1.1                          A bill for an act
  1.2             relating to workers' compensation; providing for 
  1.3             comprehensive reform of the workers' compensation 
  1.4             system; providing a group insurance mechanism; 
  1.5             regulating benefits; providing safety incentives and 
  1.6             assistance; strengthening antifraud tools; regulating 
  1.7             independent contractors; regulating the reinsurance 
  1.8             association; appropriating money; amending Minnesota 
  1.9             Statutes 1994, sections 13.69, subdivision 1; 79.085; 
  1.10            79.211, subdivision 1; 79.34, subdivision 2; 79.35; 
  1.11            79A.01, by adding subdivisions; 79A.02, subdivisions 1 
  1.12            and 4; 79A.03, subdivisions 2, 6, 7, 8, 9, and 11; 
  1.13            79A.08; 175.16; 176.011, subdivision 18; 176.021, 
  1.14            subdivisions 3 and 3a; 176.041, subdivision 1; 
  1.15            176.061, subdivision 10; 176.101, subdivisions 1, 2, 
  1.16            6, and by adding a subdivision; 176.105, subdivisions 
  1.17            2 and 4; 176.106, subdivision 7; 176.132, subdivision 
  1.18            2; 176.135, subdivision 2; 176.179; 176.181, 
  1.19            subdivision 8; 176.185, subdivision 1; 176.191, 
  1.20            subdivisions 5, 7, and by adding a subdivision; 
  1.21            176.221, subdivisions 1 and 6a; 176.232; 176.238, 
  1.22            subdivision 6; 268.08, subdivision 3; 299C.46, 
  1.23            subdivision 2; 626.05, subdivision 2; 626.11; 626.13; 
  1.24            and 626.84, subdivision 1; proposing coding for new 
  1.25            law in Minnesota Statutes, chapters 79; and 176; 
  1.26            proposing coding for new law as Minnesota Statutes, 
  1.27            chapter 79B; repealing Minnesota Statutes 1994, 
  1.28            sections 79.01, subdivision 8; 79.50; 79.51; 79.52; 
  1.29            79.53; 79.54; 79.55; 79.56; 79.57; 79.58; 79.59; 
  1.30            79.60; 79.61; 79.62; 176.011, subdivisions 25 and 26; 
  1.31            176.101, subdivisions 3a, 3b, 3c, 3d, 3e, 3f, 3g, 3h, 
  1.32            3i, 3j, 3k, 3l, 3m, 3n, 3o, 3p, 3q, 3r, 3s, 3t, and 
  1.33            3u; Laws 1990, chapter 521, section 4. 
  1.34  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.35                             ARTICLE 1
  1.36                    MUTUAL GROUP SELF-INSURANCE
  1.37     Section 1.  [79B.01] [DEFINITIONS.] 
  1.38     Subdivision 1.  [SCOPE.] For the purposes of this chapter, 
  1.39  the terms defined in this section have the meanings given them. 
  2.1      Subd. 2.  [ACCOUNTANT.] "Accountant" means a certified 
  2.2   public accountant who is not an employee of any member of the 
  2.3   mutual self-insurance group and is not affiliated with any 
  2.4   individual or organization providing services other than 
  2.5   accounting services to the group. 
  2.6      Subd. 3.  [ACTUARY.] "Actuary" means an individual who has 
  2.7   attained the status of associate or fellow of the casualty 
  2.8   actuarial society who is not an employee of any member of the 
  2.9   mutual self-insurance group and is not affiliated with any 
  2.10  individual or organization providing services other than 
  2.11  actuarial services to the group. 
  2.12     Subd. 4.  [CERTIFICATE OF DEFAULT.] "Certificate of default"
  2.13  means a notice issued by the commissioner of commerce based upon 
  2.14  information received from the commissioner of labor and 
  2.15  industry, that a mutual self-insurance group has failed to pay 
  2.16  compensation as required by chapter 176. 
  2.17     Subd. 5.  [COMMISSIONER.] "Commissioner" means the 
  2.18  commissioner of commerce except where specifically stated 
  2.19  otherwise. 
  2.20     Subd. 6.  [COMMON CLAIMS FUND.] "Common claims fund" means 
  2.21  the cash, cash equivalents, or investment accounts maintained by 
  2.22  the mutual self-insurance group to pay its workers' compensation 
  2.23  liabilities. 
  2.24     Subd. 7.  [DEFICIT.] "Deficit" as regards the mutual group 
  2.25  self-insurance fund means the excess of the amount necessary to 
  2.26  fulfill all obligations under chapter 176, for all fund years 
  2.27  that the group has been in operation over all assets of the 
  2.28  group.  For purposes of this definition, provision must be made 
  2.29  for the estimated liability for future special compensation fund 
  2.30  assessments on claims incurred prior to the determination of the 
  2.31  deficit.  No discounting of any liabilities of the mutual 
  2.32  self-insurance group shall be permitted in the determination of 
  2.33  the deficit of the group. 
  2.34     Subd. 8.  [DIRECTORS.] "Directors" means the board of 
  2.35  directors of a mutual self-insurance group. 
  2.36     Subd. 9.  [FISCAL AGENT.] "Fiscal agent" means an 
  3.1   individual or organization appointed and under the direction of 
  3.2   the board of directors to maintain and administer the mutual 
  3.3   self-insurance groups' common claims fund. 
  3.4      Subd. 10.  [FUND YEAR.] "Fund year" for mutual 
  3.5   self-insurance groups means that period of time for purposes of 
  3.6   determining any deficit or surplus.  A separate fund year shall 
  3.7   be designated for each calendar year in which the mutual 
  3.8   self-insurance group operates.  Premiums earned during the fund 
  3.9   year and any claim arising within the accident year upon which 
  3.10  the fund year is based shall be included in that fund year. 
  3.11     Subd. 11.  [INCURRED LIABILITIES FOR THE PAYMENT OF 
  3.12  COMPENSATION.] "Incurred liabilities for the payment of 
  3.13  compensation" means the sum of both of the following: 
  3.14     (1) an estimate of future workers' compensation benefits, 
  3.15  including medical and indemnity; and 
  3.16     (2) an amount determined by the commissioner to be 
  3.17  reasonably adequate to assure the administration of claims, 
  3.18  including legal costs, but not to exceed ten percent of future 
  3.19  workers' compensation benefits. 
  3.20     Subd. 12.  [INSOLVENT MUTUAL SELF-INSURER.] "Insolvent 
  3.21  mutual self-insurer" means a mutual self-insurance group that:  
  3.22  (1) failed to pay compensation as a result of a declaration of 
  3.23  bankruptcy or insolvency by a court of competent jurisdiction 
  3.24  and whose security deposit has been called by the commissioner 
  3.25  under chapter 176; or (2) failed to pay compensation and has 
  3.26  been issued a certificate of default by the commissioner and 
  3.27  whose security deposit has been called by the commissioner 
  3.28  pursuant to chapter 176.  
  3.29     Subd. 13.  [MEMBER.] "Member" means an employer that 
  3.30  participates in a mutual self-insurance group. 
  3.31     Subd. 14.  [MUTUAL SELF-INSURANCE GROUP.] "Mutual 
  3.32  self-insurance group" means a group of employers that are 
  3.33  self-insured for workers' compensation under chapter 176 and 
  3.34  elects to operate under this chapter rather than chapter 79A. 
  3.35     Subd. 15.  [MUTUAL SELF-INSURANCE GROUP SECURITY 
  3.36  FUND.] "Mutual self-insurance group security fund" means the 
  4.1   mutual self-insurance group security fund established pursuant 
  4.2   to this chapter. 
  4.3      Subd. 16.  [SERVICE COMPANY.] "Service company" means a 
  4.4   vendor of risk management services or a licensed third-party 
  4.5   administrator pursuant to section 60A.23, subdivision 8. 
  4.6      Subd. 17.  [SPECIAL COMPENSATION FUND ASSESSMENT.] "Special 
  4.7   compensation fund assessment" are those sums payable as set 
  4.8   forth in section 176.129, subdivisions 3 and 4a. 
  4.9      Subd. 18.  [SURPLUS.] "Surplus" as regards the mutual 
  4.10  self-insurance group fund means the excess of all group assets 
  4.11  over the amount necessary to fulfill all obligations under 
  4.12  chapter 176, for all fund years that the group has been in 
  4.13  operation.  Provision must be made for the estimated liability 
  4.14  for future special compensation fund assessments on claims 
  4.15  incurred prior to the determination of surplus.  No discounting 
  4.16  of any liabilities of the mutual self-insurance group shall be 
  4.17  permitted in the determination of the surplus of the group. 
  4.18     Subd. 19.  [TRUSTEES.] "Trustees" means the board of 
  4.19  trustees of the mutual self-insurance group security fund. 
  4.20     Subd. 20.  [WORKERS' COMPENSATION REINSURANCE ASSOCIATION; 
  4.21  WCRA.] "Workers' compensation reinsurance association" or "WCRA" 
  4.22  means that association governed by sections 79.34 to 79.40. 
  4.23     Sec. 2.  [79B.02] [ELIGIBILITY REQUIREMENTS FOR MUTUAL 
  4.24  SELF-INSURANCE GROUPS.] 
  4.25     Subdivision 1.  [GROUP ELIGIBILITY.] A mutual 
  4.26  self-insurance group shall consist of employers in the same 
  4.27  industry, trade, civic, cooperative, or professional group or 
  4.28  employers having any other reasonable basis to self-insure. 
  4.29     Subd. 2.  [MEMBERSHIP ELIGIBILITY.] A mutual self-insurance 
  4.30  group may only admit employers who meet the eligibility 
  4.31  requirements established by the group including financial 
  4.32  criteria, underwriting guidelines, risk profile, and any other 
  4.33  requirements stated in the mutual self-insurance group's bylaws 
  4.34  or plan of operation. 
  4.35     Sec. 3.  [79B.03] [MUTUAL SELF-INSURANCE GROUP 
  4.36  APPLICATION.] 
  5.1      Subdivision 1.  [PROCEDURE.] (a) Groups proposing to become 
  5.2   licensed as mutual self-insurance groups must complete and 
  5.3   submit an application on a form or forms prescribed by the 
  5.4   commissioner and pay a $2,500 nonrefundable application fee.  
  5.5      (b) The commissioner shall grant or deny the group's 
  5.6   application to self-insure within 60 days after a complete 
  5.7   application has been filed, provided that the time may be 
  5.8   extended for an additional 30 days upon 15 days' prior notice to 
  5.9   the applicant. 
  5.10     Subd. 2.  [REQUIRED DOCUMENTS.] All applications must be 
  5.11  accompanied by the following: 
  5.12     (a) A detailed business plan including the risk profile of 
  5.13  the proposed membership, underwriting guidelines, marketing 
  5.14  plan, minimum financial criteria for each member, and financial 
  5.15  projections for the first year of operation.  The marketing plan 
  5.16  shall include an analysis outlining how the mutual 
  5.17  self-insurance group will attain an annual premium volume of at 
  5.18  least $1,000,000 within the first three years of operation.  
  5.19  Financial projections shall include balance sheet, income 
  5.20  statement, statement of cash flows, and any other such items as 
  5.21  the commissioner may require. 
  5.22     (b) A rating plan indicating the method in which premiums 
  5.23  are to be charged to members including manual rates to be used 
  5.24  for each relevant payroll classification code.  The rating plan 
  5.25  shall be reviewed by an actuary and shall include an analysis of 
  5.26  the actuarial soundness of the plan and the effect of the plan 
  5.27  on fund solvency and liquidity.  Premium volume discounts and a 
  5.28  schedule rating plan will be permitted if they can be shown to 
  5.29  be actuarially sound and a description of how they will be used 
  5.30  is included with the application.  In developing its rating 
  5.31  plan, the mutual self-insurance group shall base its plan on the 
  5.32  Minnesota workers' compensation insurers association's manual of 
  5.33  rules, rates, and classifications approved for use in Minnesota 
  5.34  by the commissioner. 
  5.35     (c) A schedule indicating actual or anticipated operational 
  5.36  expenses of the mutual self-insurance group.  No authority to 
  6.1   self-insure will be granted unless at least 65 percent of total 
  6.2   revenues from all sources for any year of the mutual 
  6.3   self-insurance group's operation are available for the payment 
  6.4   of its claim and assessment obligations.  For purposes of this 
  6.5   calculation, claim and assessment obligations include the cost 
  6.6   of allocated loss expenses as well as special compensation fund 
  6.7   and mutual self-insurance group security fund assessments but 
  6.8   exclude the cost of unallocated loss expenses. 
  6.9      (d) An indemnity agreement from each member who will 
  6.10  participate in the mutual self-insurance group, signed by an 
  6.11  officer of each member, providing for joint and several 
  6.12  liability for all claims and expenses of all of the members of 
  6.13  the mutual self-insurance group arising in any fund year in 
  6.14  which the member was a participant on a form as specified in 
  6.15  section 79B.11. 
  6.16     (e) A copy of the mutual self-insurance group bylaws as 
  6.17  specified in section 79B.04, subdivision 2. 
  6.18     (f) A confirmation from the accountant of the mutual 
  6.19  self-insurance group indicating that the combined net worth of 
  6.20  all of the initial members is an amount at least equal to ten 
  6.21  times the group's retention level with the workers' compensation 
  6.22  reinsurance association. 
  6.23     Subd. 3.  [APPROVAL.] The commissioner shall approve an 
  6.24  application for self-insurance upon a determination that all of 
  6.25  the following conditions are met: 
  6.26     (1) a completed application and all required documents have 
  6.27  been submitted to the commissioner; 
  6.28     (2) the financial ability of mutual self-insurance group is 
  6.29  sufficient to fulfill all obligations that may arise under this 
  6.30  chapter or chapter 176; 
  6.31     (3) the annual premium of the mutual self-insurance group 
  6.32  to be charged to initial members is at least $500,000 and the 
  6.33  group's annual premium should grow to at least $1,000,000 within 
  6.34  three years; 
  6.35     (4) no individual member's premium comprises more than 20 
  6.36  percent of the entire mutual self-insurance group's annual 
  7.1   premium; 
  7.2      (5) the mutual self-insurance group has contracted with a 
  7.3   service company to administer its program; and 
  7.4      (6) the required securities or surety bond shall be on 
  7.5   deposit prior to the effective date of coverage for the mutual 
  7.6   self-insurance group. 
  7.7      Sec. 4.  [79B.04] [MUTUAL SELF-INSURANCE GROUP OPERATING 
  7.8   REQUIREMENTS.] 
  7.9      Subdivision 1.  [BOARD OF DIRECTORS.] (a) A mutual 
  7.10  self-insurance group shall elect a board of directors who shall 
  7.11  have complete authority over and control of the assets of the 
  7.12  group.  The board of directors will also be responsible for all 
  7.13  of the operations of the group. 
  7.14     (b) Members of the board of directors shall be owners, 
  7.15  officers, directors, partners, or employees of members of the 
  7.16  mutual self-insurance group. 
  7.17     (c) The directors must approve applications for membership 
  7.18  in the group. 
  7.19     Subd. 2.  [BYLAWS.] (a) The directors of each group shall 
  7.20  adopt a set of bylaws to govern the operation of the group.  
  7.21  Bylaws must specifically state the group's intention to operate 
  7.22  under this statute rather than chapter 79A.  All bylaws or 
  7.23  amendments to the bylaws must be approved by the commissioner. 
  7.24     (b) Bylaws must contain the following subjects: 
  7.25     (1) qualifications for group membership, including 
  7.26  underwriting considerations; 
  7.27     (2) the method for selecting the board of directors 
  7.28  including the directors' terms of office and the positions of 
  7.29  chairperson, secretary, and treasurer; 
  7.30     (3) the procedure for amending the bylaws; 
  7.31     (4) investment of all assets of the fund; 
  7.32     (5) frequency and extent of loss control or safety 
  7.33  engineering services provided to members; 
  7.34     (6) a schedule for payment and collection of premiums; 
  7.35     (7) expulsion procedures, including expulsion for 
  7.36  nonpayment of premiums and expulsion for excessive losses; 
  8.1      (8) delineation of authority granted to the fiscal agent; 
  8.2      (9) delineation of authority granted to the service 
  8.3   company; 
  8.4      (10) basis for determining premium contributions by 
  8.5   members, including any experience rating program, schedule 
  8.6   rating plan, or premium discount plan; 
  8.7      (11) procedures for resolving disputes between members of 
  8.8   the group, which shall not include submitting them to the 
  8.9   commissioner; and 
  8.10     (12) basis for determining distribution of any surplus to 
  8.11  the members or assessing the membership to make up any deficit. 
  8.12     (c) All groups shall file copies of its current bylaws with 
  8.13  the commissioner.  Any changes in the bylaws shall be filed with 
  8.14  the commissioner at least 30 days prior to their taking effect.  
  8.15  The commissioner may order the mutual self-insurance group to 
  8.16  rescind, revoke, or amend any bylaw. 
  8.17     Subd. 3.  [ANNUAL REVIEW.] The directors shall review at 
  8.18  least annually the following items for the purpose of 
  8.19  determining whether they are being adequately provided for: 
  8.20     (1) service company performance; 
  8.21     (2) loss control and safety engineering; 
  8.22     (3) investment policies; 
  8.23     (4) collection of delinquent debts; 
  8.24     (5) expulsion procedures; 
  8.25     (6) initial member review; 
  8.26     (7) fiscal agent performance; and 
  8.27     (8) claims handling and reporting. 
