interest in and any right to control all assets or obligations 
 67.22  posted or left on deposit as security.  In the event of a 
 67.23  declaration of bankruptcy or insolvency by a court of competent 
 67.24  jurisdiction, or in the event of the issuance of a certificate 
 67.25  of default by the commissioner, the commissioner shall liquidate 
 67.26  the deposit as provided in this chapter, and transfer it to the 
 67.27  commercial self-insurance group security fund for application to 
 67.28  the commercial self-insurance group's incurred liability. 
 67.29     (c) No securities in physical form on deposit with the 
 67.30  state treasurer or the commissioner or custodial accounts 
 67.31  assigned to the state shall be released or exchanged without an 
 67.32  order from the commissioner.  No security can be exchanged more 
 67.33  than once every 90 days. 
 67.34     (d) Any securities deposited with the state treasurer or 
 67.35  with a custodial account assigned to the state treasurer or 
 67.36  letters of credit or surety bonds held by the commissioner may 
 68.1   be exchanged or replaced by the depositor with any other 
 68.2   acceptable securities or letters of credit or surety bond of 
 68.3   like amount so long as the market value of the securities or 
 68.4   amount of the surety bonds or letter of credit equals or exceeds 
 68.5   the amount of the deposit required.  If securities are replaced 
 68.6   by surety bond, the commercial self-insurance group must 
 68.7   maintain securities on deposit in an amount sufficient to meet 
 68.8   all outstanding workers' compensation liability arising during 
 68.9   the period covered by the deposit of the replaced securities. 
 68.10     (e) The commissioner shall return on an annual basis to the 
 68.11  commercial self-insurance group all amounts of security 
 68.12  determined by the commissioner to be in excess of the statutory 
 68.13  requirements for the group to self-insure, including that 
 68.14  necessary for administrative costs, legal fees, and the payment 
 68.15  of any future workers' compensation claims. 
 68.16     Sec. 34.  [79A.25] [DEFAULT OF A COMMERCIAL SELF-INSURANCE 
 68.17  GROUP.] 
 68.18     Subdivision 1.  [NOTICE OF INSOLVENCY, BANKRUPTCY, OR 
 68.19  DEFAULT.] The commissioner of labor and industry shall notify 
 68.20  the commissioner and the commercial self-insurance group 
 68.21  security fund if the commissioner of labor and industry has 
 68.22  knowledge that any commercial self-insurance group has failed to 
 68.23  pay workers' compensation benefits as required by chapter 176.  
 68.24  If the commissioner determines that a court of competent 
 68.25  jurisdiction has declared the commercial self-insurance group to 
 68.26  be bankrupt or insolvent and the commercial self-insurance group 
 68.27  has failed to pay workers' compensation as required by chapter 
 68.28  176 or if the commissioner issues a certificate of default 
 68.29  against a commercial self-insurance group for failure to pay 
 68.30  workers' compensation as required by chapter 176, then the 
 68.31  security deposit posted by the commercial self-insurance group 
 68.32  shall be utilized to administer and pay the commercial 
 68.33  self-insurance group's workers' compensation obligation. 
 68.34     Subd. 2.  [REVOCATION OF CERTIFICATE TO SELF-INSURE.] (a) 
 68.35  The commissioner shall revoke the commercial self-insurance 
 68.36  group's certificate to self-insure once notified of the 
 69.1   commercial self-insurance group's bankruptcy, insolvency, or 
 69.2   upon issuance of a certificate of default.  The revocation shall 
 69.3   be completed as soon as practicable, but no later than 30 days 
 69.4   after the commercial self-insurance group's security has been 
 69.5   called. 
 69.6      (b) The commissioner shall also revoke a commercial 
 69.7   self-insurance group's authority to self-insure on the following 
 69.8   grounds: 
 69.9      (1) failure to comply with any lawful order of the 
 69.10  commissioner; 
 69.11     (2) failure to comply with any provision of chapter 176; 
 69.12     (3) a deterioration of the commercial self-insurance 
 69.13  group's financial condition affecting its ability to pay 
 69.14  obligations in chapter 176; 
 69.15     (4) committing an unfair or deceptive act or practice as 
 69.16  defined in section 72A.20; or 
 69.17     (5) failure to abide by the plan of operation of the 
 69.18  workers' compensation reinsurance association. 
 69.19     Subd. 3.  [NOTICE BY THE COMMISSIONER.] In the event of 
 69.20  bankruptcy, insolvency, or certificate of default, the 
 69.21  commissioner shall immediately notify by certified mail the 
 69.22  state treasurer, the surety, the issuer of an irrevocable letter 
 69.23  of credit, and any custodian of the security.  At the time of 
 69.24  notification, the commissioner shall also call the security and 
 69.25  transfer and assign it to the commercial self-insurance group 
 69.26  security fund.  The commissioner shall also notify by certified 
 69.27  mail the commercial self-insurance group's security fund and 
 69.28  order the commercial security fund to assume the insolvent 
 69.29  commercial self-insurance group's obligations for which it is 
 69.30  liable under chapter 176. 
 69.31     Sec. 35.  [79A.26] [COMMERCIAL SELF-INSURANCE GROUP 
 69.32  SECURITY FUND.] 
 69.33     Subdivision 1.  [CREATION.] The commercial self-insurance 
 69.34  group security fund is established as a nonprofit corporation 
 69.35  pursuant to the Minnesota nonprofit corporation act, sections 
 69.36  317A.001 to 317A.909.  If any provision of the Minnesota 
 70.1   nonprofit corporation act conflicts with any provision of this 
 70.2   chapter, the provisions of this chapter apply.  Each commercial 
 70.3   self-insurance group that elects to be subject to the terms of 
 70.4   sections 79A.19 to 79A.32 rather than sections 79A.01 to 79A.18 
 70.5   shall participate in the commercial self-insurance group 
 70.6   security fund.  This participation shall be a condition of 
 70.7   maintaining its certificate to self-insure. 
 70.8      Subd. 2.  [BOARD OF TRUSTEES.] The commercial security fund 
 70.9   shall be governed by a board consisting of a minimum of three 
 70.10  and maximum of five trustees.  The trustees shall be 
 70.11  representatives of commercial self-insurance groups who shall be 
 70.12  elected by the participants of the commercial security fund, 
 70.13  each group having one vote.  The trustees initially elected by 
 70.14  the participants shall serve staggered terms of either two or 
 70.15  three years.  Thereafter, trustees shall be elected to 
 70.16  three-year terms and shall serve until their successors are 
 70.17  elected and assume office pursuant to the bylaws of the 
 70.18  commercial security fund.  Two additional trustees shall be 
 70.19  appointed by the commissioner.  These trustees shall serve 
 70.20  four-year terms.  One of these trustees shall serve a two-year 
 70.21  term.  Thereafter, the trustees shall be appointed to four-year 
 70.22  terms, and shall serve until their successors are appointed and 
 70.23  assume office according to the bylaws of the commercial security 
 70.24  fund.  In addition to the trustees elected by the participants 
 70.25  or appointed by the commissioner, the commissioner of labor and 
 70.26  industry or the commissioner's designee shall be an ex officio, 
 70.27  nonvoting member of the board of trustees.  A member of the 
 70.28  board of trustees may designate another person to act in the 
 70.29  member's place as though the member were acting and the 
 70.30  designee's actions shall be deemed those of the member. 
 70.31     Subd. 3.  [BYLAWS.] The commercial security fund shall 
 70.32  establish bylaws and a plan of operation, subject to the prior 
 70.33  approval of the commissioner, necessary to the purposes of this 
 70.34  chapter and to carry out the responsibilities of the commercial 
 70.35  security fund.  The commercial security fund may carry out its 
 70.36  responsibilities directly or by contract, and may purchase 
 71.1   services and insurance and borrow funds it deems necessary for 
 71.2   the protection of the commercial self-insurance group 
 71.3   participants and their employees. 
 71.4      Subd. 4.  [CONFIDENTIAL INFORMATION.] The commercial 
 71.5   security fund may receive private data concerning the financial 
 71.6   condition of commercial self-insurance groups whose liabilities 
 71.7   to pay compensation have become its responsibility and shall 
 71.8   adopt bylaws to prevent dissemination of that information. 
 71.9      Subd. 5.  [EMPLOYEES.] Commercial security fund employees 
 71.10  are not state employees and are not subject to any state civil 
 71.11  service regulations. 
 71.12     Subd. 6.  [ASSUMPTION OF OBLIGATIONS.] Upon order of the 
 71.13  commissioner under section 79A.25, subdivision 3, the commercial 
 71.14  security fund shall assume the workers' compensation obligations 
 71.15  of an insolvent commercial self-insurance group.  The 
 71.16  commissioner shall further order the commercial self-insurance 
 71.17  group security fund to commence payment of these obligations 
 71.18  within 14 days of the receipt of this notification and order. 