  8.28     Subd. 4.  [FINANCIAL STANDARDS.] Groups shall have and 
  8.29  maintain: 
  8.30     (1) combined net worth of all members in an amount at least 
  8.31  equal to ten times the group's selected retention limit of the 
  8.32  workers' compensation reinsurance association; and 
  8.33     (2) sufficient assets, net worth, and liquidity in the 
  8.34  group's common claims fund to promptly and completely meet all 
  8.35  obligations of its members under this chapter or chapter 176. 
  8.36     Subd. 5.  [RATES.] (a) The group may not vary its rating 
  9.1   practices from the rating plan most recently approved for use by 
  9.2   the commissioner.  The group may replace its rating plan with 
  9.3   another upon approval by the commissioner.  The group may change 
  9.4   its rating plan no more than once per year. 
  9.5      (b) A rating plan must indicate the method by which 
  9.6   premiums are to be charged to members including manual rates to 
  9.7   be used for each relevant payroll classification code.  The 
  9.8   rating plan must be reviewed by an actuary and include an 
  9.9   analysis of the actuarial soundness of the plan and the effect 
  9.10  of the plan on fund solvency and liquidity.  Premium volume 
  9.11  discounts and a schedule rating plan are permitted if they can 
  9.12  be shown to be actuarially sound and a description of how they 
  9.13  will be used is included with the application. 
  9.14     (c) In developing its rating plan, the mutual 
  9.15  self-insurance group shall base its plan on the Minnesota 
  9.16  workers' compensation insurers association's manual of rules, 
  9.17  rates, and classifications approved for use in Minnesota by the 
  9.18  commissioner. 
  9.19     Subd. 6.  [NEW MEMBERSHIP.] (a) The mutual self-insurance 
  9.20  group shall file with the commissioner the name of any new 
  9.21  employer that has been accepted in the group prior to the 
  9.22  initiation date of membership along with the member's signed 
  9.23  indemnity agreement and evidence the member has deposited 
  9.24  sufficient premiums with the group as required by the group's 
  9.25  bylaws or plan of operation.  The security deposit of the group 
  9.26  must be increased to an amount equal to 50 percent of the new 
  9.27  member's premium. 
  9.28     (b) An employer must belong to the group for at least one 
  9.29  year.  If a member voluntarily terminates its membership in a 
  9.30  group during the second or third year of membership, the group 
  9.31  shall assess the member at least the following penalties:  25 
  9.32  percent of the premium due from that member for that year if 
  9.33  termination occurs within the second year of membership, and 15 
  9.34  percent of the premium due from that member for that year if 
  9.35  termination occurs within the third year.  No penalty is 
  9.36  required if an employer's withdrawal is due to merger, 
 10.1   dissolution, sale of the company, or change in the type of 
 10.2   business.  Following the completion of three consecutive years 
 10.3   of membership in the group, withdrawal from the group is allowed 
 10.4   without penalty, provided that 30 days' advance written notice 
 10.5   is given to the board of directors of the group, and the group's 
 10.6   plan of operation or bylaws allow withdrawal without a penalty.  
 10.7   Any penalty assessed pursuant to this subdivision shall be paid 
 10.8   to the common claims fund. 
 10.9      Subd. 7.  [WITHDRAWAL OR EXPULSION.] Upon receipt of any 
 10.10  notice of a member to withdraw or a decision by the board of 
 10.11  directors to expel a member, the group must give immediate 
 10.12  notice to the commissioner.  If the combined net worth or 
 10.13  financial condition of the group members, excluding the 
 10.14  terminating or expelled member, fails to meet the requirements 
 10.15  specified in subdivision 4, the group must notify the 
 10.16  commissioner within 15 days. 
 10.17     Subd. 8.  [MUTUAL SELF-INSURANCE GROUP COMMON CLAIMS 
 10.18  FUND.] (a) Each group shall establish a common claims fund. 
 10.19     (b) Each group shall, not less than ten days prior to the 
 10.20  proposed effective date of the group, collect cash premiums from 
 10.21  each member equal to not less than 20 percent of the member's 
 10.22  annual workers' compensation premium to be paid into a common 
 10.23  claims fund, maintained by the group in a designated 
 10.24  depository.  The remaining balance of the member's premium shall 
 10.25  be paid to the group in a reasonable manner over the remainder 
 10.26  of the year.  Payments in subsequent years shall be made 
 10.27  according to the schedule in the business plan, classifications, 
 10.28  and rates approved for use by the commissioner. 
 10.29     (c) Each group shall initiate proceedings against a member 
 10.30  when that member becomes more than 15 days delinquent in any 
 10.31  payment of premium to the fund. 
 10.32     (d) Commingling of any assets of the common claims fund 
 10.33  with the assets of any individual member or with any other 
 10.34  account of the service company or fiscal agent unrelated to the 
 10.35  payment of workers' compensation liabilities incurred by the 
 10.36  group is prohibited. 
 11.1      Subd. 9.  [FISCAL AGENT.] (a) The group shall designate a 
 11.2   fiscal agent to administer the financial affairs of the fund.  
 11.3   The fiscal agent shall furnish a fidelity bond issued by a 
 11.4   licensed and admitted insurer, with the group as obligee, in an 
 11.5   amount sufficient to protect the fund against the 
 11.6   misappropriation or misuse of any money or securities.  The 
 11.7   fiscal agent shall not be an owner, officer, or employee of 
 11.8   either the service company or an affiliate of the service 
 11.9   company. 
 11.10     (b) All funds shall remain in the control of the group or 
 11.11  its fiscal agent.  One or more revolving funds for payment of 
 11.12  compensation benefits due may be established for the use by the 
 11.13  service company.  The service company shall furnish a fidelity 
 11.14  bond issued by a licensed and admitted insurer, covering its 
 11.15  employees, with the group as obligee, in an amount sufficient to 
 11.16  protect all money placed in the revolving fund.  If the fidelity 
 11.17  bond of the fiscal agent also covers the money in the revolving 
 11.18  fund, the service company is not required to furnish a fidelity 
 11.19  bond.  
 11.20     (c) No director, fiscal agent, or service company of the 
 11.21  group shall utilize any of the money collected as premiums for 
 11.22  any purpose unrelated to the operation of the group.  No 
 11.23  director, fiscal agent, or service company of the group shall 
 11.24  borrow any money from the group's fund. 
 11.25     Subd. 10.  [JOINT AND SEVERAL LIABILITY.] Each member of a 
 11.26  group shall be jointly and severally liable for the obligations 
 11.27  incurred by any member of the same group under chapter 176 for 
 11.28  any fund year in which the member was a participant of the 
 11.29  mutual self-insurance group. 
 11.30     Subd. 11.  [ANNUAL AUDIT.] The accounts and records of the 
 11.31  common claims fund must be audited annually.  Audits must be 
 11.32  made by an accountant, based on generally accepted accounting 
 11.33  principles and generally accepted auditing standards, and 
 11.34  supported by actuarial review and opinion of future contingent 
 11.35  liabilities.  The accountant must determine the amount of 
 11.36  deficit or surplus of the common claims fund.  All audits 
 12.1   required by this section must be filed with the commissioner 120 
 12.2   days after the close of the fiscal year of the group.  The 
 12.3   commissioner may require a special audit to be made at other 
 12.4   times if the financial stability of the fund or the adequacy of 
 12.5   its reserves is in question. 
 12.6      Subd. 12.  [INVESTMENTS.] (a) Any securities purchased by 
 12.7   the common claims fund shall be in denominations and with dates 
 12.8   of maturity to ensure securities may be redeemable at sufficient 
 12.9   time and in sufficient amounts to meet the fund's current and 
 12.10  long-term liabilities. 
 12.11     (b) Cash assets of the common claims fund may be invested 
 12.12  in the following securities: 
 12.13     (1) direct obligations of the United States government, 
 12.14  except mortgage-backed securities of the Government National 
 12.15  Mortgage Association; 
 12.16     (2) bonds, notes, debentures, and other instruments which 
 12.17  are obligations of agencies and instrumentalities of the United 
 12.18  States including, but not limited to, the federal National 
 12.19  Mortgage Association, the federal Home Loan Mortgage 
 12.20  Corporation, the federal Home Loan Bank, the Student Loan 
 12.21  Marketing Association, and the Farm Credit System, and their 
 12.22  successors, but not including collateralized mortgage 
 12.23  obligations or mortgage pass-through instruments; 
 12.24     (3) bonds or securities that are issued by the state of 
 12.25  Minnesota and that are secured by the full faith and credit of 
 12.26  the state; 
 12.27     (4) certificates of deposit which are insured by the 
 12.28  federal Deposit Insurance Corporation and are issued by a 
 12.29  Minnesota depository institution; 
 12.30     (5) obligations of, or instruments unconditionally 
 12.31  guaranteed by, Minnesota depository institutions whose long-term 
 12.32  debt rating is at least AA-, or Aa3, or their equivalent by at 
 12.33  least two nationally recognized rating agencies. 
 12.34     Subd. 13.  [ADMINISTRATION.] (a) The mutual self-insurance 
 12.35  group must secure administrative services from a service 
 12.36  company.  Services provided by the service company must include 
 13.1   claim handling, safety and loss control, and preparation of all 
 13.2   required regulatory reports. 
 13.3      (b) The service company management must demonstrate it has 
 13.4   experience with self-insured group administration and employs or 
 13.5   has under contract claim adjustors with Minnesota specific 
 13.6   workers' compensation claim handling experience. 
 13.7      (c) The service company retained by a group to administer 
 13.8   workers' compensation claims shall estimate the total accrued 
 13.9   liability of the group for the payment of compensation for the 
 13.10  group's annual report to the commissioner and shall make the 
 13.11  estimate both in good faith and with the exercise of a 
 13.12  reasonable degree of care. 
 13.13     Subd. 14.  [MARKETING AND COMMUNICATIONS.] A group's 
 13.14  applications, coverage documents, quotations, and all marketing 
 13.15  materials must prominently display information indicating that 
 13.16  the group is a self-insured program, that members are jointly 
 13.17  and severally liable for the obligations of the group, and that 
 13.18  members will be assessed for any deficits created by the group. 
 13.19     Subd. 15.  [REINSURANCE.] (a) A group must purchase 
 13.20  specific excess coverage with the workers' compensation 
 13.21  reinsurance association at the lower retention level for its 
 13.22  first three years of operation.  After that time it may select 
 13.23  the higher retention level with prior notice given to and 
 13.24  approval of the commissioner. 
 13.25     (b) The commissioner may require a group to purchase 
 13.26  aggregate excess coverage.  Any reinsurance or excess coverage 
 13.27  purchased other than that of the workers' compensation 
 13.28  reinsurance association must be secured with an insurance 
 13.29  company or reinsurer licensed to underwrite that coverage in 
 13.30  Minnesota and maintains at least an "A" rating with the A.M. 
 13.31  Best rating organization. 
 13.32     Subd. 16.  [DISBURSEMENT OF FUND SURPLUS.] (a) One hundred 
 13.33  percent of any surplus money for a fund year in excess of 125 
 13.34  percent of the amount necessary to fulfill all obligations under 
 13.35  the workers' compensation act, chapter 176, for that fund year 
 13.36  may be declared refundable to a member at any time.  The date 
 14.1   shall be no earlier than 18 months following the end of that 
 14.2   fund year.  The first disbursement of fund surplus may not be 
 14.3   made prior to the completion of an operational audit by the 
 14.4   commissioner.  There can be no more than one refund made in any 
 14.5   12-month period.  When all the claims of any one fund year have 
 14.6   been fully paid, as certified by an actuary, all surplus money 
 14.7   from that fund year may be declared refundable. 
 14.8      (b) The group shall give notice to the commissioner of any 
 14.9   refund.  Notice shall be accompanied by a statement from the 
 14.10  group's certified public accountant certifying that the proposed 
 14.11  refund is in compliance with paragraph (a). 
 14.12     Subd. 17.  [SATISFACTION OF FUND DEFICIT.] In the event of 
 14.13  a deficit in any fund year, the deficit shall be paid up 
 14.14  immediately, either from surplus from a fund year other than the 
 14.15  current fund year, or by assessment of the membership.  The 
 14.16  commissioner shall be notified within ten days of any transfer 
 14.17  of surplus funds.  The commissioner, upon finding that a deficit 
 14.18  in a fund year has not been satisfied by a transfer of surplus 
 14.19  from another fund year, shall order an assessment to be levied 
 14.20  on a proportionate basis against the members of the group during 
 14.21  that fund year sufficient to make up any deficit. 
 14.22     Sec. 5.  [79B.05] [MUTUAL SELF-INSURANCE GROUP REPORTING 
 14.23  REQUIREMENTS.] 
 14.24     Subdivision 1.  [REQUIRED REPORTS.] Each mutual 
 14.25  self-insurance group shall submit to the commissioner: 
 14.26     (a) An annual report showing the incurred losses, paid and 
 14.27  unpaid, specifying indemnity and medical losses by 
 14.28  classification, payroll by classification, and current estimated 
 14.29  undiscounted outstanding liability for workers' compensation on 
 14.30  a calendar year basis, in a manner and on forms available from 
 14.31  the commissioner.  In addition each group will submit a 
 14.32  quarterly interim loss report showing incurred losses for all 
 14.33  its membership. 
 14.34     (b) Each group must submit on a quarterly basis a schedule 
 14.35  showing all the members who participate in the group, their date 
 14.36  of inception, and date of withdrawal, if applicable. 
 15.1      (c) Each group must submit, in a manner and on forms 
 15.2   available from the commissioner, a report specifying the audited 
 15.3   premium of the most recent fiscal year.  The report must be 
 15.4   accompanied by an expense schedule showing the group's 
 15.5   operational costs for the same fiscal year including service 
 15.6   company charges, accounting and actuarial fees, fund 
 15.7   administration charges, reinsurance premiums, royalties, 
 15.8   commissions, and any other costs associated with the 
 15.9   administration of the group program. 
 15.10     (d) An officer of the group shall, under oath, attest to 
 15.11  the accuracy of each report submitted under paragraphs (a), (b), 
 15.12  and (c).  Upon sufficient cause, the commissioner shall require 
 15.13  the group to submit a certified audit of payroll and claim 
 15.14  records conducted by an independent auditor approved by the 
 15.15  commissioner, based on generally accepted accounting principles 
 15.16  and generally accepted auditing standards, and supported by an 
 15.17  actuarial review and opinion of the future contingent 
 15.18  liabilities.  The basis for sufficient cause includes the 
 15.19  following factors: 
 15.20     (1) where the losses reported appear significantly 
 15.21  different from similar types of groups; 
 15.22     (2) where major changes in the reports exist from year to 
 15.23  year, which are not solely attributable to economic factors; or 
 15.24     (3) where the commissioner has reason to believe that the 
 15.25  losses and payroll in the report do not accurately reflect the 
 15.26  losses and payroll of the group.  
 15.27     If any discrepancy is found, the commissioner must require 
 15.28  changes in the group's business plan or service company record 
 15.29  keeping practices. 
 15.30     (e) Each group must submit a copy of the group's annual 
 15.31  federal and state income tax returns or provide proof that it 
 15.32  has received an exemption from such filings. 
 15.33     (f) With the annual loss report each group must report to 
 15.34  the commissioner any worker's compensation claim from the 
 15.35  previous year where the full, undiscounted value is estimated to 
 15.36  exceed $50,000, in a manner and on forms prescribed by the 
 16.1   commissioner. 
 16.2      (g) Each member of the group must, within four months after 
 16.3   the end of each calendar year, submit to the group its most 
 16.4   recent annual financial statement, compiled by an independent 
 16.5   public accountant, together with other financial information the 
 16.6   group may require. 
 16.7      (h) The group must submit an annual certified financial 
 16.8   audit report of the group fund. 
 16.9      Subd. 2.  [OPERATIONAL AUDIT.] (a) The commissioner, prior 
 16.10  to authorizing surplus distribution of a group's first fund year 
 16.11  or no later than after the third anniversary of the group's 
 16.12  authority to self-insure, shall conduct an operational audit of 
 16.13  the group's claim handling and reserve practices as well as its 
 16.14  underwriting procedures to determine if they adhere to the 
 16.15  group's business plan.  The commissioner may select outside 
 16.16  consultants to assist in conducting the audit.  After completion 
 16.17  of the audit, the commissioner shall either renew or revoke the 
 16.18  group's authority to self-insure.  The commissioner may also 
 16.19  order any changes deemed necessary in the claims handling, 
 16.20  reserving practices, or underwriting procedures of the group. 
 16.21     (b) The cost of the operational audit shall be borne by the 
 16.22  mutual self-insurance group. 
 16.23     Subd. 3.  [UNIT STATISTICAL REPORT.] Each group must 
 16.24  annually file a unit statistical report to the Minnesota 
 16.25  workers' compensation insurers association. 
 16.26     Sec. 6.  [79B.06] [MUTUAL SELF-INSURANCE GROUP SECURITY 
 16.27  DEPOSIT.] 
 16.28     Subdivision 1.  [ANNUAL SECURING OF LIABILITY.] Each year 
 16.29  every mutual self-insurance group must secure future incurred 
 16.30  liabilities for the payment of compensation and the performance 
 16.31  of the obligations of its membership imposed under chapter 176.  
 16.32  A new deposit must be posted within 30 days of the filing of the 
 16.33  group's annual actuarial report with the commissioner. 
 16.34     Subd. 2.  [MINIMUM DEPOSIT.] The minimum deposit is 110 
 16.35  percent of the group's future incurred liabilities for the 
 16.36  payment of compensation as determined by an actuary.  Each 
 17.1   actuarial study shall include a projection of future losses 
 17.2   during a one-year period until the next scheduled actuarial 
 17.3   study, less payments anticipated to be made during that time.  
 17.4   Deduction must be made for the total amount which is estimated 
 17.5   to be returned to the group from any specific excess insurance 
 17.6   coverage, aggregate excess insurance coverage, and any 
 17.7   supplementary benefits which are estimated to be reimbursed by 
 17.8   the special compensation fund.  Supplementary benefits may not 
 17.9   be reimbursed by the special compensation fund unless the 
 17.10  special compensation fund assessment pursuant to section 176.129 
 17.11  is paid and the required reports are filed with the special 
 17.12  compensation fund.  In the case of surety bonds, bonds shall 
 17.13  secure administrative and legal costs in addition to the 
 17.14  liability for payment of compensation reflected on the face of 
 17.15  the bond.  In no event shall the security be less than the 
 17.16  group's selected retention limit of the workers' compensation 
 17.17  reinsurance association.  The posting or depositing of security 
 17.18  under this section releases all previously posted or deposited 
 17.19  security from any obligations under the posting or depositing 
 17.20  and any surety bond released shall be returned to the surety.  
 17.21  Any other security shall be returned to the depositor or the 
 17.22  person posting the bond. 
 17.23     Subd. 3.  [TYPE OF ACCEPTABLE SECURITY.] The commissioner 
 17.24  may only accept as security, and the group shall deposit as 
 17.25  security, cash, approved government securities as set forth in 
 17.26  section 176.181, subdivision 2, surety bonds or irrevocable 
 17.27  letters of credit in any combination.  Interest or dividend 
 17.28  income or other income generated by the security shall be paid 
 17.29  to the group or, at the group's direction, applied to the 
 17.30  group's security requirement.  The current deposit shall include 
 17.31  within its coverage all amounts covered by terminated surety 
 17.32  bonds.  As used in this section, an irrevocable letter of credit 
 17.33  shall be accepted only if it is clean, irrevocable, and contains 
 17.34  an evergreen clause. 
 17.35     (a) "Clean" means a letter of credit that is not 
 17.36  conditioned on the delivery of any other documents or materials. 
 18.1      (b) "Irrevocable" means a letter of credit that cannot be 
 18.2   modified or revoked without the consent of the beneficiary, once 
 18.3   the beneficiary is established. 
 18.4      (c) "Evergreen clause" means one which specifically states 
 18.5   that expiration of a letter of credit will not take place 
 18.6   without a 60-day notice by the issuer and one which allows the 
 18.7   issuer to conduct an annual review of the account party's 
 18.8   financial condition.  If prior notice of expiration is not given 
 18.9   by the issuer, the letter of credit is automatically extended 
 18.10  for one year. 
 18.11     A clean irrevocable letter of credit shall be accepted only 
 18.12  if it is in the form prescribed by statute and is issued by a 
 18.13  financial institution that is authorized to engage in banking in 
 18.14  any of the 50 states or under the laws of the United States and 
 18.15  whose business is substantially confined to banking and 
 18.16  supervised by the state commissioner of commerce or banking of 
 18.17  similar official, and which has a long-term debt rating by a 
 18.18  recognized national rating agency of investment grade or 
 18.19  better.  If no long-term debt rating is available, the financial 
 18.20  institution must have the equivalent investment grade financial 
 18.21  characteristics. 
 18.22     Subd. 4.  [CUSTODIAL ACCOUNTS.] (a) All surety bonds, 
 18.23  irrevocable letters of credit, and documents showing issuance of 
 18.24  any irrevocable letter of credit must be deposited with, and, 
 18.25  except where specified by statute, in a form approved by the 
 18.26  commissioner.  All securities shall be deposited with the state 
 18.27  treasurer or in a custodial account with a depository 
 18.28  institution acceptable to the commissioner.  The commissioner 
 18.29  and the state treasurer may sell or collect the deposits, in the 
 18.30  case of default of the group, the amounts that yield sufficient 
 18.31  funds to pay workers' compensation due under chapter 176. 
 18.32     (b) All securities in physical form on deposit with the 
 18.33  state treasurer and surety bonds on deposit shall remain in the 
 18.34  custody of the state treasurer or the commissioner for a period 
 18.35  of time dictated by the applicable statute of limitations 
 18.36  provided in chapter 176.  All original instruments and contracts 
 19.1   creating and governing custodial accounts shall remain with the 
 19.2   state treasurer or the commissioner for the time dictated by the 
 19.3   applicable statute of limitations in chapter 176. 
 19.4      (c) Securities in physical form deposited with the state 
 19.5   treasurer must bear the following assignment, which must be 
 19.6   signed by an officer of the group, "assigned to the state of 
 19.7   Minnesota for the benefit of injured employees of the 
 19.8   self-insured employer under the Minnesota workers' compensation 
 19.9   act."  Any securities held in a custodial account, whether in 
 19.10  physical form, book entry, or other form, need not bear the 
 19.11  assignment language.  The instrument or contract creating and 
 19.12  governing any custodial account must contain the following 
 19.13  assignment language.  "This account is assigned to the state 
 19.14  treasurer by the mutual self-insurance group to pay compensation 
 19.15  and perform the obligations of employers imposed under Minnesota 
 19.16  Statutes, chapter 176.  A depositor or other party has no right, 
 19.17  title, or interest in the security deposited in the account 
 19.18  until released by the state." 
 19.19     (d) Upon the commissioner sending a request to renew, 
 19.20  request to post, or request to increase a security deposit, a 
 19.21  perfected security interest is created in the group's assets in 
 19.22  favor of the commissioner to the extent of any then unsecured 
 19.23  portion of the group's incurred liabilities.  The perfected 
 19.24  security interest is transferred to any cash or securities 
 19.25  thereafter posted by the group with the state treasurer and is 
 19.26  released only upon either of the following: 
 19.27     (1) the acceptance by the commissioner of a surety bond or 
 19.28  irrevocable letter of credit for the full amount of the incurred 
 19.29  liabilities for the payment of compensation; or 
 19.30     (2) the return of cash or securities by the commissioner.  
 19.31  The group loses all right, title, and interest in and any right 
 19.32  to control assets or obligations posted or left on deposit as 
 19.33  security.  In the event of a declaration of bankruptcy or 
 19.34  insolvency by a court of competent jurisdiction, or in the event 
 19.35  of the issuance of a certificate of default by the commissioner, 
 19.36  the commissioner shall liquidate the deposit as provided in this 
 20.1   chapter, and transfer to the mutual self-insurance group 
 20.2   security fund for application to the group's incurred liability. 
 20.3      (e) No securities in physical form on deposit with the 
 20.4   state treasurer or the commissioner or custodial accounts 
 20.5   assigned to the state shall be released or exchanged without an 
 20.6   order from the commissioner.  No security can be exchanged more 
 20.7   than once every 90 days. 
 20.8      (f) Any securities deposited with the state treasurer or 
 20.9   with a custodial account assigned to the state treasurer or 
 20.10  letters of credit or surety bonds held by the commissioner may 
 20.11  be exchanged or replaced by the depositor with any other 
 20.12  acceptable securities or letters of credit or surety bond of 
 20.13  like amount so long as the market value of the securities or 
 20.14  amount of the surety bonds or letter of credit equals or exceeds 
 20.15  the amount of the deposit required.  If securities are replaced 
 20.16  by surety bond, the mutual self-insurance group must maintain 
 20.17  securities on deposit in an amount sufficient to meet all 
 20.18  outstanding workers' compensation liability arising during the 
 20.19  period covered by the deposit of the replaced securities. 
 20.20     (g) The commissioner shall return on an annual basis to the 
 20.21  group all amounts of security determined by the commissioner to 
 20.22  be in excess of the statutory requirements for the group to 
 20.23  self-insure, including that necessary for administrative costs, 
 20.24  legal fees, and the payment of any future workers' compensation 
 20.25  claims. 
 20.26     Sec. 7.  [79B.07] [DEFAULT OF A MUTUAL SELF-INSURANCE 
 20.27  GROUP.] 
 20.28     Subdivision 1.  [NOTICE OF INSOLVENCY, BANKRUPTCY, OR 
 20.29  DEFAULT.] The commissioner of labor and industry shall notify 
 20.30  the commissioner and the mutual self-insurance group security 
 20.31  fund if the commissioner of labor and industry has knowledge 
 20.32  that any mutual self-insurance group has failed to pay workers' 
 20.33  compensation benefits as required by chapter 176.  If the 
 20.34  commissioner determines that a court of competent jurisdiction 
 20.35  has declared the group to be bankrupt or insolvent and the group 
 20.36  has failed to pay workers' compensation as required by chapter 
 21.1   176 or if the commissioner issues a certificate of default 
 21.2   against a group for failure to pay workers' compensation as 
 21.3   required by chapter 176, then the security deposit posted by the 
 21.4   group must be utilized to administer and pay the group's 
 21.5   workers' compensation obligation. 
 21.6      Subd. 2.  [REVOCATION OF CERTIFICATE TO SELF-INSURE.] (a) 
 21.7   The commissioner shall revoke the group's certificate to 
 21.8   self-insure once notified of the group's bankruptcy, insolvency, 
 21.9   or upon issuance of a certificate of default.  The revocation 
 21.10  shall be completed as soon as practicable, but no later than 30 
 21.11  days after the group's security has been called. 
 21.12     (b) The commissioner shall also revoke a group's authority 
 21.13  to self-insure on the following grounds: 
 21.14     (1) failure to comply with any lawful order of the 
 21.15  commissioner; 
 21.16     (2) failure to comply with any provision of chapter 176; 
 21.17     (3) a deterioration of the group's financial condition 
 21.18  affecting its ability to pay obligations in chapter 176; 
 21.19     (4) committing an unfair or deceptive act or practice as 
 21.20  defined in section 72A.20; or 
 21.21     (5) failure to abide by the plan of operation of the 
 21.22  workers' compensation reinsurance association. 
 21.23     Subd. 3.  [NOTICE BY THE COMMISSIONER.] In the event of 
 21.24  bankruptcy, insolvency, or certificate of default, the 
 21.25  commissioner shall immediately notify by certified mail the 
 21.26  state treasurer, the surety, the issuer of an irrevocable letter 
 21.27  of credit, and any custodian of the security.  At the time of 
 21.28  notification, the commissioner shall also call the security and 
 21.29  transfer and assign it to the mutual self-insurance group 
 21.30  security fund.  The commissioner shall also notify by certified 
 21.31  mail the mutual self-insurance group's security fund and order 
 21.32  the security fund to assume the insolvent group's obligations 
 21.33  for which it is liable under chapter 176. 
 21.34     Sec. 8.  [79B.08] [MUTUAL SELF-INSURANCE GROUP SECURITY 
 21.35  FUND.] 
 21.36     Subdivision 1.  [CREATION.] The mutual self-insurance group 
 22.1   security fund is established as a nonprofit corporation pursuant 
 22.2   to the Minnesota nonprofit corporation act, sections 317A.001 to 
 22.3   317A.909.  If any provision of the Minnesota nonprofit 
 22.4   corporation act conflicts with any provision of this chapter, 
 22.5   the provisions of this chapter apply.  Each self-insurance group 
 22.6   that elects to be subject to the terms of this statute rather 
 22.7   than chapter 79A shall participate in the mutual self-insurance 
 22.8   group security fund.  This participation shall be a condition of 
 22.9   maintaining its certificate to self-insure. 
 22.10     Subd. 2.  [BOARD OF TRUSTEES.] The security fund shall be 
 22.11  governed by a board consisting of a minimum of three and maximum 
 22.12  of five trustees.  The trustees shall be representatives of 
 22.13  mutual self-insurance groups elected by the participants of the 
 22.14  security fund, each group having one vote.  The trustees 
 22.15  initially elected by the participants shall serve staggered 
 22.16  terms of either two or three years.  Thereafter, trustees shall 
 22.17  be elected to three-year terms and shall serve until their 
 22.18  successors are elected and assume office pursuant to the bylaws 
 22.19  of the security fund.  Two additional trustees shall be 
 22.20  appointed by the commissioner.  These trustees shall serve 
 22.21  four-year terms.  One of these trustees shall serve a two-year 
 22.22  term.  Thereafter, the trustees shall be appointed to four-year 
 22.23  terms, and shall serve until their successors are appointed and 
 22.24  assume office according to the bylaws of the security fund.  In 
 22.25  addition to the trustees elected by the participants or 
 22.26  appointed by the commissioner, the commissioner of labor and 
 22.27  industry or the commissioner's designee is an ex officio, 
 22.28  nonvoting member of the board of trustees.  A member of the 
 22.29  board of trustees may designate another person to act in the 
 22.30  member's place as though the member were acting and the 
 22.31  designee's actions shall be deemed those of the member. 
 22.32     Subd. 3.  [BYLAWS.] The security fund must establish bylaws 
 22.33  and a plan of operation, subject to the prior approval of the 
 22.34  commissioner, necessary to the purposes of this chapter and to 
 22.35  carry out the responsibilities of the security fund.  The 
 22.36  security fund may carry out its responsibilities directly or by 
 23.1   contract, and may purchase services and insurance and borrow 
 23.2   funds necessary for the protection of the mutual self-insurance 
 23.3   group participants and their employees. 
 23.4      Subd. 4.  [CONFIDENTIAL INFORMATION.] The security fund may 
 23.5   receive private data concerning the financial condition of 
 23.6   mutual self-insurance groups whose liabilities to pay 
 23.7   compensation have become its responsibility and shall adopt 
 23.8   bylaws to prevent dissemination of that information. 
 23.9      Subd. 5.  [EMPLOYEES.] Security fund employees are not 
 23.10  state employees and are not subject to any state civil service 
 23.11  regulations. 
 23.12     Subd. 6.  [ASSUMPTION OF OBLIGATIONS.] Upon order of the 
 23.13  commissioner under section 79B.07, subdivision 3, the security 
 23.14  fund shall assume the workers' compensation obligations of an 
 23.15  insolvent group.  The commissioner must order the mutual 
 23.16  self-insurance group security fund to commence payment of these 
 23.17  obligations within 14 days of the receipt of the order. 
 23.18     Subd. 7.  [ACT OR OMISSIONS; PENALTIES.] Notwithstanding 
 23.19  subdivision 6, the security fund shall not be liable for the 
 23.20  payment of any penalties assessed for any act or omission on the 
 23.21  part of any person other than the security fund or its appointed 
 23.22  administrator, including, but not limited to, the penalties 
 23.23  provided in chapter 176 unless the security fund or its 
 23.24  appointed administrator would be subject to penalties under 
 23.25  chapter 176 as the result of the actions of the security fund or 
 23.26  its administrator. 
 23.27     Subd. 8.  [PARTY IN INTEREST.] The security fund shall be a 
 23.28  party in interest in all proceedings involving compensation 
 23.29  claims against an insolvent mutual self-insurance group whose 
 23.30  compensation obligations have been paid or assumed by the 
 23.31  security fund.  The security fund shall have the same rights and 
 23.32  defenses as the insolvent mutual self-insurance group, 
 23.33  including, but not limited to, all of the following: 
 23.34     (1) to appear, defend, and appeal claims; 
 23.35     (2) to receive notice of, investigate, adjust, compromise, 
 23.36  settle, and pay claims; and 
 24.1      (3) to investigate, handle, and deny claims. 
 24.2      Subd. 9.  [PAYMENTS TO SECURITY FUND.] Notwithstanding 
 24.3   anything in this chapter or chapter 176 to the contrary, if the 
 24.4   mutual self-insurance group security fund assumes the 
 24.5   obligations of any bankrupt or insolvent mutual self-insurance 
 24.6   group pursuant to this section, then the proceeds of any surety 
 24.7   bond, workers' compensation reinsurance association, specific 
 24.8   excess insurance or aggregate excess insurance policy, and any 
 24.9   special compensation fund payment or supplementary benefit 
 24.10  reimbursements shall be paid to the mutual self-insurance group 
 24.11  security fund instead of the bankrupt or insolvent group or its 
 24.12  successor in interest.  No special compensation fund 
 24.13  reimbursements shall be made to the security fund unless the 
 24.14  special compensation fund assessments under section 176.129 are 
 24.15  paid and the required reports are made to the special 
 24.16  compensation fund. 
 24.17     Subd. 10.  [INSOLVENT MUTUAL SELF-INSURANCE GROUP.] The 
 24.18  security fund must obtain reimbursement from an insolvent mutual 
 24.19  self-insurance group up to the amount of the group's workers' 
 24.20  compensation obligations paid and assumed by the security fund, 
 24.21  including reasonable administrative and legal costs.  This right 
 24.22  includes, but is not limited to, a right to claim for wages and 
 24.23  other necessities of life advanced to claimants as subrogee of 
 24.24  the claimants in any action to collect against the mutual 
 24.25  self-insurance group as debtor. 