 71.19     Subd. 7.  [ACT OR OMISSIONS; PENALTIES.] Notwithstanding 
 71.20  subdivision 6, the commercial security fund shall not be liable 
 71.21  for the payment of any penalties assessed for any act or 
 71.22  omission on the part of any person other than the commercial 
 71.23  security fund or its appointed administrator, including, but not 
 71.24  limited to, the penalties provided in chapter 176 unless the 
 71.25  commercial security fund or its appointed administrator would be 
 71.26  subject to penalties under chapter 176 as the result of the 
 71.27  actions of the commercial security fund or its administrator. 
 71.28     Subd. 8.  [PARTY IN INTEREST.] The commercial security fund 
 71.29  shall be a party in interest in all proceedings involving 
 71.30  compensation claims against an insolvent commercial 
 71.31  self-insurance group whose compensation obligations have been 
 71.32  paid or assumed by the commercial security fund.  The commercial 
 71.33  security fund shall have the same rights and defenses as the 
 71.34  insolvent commercial self-insurance group, including, but not 
 71.35  limited to, all of the following: 
 71.36     (1) to appear, defend, and appeal claims; 
 72.1      (2) to receive notice of, investigate, adjust, compromise, 
 72.2   settle, and pay claims; and 
 72.3      (3) to investigate, handle, and deny claims. 
 72.4      Subd. 9.  [PAYMENTS TO COMMERCIAL SECURITY FUND.] 
 72.5   Notwithstanding sections 79A.19 to 79A.32 or chapter 176 to the 
 72.6   contrary, in the event that the commercial self-insurance group 
 72.7   security fund assumes the obligations of any bankrupt or 
 72.8   insolvent commercial self-insurance group pursuant to this 
 72.9   section, then the proceeds of any surety bond, workers' 
 72.10  compensation reinsurance association, specific excess insurance 
 72.11  or aggregate excess insurance policy, and any special 
 72.12  compensation fund payment or supplementary benefit 
 72.13  reimbursements shall be paid to the commercial self-insurance 
 72.14  group security fund instead of the bankrupt or insolvent 
 72.15  commercial self-insurance group or its successor in interest.  
 72.16  No special compensation fund reimbursements shall be made to the 
 72.17  commercial security fund unless the special compensation fund 
 72.18  assessments under section 176.129 are paid and the required 
 72.19  reports are made to the special compensation fund. 
 72.20     Subd. 10.  [INSOLVENT COMMERCIAL SELF-INSURANCE GROUP.] The 
 72.21  commercial security fund shall have the right and obligation to 
 72.22  obtain reimbursement from an insolvent commercial self-insurance 
 72.23  group up to the amount of the commercial self-insurance group's 
 72.24  workers' compensation obligations paid and assumed by the 
 72.25  commercial security fund, including reasonable administrative 
 72.26  and legal costs.  This right includes, but is not limited to, a 
 72.27  right to claim for wages and other necessities of life advanced 
 72.28  to claimants as subrogee of the claimants in any action to 
 72.29  collect against the commercial self-insurance group as debtor. 
 72.30     Subd. 11.  [SECURITY DEPOSITS.] The commercial security 
 72.31  fund shall have the right and obligation to obtain from the 
 72.32  security deposit of an insolvent commercial self-insurance group 
 72.33  the amount of the commercial self-insurance group's compensation 
 72.34  obligations, including reasonable administrative and legal 
 72.35  costs, paid or assumed by the commercial security fund.  
 72.36  Reimbursement of administrative costs, including legal costs, 
 73.1   shall be subject to approval by a majority of the commercial 
 73.2   security fund's voting trustees.  The commercial security fund 
 73.3   shall be a party in interest in any action to obtain the 
 73.4   security deposit for the payment of compensation obligations of 
 73.5   an insolvent commercial self-insurance group. 
 73.6      Subd. 12.  [LEGAL ACTIONS.] The commercial security fund 
 73.7   shall have the right to bring an action against any person or 
 73.8   entity to recover compensation paid and liability assumed by the 
 73.9   commercial security fund, including, but not limited to, any 
 73.10  excess insurance carrier of the insolvent commercial 
 73.11  self-insurance group and any person or entity whose negligence 
 73.12  or breach of an obligation contributed to any underestimation of 
 73.13  the commercial self-insurance group's accrued liability as 
 73.14  reported to the commissioner. 
 73.15     Subd. 13.  [PARTY IN INTEREST.] The commercial security 
 73.16  fund may be a party in interest in any action brought by any 
 73.17  other person seeking damages resulting from the failure of an 
 73.18  insolvent commercial self-insurance group to pay workers' 
 73.19  compensation required under this subdivision. 
 73.20     Subd. 14.  [ASSETS MAINTAINED.] The commercial security 
 73.21  fund shall maintain cash, readily marketable securities, or 
 73.22  other assets, or a line of credit, approved by the commissioner, 
 73.23  sufficient to immediately continue the payment of the 
 73.24  compensation obligations of an insolvent commercial 
 73.25  self-insurance group pending receipt of the security deposit, 
 73.26  surety bond proceeds, irrevocable letter of credit, or, if 
 73.27  necessary, assessment of the participants.  The commissioner may 
 73.28  establish the minimum amount to be maintained by, or immediately 
 73.29  available to, the commercial security fund for this purpose. 
 73.30     Subd. 15.  [ASSESSMENT.] The commercial security fund may 
 73.31  assess each of its participants a pro rata share of the funding 
 73.32  necessary to carry out its obligation and the purposes of 
 73.33  sections 79A.19 to 79A.32.  Total annual assessments in any 
 73.34  calendar year shall be a percentage of the workers' compensation 
 73.35  benefits paid under sections 176.101 and 176.111 during the 
 73.36  previous calendar year.  The annual assessment calculation shall 
 74.1   not include supplementary benefits paid which will be reimbursed 
 74.2   by the special compensation fund.  Funds obtained by assessments 
 74.3   under this subdivision may only be used for the purposes of 
 74.4   sections 79A.19 to 79A.32.  The trustees shall certify to the 
 74.5   commissioner the collection and receipt of all money from 
 74.6   assessments, noting any delinquencies.  The trustees shall take 
 74.7   any action deemed appropriate to collect any delinquent 
 74.8   assessments. 
 74.9      Subd. 16.  [AUDIT OF FUND.] The trustees shall annually 
 74.10  contract for an independent certified audit of the financial 
 74.11  activities of the fund.  An annual report on the financial 
 74.12  status of the commercial self-insurance group security fund 
 74.13  shall be submitted to the commissioner and to each commercial 
 74.14  group participant. 
 74.15     Sec. 36.  [79A.27] [INDEMNITY AGREEMENT FORM.] 
 74.16         INDIVIDUAL AND PROPORTIONATE INDEMNITY AGREEMENT
 74.17     WHEREAS, (name of company) has agreed to be and has been 
 74.18  accepted as a member of (name of commercial self-insurance 
 74.19  group). 
 74.20     WHEREAS, (name of company) has agreed to be bound by all of 
 74.21  the provisions of the Minnesota workers' compensation act and 
 74.22  all rules promulgated thereunder. 
 74.23     WHEREAS, that (name of company) has agreed to be bound by 
 74.24  bylaws or plan of operation and all amendments thereto of (name 
 74.25  of commercial self-insurance group); 
 74.26     NOW THEREFORE, IT IS AGREED that:  
 74.27     1.  (Name of company) shall be jointly and severally liable 
 74.28  for all claims and expenses of all the members of (name of 
 74.29  commercial self-insurance group) arising in any fund year in 
 74.30  which (name of company) is a member of the commercial 
 74.31  self-insurance group.  
 74.32     2.  (Name of commercial self-insurance group) shall assess 
 74.33  (name of company) on an individual and proportionate basis for 
 74.34  its share of the total liability of the commercial 
 74.35  self-insurance group.  
 74.36     3.  In the event that (name of company) is not a member for 
 75.1   the full year, it shall be only liable for a pro rata share of 
 75.2   that liability. 
 75.3      IN WITNESS WHEREOF, the (name of company) and (name of 
 75.4   commercial self-insurance group) have caused this indemnity 
 75.5   agreement to be executed by its authorized officers: 
 75.6   Commercial Self-Insurance Group Name      Company Name
 75.8   By: ............................          By: ...................
 75.9   date: ..........................          date: .................
 75.10     Sec. 37.  [79A.28] [OPEN MEETING; ADMINISTRATIVE PROCEDURE 
 75.11  ACT.] 
 75.12     The commercial self-insurance group security fund and its 
 75.13  board of trustees shall not be subject to: 
 75.14     (1) the open meeting law; 
 75.15     (2) the open appointments law; 
 75.16     (3) the data privacy law; and 
 75.17     (4) except where specifically set forth, the administrative 
 75.18  procedure act. 
 75.19     Sec. 38.  [79A.29] [RULES.] 
 75.20     The commissioner may adopt, amend, and repeal rules 
 75.21  reasonably necessary to carry out the purposes of this chapter.  