 24.26     Subd. 11.  [SECURITY DEPOSITS.] The security fund must 
 24.27  obtain from the security deposit of an insolvent group the 
 24.28  amount of the group's compensation obligations, including 
 24.29  reasonable administrative and legal costs, paid or assumed by 
 24.30  the security fund.  Reimbursement of administrative costs, 
 24.31  including legal costs, is subject to approval by a majority of 
 24.32  the security fund's voting trustees.  The security fund shall be 
 24.33  a party in interest in any action to obtain the security deposit 
 24.34  for the payment of compensation obligations of an insolvent 
 24.35  group. 
 24.36     Subd. 12.  [LEGAL ACTIONS.] The security fund may bring an 
 25.1   action against any person or entity to recover compensation paid 
 25.2   and liability assumed by the security fund, including, but not 
 25.3   limited to, any excess insurance carrier of the insolvent group 
 25.4   and any person or entity whose negligence or breach of an 
 25.5   obligation contributed to any underestimation of the group's 
 25.6   accrued liability as reported to the commissioner. 
 25.7      Subd. 13.  [PARTY IN INTEREST.] The security fund may be a 
 25.8   party in interest in any action brought by any other person 
 25.9   seeking damages resulting from the failure of an insolvent 
 25.10  mutual self-insurance group to pay workers' compensation 
 25.11  required under this subdivision. 
 25.12     Subd. 14.  [ASSETS MAINTAINED.] The security fund shall 
 25.13  maintain cash, readily marketable securities, or other assets, 
 25.14  or a line of credit, approved by the commissioner, sufficient to 
 25.15  immediately continue the payment of the compensation obligations 
 25.16  of an insolvent group pending receipt of the security deposit, 
 25.17  surety bond proceeds, irrevocable letter of credit, or, if 
 25.18  necessary, assessment of the participants.  The commissioner may 
 25.19  establish the minimum amount to be maintained by, or immediately 
 25.20  available to, the security fund for this purpose. 
 25.21     Subd. 15.  [ASSESSMENT.] The security fund may assess each 
 25.22  of its participants a pro rata share of the funding necessary to 
 25.23  carry out its obligation and the purposes of this chapter.  
 25.24  Total annual assessments in any calendar year shall be a 
 25.25  percentage of the workers' compensation benefits paid under 
 25.26  sections 176.101 and 176.111 during the previous calendar year.  
 25.27  The annual assessment calculation shall not include 
 25.28  supplementary benefits paid which will be reimbursed by the 
 25.29  special compensation fund.  Funds obtained by assessments under 
 25.30  this subdivision may only be used for the purposes of this 
 25.31  chapter.  The trustees shall certify to the commissioner the 
 25.32  collection and receipt of all money from assessments, noting any 
 25.33  delinquencies.  The trustees shall take any action deemed 
 25.34  appropriate to collect any delinquent assessments. 
 25.35     Subd. 16.  [AUDIT OF FUND.] The trustees shall annually 
 25.36  contract for an independent certified audit of the financial 
 26.1   activities of the fund.  An annual report on the financial 
 26.2   status of the mutual self-insurance group security fund must be 
 26.3   submitted to the commissioner and to each group member. 
 26.4      Sec. 9.  [79B.09] [LETTER OF CREDIT FORM.] 
 26.5      The form for the letter of credit under this chapter shall 
 26.6   be: 
 26.7   Effective Date 
 26.8   State of Minnesota (Beneficiary) 
 26.9   (Address) 
 26.10  Dear Sirs: 
 26.11  By order of ....... (Self-Insurer) we are instructed to open a 
 26.12  clean irrevocable Letter of Credit in your favor for United 
 26.13  States $.......(Amount). 
 26.14  We undertake that drawings under this Letter of Credit will be 
 26.15  honored upon presentation of your draft drawn on ....... 
 26.16  (issuing bank), at ....... (address) prior to expiration date. 
 26.17  The Letter of Credit expires on ....... but will automatically 
 26.18  extend for an additional one year if you have not received by 
 26.19  registered mail notification of intention not to renew 60 days 
 26.20  prior to the original expiration date and each subsequent 
 26.21  expiration date. 
 26.22     Except as expressly stated herein, this undertaking is not 
 26.23  subject to any condition or qualification.  The obligation of 
 26.24  ....... (issuing bank) under this Letter of Credit shall be the 
 26.25  individual obligation of ....... (issuing bank), in no way 
 26.26  contingent upon reimbursement with respect thereto. 
 26.27  Very truly yours, 
 26.28  ..............(signature) 
 26.29     Sec. 10.  [79B.10] [SURETY BOND FORM.] 
 26.30     The form for the surety bond under this chapter shall be: 
 26.31            STATE OF MINNESOTA
 26.32            COMMISSIONER
 26.33            SURETY BOND OF SELF-INSURER OF WORKERS' COMPENSATION
 26.34  IN THE MATTER OF THE CERTIFICATE OF  )
 26.35                                       )    SURETY BOND
 26.36                                       )    NO.............
 27.1                                        )    PREMIUM
 27.2                                        )
 27.3   Employer, Certificate No:......... 
 27.4   KNOW ALL PERSONS BY THESE PRESENTS: 
 27.5      That ............................. 
 27.6              (Mutual Self-Insurance Group.)
 27.7   Whose address is ............................... 
 27.8   as Principal, and .................... 
 27.9                    (Surety)
 27.10  a corporation organized under the laws of 
 27.11  ......................... and authorized to transact a general 
 27.12  surety business in the State of Minnesota, as Surety, are held 
 27.13  and firmly bound to the State of Minnesota in the penal sum of 
 27.14  ............. dollars ($........) for which payment we bind 
 27.15  ourselves, our heirs, executors, administrators, successors, and 
 27.16  assigns, jointly and severally, firmly by these presents. 
 27.17     WHEREAS, in accordance with Minnesota Statutes, chapter 
 27.18  176, the principal elected to self-insure, and made application 
 27.19  for, or received from the commissioner of commerce of the state 
 27.20  of Minnesota, a certificate to self-insure, upon furnishing of 
 27.21  proof satisfactory to the commissioner of commerce of ability to 
 27.22  self-insure and to compensate any or all employees of said 
 27.23  principal for injury or disability, and their dependents for 
 27.24  death incurred or sustained by said employees pursuant to the 
 27.25  terms, provisions, and limitations of said statute; 
 27.26     NOW THEREFORE, the conditions of this bond or obligation 
 27.27  are such that if principal shall pay and furnish compensation, 
 27.28  pursuant to the terms, provisions, and limitations of said 
 27.29  statute to its employees for injury or disability, and to the 
 27.30  dependents of its employees, then this bond or obligation shall 
 27.31  be null and void; otherwise to remain in full force and effect. 
 27.32     FURTHERMORE, it is understood and agreed that: 
 27.33     1.  This bond may be amended, by agreement between the 
 27.34  parties hereto and the commissioner of commerce as to the 
 27.35  identity of the principal herein named; and, by agreement of the 
 27.36  parties hereto, as to the premium or rate of premium.  Such 
 28.1   amendment must be by endorsement upon, or rider to, this bond, 
 28.2   executed by the surety and delivered to or filed with the 
 28.3   commissioner. 
 28.4      2.  The surety does, by these presents, undertake and agree 
 28.5   that the obligation of this bond shall cover and extend to all 
 28.6   past, present, existing, and potential liability of said 
 28.7   principal, as a self-insurer, to the extent of the penal sum 
 28.8   herein named without regard to specific injuries, date or dates 
 28.9   of injuries, happenings or events. 
 28.10     3.  The penal sum of this bond may be increased or 
 28.11  decreased, by agreement between the parties hereto and the 
 28.12  commissioner of commerce, without impairing the obligation 
 28.13  incurred under this bond for the overall coverage of the said 
 28.14  principal, for all past, present, existing, and potential 
 28.15  liability, as a self-insurer, without regard to specific 
 28.16  injuries, date or dates of injuries, happenings or events, to 
 28.17  the extent, in the aggregate, of the penal sum as increased or 
 28.18  decreased.  Such amendment must be by endorsement. 
 28.19     4.  The aggregate liability of the surety hereunder on all 
 28.20  claims whatsoever shall not exceed the penal sum of this bond in 
 28.21  any event. 
 28.22     5.  This bond shall be continuous in form and shall remain 
 28.23  in full force and effect unless terminated as follows: 
 28.24     (a) The obligation of this bond shall terminate upon 
 28.25  written notice of cancellation from the surety, given by 
 28.26  registered or certified mail to the commissioner of commerce, 
 28.27  state of Minnesota, save and except as to all past, present, 
 28.28  existing, and potential liability of the principal incurred, 
 28.29  including obligations resulting from claims which are incurred 
 28.30  but not yet reported, as a self-insurer prior to effective date 
 28.31  of termination.  This termination is effective 60 days after 
 28.32  receipt of notice of cancellation by the commissioner of 
 28.33  commerce, state of Minnesota. 
 28.34     (b) This bond shall also terminate upon the revocation of 
 28.35  the certificate to self-insure, save and except as to all past, 
 28.36  present, existing, and potential liability of the principal 
 29.1   incurred, including obligations resulting from claims which are 
 29.2   incurred, but not yet reported, as a self-insurer prior to 
 29.3   effective date of termination.  The principal and the surety, 
 29.4   herein named, shall be immediately notified in writing by said 
 29.5   commissioner, in the event of such revocation. 
 29.6      6.  Where the principal posts with the commissioner of 
 29.7   commerce, state of Minnesota, or the state treasurer, state of 
 29.8   Minnesota, a replacement security deposit, in the form of a 
 29.9   surety bond, irrevocable letter of credit, cash, securities, or 
 29.10  any combination thereof, in the full amount as may be required 
 29.11  by the commissioner of commerce, state of Minnesota, to secure 
 29.12  all incurred liabilities for the payment of compensation of said 
 29.13  principal under Minnesota Statutes, chapter 176, the surety is 
 29.14  released from obligations under the surety bond upon the date of 
 29.15  acceptance by the commissioner of commerce, state of Minnesota, 
 29.16  of said replacement security deposit.  
 29.17     7.  If the said principal shall suspend payment of workers' 
 29.18  compensation benefits or shall become insolvent or a receiver 
 29.19  shall be appointed for its business, or the commissioner of 
 29.20  commerce, state of Minnesota, issues a certificate of default, 
 29.21  the undersigned surety will become liable for the workers' 
 29.22  compensation obligations of the principal on the date benefits 
 29.23  are suspended.  The surety shall begin payments within 14 days 
 29.24  under paragraph 8, or 30 days under paragraph 10, after receipt 
 29.25  of written notification by certified mail from the commissioner 
 29.26  of commerce, state of Minnesota, to begin payments under the 
 29.27  terms of this bond. 
 29.28     8.  If the surety exercises its option to administer 
 29.29  claims, it shall pay benefits due to the principal's injured 
 29.30  workers within 14 days of the receipt of the notification by the 
 29.31  commissioner of commerce, state of Minnesota, pursuant to 
 29.32  paragraph 7, without a formal award of a compensation judge, the 
 29.33  commissioner of labor and industry, any intermediate appellate 
 29.34  court, or the Minnesota supreme court and such payment will be a 
 29.35  charge against the penal sum of the bond.  Administrative and 
 29.36  legal costs incurred by the surety in discharging its 
 30.1   obligations and payment of the principal's obligations for 
 30.2   administration and legal expenses under Minnesota Statutes, 
 30.3   chapters 79B and 176 shall also be a charge against the penal 
 30.4   sum of the bond; however, the total amount of this surety bond 
 30.5   set aside for the payment of said administrative and legal 
 30.6   expenses shall be limited to a maximum ten percent of the total 
 30.7   penal sum of the bond unless otherwise authorized by the 
 30.8   security fund. 
 30.9      9.  If any part or provision of this bond shall be declared 
 30.10  unenforceable or held to be invalid by a court of proper 
 30.11  jurisdiction, such determination shall not affect the validity 
 30.12  or enforceability of the other provisions or parts of this bond. 
 30.13     10.  If the surety does not give notice to the security 
 30.14  fund and the commissioner of commerce, state of Minnesota, 
 30.15  within two business days of receipt of written notification from 
 30.16  the commissioner of commerce, state of Minnesota, pursuant to 
 30.17  paragraph 7, to exercise its option to administer claims 
 30.18  pursuant to paragraph 8, then the self-insurer's security fund 
 30.19  will assume the payments of the workers' compensation 
 30.20  obligations of the principal pursuant to Minnesota Statutes, 
 30.21  chapter 176.  The surety shall pay, within 30 days of the 
 30.22  receipt of the notification by the commissioner of commerce, 
 30.23  state of Minnesota, pursuant to paragraph 7, to the 
 30.24  self-insurer's security fund as an initial deposit an amount 
 30.25  equal to ten percent of the penal sum of the bond, and shall 
 30.26  thereafter, upon notification from the security fund that the 
 30.27  balance of the initial deposit had fallen to one percent of the 
 30.28  penal sum of the bond, remit to the security fund an amount 
 30.29  equal to the payments made by the security fund in the three 
 30.30  calendar months immediately preceding said notification.  All 
 30.31  such payments will be a charge against the penal sum of the bond.
 30.32     11.  Disputes concerning the posting, renewal, termination, 
 30.33  exoneration, or return of all or any portion of the principal's 
 30.34  security deposit or any liability arising out of the posting or 
 30.35  failure to post security, or the adequacy of the security or the 
 30.36  reasonableness of administrative costs, including legal costs, 
 31.1   arising between or among a surety, the issuer of an agreement of 
 31.2   assumption and guarantee of workers' compensation liabilities, 
 31.3   the issuer of a Letter of Credit, any custodian of the security 
 31.4   deposit, the principal, or the self-insurer's security fund 
 31.5   shall be resolved by the commissioner of commerce under 
 31.6   Minnesota Statutes, chapters 79B and 176. 
 31.7      12.  Written notification to the surety required by this 
 31.8   bond shall be sent to: 
 31.9                             .........................
 31.10                            Name of Surety
 31.11                            .........................
 31.12                            To the attention of Person or Position
 31.13                            .........................
 31.14                            Address
 31.15                            .........................
 31.16                            City, State, Zip
 31.17     Written notification to the principal required by this bond 
 31.18  shall be sent to: 
 31.19                            .........................
 31.20                            Name of Principal
 31.21                            .........................
 31.22                            To the attention of Person or Position
 31.23                            .........................
 31.24                            Address
 31.25                            .........................
 31.26                            City, State, Zip
 31.27     13.  This bond is executed by the surety to comply with 
 31.28  Minnesota Statutes, chapter 176, and said bond shall be subject 
 31.29  to all terms and provisions thereof. 
 31.30                            .........................
 31.31                            Name of Surety
 31.32                            .........................
 31.33                            Address
 31.34                            .........................
 31.35                            City, State, Zip
 31.36     THIS bond is executed under an unrevoked appointment or 
 32.1   power of attorney. 
 32.2      I certify (or declare) under penalty of perjury under the 
 32.3   laws of the state of Minnesota that the foregoing is true and 
 32.4   correct. 
 32.5   Date:..........           .........................
 32.6                             Signature of Attorney-In-Fact
 32.7                             ..........................
 32.8                             Printed or Typed Name of
 32.9                             Attorney-In-Fact
 32.10     A copy of the transcript or record of the unrevoked 
 32.11  appointment, power of attorney, bylaws, or other instrument, 
 32.12  duly certified by the proper authority and attested by the seal 
 32.13  of the insurer entitling or authorizing the person who executed 
 32.14  the bond to do so for and in behalf of the insurer, must be 
 32.15  filed in the office of the commissioner of commerce or must be 
 32.16  included with this bond for such filing. 
 32.17     Sec. 11.  [79B.11] [INDEMNITY AGREEMENT FORM.] 
 32.18                       INDEMNITY AGREEMENT
 32.19     1.  Whereas, (name of company) has agreed to be and has 
 32.20  been accepted as a member of (name of mutual self-insurance 
 32.21  group). 
 32.22     2.  Whereas, (name of company) has agreed to be bound by 
 32.23  all of the provisions of the Minnesota workers' compensation act 
 32.24  and all rules promulgated thereunder. 
 32.25     3.  Whereas, that (name of company) has agreed to be bound 
 32.26  by bylaws or plan of operation and all amendments thereto of 
 32.27  (name of mutual self-insurance group). 
 32.28     4.  Whereas, that (name of company) has agreed to be 
 32.29  jointly and severally liable for all claims and expenses of all 
 32.30  the members of (name of mutual self-insurance group) arising in 
 32.31  any fund year in which (name of company) is a member of the 
 32.32  group.  Provided that if (name of company) is not a member for 
 32.33  the full year, it shall be only liable for a pro rata share of 
 32.34  that liability. 
 32.35     IN WITNESS WHEREOF, the (name of company) and (name of 
 32.36  mutual self-insurance group) have caused this indemnity 
 33.1   agreement to be executed by its authorized agreement to be 
 33.2   executed by its authorized officers: 
 33.3   Mutual Self-Insurance Group Name          Company Name
 33.5   By: ............................          By: ...................
 33.6   date: ..........................          date: .................
 33.7      Sec. 12.  [79B.12] [OPEN MEETING; ADMINISTRATIVE PROCEDURE 
 33.8   ACT.] 
 33.9      The mutual self-insurance group security fund and its board 
 33.10  of trustees shall not be subject to: 
 33.11     (1) the open meeting law; 
 33.12     (2) the open appointments law; 
 33.13     (3) the data privacy law; and 
 33.14     (4) except where specifically set forth, the administrative 
 33.15  procedure act. 
 33.16     Sec. 13.  [79B.13] [RULES.] 
 33.17     The commissioner may adopt, amend, and repeal rules 
 33.18  reasonably necessary to carry out the purposes of this chapter.  
 33.19  This authorization includes, but is not limited to, the adoption 
 33.20  of rules to do all of the following: 
 33.21     (1) except as otherwise specifically provided by statute, 
 33.22  specifying what constitutes ability to self-insure under this 
 33.23  chapter and to pay any compensation which may become due under 
 33.24  chapter 176; 
 33.25     (2) specifying what constitutes a failure or inability to 
 33.26  fulfill an insolvent mutual self-insurance group's obligations 
 33.27  under this chapter; 
 33.28     (3) interpreting and defining the terms used in this 
 33.29  chapter; 
 33.30     (4) establishing procedures and standards for hearing and 
 33.31  determinations and providing for those determinations to be 
 33.32  appealed; 
 33.33     (5) except where otherwise specifically provided by 
 33.34  statute, specifying the standards, forms, and content of 
 33.35  agreements, forms, and reports between parties who have 
 33.36  obligations pursuant to this chapter; 
 34.1      (6) providing for the combinations and relative liabilities 
 34.2   of security deposits, assumptions, and guarantees used under 
 34.3   this chapter; and 
 34.4      (7) disclosing otherwise private data concerning mutual 
 34.5   self-insurers to courts or mutual self-insurance group security 
 34.6   fund and specifying appropriate safeguards for that information. 
 34.7      Sec. 14.  [79B.14] [GOVERNING LAW.] 
 34.8      If there is any inconsistency among chapter 79B and any 
 34.9   rule or statute and law, chapter 79B shall govern. 
 34.10     Sec. 15.  [EFFECTIVE DATE.] 
 34.11     This article is effective July 1, 1995. 
 34.12                             ARTICLE 2
 34.13                         ASSIGNED RISK PLAN
 34.14     Section 1.  [LEGISLATIVE AUDITOR; ASSIGNED RISK 
 34.15  EVALUATION.] 
 34.16     The legislative audit commission is requested to direct the 
 34.17  legislative auditor to conduct an evaluation of the assigned 
 34.18  risk plan created by Minnesota Statutes, sections 79.251 to 
 34.19  79.252.  The evaluation shall include: 
 34.20     (1) whether the assigned risk plan should be organized and 
 34.21  operated in a different manner; 
 34.22     (2) the development of strategies that permits small safe 
 34.23  employers to receive the benefit of their safe workplace through 
 34.24  reduced premiums; 
 34.25     (3) safety practices of unsafe employers placed in the 
 34.26  assigned risk plan due to their own poor safety record or the 
 34.27  poor safety record of their industry; 
 34.28     (4) an analysis of the claims adjusting and reserving 
 34.29  practices of the plan; and 
 34.30     (5) a plan for the state fund mutual insurance company to 
 34.31  be the sole service company or insurer servicing policies or 
 34.32  contract of coverage under the assigned risk plan. 
 34.33     The evaluation shall specifically focus on developing 
 34.34  alternative insurance techniques for small employers in the 
 34.35  assigned risk plan such as grouping or self-insurance that can 
 34.36  be utilized to reduce insurance premiums. 
 35.1      The legislative auditor shall report findings of the 
 35.2   evaluation to the legislature by January 15, 1996. 
 35.3      Sec. 2.  [STATE FUND MUTUAL; ASSIGNED RISK PLAN.] 
 35.4      Upon the expiration of current contracts to service 
 35.5   policies and contracts of coverage of the assigned risk plan, 
 35.6   the commissioner of commerce shall contract with the state fund 
 35.7   mutual insurance company to service that business. 
 35.8      Sec. 3.  [EFFECTIVE DATE.] 
 35.9      This article is effective the day following final enactment.
 35.10                             ARTICLE 3
 35.11                               SAFETY
 35.12     Section 1.  [79.082] [SAFETY PREMIUM CREDIT.] 
 35.13     An insurer must provide a ten percent credit against the 
 35.14  premium otherwise payable by an employer if the employer has 
 35.15  been insured against workers' compensation liability under 
 35.16  chapter 176 for the immediately preceding three calendar years 
 35.17  and has had no accidents for which benefits were paid under 
 35.18  Minnesota Statutes, section 176.101, in the immediately 
 35.19  preceding three calendar years.  This section applies only to an 
 35.20  employer that is a "small business" as defined in Minnesota 
 35.21  Statutes, section 645.445, subdivision 2.  For the purpose of 
 35.22  this section, insurer includes the assigned risk plan. 
 35.23     Sec. 2.  Minnesota Statutes 1994, section 79.085, is 
 35.24  amended to read: 
 35.25     79.085 [SAFETY AND RETURN TO WORK PROGRAMS.] 
 35.26     All insurers writing workers' compensation insurance in 
 35.27  this state shall provide return to work and safety and 
 35.28  occupational health loss control consultation services at no fee 
 35.29  to each of their policyholders requesting the services in 
 35.30  writing.  Insurers must annually notify their policyholder of 
 35.31  their right under this section to return to work and free safety 
 35.32  and occupational health loss consultation services.  The 
 35.33  services must include the conduct of workplace surveys to 
 35.34  identify health and safety problems, review of employer injury 
 35.35  records with appropriate personnel, and development of plans to 
 35.36  improve employer occupational health and safety loss records.  
 36.1   Insurers shall notify each policyholder of the availability of 
 36.2   those services and the telephone number and address where such 
 36.3   services can be requested.  The notification may be delivered 
 36.4   with the policy of workers' compensation insurance. 
 36.5      Sec. 3.  Minnesota Statutes 1994, section 176.232, is 
 36.6   amended to read: 
 36.7      176.232 [SAFETY COMMITTEES.] 
 36.8      Every public or private employer of more than 25 employees 
 36.9   shall establish and administer a joint labor-management safety 
 36.10  committee.  
 36.11     Every public or private employer of 25 or fewer employees 
 36.12  shall establish and administer a safety committee if: 
 36.13     (1) the employer has a lost workday cases incidence rate in 
 36.14  the top ten percent of all rates for employers in the same 
 36.15  industry; or 
 36.16     (2) the workers' compensation premium classification 
 36.17  assigned to the greatest portion of the payroll for the employer 
 36.18  has a pure premium rate as reported by the workers' compensation 
 36.19  rating association in the top 25 percent of premium rates for 
 36.20  all classes. 
 36.21     Employee safety committee members must be selected by 
 36.22  employees.  An employer that fails to establish or administer a 
 36.23  safety committee as required by this section may be cited by the 
 36.24  commissioner.  A citation is punishable as a serious violation 
 36.25  under Minnesota Statutes, section 182.666. 
 36.26     The commissioner may adopt rules regarding the training of 
 36.27  safety committee members and the operation of safety committees. 
 36.28     Sec. 4.  [176.233] [EMPLOYER SAFETY PROGRAMS.] 
 36.29     Subdivision 1.  [PROGRAM REQUIREMENT.] Each public or 
 36.30  private employer must establish and administer a safety program. 
 36.31     An employer who employs temporary workers shall include 
 36.32  those workers in the employer's safety program.  A temporary 
 36.33  services contractor shall provide a safety program for employees 
 36.34  not employed by other employers. 
 36.35     Subd. 2.  [PROGRAM COMPONENTS.] Each safety program must 
 36.36  include, but not be limited to: 
 37.1      (1) new employee general safety orientation; 
 37.2      (2) job- or task-specific safety training; 
 37.3      (3) continuous refresher safety training, including 
 37.4   periodic safety meetings; 
 37.5      (4) periodic hazard assessment, with corrective actions 
 37.6   identified; and 
 37.7      (5) appropriate documentation of performance of the 
 37.8   activities. 
 37.9      Subd. 3.  [LARGER EMPLOYERS.] An employer of more than five 
 37.10  employees must have: 
 37.11     (1) procedures of reporting and investigating all 
 37.12  work-related incidents, accidents, injuries, and illnesses; and 
 37.13     (2) policies and procedures that assign specific safety 
 37.14  responsibilities and safety performance accountability. 
 37.15     Subd. 4.  [INSURANCE CONTRACT.] Each insurance contract or 
 37.16  agreement must require each insured employer to implement a 
 37.17  safety program as part of the contract or agreement to provide 
 37.18  workers' compensation coverage. 
 37.19     Sec. 5.  [SMALL BUSINESS WORKERS' COMPENSATION SAFETY PILOT 
 37.20  PROJECT.] 
 37.21     The commissioner of commerce shall by July 1, 1995, 
 37.22  contract with the division of environmental and occupational 
 37.23  health of the school of public health of the University of 
 37.24  Minnesota for a pilot injury prevention project.  The contract 
 37.25  shall require the department of environmental and occupational 
 37.26  health to consult and provide assistance about ergonomic 
 37.27  problems to small employers insured by the state assigned risk 
 37.28  plan.  The consultative and assistance services shall focus on 
 37.29  employers having employees that can most benefit from the 
 37.30  consultation and assistance.  The contract shall be for the 
 37.31  period July 1, 1995 to June 30, 1997.  For the purpose of this 
 37.32  section, small employer means an employer with less than 500 
 37.33  employees. 
 37.34     Sec. 6.  [SMALL BUSINESS INJURY AND ILLNESS PREVENTION 
 37.35  SURVEY.] 
 37.36     The division of environmental and occupational health of 
 38.1   the school of public health of the University of Minnesota shall 
 38.2   evaluate injury and illness prevention activities of small 
 38.3   business by surveying small businesses to assess the following: 
 38.4      (1) current use of occupational safety and health services 
 38.5   by small businesses; 
 38.6      (2) specific areas in which small business needs 
 38.7   assistance; 
 38.8      (3) in what form is desired assistance most helpful; 
 38.9      (4) what services are sponsored by public and public sector 
 38.10  programs; 
 38.11     (5) what measures exist to assess the effectiveness of 
 38.12  these programs; and 
 38.13     (6) how can these programs be best adapted by Minnesota. 
 38.14     The division shall provide technical assistance and advice 
 38.15  to small businesses as part of the survey process. 
 38.16     For the purpose of this section, small business means a 
 38.17  business with less than 500 employees. 
 38.18     The survey shall be completed by January 1, 1997.  The 
 38.19  division shall report the survey results and any recommendations 
 38.20  to the legislature and the commissioner of labor and industry by 
 38.21  February 1, 1997. 
 38.22     Sec. 7.  [EFFECTIVE DATE.] 
 38.23     Sections 1, 2, and 4, subdivision 4, are effective for 
 38.24  policies of insurance insured or renewed after August 1, 1995. 
 38.25                             ARTICLE 4
 38.26                      INDEPENDENT CONTRACTORS
 38.27     Section 1.  Minnesota Statutes 1994, section 176.041, 
 38.28  subdivision 1, is amended to read: 
 38.29     Subdivision 1.  [EMPLOYMENTS EXCLUDED.] This chapter does 
 38.30  not apply to any of the following:  
 38.31     (a) a person employed by a common carrier by railroad 
 38.32  engaged in interstate or foreign commerce and who is covered by 
 38.33  the Federal Employers' Liability Act, United States Code, title 
 38.34  45, sections 51 to 60, or other comparable federal law; 
 38.35     (b) a person employed by a family farm as defined by 
 38.36  section 176.011, subdivision 11a; 
 39.1      (c) the spouse, parent, and child, regardless of age, of a 
 39.2   farmer-employer working for the farmer-employer; 
 39.3      (d) a sole proprietor, or the spouse, parent, and child, 
 39.4   regardless of age, of a sole proprietor; 
 39.5      (e) a partner engaged in a farm operation or a partner 
 39.6   engaged in a business and the spouse, parent, and child, 
 39.7   regardless of age, of a partner in the farm operation or 
 39.8   business; 
 39.9      (f) an executive officer of a family farm corporation; 
 39.10     (g) an executive officer of a closely held corporation 
 39.11  having less than 22,880 hours of payroll in the preceding 
 39.12  calendar year, if that executive officer owns at least 25 
 39.13  percent of the stock of the corporation; 
 39.14     (h) a spouse, parent, or child, regardless of age, of an 
 39.15  executive officer of a family farm corporation as defined in 
 39.16  section 500.24, subdivision 2, and employed by that family farm 
 39.17  corporation; 
 39.18     (i) a spouse, parent, or child, regardless of age, of an 
 39.19  executive officer of a closely held corporation who is referred 
 39.20  to in paragraph (g); 
 39.21     (j) another farmer or a member of the other farmer's family 
 39.22  exchanging work with the farmer-employer or family farm 
 39.23  corporation operator in the same community; 
 39.24     (k) a person whose employment at the time of the injury is 
 39.25  casual and not in the usual course of the trade, business, 
 39.26  profession, or occupation of the employer; 
 39.27     (l) persons who are independent contractors as defined by 
 39.28  rules adopted by the commissioner pursuant to section 176.83 
 39.29  except that this exclusion does not apply to an employee of an 
 39.30  independent contractor nor to an independent contractor declared 
 39.31  an employee under section 176.042; 
 39.32     (m) an officer or a member of a veterans' organization 
 39.33  whose employment relationship arises solely by virtue of 
 39.34  attending meetings or conventions of the veterans' organization, 
 39.35  unless the veterans' organization elects by resolution to 
 39.36  provide coverage under this chapter for the officer or member; 
 40.1      (n) a person employed as a household worker in, for, or 
 40.2   about a private home or household who earns less than $1,000 in 
 40.3   cash in a three-month period from a single private home or 
 40.4   household provided that a household worker who has earned $1,000 
 40.5   or more from the household worker's present employer in a 
 40.6   three-month period within the previous year is covered by this 
 40.7   chapter regardless of whether or not the household worker has 
 40.8   earned $1,000 in the present quarter; 
 40.9      (o) persons employed by a closely held corporation who are 
 40.10  related by blood or marriage, within the third degree of kindred 
 40.11  according to the rules of civil law, to an officer of the 
 40.12  corporation, who is referred to in paragraph (g), if the 
 40.13  corporation files a written election with the commissioner to 
 40.14  exclude such individuals.  A written election is not required 
 40.15  for a person who is otherwise excluded from this chapter by this 
 40.16  section; 
 40.17     (p) a nonprofit association which does not pay more than 
 40.18  $1,000 in salary or wages in a year; 
 40.19     (q) persons covered under the Domestic Volunteer Service 
 40.20  Act of 1973, as amended, United States Code, title 42, sections 
 40.21  5011, et seq.; 
 40.22     (r) a manager of a limited liability company having ten or 
 40.23  fewer members and having less than 22,880 hours of payroll in 
 40.24  the preceding calendar year, if that manager owns at least a 25 
 40.25  percent membership interest in the limited liability company; 
 40.26     (s) a spouse, parent, or child, regardless of age, of a 
 40.27  manager of a limited liability company described in paragraph 
 40.28  (r); 
 40.29     (t) persons employed by a limited liability company having 
 40.30  ten or fewer members and having less than 22,880 hours of 
 40.31  payroll in the preceding calendar year who are related by blood 
 40.32  or marriage, within the third degree of kindred according to the 
 40.33  rules of civil law, to a manager of a limited liability company 
 40.34  described in paragraph (r), if the company files a written 
 40.35  election with the commissioner to exclude these persons.  A 
 40.36  written election is not required for a person who is otherwise 
 41.1   excluded from this chapter by this section; or 
 41.2      (u) members of limited liability companies who satisfy the 
 41.3   requirements of paragraph (l). 
 41.4      Sec. 2.  [176.042] [INDEPENDENT CONTRACTORS; BUILDING 
 41.5   CONSTRUCTION OR IMPROVEMENTS.] 
 41.6      Subdivision 1.  [GENERAL RULE; ARE EMPLOYEES.] Except as 
 41.7   provided in subdivision 2, an independent contractor is an 
 41.8   employee for the purposes of this chapter if: 
 41.9      (1) the independent contractor performs construction trade 
 41.10  or craft services at a commercial or residential building 
 41.11  construction or improvement project in the private or public 
 41.12  sector; and 
 41.13     (2) those services are performed in the course of the trade 
 41.14  or business of the person or business entity with whom the 
 41.15  independent contractor has contracted. 
 41.16     Subd. 2.  [EXCEPTION.] An independent contractor is not an 
 41.17  employee pursuant to subdivision 1 if the independent contractor 
 41.18  meets all of the following conditions: 
 41.19     (1) maintains a separate business with the independent 
 41.20  contractor's own office, equipment, materials, and other 
 41.21  facilities; 
 41.22     (2) holds or has applied for a federal employer 
 41.23  identification number; 
 41.24     (3) operates under contracts to perform specific services 
 41.25  or work for specific amounts of money and under which the 
 41.26  independent contractor controls the means of performing the 
 41.27  services or work; 
 41.28     (4) incurs the main expenses related to the service or work 
 41.29  that the independent contractor performs under contract; 
 41.30     (5) is responsible for the satisfactory completion of work 
 41.31  or services that the independent contractor contracts to perform 
 41.32  and is liable for a failure to complete the work or service; 
 41.33     (6) receives compensation for work or service performed 
 41.34  under a contract on a commission or per job or competitive bid 
 41.35  basis and not on any other basis; 
 41.36     (7) may realize a profit or suffer a loss under contracts 
 42.1   to perform work or service; 
 42.2      (8) has continuing or recurring business liabilities or 
 42.3   obligations; and 
 42.4      (9) the success or failure of the independent contractor's 
 42.5   business depends on the relationship of business receipts to 
 42.6   expenditures. 