 75.22  Minnesota Rules, chapter 2780, shall apply to commercial 
 75.23  self-insurance groups unless otherwise specified by rule. 
 75.24     Sec. 39.  [79A.30] [GOVERNING LAW.] 
 75.25     If there is any inconsistency between sections 79A.19 to 
 75.26  79A.32 and any other statute or rule, the provisions of sections 
 75.27  79A.19 to 79A.32 shall govern with respect to commercial 
 75.28  self-insurance groups. 
 75.29     Sec. 40.  [79A.31] [COMMERCIAL SELF-INSURANCE GROUP 
 75.30  SECURITY FUND MEMBERSHIP; WITHDRAWAL FROM SELF-INSURERS' 
 75.31  SECURITY FUND.] 
 75.32     Subdivision 1.  [WITHDRAWAL.] Any group self-insurer that 
 75.33  is a member as of August 1, 1995, of the self-insurers' security 
 75.34  fund established under section 79A.09, may until January 1, 
 75.35  1996, elect to withdraw from that fund and become a member of 
 75.36  the commercial self-insurance group security fund established 
 76.1   under section 79A.26.  The transferring group shall be subject 
 76.2   to the provisions and requirements of sections 79A.19 to 79A.34 
 76.3   as of the date of transfer.  Additional security may be required 
 76.4   pursuant to section 79A.24.  Group self-insurers electing to 
 76.5   transfer to the commercial self-insurance group fund shall not 
 76.6   be subject to the provisions of section 79A.06, subdivision 5, 
 76.7   including, but not limited to, assessments by the self-insurers' 
 76.8   security fund. 
 76.9      Subd. 2.  [TRANSFER; NOTICE TO COMMISSIONER.] A group 
 76.10  self-insurer shall provide to the commissioner written notice of 
 76.11  its intent to transfer membership to the commercial 
 76.12  self-insurance group security fund.  The notice shall be sent at 
 76.13  least 30 days prior to the date the group self-insurer requests 
 76.14  membership in the commercial self-insurance group security fund. 
 76.15     Subd. 3.  [TRANSFER OF POTENTIAL AND CONTINGENT 
 76.16  LIABILITIES.] Upon transfer pursuant to subdivision 1, the 
 76.17  commercial self-insurance group security fund shall assume all 
 76.18  of the past, present, and future potential and contingent 
 76.19  workers' compensation liabilities of the transferring group in 
 76.20  the event of any bankruptcy or insolvency of that group or its 
 76.21  failure to meet its obligations under this chapter and chapter 
 76.22  176.  
 76.23     Subd. 4.  [ELECTION.] A group self-insurer established 
 76.24  after August 1, 1995, may elect to become a member of either the 
 76.25  self-insurers' security fund or the commercial self-insurance 
 76.26  group security fund.  However, once the election is made, a 
 76.27  group may not transfer to the other security fund.  
 76.28     Sec. 41.  [79A.32] [REPORTING TO MINNESOTA WORKERS' 
 76.29  COMPENSATION INSURERS' ASSOCIATION.] 
 76.30     Subdivision 1.  [REQUIRED ACTIVITY.] Each self-insurer 
 76.31  shall perform the following activities: 
 76.32     (1) maintain membership in and report loss experience data 
 76.33  to the Minnesota workers' compensation insurers association, or 
 76.34  a licensed data service organization, in accordance with the 
 76.35  statistical plan and rules of the organization as approved by 
 76.36  the commissioner; 
 77.1      (2) establish a plan for merit rating which shall be 
 77.2   consistently applied to all insureds, provided that members of a 
 77.3   data service organization may use merit rating plans developed 
 77.4   by that data service organization; 
 77.5      (3) provide an annual report to the commissioner containing 
 77.6   the information and prepared in the form required by the 
 77.7   commissioner; and 
 77.8      (4) keep a record of the losses paid by the self-insurers 
 77.9   and premiums for the group self-insurers. 
 77.10     Subd. 2.  [PERMITTED ACTIVITY.] In addition to any other 
 77.11  activities not prohibited by this chapter, self-insurers may: 
 77.12     (1) through licensed data service organizations, 
 77.13  individually, or with self-insurers commonly owned, managed, or 
 77.14  controlled, conduct research and collect statistics to 
 77.15  investigate, identify, and classify information relating to 
 77.16  causes or prevention of losses; 
 77.17     (2) develop and use classification plans and rates based 
 77.18  upon any reasonable factors; and 
 77.19     (3) develop rules for the assignment of risks to 
 77.20  classifications. 
 77.21     Subd. 3.  [DELAYED REPORTING.] Private self-insurers 
 77.22  established under sections 79A.01 to 79A.18 prior to August 1, 
 77.23  1995, need not begin filing the reports required under 
 77.24  subdivision 1 until January 1, 1998.  
 77.25     Sec. 42.  Minnesota Statutes 1994, section 168.012, 
 77.26  subdivision 1, is amended to read: 
 77.27     Subdivision 1.  (a) The following vehicles are exempt from 
 77.28  the provisions of this chapter requiring payment of tax and 
 77.29  registration fees, except as provided in subdivision 1c:  
 77.30     (1) vehicles owned and used solely in the transaction of 
 77.31  official business by representatives of foreign powers, by the 
 77.32  federal government, the state, or any political subdivision; 
 77.33     (2) vehicles owned and used exclusively by educational 
 77.34  institutions and used solely in the transportation of pupils to 
 77.35  and from such institutions; 
 77.36     (3) vehicles used solely in driver education programs at 
 78.1   nonpublic high schools; 
 78.2      (4) vehicles owned by nonprofit charities and used 
 78.3   exclusively to transport disabled persons for educational 
 78.4   purposes; 
 78.5      (5) vehicles owned and used by honorary consul or consul 
 78.6   general of foreign governments; and 
 78.7      (6) ambulances owned by ambulance services licensed under 
 78.8   section 144.802, the general appearance of which is unmistakable.
 78.9      (b) Vehicles owned by the federal government, municipal 
 78.10  fire apparatus, police patrols and ambulances, the general 
 78.11  appearance of which is unmistakable, shall not be required to 
 78.12  register or display number plates.  
 78.13     (c) Unmarked vehicles used in general police work, liquor 
 78.14  investigations, arson investigations, and passenger automobiles, 
 78.15  pickup trucks, and buses owned or operated by the department of 
 78.16  corrections shall be registered and shall display appropriate 
 78.17  license number plates which shall be furnished by the registrar 
 78.18  at cost.  Original and renewal applications for these license 
 78.19  plates authorized for use in general police work and for use by 
 78.20  the department of corrections must be accompanied by a 
 78.21  certification signed by the appropriate chief of police if 
 78.22  issued to a police vehicle, the appropriate sheriff if issued to 
 78.23  a sheriff's vehicle, the commissioner of corrections if issued 
 78.24  to a department of corrections vehicle, or the appropriate 
 78.25  officer in charge if issued to a vehicle of any other law 
 78.26  enforcement agency.  The certification must be on a form 
 78.27  prescribed by the commissioner and state that the vehicle will 
 78.28  be used exclusively for a purpose authorized by this section.  
 78.29     (d) Unmarked vehicles used by the department departments of 
 78.30  revenue and labor and industry, fraud unit, in conducting 
 78.31  seizures or criminal investigations must be registered and must 
 78.32  display passenger vehicle classification license number plates 
 78.33  which shall be furnished at cost by the registrar.  Original and 
 78.34  renewal applications for these passenger vehicle license plates 
 78.35  must be accompanied by a certification signed by the 
 78.36  commissioner of revenue or the commissioner of labor and 
 79.1   industry.  The certification must be on a form prescribed by the 
 79.2   commissioner and state that the vehicles will be used 
 79.3   exclusively for the purposes authorized by this section. 
 79.4      (e) All other motor vehicles shall be registered and 
 79.5   display tax-exempt number plates which shall be furnished by the 
 79.6   registrar at cost, except as provided in subdivision 1c.  All 
 79.7   vehicles required to display tax-exempt number plates shall have 
 79.8   the name of the state department or political subdivision, or 
 79.9   the nonpublic high school operating a driver education program, 
 79.10  on the vehicle plainly displayed on both sides thereof in 
 79.11  letters not less than 2-1/2 inches high and one-half inch wide; 
 79.12  except that each state hospital and institution for the mentally 
 79.13  ill and mentally retarded may have one vehicle without the 
 79.14  required identification on the sides of the vehicle, and county 
 79.15  social service agencies may have vehicles used for child and 
 79.16  vulnerable adult protective services without the required 
 79.17  identification on the sides of the vehicle.  Such identification 
 79.18  shall be in a color giving contrast with that of the part of the 
 79.19  vehicle on which it is placed and shall endure throughout the 
 79.20  term of the registration.  The identification must not be on a 
 79.21  removable plate or placard and shall be kept clean and visible 
 79.22  at all times; except that a removable plate or placard may be 
 79.23  utilized on vehicles leased or loaned to a political subdivision 
 79.24  or to a nonpublic high school driver education program. 