 42.7      Sec. 3.  [EFFECTIVE DATE.] 
 42.8      Sections 1 and 2 are effective October 1, 1995. 
 42.9                              ARTICLE 5
 42.10                               FRAUD
 42.11     Section 1.  Minnesota Statutes 1994, section 13.69, 
 42.12  subdivision 1, is amended to read: 
 42.13     Subdivision 1.  [CLASSIFICATIONS.] (a) The following 
 42.14  government data of the department of public safety are private 
 42.15  data:  
 42.16     (1) medical data on driving instructors, licensed drivers, 
 42.17  and applicants for parking certificates and special license 
 42.18  plates issued to physically handicapped persons; and 
 42.19     (2) social security numbers in driver's license and motor 
 42.20  vehicle registration records, except that social security 
 42.21  numbers must be provided to the department of revenue for 
 42.22  purposes of tax administration and the department of labor and 
 42.23  industry for purposes of workers' compensation administration 
 42.24  and enforcement.  
 42.25     (b) The following government data of the department of 
 42.26  public safety are confidential data:  data concerning an 
 42.27  individual's driving ability when that data is received from a 
 42.28  member of the individual's family. 
 42.29     Sec. 2.  Minnesota Statutes 1994, section 175.16, is 
 42.30  amended to read: 
 42.31     175.16 [DIVISIONS.] 
 42.32     Subdivision 1.  [ESTABLISHED.] The department of labor and 
 42.33  industry shall consist of the following divisions:  division of 
 42.34  workers' compensation, division of boiler inspection, division 
 42.35  of occupational safety and health, division of statistics, 
 42.36  division of steamfitting standards, division of voluntary 
 43.1   apprenticeship, division of labor standards, and such other 
 43.2   divisions as the commissioner of the department of labor and 
 43.3   industry may deem necessary and establish.  Each division of the 
 43.4   department and persons in charge thereof shall be subject to the 
 43.5   supervision of the commissioner of the department of labor and 
 43.6   industry and, in addition to such duties as are or may be 
 43.7   imposed on them by statute, shall perform such other duties as 
 43.8   may be assigned to them by said commissioner. 
 43.9      Subd. 2.  [FRAUD INVESTIGATION UNIT.] The department of 
 43.10  labor and industry shall contain a fraud investigation unit for 
 43.11  the purposes of investigating fraudulent or other illegal 
 43.12  practices of health care providers, employers, insurers, 
 43.13  attorneys, employees, and others related to workers' 
 43.14  compensation and to investigate other matters under the 
 43.15  jurisdiction of the department. 
 43.16     The director of the fraud investigation unit shall be 
 43.17  appointed by and is subject to the control and direction of the 
 43.18  commissioner.  The director shall have full investigative 
 43.19  powers, including the power to issue subpoenas to compel the 
 43.20  production of witnesses, books and records, and other 
 43.21  documents.  Subpoenas shall be served and enforced in the same 
 43.22  manner as district court subpoenas.  The director may administer 
 43.23  oaths and take and record testimony of witnesses.  Investigative 
 43.24  data obtained by the fraud investigation unit shall be treated 
 43.25  as other law enforcement and investigative data under chapter 
 43.26  13.  The fraud unit director shall refer determinations of 
 43.27  illegal activity to the attorney general or other appropriate 
 43.28  prosecuting authority.  The attorney general and other 
 43.29  appropriate prosecuting authorities must give high priority to 
 43.30  reviewing and prosecuting cases referred to them under this 
 43.31  section. 
 43.32     The attorney general shall train personnel of the 
 43.33  department of labor and industry in effective investigative 
 43.34  practices and in the requisites for successful prosecution of 
 43.35  illegal activity.  Investigators with peace officer standards 
 43.36  and training certification shall have the general powers of a 
 44.1   peace officer. 
 44.2      Sec. 3.  Minnesota Statutes 1994, section 176.181, 
 44.3   subdivision 8, is amended to read: 
 44.4      Subd. 8.  [DATA SHARING.] (a) The departments of labor and 
 44.5   industry, economic security, human services, agriculture, 
 44.6   transportation, and revenue are authorized to share information 
 44.7   regarding the employment status of individuals, including but 
 44.8   not limited to payroll and withholding and income tax 
 44.9   information, and may use that information for purposes 
 44.10  consistent with this section and regarding the employment or 
 44.11  employer status of individuals, partnerships, limited liability 
 44.12  companies, corporations, or employers, including, but not 
 44.13  limited to, general contractors, intermediate contractors, and 
 44.14  subcontractors.  The commissioner shall request data in writing 
 44.15  and the responding department shall respond to the request by 
 44.16  producing the requested data within 30 days. 
 44.17     (b) The commissioner is authorized to inspect and to order 
 44.18  the production of all payroll and other business records and 
 44.19  documents of any alleged employer in order to determine the 
 44.20  employment status of persons and compliance with this section.  
 44.21  If any person or employer refuses to comply with such an order, 
 44.22  the commissioner may apply to the district court of the county 
 44.23  where the person or employer is located for an order compelling 
 44.24  production of the documents. 
 44.25     Sec. 4.  [176.861] [DISCLOSURE OF INFORMATION.] 
 44.26     Subdivision 1.  [INSURANCE INFORMATION.] The commissioner 
 44.27  may, in writing, require an insurance company to release to the 
 44.28  commissioner any or all relevant information or evidence the 
 44.29  commissioner deems important which the company may have in its 
 44.30  possession relating to a workers' compensation claim including 
 44.31  material relating to the investigation of the claim, statements 
 44.32  of any person, and any other evidence relevant to the 
 44.33  investigation. 
 44.34     Subd. 2.  [INFORMATION RELEASED TO AUTHORIZED PERSONS.] If 
 44.35  an insurance company has reason to believe that a claim may be 
 44.36  suspicious, fraudulent, or illegal, the company shall, in 
 45.1   writing, notify the commissioner and provide the commissioner 
 45.2   with all relevant material related to the company's inquiry into 
 45.3   the claim. 
 45.4      Subd. 3.  [GOOD FAITH IMMUNITY.] An insurance company or 
 45.5   its agent acting in its behalf who releases information, whether 
 45.6   oral or written, acting in good faith, pursuant to subdivisions 
 45.7   1 and 2 is immune from any liability, civil or criminal, that 
 45.8   might otherwise be incurred or imposed. 
 45.9      Subd. 4.  [SELF-INSURER; ASSIGNED RISK PLAN.] For the 
 45.10  purposes of this section "insurance company" includes a 
 45.11  self-insurer and the assigned risk plan and their agents. 
 45.12     Sec. 5.  Minnesota Statutes 1994, section 299C.46, 
 45.13  subdivision 2, is amended to read: 
 45.14     Subd. 2.  [CRIMINAL JUSTICE AGENCY DEFINED.] For the 
 45.15  purposes of sections 299C.46 to 299C.49, "criminal justice 
 45.16  agency" shall mean an agency of the state, including the fraud 
 45.17  investigation unit of the department of labor and industry, or 
 45.18  an agency of a political subdivision charged with detection, 
 45.19  enforcement, prosecution, adjudication or incarceration in 
 45.20  respect to the criminal or traffic laws of this state. 
 45.21     Sec. 6.  Minnesota Statutes 1994, section 626.05, 
 45.22  subdivision 2, is amended to read: 
 45.23     Subd. 2.  [PEACE OFFICER.] The term "peace officer," as 
 45.24  used in sections 626.04 to 626.17, means a person who is 
 45.25  licensed as a peace officer in accordance with section 626.84, 
 45.26  subdivision 1, and who serves as a sheriff, deputy sheriff, 
 45.27  police officer, constable, conservation officer, agent of the 
 45.28  bureau of criminal apprehension, agent of the division of 
 45.29  gambling enforcement, University of Minnesota peace officer, 
 45.30  investigator of the fraud investigation unit of the department 
 45.31  of labor or industry with peace officer standards and training 
 45.32  certification, or state patrol trooper as authorized by section 
 45.33  299D.03. 
 45.34     Sec. 7.  Minnesota Statutes 1994, section 626.11, is 
 45.35  amended to read: 
 45.36     626.11 [ISSUANCE OF WARRANT.] 
 46.1      If the judge is satisfied of the existence of the grounds 
 46.2   of the application, or that there is probable cause to believe 
 46.3   their existence, the judge must issue a signed search warrant, 
 46.4   naming the judge's judicial office, to a peace officer in the 
 46.5   judge's county or, to an agent of the bureau of criminal 
 46.6   apprehension, or to an investigator of the fraud investigation 
 46.7   unit of the department of labor and industry with peace officer 
 46.8   standards and training certification.  The warrant shall direct 
 46.9   the officer or agent to search the person or place named for the 
 46.10  property or things specified, and to retain the property or 
 46.11  things in the officer's or agent's custody subject to order of 
 46.12  the court issuing the warrant. 
 46.13     Sec. 8.  Minnesota Statutes 1994, section 626.13, is 
 46.14  amended to read: 
 46.15     626.13 [SERVICE; PERSONS MAKING.] 
 46.16     A search warrant may in all cases be served by any of the 
 46.17  officers mentioned in its directions, but by no other person, 
 46.18  except in aid of the officer on the officer's requiring it, the 
 46.19  officer being present and acting in its execution.  If the 
 46.20  warrant is to be served by an agent of the bureau of criminal 
 46.21  apprehension, an agent of the division of gambling 
 46.22  enforcement, an investigator of the fraud investigation unit of 
 46.23  the department of labor and industry with peace officer 
 46.24  standards and training certification, a state patrol trooper, or 
 46.25  a conservation officer, the agent, investigator, state patrol 
 46.26  trooper, or conservation officer shall notify the chief of 
 46.27  police of an organized full-time police department of the 
 46.28  municipality or, if there is no such local chief of police, the 
 46.29  sheriff or a deputy sheriff of the county in which service is to 
 46.30  be made prior to execution. 
 46.31     Sec. 9.  Minnesota Statutes 1994, section 626.84, 
 46.32  subdivision 1, is amended to read: 
 46.33     Subdivision 1.  [DEFINITIONS.] For purposes of sections 
 46.34  626.84 to 626.863, the following terms have the meanings given 
 46.35  them: 
 46.36     (a) "Board" means the board of peace officer standards and 
 47.1   training. 
 47.2      (b) "Director" means the executive director of the board. 
 47.3      (c) "Peace officer" means an employee or an elected or 
 47.4   appointed official of a political subdivision or law enforcement 
 47.5   agency who is licensed by the board, charged with the prevention 
 47.6   and detection of crime and the enforcement of the general 
 47.7   criminal laws of the state and who has the full power of arrest, 
 47.8   and shall also include the Minnesota state patrol, agents of the 
 47.9   division of gambling enforcement, investigators of the fraud 
 47.10  investigation unit of the department of labor and industry with 
 47.11  peace officer standards and certification training, and state 
 47.12  conservation officers. 
 47.13     (d) "Constable" has the meaning assigned to it in section 
 47.14  367.40. 
 47.15     (e) "Deputy constable" has the meaning assigned to it in 
 47.16  section 367.40. 
 47.17     (f) "Part-time peace officer" means an individual licensed 
 47.18  by the board whose services are utilized by law enforcement 
 47.19  agencies no more than an average of 20 hours per week, not 
 47.20  including time spent on call when no call to active duty is 
 47.21  received, calculated on an annual basis, who has either full 
 47.22  powers of arrest or authorization to carry a firearm while on 
 47.23  active duty.  The term shall apply even though the individual 
 47.24  receives no compensation for time spent on active duty, and 
 47.25  shall apply irrespective of the title conferred upon the 
 47.26  individual by any law enforcement agency.  The limitation on the 
 47.27  average number of hours in which the services of a part-time 
 47.28  peace officer may be utilized shall not apply to a part-time 
 47.29  peace officer who has formally notified the board pursuant to 
 47.30  rules adopted by the board of the part-time peace officer's 
 47.31  intention to pursue the specialized training for part-time peace 
 47.32  officers who desire to become peace officers pursuant to 
 47.33  sections 626.843, subdivision 1, clause (g), and 626.845, 
 47.34  subdivision 1, clause (g).  
 47.35     (g) "Reserve officer" means an individual whose services 
 47.36  are utilized by a law enforcement agency to provide 
 48.1   supplementary assistance at special events, traffic or crowd 
 48.2   control, and administrative or clerical assistance.  A reserve 
 48.3   officer's duties do not include enforcement of the general 
 48.4   criminal laws of the state, and the officer does not have full 
 48.5   powers of arrest or authorization to carry a firearm on duty.  
 48.6      (h) "Law enforcement agency" means a unit of state or local 
 48.7   government that is authorized by law to grant full powers of 
 48.8   arrest and to charge a person with the duties of preventing and 
 48.9   detecting crime and enforcing the general criminal laws of the 
 48.10  state. 
 48.11     (i) "Professional peace officer education" means a 
 48.12  post-secondary degree program, or a nondegree program for 
 48.13  persons who already have a college degree, that is offered by a 
 48.14  college or university in Minnesota, designed for persons seeking 
 48.15  licensure as a peace officer, and approved by the board. 
 48.16     Sec. 10.  [EFFECTIVE DATE.] 
 48.17     Sections 1 to 9 are effective July 1, 1995. 
 48.18                             ARTICLE 6
 48.19           WORKERS' COMPENSATION REINSURANCE ASSOCIATION 
 48.20     Section 1.  Minnesota Statutes 1994, section 79.34, 
 48.21  subdivision 2, is amended to read: 
 48.22     Subd. 2.  [LOSSES; RETENTION LIMITS.] The reinsurance 
 48.23  association shall provide and each member shall accept 
 48.24  indemnification for 100 percent of the amount of ultimate loss 
 48.25  sustained in each loss occurrence relating to one or more claims 
 48.26  arising out of a single compensable event, including aggregate 
 48.27  losses related to a single event or occurrence which constitutes 
 48.28  a single loss occurrence, under chapter 176 on and after October 
 48.29  1, 1979, in excess of $300,000 or $100,000 a low, a high, or a 
 48.30  super retention limit, at the option of the member.  In case of 
 48.31  occupational disease causing disablement on and after October 1, 
 48.32  1979, each person suffering disablement due to occupational 
 48.33  disease is considered to be involved in a separate loss 
 48.34  occurrence.  The lower retention limit shall be increased to the 
 48.35  nearest $10,000, on January 1, 1982 and on each January 1 
 48.36  thereafter by the percentage increase in the statewide average 
 49.1   weekly wage, as determined in accordance with section 176.011, 
 49.2   subdivision 20.  On January 1, 1982 and on each January 1 
 49.3   thereafter, the higher retention limit shall be increased by the 
 49.4   amount necessary to retain a $200,000 difference between the two 
 49.5   retention limits.  On January 1, 1995, the lower retention limit 
 49.6   is $250,000, which shall also be known as the 1995 base 
 49.7   retention limit.  On each January 1 thereafter, the cumulative 
 49.8   annual percentage changes in the statewide average weekly wage 
 49.9   after October 1, 1994, as determined in accordance with section 
 49.10  176.011, subdivision 20, shall first be multiplied by the 1995 
 49.11  base retention limit, the result of which shall then be added to 
 49.12  the 1995 base retention limit.  The resulting figure shall be 
 49.13  rounded to the nearest $10,000, yielding the low retention limit 
 49.14  for that year, provided that the low retention limit shall not 
 49.15  be reduced in any year.  The high retention limit shall be two 
 49.16  times the low retention limit and shall be adjusted when the low 
 49.17  retention limit is adjusted.  The super retention limit shall be 
 49.18  four times the low retention limit and shall be adjusted when 
 49.19  the low retention limit is adjusted.  Ultimate loss as used in 
 49.20  this section means the actual loss amount which a member is 
 49.21  obligated to pay and which is paid by the member for workers' 
 49.22  compensation benefits payable under chapter 176 and shall not 
 49.23  include claim expenses, assessments, damages or penalties.  For 
 49.24  losses incurred on or after January 1, 1979, any amounts paid by 
 49.25  a member pursuant to sections 176.183, 176.221, 176.225, and 
 49.26  176.82 shall not be included in ultimate loss and shall not be 
 49.27  indemnified by the reinsurance association.  A loss is incurred 
 49.28  by the reinsurance association on the date on which the accident 
 49.29  or other compensable event giving rise to the loss occurs, and a 
 49.30  member is liable for a loss up to its retention limit in effect 
 49.31  at the time that the loss was incurred, except that members 
 49.32  which are determined by the reinsurance association to be 
 49.33  controlled by or under common control with another member, and 
 49.34  which are liable for claims from one or more employees entitled 
 49.35  to compensation for a single compensable event, including 
 49.36  aggregate losses relating to a single loss occurrence, may 
 50.1   aggregate their losses and obtain indemnification from the 
 50.2   reinsurance association for the aggregate losses in excess of 
 50.3   the higher highest retention limit selected by any of the 
 50.4   members in effect at the time the loss was incurred.  Each 
 50.5   member is liable for payment of its ultimate loss and shall be 
 50.6   entitled to indemnification from the reinsurance association for 
 50.7   the ultimate loss in excess of the member's retention limit in 
 50.8   effect at the time of the loss occurrence. 