 79.25     Sec. 43.  Minnesota Statutes 1994, section 175.16, is 
 79.26  amended to read: 
 79.27     175.16 [DIVISIONS.] 
 79.28     The department of labor and industry shall consist of the 
 79.29  following divisions:  division of workers' compensation, 
 79.30  division of boiler inspection, division of occupational safety 
 79.31  and health, division of statistics, division of steamfitting 
 79.32  standards, division of voluntary apprenticeship, division of 
 79.33  labor standards, and such other divisions as the commissioner of 
 79.34  the department of labor and industry may deem necessary and 
 79.35  establish.  Each division of the department and persons in 
 79.36  charge thereof shall be subject to the supervision of the 
 80.1   commissioner of the department of labor and industry and, in 
 80.2   addition to such duties as are or may be imposed on them by 
 80.3   statute, shall perform such other duties as may be assigned to 
 80.4   them by said commissioner.  Notwithstanding any other law to the 
 80.5   contrary, the commissioner is the administrator and supervisor 
 80.6   of all of the department's dispute resolution functions and 
 80.7   personnel and may delegate authority to settlement judges and 
 80.8   others to make determinations under sections 176.106, 176.238, 
 80.9   and 176.239 and to approve settlement of claims under section 
 80.10  176.521. 
 80.11     Sec. 44.  Minnesota Statutes 1994, section 176.011, 
 80.12  subdivision 16, is amended to read: 
 80.13     Subd. 16.  [PERSONAL INJURY.] "Personal injury" means 
 80.14  injury arising out of and in the course of employment and 
 80.15  includes personal injury caused by occupational disease; but 
 80.16  does not cover an employee except while engaged in, on, or about 
 80.17  the premises where the employee's services require the 
 80.18  employee's presence as a part of such that service at the time 
 80.19  of the injury and during the hours of such that service.  Where 
 80.20  the employer regularly furnished transportation to employees to 
 80.21  and from the place of employment such, those employees are 
 80.22  subject to this chapter while being so transported, but shall.  
 80.23  Personal injury does not include an injury caused by the act of 
 80.24  a third person or fellow employee intended to injure the 
 80.25  employee because of personal reasons, and not directed against 
 80.26  the employee as an employee, or because of the employment. 
 80.27     Sec. 45.  Minnesota Statutes 1994, section 176.081, 
 80.28  subdivision 1, is amended to read: 
 80.29     Subdivision 1.  [APPROVAL LIMITATION OF FEES.] (a) A fee 
 80.30  for legal services of 25 percent of the first $4,000 of 
 80.31  compensation awarded to the employee and 20 percent of the next 
 80.32  $60,000 of compensation awarded to the employee is the maximum 
 80.33  permissible fee and does not require approval by the 
 80.34  commissioner, compensation judge, or any other party except as 
 80.35  provided in paragraph (d).  All fees, including fees for 
 80.36  obtaining medical or rehabilitation benefits, must be calculated 
 81.1   according to the formula under this subdivision, or earned in 
 81.2   hourly fees for representation at discontinuance conferences 
 81.3   under section 176.239, or earned in hourly fees for 
 81.4   representation on rehabilitation or medical issues under section 
 81.5   176.102, 176.135, or 176.136.  Attorney fees for recovery of 
 81.6   medical or rehabilitation benefits or services shall be assessed 
 81.7   against the employer or insurer if these fees exceed the 
 81.8   contingent fee under this section in connection with benefits 
 81.9   currently in dispute.  The amount of the fee that the employer 
 81.10  or insurer is liable for is the amount determined under 
 81.11  subdivision 5, minus the contingent fee except as otherwise 
 81.12  provided in clause (1) or (2).  
 81.13     (1) the contingent attorney fee for recovery of monetary 
 81.14  benefits according to the formula in this section is presumed to 
 81.15  be adequate to cover recovery of medical and rehabilitation 
 81.16  benefit or services concurrently in dispute.  Attorney fees for 
 81.17  recovery of medical or rehabilitation benefits or services shall 
 81.18  be assessed against the employer or insurer only if the attorney 
 81.19  establishes that the contingent fee is inadequate to reasonably 
 81.20  compensate the attorney for representing the employee in the 
 81.21  medical or rehabilitation dispute.  In cases where the 
 81.22  contingent fee is inadequate the employer or insurer is liable 
 81.23  for attorney fees based on the formula in this subdivision or in 
 81.24  clause (2). 
 81.25     For the purposes of applying the formula where the employer 
 81.26  or insurer is liable for attorney fees, the amount of 
 81.27  compensation awarded for obtaining disputed medical and 
 81.28  rehabilitation benefits under sections 176.102, 176.135, and 
 81.29  176.136 shall be the dollar value of the medical or 
 81.30  rehabilitation benefit awarded, where ascertainable.  
 81.31     (2) The maximum attorney fee for obtaining a change of 
 81.32  doctor or qualified rehabilitation consultant, or any other 
 81.33  disputed medical or rehabilitation benefit for which a dollar 
 81.34  value is not reasonably ascertainable, is the amount charged in 
 81.35  hourly fees for the representation or $500, whichever is less, 
 81.36  to be paid by the employer or insurer. 
 82.1      (3) The fees for obtaining disputed medical or 
 82.2   rehabilitation benefits are included in the $13,000 limit in 
 82.3   paragraph (b).  An attorney must concurrently file all 
 82.4   outstanding disputed issues.  An attorney is not entitled to 
 82.5   attorney fees for representation in any issue which could 
 82.6   reasonably have been addressed during the pendency of other 
 82.7   issues for the same injury. 
 82.8      (b) All fees for legal services related to the same injury 
 82.9   are cumulative and may not exceed $13,000, except as provided by 
 82.10  subdivision 2.  If multiple injuries are the subject of a 
 82.11  dispute, the commissioner, compensation judge, or court of 
 82.12  appeals shall specify the attorney fee attributable to each 
 82.13  injury.  
 82.14     (c) If the employer or the insurer or the defendant is 
 82.15  given written notice of claims for legal services or 
 82.16  disbursements, the claim shall be a lien against the amount paid 
 82.17  or payable as compensation.  Subject to the foregoing maximum 
 82.18  amount for attorney fees, up to 25 percent of the first $4,000 
 82.19  of periodic compensation awarded to the employee and 20 percent 
 82.20  of the next $60,000 of periodic compensation awarded to the 
 82.21  employee may be withheld from the periodic payments for attorney 
 82.22  fees or disbursements if the payor of the funds clearly 
 82.23  indicates on the check or draft issued to the employee for 
 82.24  payment the purpose of the withholding, the name of the 
 82.25  attorney, the amount withheld, and the gross amount of the 
 82.26  compensation payment before withholding.  In no case shall fees 
 82.27  be calculated on the basis of any undisputed portion of 
 82.28  compensation awards.  Allowable fees under this chapter shall be 
 82.29  based solely upon genuinely disputed claims or portions of 
 82.30  claims, including disputes related to the payment of 
 82.31  rehabilitation benefits or to other aspects of a rehabilitation 
 82.32  plan.  Fees for administrative conferences under section 176.239 
 82.33  shall be determined on an hourly basis, according to the 
 82.34  criteria in subdivision 5.  The existence of a dispute is 
 82.35  dependent upon a disagreement after the employer or insurer has 
 82.36  had adequate time and information to take a position on 
 83.1   liability.  Neither the holding of a hearing nor the filing of 
 83.2   an application for a hearing alone may determine the existence 
 83.3   of a dispute.  Except where the employee is represented by an 
 83.4   attorney in other litigation pending at the department or at the 
 83.5   office of administrative hearings, a fee may not be charged 
 83.6   after June 1, 1996, for services with respect to a medical or 
 83.7   rehabilitation issue arising under section 176.102, 176.135, or 
 83.8   176.136 performed before the employee has consulted with the 
 83.9   department and the department certifies that there is a dispute 
 83.10  and that it has tried to resolve the dispute.  
 83.11     (d) An attorney who is claiming legal fees for representing 
 83.12  an employee in a workers' compensation matter shall file a 
 83.13  statement of attorney fees with the commissioner, compensation 
 83.14  judge before whom the matter was heard, or workers' compensation 
 83.15  court of appeals on cases before the court.  A copy of the 
 83.16  signed retainer agreement shall also be filed.  The employee and 
 83.17  insurer shall receive a copy of the statement.  The statement 
 83.18  shall be on a form prescribed by the commissioner, and shall 
 83.19  report the number of hours spent on the case, and shall clearly 
 83.20  and conspicuously state that the employee or insurer has ten 
 83.21  calendar days to object to the attorney fees requested.  If no 
 83.22  objection is timely made by the employee or insurer, the amount 
 83.23  requested shall be conclusively presumed reasonable providing 
 83.24  the amount does not exceed the limitation in subdivision 1.  The 
 83.25  commissioner, compensation judge, or court of appeals shall 
 83.26  issue an order granting the fees and the amount requested shall 
 83.27  be awarded to the party requesting the fee.  
 83.28     If a timely objection is filed, or the fee is determined on 
 83.29  an hourly basis, the commissioner, compensation judge, or court 
 83.30  of appeals shall review the matter and make a determination 
 83.31  based on the criteria in subdivision 5. 
 83.32     If no timely objection is made by an employer or insurer, 
 83.33  reimbursement under subdivision 7 shall be made if the statement 
 83.34  of fees requested this reimbursement. 
 83.35     (e) Employers and insurers may not pay attorney fees or 
 83.36  wages for legal services of more than $13,000 per case unless 
 84.1   the additional fees or wages are approved under subdivision 2.  
 84.2      (f) Each insurer and self-insured employer shall file 
 84.3   annual statements with the commissioner detailing the total 
 84.4   amount of legal fees and other legal costs incurred by the 
 84.5   insurer or employer during the year.  The statement shall 
 84.6   include the amount paid for outside and in-house counsel, 
 84.7   deposition and other witness fees, and all other costs relating 
 84.8   to litigation.  
 84.9      Sec. 46.  Minnesota Statutes 1994, section 176.081, 
 84.10  subdivision 7, is amended to read: 
 84.11     Subd. 7.  [AWARD; ADDITIONAL AMOUNT.] If the employer or 
 84.12  insurer files a denial of liability, notice of discontinuance, 
 84.13  or fails to make payment of compensation or medical expenses 
 84.14  within the statutory period after notice of injury or 
 84.15  occupational disease, or otherwise unsuccessfully resists the 
 84.16  payment of compensation or medical expenses, or unsuccessfully 
 84.17  disputes the payment of rehabilitation benefits or other aspects 
 84.18  of a rehabilitation plan, and the injured person has employed an 
 84.19  attorney at law, who successfully procures payment on behalf of 
 84.20  the employee or who enables the resolution of a dispute with 
 84.21  respect to a rehabilitation plan, the compensation judge, 
 84.22  commissioner, or the workers' compensation court of appeals upon 
 84.23  appeal, upon application, shall award to the employee against 
 84.24  the insurer or self-insured employer or uninsured employer, in 
 84.25  addition to the compensation benefits paid or awarded to the 
 84.26  employee, an amount equal to 25 30 percent of that portion of 
 84.27  the attorney's fee which has been awarded pursuant to this 
 84.28  section that is in excess of $250.  
 84.29     Sec. 47.  Minnesota Statutes 1994, section 176.081, 
 84.30  subdivision 7a, is amended to read: 
 84.31     Subd. 7a.  [SETTLEMENT OFFER.] At any time prior to one day 
 84.32  before a matter is to be heard, a party litigating a claim made 
 84.33  pursuant to this chapter may serve upon the adverse party a 
 84.34  reasonable offer of settlement of the claim, with provision for 
 84.35  costs and disbursements then accrued.  If before the hearing the 
 84.36  adverse party serves written notice that the offer is accepted, 
 85.1   either party may then file the offer and notice of acceptance, 
 85.2   together with the proof of service thereof, and thereupon 
 85.3   judgment shall be entered.  
 85.4      If an offer by an employer or insurer is not accepted by 
 85.5   the employee, it shall be deemed withdrawn and evidence thereof 
 85.6   is not admissible, except in a proceeding to determine 
 85.7   attorney's fees.  Notwithstanding the provisions of subdivision 
 85.8   7, if the judgment finally obtained by the employee is less 
 85.9   favorable than the offer, the employer shall not be liable for 
 85.10  any part of the attorney's fees awarded pursuant to this section.
 85.11     If an offer by an employee is not accepted by the employer 
 85.12  or insurer, it shall be deemed withdrawn and evidence thereof is 
 85.13  not admissible, except in a proceeding to determine attorney's 
 85.14  fees.  Notwithstanding the provisions of subdivision 7, if the 
 85.15  judgment finally obtained by the employee is at least as 
 85.16  favorable as the offer, the employer shall pay an additional 25 
 85.17  percent, over the amount provided in subdivision 7, of that 
 85.18  portion of the attorney's fee which has been awarded pursuant to 
 85.19  this section that is in excess of $250.  
 85.20     The fact that an offer is made but not accepted does not 
 85.21  preclude a subsequent offer.  
 85.22     Sec. 48.  Minnesota Statutes 1994, section 176.081, 
 85.23  subdivision 9, is amended to read: 
 85.24     Subd. 9.  [RETAINER AGREEMENT.] An attorney who is hired by 
 85.25  an employee to provide legal services with respect to a claim 
 85.26  for compensation made pursuant to this chapter shall prepare a 
 85.27  retainer agreement in which the provisions of this section are 
 85.28  specifically set out and provide a copy of this agreement to the 
 85.29  employee.  The retainer agreement shall provide a space for the 
 85.30  signature of the employee.  A signed agreement shall raise a 
 85.31  conclusive presumption that the employee has read and 
 85.32  understands the statutory fee provisions.  No fee shall be 
 85.33  awarded pursuant to this section in the absence of a signed 
 85.34  retainer agreement.  
 85.35     The retainer agreement shall contain a notice to the 
 85.36  employee regarding the maximum fee allowed under this section in 
 86.1   ten-point type, which shall read: 
 86.2                       Notice of Maximum Fee
 86.3      The maximum fee allowed by law for legal services is 25 
 86.4   percent of the first $4,000 of compensation awarded to the 
 86.5   employee and 20 percent of the next $60,000 of compensation 
 86.6   awarded to the employee subject to a cumulative maximum fee of 
 86.7   $13,000 for fees related to the same injury. 
 86.8      The employee shall take notice that the employee is under 
 86.9   no legal or moral obligation to pay any fee for legal services 
 86.10  in excess of the foregoing maximum fee. 
 86.11     Sec. 49.  Minnesota Statutes 1994, section 176.081, is 
 86.12  amended by adding a subdivision to read: 
 86.13     Subd. 12.  [SANCTIONS; FAILURE TO PREPARE, APPEAR, OR 
 86.14  PARTICIPATE.] If a party or party's attorney fails to appear at 
 86.15  any conference or hearing scheduled under this chapter, is 
 86.16  substantially unprepared to participate in the conference or 
 86.17  hearing, or fails to participate in good faith, the commissioner 
 86.18  or compensation judge, upon motion or upon its own initiative, 
 86.19  shall require the party or the party's attorney or both to pay 
 86.20  the reasonable expenses including attorney fees, incurred by the 
 86.21  other party due to the failure to appear, prepare, or 
 86.22  participate.  Attorney fees or other expenses may not be awarded 
 86.23  if the commissioner or compensation judge finds that the 
 86.24  noncompliance was substantially justified or that other 
 86.25  circumstances would make the sanction unjust.  The department of 
 86.26  labor and industry, and the office of administrative hearings 
 86.27  may by rule establish additional sanctions for failure of a 
 86.28  party or the party's attorney to appear, prepare for, or 
 86.29  participate in a conference or hearing. 
 86.30     Sec. 50.  Minnesota Statutes 1994, section 176.102, 
 86.31  subdivision 3a, is amended to read: 
 86.32     Subd. 3a.  [DISCIPLINARY ACTIONS.] The panel has authority 
 86.33  to discipline qualified rehabilitation consultants and vendors 
 86.34  and may impose a penalty of up to $1,000 $3,000 per violation, 
 86.35  payable to the special compensation fund, and may suspend or 
 86.36  revoke certification.  Complaints against registered qualified 
 87.1   rehabilitation consultants and vendors shall be made to the 
 87.2   commissioner who shall investigate all complaints.  If the 
 87.3   investigation indicates a violation of this chapter or rules 
 87.4   adopted under this chapter, the commissioner may initiate a 
 87.5   contested case proceeding under the provisions of chapter 14.  
 87.6   In these cases, the rehabilitation review panel shall make the 
 87.7   final decision following receipt of the report of an 
 87.8   administrative law judge.  The decision of the panel is 
 87.9   appealable to the workers' compensation court of appeals in the 
 87.10  manner provided by section 176.421.  The panel shall 
 87.11  continuously study rehabilitation services and delivery, develop 
 87.12  and recommend rehabilitation rules to the commissioner, and 
 87.13  assist the commissioner in accomplishing public education. 
 87.14     The commissioner may appoint alternates for one-year terms 
 87.15  to serve as a member when a member is unavailable.  The number 
 87.16  of alternates shall not exceed one labor member, one employer or 
 87.17  insurer member, and one member representing medicine, 
 87.18  chiropractic, or rehabilitation. 