 50.9      A member that chooses the higher high or super retention 
 50.10  limit shall retain the liability for all losses below the higher 
 50.11  chosen retention limit itself and shall not transfer the 
 50.12  liability to any other entity or reinsure or otherwise contract 
 50.13  for reimbursement or indemnification for losses below its 
 50.14  retention limit, except in the following cases:  (a) when the 
 50.15  reinsurance or contract is with another member which, directly 
 50.16  or indirectly, through one or more intermediaries, control or 
 50.17  are controlled by or are under common control with the member; 
 50.18  (b) when the reinsurance or contract provides for reimbursement 
 50.19  or indemnification of a member if and only if the total of all 
 50.20  claims which the member pays or incurs, but which are not 
 50.21  reimbursable or subject to indemnification by the reinsurance 
 50.22  association for a given period of time, exceeds a dollar value 
 50.23  or percentage of premium written or earned and stated in the 
 50.24  reinsurance agreement or contract; (c) when the reinsurance or 
 50.25  contract is a pooling arrangement with other insurers where 
 50.26  liability of the member to pay claims pursuant to chapter 176 is 
 50.27  incidental to participation in the pool and not as a result of 
 50.28  providing workers' compensation insurance to employers on a 
 50.29  direct basis under chapter 176; (d) when the reinsurance or 
 50.30  contract is limited to all the claims of a specific insured of a 
 50.31  member which are reimbursed or indemnified by a reinsurer which, 
 50.32  directly or indirectly, through one or more intermediaries, 
 50.33  controls or is controlled by or is under common control with the 
 50.34  insured of the member so long as any subsequent contract or 
 50.35  reinsurance of the reinsurer relating to the claims of the 
 50.36  insured of a member is not inconsistent with the bases of 
 51.1   exception provided under clauses (a), (b) and (c); or (e) when 
 51.2   the reinsurance or contract is limited to all claims of a 
 51.3   specific self-insurer member which are reimbursed or indemnified 
 51.4   by a reinsurer which, directly or indirectly, through one or 
 51.5   more intermediaries, controls or is controlled by or is under 
 51.6   common control with the self-insurer member so long as any 
 51.7   subsequent contract or reinsurance of the reinsurer relating to 
 51.8   the claims of the self-insurer member are not inconsistent with 
 51.9   the bases for exception provided under clauses (a), (b) and (c). 
 51.10     Whenever it appears to the commissioner of labor and 
 51.11  industry that any member that chooses the higher high or super 
 51.12  retention limit has participated in the transfer of liability to 
 51.13  any other entity or reinsured or otherwise contracted for 
 51.14  reimbursement or indemnification of losses below its retention 
 51.15  limit in a manner inconsistent with the bases for exception 
 51.16  provided under clauses (a), (b), (c), (d), and (e), the 
 51.17  commissioner may, after giving notice and an opportunity to be 
 51.18  heard, order the member to pay to the state of Minnesota an 
 51.19  amount not to exceed twice the difference between the 
 51.20  reinsurance premium for the higher and lower high or super 
 51.21  retention limit, as appropriate, and the low retention limit 
 51.22  applicable to the member for each year in which the prohibited 
 51.23  reinsurance or contract was in effect.  Any member subject to 
 51.24  this penalty provision shall continue to be bound by its 
 51.25  selection of the higher high or super retention limit for 
 51.26  purposes of membership in the reinsurance association.  
 51.27     Sec. 2.  Minnesota Statutes 1994, section 79.35, is amended 
 51.28  to read: 
 51.29     79.35 [DUTIES; RESPONSIBILITIES; POWERS.] 
 51.30     The reinsurance association shall do the following on 
 51.31  behalf of its members: 
 51.32     (a) Assume 100 percent of the liability as provided in 
 51.33  section 79.34; 
 51.34     (b) Establish procedures by which members shall promptly 
 51.35  report to the reinsurance association each claim which, on the 
 51.36  basis of the injury sustained, may reasonably be anticipated to 
 52.1   involve liability to the reinsurance association if the member 
 52.2   is held liable under chapter 176.  Solely for the purpose of 
 52.3   reporting claims, the member shall in all instances consider 
 52.4   itself legally liable for the injury.  The member shall advise 
 52.5   the reinsurance association of subsequent developments likely to 
 52.6   materially affect the interest of the reinsurance association in 
 52.7   the claim; 
 52.8      (c) Maintain relevant loss and expense data relative to all 
 52.9   liabilities of the reinsurance association and require each 
 52.10  member to furnish statistics in connection with liabilities of 
 52.11  the reinsurance association at the times and in the form and 
 52.12  detail as may be required by the plan of operation; 
 52.13     (d) Calculate and charge to members a total premium 
 52.14  sufficient to cover the expected liability which the reinsurance 
 52.15  association will incur in excess of the higher retention limit 
 52.16  but less than the prefunded limit, together with incurred or 
 52.17  estimated to be incurred operating and administrative expenses 
 52.18  for the period to which this premium applies and actual claim 
 52.19  payments to be made by members, during the period to which this 
 52.20  premium applies, for claims in excess of the prefunded limit in 
 52.21  effect at the time the loss was incurred.  Each member shall be 
 52.22  charged a premium established by the board as sufficient to 
 52.23  cover the reinsurance association's incurred liabilities and 
 52.24  expenses between the member's selected retention limit and the 
 52.25  prefunded limit.  The prefunded limit shall be $2,500,000 on and 
 52.26  after October 1, 1979, provided that the prefunded limit shall 
 52.27  be increased on January 1, 1983 and on each January 1 thereafter 
 52.28  by the percentage increase in the statewide average weekly wage, 
 52.29  to the nearest $100,000, as determined in accordance with 
 52.30  section 176.011, subdivision 20 times the lower retention limit 
 52.31  established in section 79.34, subdivision 2.  Each member shall 
 52.32  be charged a proportion of the total premium calculated for its 
 52.33  selected retention limit in an amount equal to its proportion of 
 52.34  the exposure base of all members during the period to which the 
 52.35  reinsurance association premium will apply.  The exposure base 
 52.36  shall be determined by the board and is subject to the approval 
 53.1   of the commissioner of labor and industry.  In determining the 
 53.2   exposure base, the board shall consider, among other things, 
 53.3   equity, administrative convenience, records maintained by 
 53.4   members, amenability to audit, and degree of risk 
 53.5   refinement.  Each member exercising the lower retention option 
 53.6   shall also be charged a premium established by the board as 
 53.7   sufficient to cover incurred or estimated to be incurred claims 
 53.8   for the liability the reinsurance association is likely to incur 
 53.9   between the lower and higher retention limits for the period to 
 53.10  which the premium applies.  Each member shall also be charged a 
 53.11  premium determined by the board to equitably distribute excess 
 53.12  or deficient premiums from previous periods including any excess 
 53.13  or deficient premiums resulting from a retroactive change in the 
 53.14  prefunded limit.  The premiums charged to members shall not be 
 53.15  unfairly discriminatory as defined in section 79.074.  All 
 53.16  premiums shall be approved by the commissioner of labor and 
 53.17  industry; 
 53.18     (e) Require and accept the payment of premiums from members 
 53.19  of the reinsurance association; 
 53.20     (f) Receive and distribute all sums required by the 
 53.21  operation of the reinsurance association; 
 53.22     (g) Establish procedures for reviewing claims procedures 
 53.23  and practices of members of the reinsurance association.  If the 
 53.24  claims procedures or practices of a member are considered 
 53.25  inadequate to properly service the liabilities of the 
 53.26  reinsurance association, the reinsurance association may 
 53.27  undertake, or may contract with another person, including 
 53.28  another member, to adjust or assist in the adjustment of claims 
 53.29  which create a potential liability to the association.  The 
 53.30  reinsurance association may charge the cost of the adjustment 
 53.31  under this paragraph to the member, except that any penalties or 
 53.32  interest incurred under sections 176.183, 176.221, 176.225, and 
 53.33  176.82 as a result of actions by the reinsurance association 
 53.34  after it has undertaken adjustment of the claim shall not be 
 53.35  charged to the member but shall be included in the ultimate loss 
 53.36  and listed as a separate item; and 
 54.1      (h) Provide each member of the reinsurance association with 
 54.2   an annual report of the operations of the reinsurance 
 54.3   association in a form the board of directors may specify. 
 54.4      Sec. 3.  [79.551] [WCRA PREMIUM REFUND; DETERMINATION.] 
 54.5      The commissioner must disallow as excessive any premium 
 54.6   that does not include a pass-through to its policyholders of a 
 54.7   refund to an insurer of excess premium from the workers' 
 54.8   compensation reinsurance association.  This section applies 
 54.9   whether or not there is a competitive market for insurance.  
 54.10  This section does not apply if the insurer has in some other 
 54.11  manner than a premium reduction, passed through a refund to its 
 54.12  policyholders.  This section applies to a refund of excessive 
 54.13  premiums made on or after the effective date of this act and to 
 54.14  refunds made before the effective date of this act if the refund 
 54.15  was the subject of a lawsuit that was not finally determined on 
 54.16  appeal until on or after January 1, 1995. 
 54.17     Sec. 4.  [EFFECTIVE DATE.] 
 54.18     Section 1 is effective January 1, 1996.  Section 3 is 
 54.19  effective the day following final enactment. 
 54.20                             ARTICLE 7
 54.21                       COLLECTIVE BARGAINING
 54.22     Section 1.  [176.1812] [COLLECTIVE BARGAINING AGREEMENTS.] 
 54.23     Subdivision 1.  [REQUIREMENTS.] Upon appropriate filing, 
 54.24  the commissioner, compensation judge, workers' compensation 
 54.25  court of appeals, and courts shall recognize as valid and 
 54.26  binding a provision in a collective bargaining agreement between 
 54.27  a qualified employer or qualified groups of employers engaged in 
 54.28  construction, construction maintenance, and related activities 
 54.29  and the certified and exclusive representative of its employees 
 54.30  to establish certain obligations and procedures relating to 
 54.31  workers' compensation.  For purposes of this section, "qualified 
 54.32  employer" means any self-insured employer, any employer, through 
 54.33  itself or any affiliate as defined in section 60D.15, 
 54.34  subdivision 2, who is responsible for the first $100,000 or more 
 54.35  of any claim, or a private employer developing or projecting an 
 54.36  annual workers' compensation premium, in Minnesota, of $250,000 
 55.1   or more.  For purposes of this section, a "qualified group of 
 55.2   employers" means a group of private employers engaged in 
 55.3   workers' compensation group self-insurance complying with 
 55.4   section 79A.03, subdivision 6, which develops or projects annual 
 55.5   workers' compensation insurance premiums of $2,000,000 or more.  
 55.6   This agreement must be limited to, but need not include, all of 
 55.7   the following: 
 55.8      (a) an alternative dispute resolution system to supplement, 
 55.9   modify, or replace the procedural or dispute resolution 
 55.10  provisions of this chapter.  The system may include mediation, 
 55.11  arbitration, or other dispute resolution proceedings, the 
 55.12  results of which may be final and binding upon the parties.  A 
 55.13  system of arbitration shall provide that the decision of the 
 55.14  arbiter is subject to review either by the workers' compensation 
 55.15  court of appeals in the same manner as an award or order of a 
 55.16  compensation judge or, in lieu of review by the workers' 
 55.17  compensation court of appeals, by the office of administrative 
 55.18  hearings, by the district court, by the Minnesota court of 
 55.19  appeals, or by the supreme court in the same manner as the 
 55.20  workers' compensation court of appeals and may provide that any 
 55.21  arbiter's award disapproved by a court be referred back to the 
 55.22  arbiter for reconsideration and possible modification; 
 55.23     (b) an agreed list of providers of medical treatment that 
 55.24  may be the exclusive source of all medical and related treatment 
 55.25  provided under this chapter which need not be certified under 
 55.26  section 176.1351; 
 55.27     (c) the use of a limited list of impartial physicians to 
 55.28  conduct independent medical examinations; 
 55.29     (d) the creation of a light duty, modified job, or return 
 55.30  to work program; 
 55.31     (e) the use of a limited list of individuals and companies 
 55.32  for the establishment of vocational rehabilitation or retraining 
 55.33  programs which list is not subject to the requirements of 
 55.34  section 176.102; 
 55.35     (f) the establishment of safety committees and safety 
 55.36  procedures; or 
 56.1      (g) the adoption of a 24-hour health care coverage plan if 
 56.2   a 24-hour plan pilot project is authorized by law, according to 
 56.3   the terms and conditions authorized by that law. 
 56.4      Subd. 2.  [FILING AND REVIEW.] A copy of the agreement and 
 56.5   the approximate number of employees who will be covered under it 
 56.6   must be filed with the commissioner.  Within 21 days of receipt 
 56.7   of an agreement, the commissioner shall review the agreement for 
 56.8   compliance with this section and the benefit provisions of this 
 56.9   chapter and notify the parties of any additional information 
 56.10  required or any recommended modification that would bring the 
 56.11  agreement into compliance.  Upon receipt of any requested 
 56.12  information or modification, the commissioner must notify the 
 56.13  parties within 21 days whether the agreement is in compliance 
 56.14  with this section and the benefit provisions of this chapter. 
 56.15     In order for any agreement to remain in effect, it must 
 56.16  provide for a timely and accurate method of reporting to the 
 56.17  commissioner necessary information regarding service cost and 
 56.18  utilization to enable the commissioner to annually report to the 
 56.19  legislature.  The information provided to the commissioner must 
 56.20  include aggregate data on the: 
 56.21     (i) person hours and payroll covered by agreements filed; 
 56.22     (ii) number of claims filed; 
 56.23     (iii) average cost per claim; 
 56.24     (iv) number of litigated claims, including the number of 
 56.25  claims submitted to arbitration, the workers' compensation court 
 56.26  of appeals, the office of administrative hearings, the district 
 56.27  court, the Minnesota court of appeals or the supreme court; 
 56.28     (v) number of contested claims resolved prior to 
 56.29  arbitration; 
 56.30     (vi) projected incurred costs and actual costs of claims; 
 56.31     (vii) employer's safety history; 
 56.32     (viii) number of workers participating in vocational 
 56.33  rehabilitation; and 
 56.34     (ix) number of workers participating in light-duty programs.
 56.35     Subd. 3.  [REFUSAL TO RECOGNIZE.] A person aggrieved by the 
 56.36  commissioner's decision concerning an agreement may request in 
 57.1   writing, within 30 days of the date the notice is issued, the 
 57.2   initiation of a contested case proceeding under chapter 14.  The 
 57.3   request to initiate a contested case must be received by the 
 57.4   department by the 30th day after the commissioner's decision.  
 57.5   An appeal from the commissioner's final decision and order may 
 57.6   be taken to the workers' compensation court of appeals pursuant 
 57.7   to sections 176.421 and 176.442. 
 57.8      Subd. 4.  [VOID AGREEMENTS.] Nothing in this section shall 
 57.9   allow any agreement that diminishes an employee's entitlement to 
 57.10  benefits as otherwise set forth in this chapter.  For the 
 57.11  purposes of this section, the procedural rights and dispute 
 57.12  resolution agreements under subdivision 1, clauses (a) to (g), 
 57.13  are not agreements which diminish an employee's entitlement to 
 57.14  benefits.  Any agreement that diminishes an employee's 
 57.15  entitlement to benefits as set forth in this chapter is null and 
 57.16  void. 
 57.17     Subd. 5.  [NOTICE TO INSURANCE CARRIER.] If the employer is 
 57.18  insured under this chapter, the collective bargaining agreement 
 57.19  provision shall not be recognized by the commissioner, 
 57.20  compensation judge, workers' compensation court of appeals, and 
 57.21  other courts unless the employer has given notice to the 
 57.22  employer's insurance carrier, in the manner provided in the 
 57.23  insurance contract, of intent to enter into an agreement with 
 57.24  its employees as provided in this section. 
 57.25     Subd. 6.  [PILOT PROGRAM.] The commissioner shall establish 
 57.26  a pilot program ending December 31, 1997, in which up to ten 
 57.27  private employers not engaged in construction, construction 
 57.28  maintenance, and related activities shall be authorized to enter 
 57.29  into valid agreements under this section with their employees.  
 57.30  The agreements shall be recognized and enforced as provided by 
 57.31  this section.  Private employers shall participate in the pilot 
 57.32  program through collectively bargained agreements with the 
 57.33  certified and exclusive representatives of their employees and 
 57.34  without regard to the dollar insurance premium limitations in 
 57.35  subdivision 1. 
 57.36     Subd. 7.  [RULES.] The commissioner may adopt emergency or 
 58.1   permanent rules necessary to implement this section. 