 87.19     Sec. 51.  Minnesota Statutes 1994, section 176.102, 
 87.20  subdivision 11, is amended to read: 
 87.21     Subd. 11.  [RETRAINING; COMPENSATION.] (a) Retraining is 
 87.22  limited to 156 weeks.  An employee who has been approved for 
 87.23  retraining may petition the commissioner or compensation judge 
 87.24  for additional compensation not to exceed 25 percent of the 
 87.25  compensation otherwise payable.  If the commissioner or 
 87.26  compensation judge determines that this additional compensation 
 87.27  is warranted due to unusual or unique circumstances of the 
 87.28  employee's retraining plan, the commissioner may award 
 87.29  additional compensation in an amount not to exceed the 
 87.30  employee's request.  This additional compensation shall cease at 
 87.31  any time the commissioner or compensation judge determines the 
 87.32  special circumstances are no longer present.  
 87.33     (b) If the employee is not employed during a retraining 
 87.34  plan that has been specifically approved under this section, 
 87.35  temporary total compensation is payable for up to 90 days after 
 87.36  the end of the retraining plan; except that, payment during the 
 88.1   90-day period is subject to cessation in accordance with section 
 88.2   176.101.  If the employee is employed during the retraining plan 
 88.3   but earning less than at the time of injury, temporary partial 
 88.4   compensation is payable at the rate of 66-2/3 percent of the 
 88.5   difference between the employee's weekly wage at the time of 
 88.6   injury and the weekly wage the employee is able to earn in the 
 88.7   employee's partially disabled condition, subject to the maximum 
 88.8   rate for temporary total compensation.  Temporary partial 
 88.9   compensation is not subject to the 225-week or 450-week 
 88.10  limitations provided by section 176.101, subdivision 2, during 
 88.11  the retraining plan, but is subject to those limitations before 
 88.12  and after the plan. 
 88.13     (c) Any request for retraining shall be filed with the 
 88.14  commissioner before 104 weeks of any combination of temporary 
 88.15  total or temporary partial compensation have been paid.  
 88.16  Retraining shall not be available after 104 weeks of any 
 88.17  combination of temporary total or temporary partial compensation 
 88.18  benefits have been paid unless the request for the retraining 
 88.19  has been filed with the commissioner prior to the time the 104 
 88.20  weeks of compensation have been paid. 
 88.21     (d) The employer or insurer must notify the employee in 
 88.22  writing of the 104 week limitation for filing a request for 
 88.23  retraining with the commissioner.  This notice must be given 
 88.24  before 80 weeks of temporary total disability or temporary 
 88.25  partial disability compensation have been paid, regardless of 
 88.26  the number of weeks that have elapsed since the date of injury.  
 88.27  If the notice is not given before the 80 weeks, the period of 
 88.28  time within which to file a request for retraining is extended 
 88.29  by the number of days the notice is late, but in no event may a 
 88.30  request be filed later than 225 weeks after any combination of 
 88.31  temporary total disability or temporary partial disability 
 88.32  compensation have been paid.  The commissioner may assess a 
 88.33  penalty of $25 per day that the notice is late, up to a maximum 
 88.34  penalty of $2,000, against an employer or insurer for failure to 
 88.35  provide the notice.  The penalty is payable to the assigned risk 
 88.36  safety account. 
 89.1      Sec. 52.  Minnesota Statutes 1994, section 176.103, 
 89.2   subdivision 2, is amended to read: 
 89.3      Subd. 2.  [SCOPE.] The commissioner shall monitor the 
 89.4   medical and surgical treatment provided to injured employees, 
 89.5   the services of other health care providers and shall also 
 89.6   monitor hospital utilization as it relates to the treatment of 
 89.7   injured employees.  This monitoring shall include determinations 
 89.8   concerning the appropriateness of the service, whether the 
 89.9   treatment is necessary and effective, the proper cost of 
 89.10  services, the quality of the treatment, the right of providers 
 89.11  to receive payment under this chapter for services rendered or 
 89.12  the right to receive payment under this chapter for future 
 89.13  services.  Insurers and self-insurers must assist the 
 89.14  commissioner in this monitoring by reporting to the commissioner 
 89.15  cases of suspected excessive, inappropriate, or unnecessary 
 89.16  treatment.  The commissioner shall report specific cases of 
 89.17  suspected inappropriate, unnecessary, and excessive treatment to 
 89.18  the medical services review board.  The medical services review 
 89.19  board shall review those cases and make a determination of 
 89.20  whether there is inappropriate, unnecessary, or excessive 
 89.21  treatment based on rules adopted by the commissioner in 
 89.22  consultation with the medical services review board.  The 
 89.23  determination of the board is not subject to the contested case 
 89.24  provisions of the administrative procedure act in chapter 14.  
 89.25  An affected provider shall be given notice and an opportunity to 
 89.26  be heard before the board prior to the board reporting its 
 89.27  findings and conclusions.  The board shall report its findings 
 89.28  and conclusions to the commissioner.  The findings and 
 89.29  conclusions of the board are binding on the commissioner.  The 
 89.30  commissioner shall order a sanction if the board has concluded 
 89.31  there was inappropriate, unnecessary, or excessive treatment.  
 89.32  The commissioner in consultation with the medical services 
 89.33  review board shall adopt rules defining standards of treatment 
 89.34  including inappropriate, unnecessary, or excessive treatment and 
 89.35  the sanctions to be imposed for inappropriate, unnecessary, or 
 89.36  excessive treatment.  The sanctions imposed may include, without 
 90.1   limitation, a warning, a restriction on providing treatment, 
 90.2   requiring preauthorization by the board for a plan of treatment, 
 90.3   and suspension from receiving compensation for the provision of 
 90.4   treatment under chapter 176.  The commissioner's authority under 
 90.5   this section also includes the authority to make determinations 
 90.6   regarding any other activity involving the questions of 
 90.7   utilization of medical services, and any other determination the 
 90.8   commissioner deems necessary for the proper administration of 
 90.9   this section, but does not include the authority to make the 
 90.10  initial determination of primary liability, except as provided 
 90.11  by section 176.305. 
 90.12     Sec. 53.  Minnesota Statutes 1994, section 176.103, 
 90.13  subdivision 3, is amended to read: 
 90.14     Subd. 3.  [MEDICAL SERVICES REVIEW BOARD; SELECTION; 
 90.15  POWERS.] (a) There is created a medical services review board 
 90.16  composed of the commissioner or the commissioner's designee as 
 90.17  an ex officio member, two persons representing chiropractic, one 
 90.18  person representing hospital administrators, one physical 
 90.19  therapist, and six physicians representing different specialties 
 90.20  which the commissioner determines are the most frequently 
 90.21  utilized by injured employees.  The board shall also have one 
 90.22  person representing employees, one person representing employers 
 90.23  or insurers, and one person representing the general public.  
 90.24  The members shall be appointed by the commissioner and shall be 
 90.25  governed by section 15.0575.  Terms of the board's members may 
 90.26  be renewed.  The board may appoint from its members whatever 
 90.27  subcommittees it deems appropriate.  
 90.28     The commissioner may appoint alternates for one-year terms 
 90.29  to serve as a member when a member is unavailable.  The number 
 90.30  of alternates shall not exceed one chiropractor, one physical 
 90.31  therapist, one hospital administrator, three physicians, one 
 90.32  employee representative, one employer or insurer representative, 
 90.33  and one representative of the general public. 
 90.34     The board shall review clinical results for adequacy and 
 90.35  recommend to the commissioner scales for disabilities and 
 90.36  apportionment.  
 91.1      The board shall review and recommend to the commissioner 
 91.2   rates for individual clinical procedures and aggregate costs.  
 91.3   The board shall assist the commissioner in accomplishing public 
 91.4   education.  
 91.5      In evaluating the clinical consequences of the services 
 91.6   provided to an employee by a clinical health care provider, the 
 91.7   board shall consider the following factors in the priority 
 91.8   listed:  
 91.9      (1) the clinical effectiveness of the treatment; 
 91.10     (2) the clinical cost of the treatment; and 
 91.11     (3) the length of time of treatment.  
 91.12     The board shall advise the commissioner on the adoption of 
 91.13  rules regarding all aspects of medical care and services 
 91.14  provided to injured employees.  
 91.15     (b) The medical services review board may upon petition 
 91.16  from the commissioner and after hearing, issue a warning, a 
 91.17  penalty of $200 per violation, a restriction on providing 
 91.18  treatment that requires preauthorization by the board, 
 91.19  commissioner, or compensation judge for a plan of treatment, 
 91.20  disqualify, or suspend a provider from receiving payment for 
 91.21  services rendered under this chapter if a provider has violated 
 91.22  any part of this chapter or rule adopted under this chapter, or 
 91.23  where there has been a pattern of, or an egregious case of, 
 91.24  inappropriate, unnecessary, or excessive treatment by a provider.
 91.25  The hearings are initiated by the commissioner under the 
 91.26  contested case procedures of chapter 14.  The board shall make 
 91.27  the final decision following receipt of the recommendation of 
 91.28  the administrative law judge.  The board's decision is 
 91.29  appealable to the workers' compensation court of appeals in the 
 91.30  manner provided by section 176.421. 
 91.31     (c) The board may adopt rules of procedure.  The rules may 
 91.32  be joint rules with the rehabilitation review panel.  
 91.33     Sec. 54.  Minnesota Statutes 1994, section 176.104, 
 91.34  subdivision 1, is amended to read: 
 91.35     Subdivision 1.  [DISPUTE.] If there exists a dispute 
 91.36  regarding medical causation or whether an injury arose out of 
 92.1   and in the course and scope of employment and an employee has 
 92.2   been disabled for the requisite time under section 176.102, 
 92.3   subdivision 4, is otherwise eligible for rehabilitation services 
 92.4   under section 176.102 prior to determination of liability, the 
 92.5   employee shall be referred by the commissioner to the 
 92.6   department's vocational rehabilitation unit which shall provide 
 92.7   rehabilitation consultation if appropriate.  The services 
 92.8   provided by the department's vocational rehabilitation unit and 
 92.9   the scope and term of the rehabilitation are governed by section 
 92.10  176.102 and rules adopted pursuant to that section.  
 92.11  Rehabilitation costs and services under this subdivision shall 
 92.12  be monitored by the commissioner. 
 92.13     Sec. 55.  Minnesota Statutes 1994, section 176.106, is 
 92.14  amended to read: 
 92.15     176.106 [ADMINISTRATIVE CONFERENCE.] 
 92.16     Subdivision 1.  [SCOPE.] All determinations by the 
 92.17  commissioner or the commissioner's designee pursuant to section 
 92.18  176.102, 176.103, 176.135, or 176.136 shall be in accordance 
 92.19  with the procedures contained in this section.  
 92.20     Subd. 2.  [REQUEST FOR CONFERENCE.] Any party may request 
 92.21  an administrative conference by filing a request on a form 
 92.22  prescribed by the commissioner.  
 92.23     Subd. 3.  [CONFERENCE.] The matter shall be scheduled for 
 92.24  an administrative conference within 60 days after receipt of the 
 92.25  request for a conference.  Notice of the conference shall be 
 92.26  served on all parties no later than 14 days prior to the 
 92.27  conference, unless the commissioner determines that a conference 
 92.28  shall not be held.  The commissioner may order an administrative 
 92.29  conference before the commissioner's designee whether or not a 
 92.30  request for conference is filed.  
 92.31     The commissioner may refuse to hold an administrative 
 92.32  conference and refer the matter for a settlement or pretrial 
 92.33  conference or may certify the matter to the office of 
 92.34  administrative hearings for a full hearing before a compensation 
 92.35  judge.  
 92.36     Subd. 4.  [APPEARANCES.] All parties shall appear either 
 93.1   personally, by telephone, by representative, or by written 
 93.2   submission.  The commissioner commissioner's designee shall 
 93.3   determine the issues in dispute based upon the information 
 93.4   available at the conference. 
 93.5      Subd. 5.  [DECISION.] A written decision shall be issued by 
 93.6   the commissioner or an authorized representative commissioner's 
 93.7   designee determining all issues considered at the conference or 
 93.8   if a conference was not held, based on the written submissions.  
 93.9   Disputed issues of fact shall be determined by a preponderance 
 93.10  of the evidence.  The decision must be issued within 30 days 
 93.11  after the close of the conference or if no conference was held, 
 93.12  within 60 days after receipt of the request for conference.  The 
 93.13  decision must include a statement indicating the right to 
 93.14  request a de novo hearing before a compensation judge and how to 
 93.15  initiate the request.  
 93.16     Subd. 6.  [PENALTY.] At a conference, if the insurer does 
 93.17  not provide a specific reason for nonpayment of the items in 
 93.18  dispute, the commissioner commissioner's designee may assess a 
 93.19  penalty of $300 payable to the assigned risk safety account, 
 93.20  unless it is determined that the reason for the lack of 
 93.21  specificity was the failure of the insurer, upon timely request, 
 93.22  to receive information necessary to remedy the lack of 
 93.23  specificity.  This penalty is in addition to any penalty that 
 93.24  may be applicable for nonpayment.  
 93.25     Subd. 7.  [REQUEST FOR HEARING.] Any party aggrieved by the 
 93.26  decision of the commissioner commissioner's designee may request 
 93.27  a formal hearing by filing the request with the commissioner and 
 93.28  serving the request on all parties no later than 30 days after 
 93.29  the decision; provided, however, that the commissioner shall 
 93.30  review a decision of the commissioner's designee regarding a 
 93.31  claim for a medical benefit of $1500 or less and the 
 93.32  commissioner's decision shall be final.  The request Requests on 
 93.33  other issues shall be referred to the office of administrative 
 93.34  hearings for a de novo hearing before a compensation 
 93.35  judge.  Except where the only issues to be determined pursuant 
 93.36  to this section involve liability for past treatment or services 
 94.1   that will not affect entitlement to ongoing or future proposed 
 94.2   treatment or services under section 176.102 or 176.135, the 
 94.3   commissioner shall refer a timely request to the office of 
 94.4   administrative hearings within five working days after filing of 
 94.5   the request and the hearing at the office of administrative 
 94.6   hearings must be held on the first date that all parties are 
 94.7   available but not later than 60 days after the office of 
 94.8   administrative hearings receives the matter. Following the 
 94.9   hearing, the compensation judge must issue the decision within 
 94.10  30 days.  The decision of the compensation judge is appealable 
 94.11  pursuant to section 176.421. 
 94.12     Subd. 8.  [DENIAL OF PRIMARY LIABILITY.] The commissioner 
 94.13  does not have authority to make determinations relating to 
 94.14  medical or rehabilitation benefits when there is a genuine 
 94.15  dispute over whether the injury initially arose out of and in 
 94.16  the course of employment, except as provided by section 176.305. 
 94.17     Subd. 9.  [SUBSEQUENT CAUSATION ISSUES.] If initial 
 94.18  liability for an injury has been admitted or established and an 
 94.19  issue subsequently arises regarding causation between the 
 94.20  employee's condition and the work injury, the commissioner may 
 94.21  make the subsequent causation determination subject to de novo 
 94.22  hearing by a compensation judge with a right to review by the 
 94.23  court of appeals, as provided in this chapter.  
 94.24     Sec. 56.  [176.107] [TELECONFERENCES.] 
 94.25     The division, department, office, or the court of appeals 
 94.26  may, at its discretion, conduct mediation sessions, 
 94.27  administrative conferences, settlement conferences, or hearings 
 94.28  as provided in this chapter in person, by telephone, or by 
 94.29  visual or audio teleconferencing methods. 
 94.30     Sec. 57.  [176.108] [LIGHT-DUTY WORK POOLS.] 
 94.31     Employers may form light-duty work pools for the purpose of 
 94.32  encouraging the return to work of injured employees.  The 
 94.33  commissioner may adopt emergency and permanent rules necessary 
 94.34  to implement this section. 
 94.35     Sec. 58.  Minnesota Statutes 1994, section 176.129, 
 94.36  subdivision 9, is amended to read: 
 95.1      Subd. 9.  [POWERS OF FUND.] In addition to powers granted 
 95.2   to the special compensation fund by this chapter the fund may do 
 95.3   the following:  
 95.4      (a) sue and be sued in its own name; 
 95.5      (b) intervene in or commence an action under this chapter 
 95.6   or any other law, including, but not limited to, intervention or 
 95.7   action as a subrogee to the division's right in a third-party 
 95.8   action, any proceeding under this chapter in which liability of 
 95.9   the special compensation fund is an issue, or any proceeding 
 95.10  which may result in other liability of the fund or to protect 
 95.11  the legal right of the fund; 
 95.12     (c) enter into settlements including but not limited to 
 95.13  structured, annuity purchase agreements with appropriate parties 
 95.14  under this chapter;.  Notwithstanding any other provision of 
 95.15  this chapter, any settlement may provide that the fund partially 
 95.16  or totally denies liability for payment of benefits, and no 
 95.17  determination of employer insurance status and liability under 
 95.18  section 176.183, subdivision 2, shall be required for approval 
 95.19  of the stipulation for a settlement; 
 95.20     (d) contract with another party to administer the special 
 95.21  compensation fund; 
 95.22     (e) take any other action which an insurer is permitted by 
 95.23  law to take in operating within this chapter; and 
 95.24     (f) conduct a financial audit of indemnity claim payments 
 95.25  and assessments reported to the fund.  This may be contracted by 
 95.26  the fund to a private auditing firm. 
 95.27     Sec. 59.  Minnesota Statutes 1994, section 176.129, 
 95.28  subdivision 10, is amended to read: 
 95.29     Subd. 10.  [PENALTY.] Sums paid to the commissioner 
 95.30  pursuant to this section shall be in the manner prescribed by 
 95.31  the commissioner.  The commissioner may impose a penalty payable 
 95.32  to the assigned risk safety account of up to 15 percent of the 
 95.33  amount due under this section but not less than $500 $1,000 in 
 95.34  the event payment is not made in the manner prescribed.  
 95.35     Sec. 60.  Minnesota Statutes 1994, section 176.130, 
 95.36  subdivision 9, is amended to read: 
 96.1      Subd. 9.  [FALSE REPORTS.] Any person or entity that, for 
 96.2   the purpose of evading payment of the assessment or avoiding the 
 96.3   reimbursement, or any part of it, makes a false report under 
 96.4   this section shall pay to the assigned risk safety account, in 
 96.5   addition to the assessment, a penalty of 50 75 percent of the 
 96.6   amount of the assessment.  A person who knowingly makes or signs 
 96.7   a false report, or who knowingly submits other false 
 96.8   information, is guilty of a misdemeanor.  
 96.9      Sec. 61.  Minnesota Statutes 1994, section 176.135, 
 96.10  subdivision 1, is amended to read: 
 96.11     Subdivision 1.  [MEDICAL, PSYCHOLOGICAL, CHIROPRACTIC, 
 96.12  PODIATRIC, SURGICAL, HOSPITAL.] (a) The employer shall furnish 
 96.13  any medical, psychological, chiropractic, podiatric, surgical 
 96.14  and hospital treatment, including nursing, medicines, medical, 
 96.15  chiropractic, podiatric, and surgical supplies, crutches and 
 96.16  apparatus, including artificial members, or, at the option of 
 96.17  the employee, if the employer has not filed notice as 
 96.18  hereinafter provided, Christian Science treatment in lieu of 
 96.19  medical treatment, chiropractic medicine and medical supplies, 
 96.20  as may reasonably be required at the time of the injury and any 
 96.21  time thereafter to cure and relieve from the effects of the 
 96.22  injury.  This treatment shall include treatments necessary to 
 96.23  physical rehabilitation. 
 96.24     (b) The employer shall pay for the reasonable value of 
 96.25  nursing services provided by a member of the employee's family 
 96.26  in cases of permanent total disability.  
 96.27     (c) Exposure to rabies is an injury and an employer shall 
 96.28  furnish preventative treatment to employees exposed to rabies. 
 96.29     (d) The employer shall furnish replacement or repair for 
 96.30  artificial members, glasses, or spectacles, artificial eyes, 
 96.31  podiatric orthotics, dental bridge work, dentures or artificial 
 96.32  teeth, hearing aids, canes, crutches, or wheel chairs damaged by 
 96.33  reason of an injury arising out of and in the course of the 
 96.34  employment.  For the purpose of this paragraph, "injury" 
 96.35  includes damage wholly or in part to an artificial member.  In 
 96.36  case of the employer's inability or refusal seasonably to 
 97.1   provide the items required to be provided under this paragraph, 
 97.2   the employer is liable for the reasonable expense incurred by or 
 97.3   on behalf of the employee in providing the same, including costs 
 97.4   of copies of any medical records or medical reports that are in 
 97.5   existence, obtained from health care providers, and that 
 97.6   directly relate to the items for which payment is sought under 
 97.7   this chapter, limited to the charges allowed by subdivision 7, 
 97.8   and attorney fees incurred by the employee.  Attorney's fees 
 97.9   shall be determined on an hourly basis according to the criteria 
 97.10  in section 176.081, subdivision 5.  
 97.11     (e) Both the commissioner and the compensation judges have 
 97.12  authority to make determinations under this section in 
 97.13  accordance with sections 176.106 and 176.305.  
 97.14     (f) An employer may require that the treatment and supplies 
 97.15  required to be provided by an employer by this section be 
 97.16  received in whole or in part from a managed care plan certified 
 97.17  under section 176.1351 except as otherwise provided by that 
 97.18  section. 
 97.19     Sec. 62.  Minnesota Statutes 1994, section 176.1351, 
 97.20  subdivision 1, is amended to read: 
 97.21     Subdivision 1.  [APPLICATION.] Any person or entity, other 
 97.22  than a workers' compensation insurer or an employer for its own 
 97.23  employees, may make written application to the commissioner to 
 97.24  have a plan certified that provides management of quality 
 97.25  treatment to injured workers for injuries and diseases 
 97.26  compensable under this chapter.  Specifically, and without 
 97.27  limitation, an entity licensed under chapter 62C or 62D or a 
 97.28  preferred provider organization that is subject to chapter 72A 
 97.29  is eligible for certification under this section.  Each 
 97.30  application for certification shall be accompanied by a 
 97.31  reasonable fee prescribed by the commissioner which shall be 
 97.32  deposited in the special compensation fund.  A plan may be 
 97.33  certified to provide services in a limited geographic area.  A 
 97.34  certificate is valid for the period the commissioner prescribes 
 97.35  unless revoked or suspended.  Application for certification 
 97.36  shall be made in the form and manner and shall set forth 
 98.1   information regarding the proposed plan for providing services 
 98.2   as the commissioner may prescribe.  The information shall 
 98.3   include, but not be limited to: 
 98.4      (1) a list of the names of all health care providers who 
 98.5   will provide services under the managed care plan, together with 
 98.6   appropriate evidence of compliance with any licensing or 
 98.7   certification requirements for those providers to practice in 
 98.8   this state; and 
 98.9      (2) a description of the places and manner of providing 
 98.10  services under the plan. 
 98.11     Sec. 63.  Minnesota Statutes 1994, section 176.1351, 
 98.12  subdivision 5, is amended to read: 
 98.13     Subd. 5.  [REVOCATION, SUSPENSION, AND REFUSAL TO CERTIFY; 
 98.14  PENALTIES AND ENFORCEMENT.] (a) The commissioner shall refuse to 
 98.15  certify or shall revoke or suspend the certification of a 
 98.16  managed care plan if the commissioner finds that the plan for 
 98.17  providing medical or health care services fails to meet the 
 98.18  requirements of this section, or service under the plan is not 
 98.19  being provided in accordance with the terms of a certified plan. 
 98.20     (b) In lieu of or in addition to suspension or revocation 
 98.21  under paragraph (a), the commissioner may, for any noncompliance 
 98.22  with the managed care plan as certified or any violation of a 
 98.23  statute or rule applicable to a managed care plan, assess an 
 98.24  administrative penalty payable to the special compensation fund 
 98.25  in an amount up to $25,000 for each violation or incidence of 
 98.26  noncompliance.  The commissioner may adopt emergency or 
 98.27  permanent rules necessary to implement this subdivision.  In 
 98.28  determining the level of an administrative penalty, the 
 98.29  commissioner shall consider the following factors: 
 98.30     (1) the number of workers affected or potentially affected 
 98.31  by the violation or noncompliance; 
 98.32     (2) the effect or potential effect of the violation or 
 98.33  noncompliance on workers' health, access to health services, or 
 98.34  workers' compensation benefits; 
 98.35     (3) the effect or potential effect of the violation or 
 98.36  noncompliance on workers' understanding of their rights and 
 99.1   obligations under the workers' compensation law and rules; 
 99.2      (4) whether the violation or noncompliance is an isolated 
 99.3   incident or part of a pattern of violations; and 
 99.4      (5) the potential or actual economic benefits derived by 
 99.5   the managed care plan or a participating provider by virtue of 
 99.6   the violation or noncompliance. 
 99.7      The commissioner shall give written notice to the managed 
 99.8   care plan of the penalty assessment and the reasons for the 
 99.9   penalty.  The managed care plan has 30 days from the date the 
 99.10  penalty notice is issued within which to file a written request 
 99.11  for an administrative hearing and review of the commissioner's 
 99.12  determination pursuant to section 176.85, subdivision 1. 
 99.13     (c) If the commissioner, for any reason, has cause to 
 99.14  believe that a managed care plan has or may violate a statute or 
 99.15  rule or a provision of the managed care plan as certified, the 
 99.16  commissioner may, before commencing action under paragraph (a) 
 99.17  or (b), call a conference with the managed care plan and other 
 99.18  persons who may be involved in the suspected violation or 
 99.19  noncompliance for the purpose of ascertaining the facts relating 
 99.20  to the suspected violation or noncompliance and arriving at an 
 99.21  adequate and effective means of correcting or preventing the 
 99.22  violation or noncompliance.  The commissioner may enter into 
 99.23  stipulated consent agreements with the managed care plan for 
 99.24  corrective or preventive action or the amount of the penalty to 
 99.25  be paid.  Proceedings under this paragraph shall not be governed 
 99.26  by any formal procedural requirements, and may be conducted in a 
 99.27  manner the commissioner deems appropriate under the 
 99.28  circumstances. 
 99.29     (d) The commissioner may issue an order directing a managed 
 99.30  care plan or a representative of a managed care plan to cease 
 99.31  and desist from engaging in any act or practice that is not in 
 99.32  compliance with the managed care plan as certified, or that it 
 99.33  is in violation of an applicable statute or rule.  Within 30 
 99.34  days of service of the order, the managed care plan may request 
 99.35  review of the cease and desist order by an administrative law 
 99.36  judge pursuant to chapter 14.  The decision of the