 58.2                              ARTICLE 8
 58.3                       EQUITABLE APPORTIONMENT
 58.4      Section 1.  Minnesota Statutes 1994, section 176.191, is 
 58.5   amended by adding a subdivision to read: 
 58.6      Subd. 1a.  [EQUITABLE APPORTIONMENT.] Equitable 
 58.7   apportionment of liability for an injury under this chapter is 
 58.8   not allowed except that apportionment among employers and 
 58.9   insurers is allowed in a settlement agreement filed pursuant to 
 58.10  section 176.521, and an employer or insurer may require 
 58.11  equitable apportionment of liability for workers' compensation 
 58.12  benefits among employer and insurers by arbitration pursuant to 
 58.13  subdivision 5.  To the same extent limited by this subdivision, 
 58.14  contribution and reimbursement actions based on equitable 
 58.15  apportionment are not allowed under this chapter.  If 
 58.16  apportionment, contribution, or reimbursement issues are 
 58.17  arbitrated pursuant to this section, the arbitration proceeding 
 58.18  is for the limited purpose of apportioning liability for 
 58.19  workers' compensation benefits payable among employers and 
 58.20  insurers.  This subdivision applies without regard to whether 
 58.21  one or more of the injuries results from cumulative trauma or a 
 58.22  specific injury, but does not apply to an occupational disease.  
 58.23  In the case of an occupational disease, section 176.66 applies.  
 58.24  In the arbitration of equitable apportionment under this 
 58.25  section, the parties and the arbitrator must be guided by 
 58.26  general rules of arbitrator selection and presumptive 
 58.27  apportionment among employers and insurers that are developed by 
 58.28  the insurer's administrative task force and approved by the 
 58.29  commissioner of the department of labor and industry.  
 58.30  Apportionment against preexisting disability is allowed only for 
 58.31  permanent partial disability as provided in section 176.101, 
 58.32  subdivision 4a.  Nothing in this subdivision shall be 
 58.33  interpreted to repeal or in any way affect the law with respect 
 58.34  to special compensation fund liability or benefits.  
 58.35     Sec. 2.  Minnesota Statutes 1994, section 176.191, 
 58.36  subdivision 5, is amended to read: 
 59.1      Subd. 5.  [ARBITRATION.] Where a dispute exists between an 
 59.2   employer, insurer, the special compensation fund, the reopened 
 59.3   case fund, or the workers' compensation reinsurance association, 
 59.4   regarding apportionment of liability for benefits payable under 
 59.5   this chapter, the dispute and the requesting party has expended 
 59.6   over $10,000 in medical or 52 weeks worth of indemnity benefits 
 59.7   and made the request within one year thereafter, a party may be 
 59.8   submitted with consent of all interested parties request 
 59.9   submission of the dispute as to apportionment of liability among 
 59.10  employers and insurers to binding arbitration.  The request is 
 59.11  binding on all parties and mandates the submission to binding 
 59.12  arbitration.  The decision of the arbitrator shall be conclusive 
 59.13  with respect to all issues presented except as provided in 
 59.14  subdivisions 6 and 7 on the issue of apportionment among 
 59.15  employers and insurers.  Consent of the employee is not required 
 59.16  for submission of a dispute to arbitration pursuant to this 
 59.17  section and the employee is not bound by the results of the 
 59.18  arbitration.  An arbitration award shall not be admissible in 
 59.19  any other proceeding under this chapter.  Notice of the 
 59.20  proceeding shall be given to the employee.  
 59.21     The employee, or any person with material information to 
 59.22  the facts to be arbitrated, shall attend the arbitration 
 59.23  proceeding if any party to the proceeding deems it necessary. 
 59.24  Nothing said by an employee in connection with any arbitration 
 59.25  proceeding may be used against the employee in any other 
 59.26  proceeding under this chapter.  Reasonable expenses of meals, 
 59.27  lost wages, and travel of the employee or witnesses in attending 
 59.28  shall be reimbursed on a pro rata basis.  Arbitration costs 
 59.29  shall be paid by the parties, except the employee, on a pro rata 
 59.30  basis. 
 59.31     Sec. 3.  Minnesota Statutes 1994, section 176.191, 
 59.32  subdivision 7, is amended to read: 
 59.33     Subd. 7.  [REPRESENTATION.] If an employee brings an action 
 59.34  under the circumstances described in subdivision 6 in which 
 59.35  there had been an arbitration proceeding under subdivisions 1a 
 59.36  and 5, the parties to the previous arbitration may be 
 60.1   represented at the new action by a common or joint attorney.  
 60.2      Sec. 4.  [EFFECTIVE DATE.] 
 60.3      This article is effective October 1, 1995, and applies to 
 60.4   related injuries occurring on and after that date. 
 60.5                              ARTICLE 9
 60.6                     CHAPTER 79A GROUP INSURANCE
 60.7      Section 1.  Minnesota Statutes 1994, section 79A.01, is 
 60.8   amended by adding a subdivision to read: 
 60.9      Subd. 11.  [TRADE ASSOCIATION.] "Trade association" means 
 60.10  an association of businesses with common business interest whose 
 60.11  members are engaged in similar employment activities and have 
 60.12  joined together for the purpose of promoting their common 
 60.13  interest.  For the purposes of this chapter, "trade association" 
 60.14  includes a cooperative organized under chapter 308A. 
 60.15     Sec. 2.  Minnesota Statutes 1994, section 79A.01, is 
 60.16  amended by adding a subdivision to read: 
 60.17     Subd. 12.  [PREFERRED RISK GROUP.] "Preferred risk group" 
 60.18  means a group of members of a trade association that has been in 
 60.19  existence and operating for at least five consecutive years 
 60.20  before application to self-insure for workers' compensation and 
 60.21  whose board membership consists of a manager of the trade 
 60.22  association, and at least two of the trade association's board 
 60.23  members.  Members of the preferred risk group shall constitute a 
 60.24  majority of the board of directors.  No third-party 
 60.25  administrators shall serve on the board. 
 60.26     Sec. 3.  Minnesota Statutes 1994, section 79A.02, 
 60.27  subdivision 1, is amended to read: 
 60.28     Subdivision 1.  [MEMBERSHIP.] For the purposes of assisting 
 60.29  the commissioner, there is established a workers' compensation 
 60.30  self-insurers' advisory committee of five members that are 
 60.31  employers or groups authorized to self-insure in Minnesota.  
 60.32  Three of the members shall be elected by the members of the 
 60.33  self-insurers' security fund and two shall be appointed by the 
 60.34  commissioner.  One of the members shall be a group. 
 60.35     Sec. 4.  Minnesota Statutes 1994, section 79A.02, 
 60.36  subdivision 4, is amended to read: 
 61.1      Subd. 4.  [RECOMMENDATIONS TO COMMISSIONER REGARDING 
 61.2   REVOCATION.] After each fifth anniversary from the date each 
 61.3   individual and, group, or preferred risk group self-insurer 
 61.4   becomes certified to self-insure, the committee shall review all 
 61.5   relevant financial data filed with the department of commerce 
 61.6   that is otherwise available to the public and make a 
 61.7   recommendation to the commissioner about whether each 
 61.8   self-insurer's certificate should be revoked.  
 61.9      Sec. 5.  Minnesota Statutes 1994, section 79A.03, 
 61.10  subdivision 2, is amended to read: 
 61.11     Subd. 2.  [CERTIFIED FINANCIAL STATEMENT.] Each application 
 61.12  for self-insurance shall be accompanied by a certified financial 
 61.13  statement, except in the case of a group application.  Certified 
 61.14  financial statements for a period ending more than six months 
 61.15  prior to the date of the application must be accompanied by an 
 61.16  affidavit, signed by a company officer under oath, stating that 
 61.17  there has been no material lessening of the net worth nor other 
 61.18  adverse changes in its financial condition since the end of the 
 61.19  period.  The commissioner may require additional financial 
 61.20  information necessary to carry out the purpose of this chapter. 
 61.21     Sec. 6.  Minnesota Statutes 1994, section 79A.03, 
 61.22  subdivision 6, is amended to read: 
 61.23     Subd. 6.  [APPLICATIONS FOR GROUP SELF-INSURANCE.] (a) Two 
 61.24  or more employers, or a trade association may apply to the 
 61.25  commissioner for the authority to self-insure as a group or 
 61.26  preferred risk group, using forms available from the 
 61.27  commissioner.  This initial application shall be accompanied by 
 61.28  a copy of the bylaws or plan of operation adopted by the group.  
 61.29  Such bylaws or plan of operation shall conform to the conditions 
 61.30  prescribed by law or rule.  The commissioner shall approve or 
 61.31  disapprove the bylaws within 60 days unless a question as to the 
 61.32  legality of a specific bylaw or plan provision has been referred 
 61.33  to the attorney general's office.  The commissioner shall make a 
 61.34  determination as to the application within 15 days after receipt 
 61.35  of the requested response from the attorney general's office. 
 61.36     (b) After the initial application and the bylaws or plan of 
 62.1   operation have been approved by the commissioner or at the time 
 62.2   of the initial application, the group or preferred risk group 
 62.3   shall submit the names of employers that will be members of the 
 62.4   group; an indemnity agreement providing for joint and several 
 62.5   liability, and in the case of a preferred group, an individual 
 62.6   and proportional liability assessment agreement for all group 
 62.7   members for any and all workers' compensation claims incurred by 
 62.8   any member of the group, as set forth in Minnesota Rules, part 
 62.9   2780.9920, signed by an officer of each member; and an 
 62.10  accounting review performed by a certified public accountant.  A 
 62.11  certified financial audit may be filed in lieu of an accounting 
 62.12  review.  In the case of preferred risk group members, individual 
 62.13  member financial statements need only be sent to the group, 
 62.14  unless one member's premium exceeds 30 percent of the total 
 62.15  group premium.  If one member exceeds 30 percent, then that 
 62.16  member must provide a reviewed or audited financial statement to 
 62.17  the department. 
 62.18     Sec. 7.  Minnesota Statutes 1994, section 79A.03, 
 62.19  subdivision 7, is amended to read: 
 62.20     Subd. 7.  [FINANCIAL STANDARDS.] A group or preferred group 
 62.21  risk proposing to self-insure shall have and maintain: 
 62.22     (a) A combined net worth of all of the members of an amount 
 62.23  at least equal to the greater of ten times the retention 
 62.24  selected with the workers' compensation reinsurance association 
 62.25  or one-third of the current annual modified premium of the 
 62.26  members.  In the case of preferred risk group members, members 
 62.27  shall have a combined net worth of all of the members of an 
 62.28  amount at least equal to the greater of 15 times the retention 
 62.29  selected with the workers' compensation reinsurance association 
 62.30  or 100 percent of the current annual modified premium of the 
 62.31  members, whichever is greater. 
 62.32     (b) Sufficient assets, net worth, and liquidity to promptly 
 62.33  and completely meet all obligations of its members under chapter 
 62.34  176 or this chapter.  In determining whether a group is in sound 
 62.35  financial condition, consideration shall be given to the 
 62.36  combined net worth of the member companies; the consolidated 
 63.1   long-term and short-term debt to equity ratios of the member 
 63.2   companies; any excess insurance other than reinsurance with the 
 63.3   workers' compensation reinsurance association, purchased by the 
 63.4   group from an insurer licensed in Minnesota or from an 
 63.5   authorized surplus line carrier; other financial data requested 
 63.6   by the commissioner or submitted by the group; and the combined 
 63.7   workers' compensation experience of the group for the last four 
 63.8   years. 
 63.9      Sec. 8.  Minnesota Statutes 1994, section 79A.03, 
 63.10  subdivision 8, is amended to read: 
 63.11     Subd. 8.  [PROCESSING APPLICATION.] The commissioner shall 
 63.12  grant or deny the group's application to self-insure within 60 
 63.13  days after a complete application has been filed, provided that 
 63.14  the time may be extended for an additional 30 days upon 15 days' 
 63.15  prior notice to the applicant.  The commissioner shall grant 
 63.16  approval for self-insurance upon a determination that the 
 63.17  financial ability of the self-insurer's group is sufficient to 
 63.18  fulfill all joint and several obligations of the member 
 63.19  companies that may arise under chapter 176 or this chapter; the 
 63.20  gross annual premium of the group members is at least 
 63.21  $300,000 and $500,000 for preferred risk group members; the 
 63.22  group has established a fund pursuant to Minnesota Rules, parts 
 63.23  2780.4100 to 2780.5000; the group has contracted with a licensed 
 63.24  workers' compensation service company to administer its program; 
 63.25  and the required securities or surety bond shall be on deposit 
 63.26  prior to the effective date of coverage for any member.  
 63.27  Approval shall be effective until revoked by order of the 
 63.28  commissioner or until the employer members of the group become 
 63.29  insured. 
 63.30     Sec. 9.  Minnesota Statutes 1994, section 79A.03, 
 63.31  subdivision 9, is amended to read: 
 63.32     Subd. 9.  [FILING REPORTS.] (a) Incurred losses, paid and 
 63.33  unpaid, specifying indemnity and medical losses by 
 63.34  classification, payroll by classification, and current estimated 
 63.35  outstanding liability for workers' compensation shall be 
 63.36  reported to the commissioner by each self-insurer on a calendar 
 64.1   year basis, in a manner and on forms available from the 
 64.2   commissioner.  Payroll information must be filed by April 1 of 
 64.3   the following year, and loss information and total workers' 
 64.4   compensation liability must be filed by August 1 of the 
 64.5   following year.  
 64.6      (b) Each self-insurer shall, under oath, attest to the 
 64.7   accuracy of each report submitted pursuant to paragraph (a).  
 64.8   Upon sufficient cause, the commissioner shall require the 
 64.9   self-insurer to submit a certified audit of payroll and claim 
 64.10  records conducted by an independent auditor approved by the 
 64.11  commissioner, based on generally accepted accounting principles 
 64.12  and generally accepted auditing standards, and supported by an 
 64.13  actuarial review and opinion of the future contingent 
 64.14  liabilities.  The basis for sufficient cause shall include the 
 64.15  following factors:  where the losses reported appear 
 64.16  significantly different from similar types of businesses; where 
 64.17  major changes in the reports exist from year to year, which are 
 64.18  not solely attributable to economic factors; or where the 
 64.19  commissioner has reason to believe that the losses and payroll 
 64.20  in the report do not accurately reflect the losses and payroll 
 64.21  of that employer.  If any discrepancy is found, the commissioner 
 64.22  shall require changes in the self-insurer's or workers' 
 64.23  compensation service company record keeping practices. 
 64.24     (c) With the annual loss report due August 1, each 
 64.25  self-insurer shall report to the commissioner any workers' 
 64.26  compensation claim from the previous year where the full, 
 64.27  undiscounted value is estimated to exceed $50,000, in a manner 
 64.28  and on forms prescribed by the commissioner.  
 64.29     (d) Each individual self-insurer shall, within four months 
 64.30  after the end of its fiscal year, annually file with the 
 64.31  commissioner its latest 10K report required by the Securities 
 64.32  and Exchange Commission.  If an individual self-insurer does not 
 64.33  prepare a 10K report, it shall file an annual certified 
 64.34  financial statement, together with such other financial 
 64.35  information as the commissioner may require to substantiate data 
 64.36  in the financial statement.  
 65.1      (e) Each member of the group shall, within four months 
 65.2   after the end of each fiscal year for that group, file the most 
 65.3   recent annual financial statement, reviewed by a certified 
 65.4   public accountant in accordance with the Statements on Standards 
 65.5   for Accounting and Review Services, Volume 2, the American 
 65.6   Institute of Certified Public Accountants Professional 
 65.7   Standards, or audited in accordance with generally accepted 
 65.8   auditing standards, together with such other financial 
 65.9   information the commissioner may require.  In addition, the 
 65.10  group shall file, within four months after the end of each 
 65.11  fiscal year for that group, combining financial statements of 
 65.12  the group members, compiled by a certified public accountant in 
 65.13  accordance with the Statements on Standards for Accounting and 
 65.14  Review Services, Volume 2, the American Institute of Certified 
 65.15  Public Accountants Professional Standards.  Payroll and loss 
 65.16  information must also be provided to the Workers' Compensation 
 65.17  Insurers Association.  The combining financial statements shall 
 65.18  include, but not be limited to, a balance sheet, income 
 65.19  statement, statement of changes in net worth, and statement of 
 65.20  cash flow.  Each combining financial statement shall include a 
 65.21  column for each individual group member along with a total 
 65.22  column.  
 65.23     Where a group has 50 or more members, the group shall file, 
 65.24  in lieu of the combining financial statements, a combined 
 65.25  financial statement showing only the total column for the entire 
 65.26  group's balance sheet, income statement, statement of changes in 
 65.27  net worth, and statement of cash flow.  Additionally, the group 
 65.28  shall disclose, for each member, the total assets, net worth, 
 65.29  revenue, and income for the most recent fiscal year.  The 
 65.30  combining and combined financial statements may omit all 
 65.31  footnote disclosures.  
 65.32     Where members belong to a preferred risk group, the 
 65.33  preferred group shall file, in lieu of the combining financial 
 65.34  statements, a compiled combined financial statement prepared by 
 65.35  a certified public accountant showing only the total column for 
 65.36  the entire group's balance sheet, income statement, statement of 
 66.1   changes in net worth, statement of cash flow, and a list of all 
 66.2   members comprising the combined statement.  Additionally, 
 66.3   individual members constituting at least 75 percent of the 
 66.4   premium shall submit to the preferred risk group reviewed or 
 66.5   audited financial statements, and the remaining members may 
 66.6   submit compilation level statements.  The combined financial 
 66.7   statement shall attest that financial statements of members 
 66.8   representing 75 percent of the group's premium has been reviewed 
 66.9   or audited.  The preferred risk group shall also provide any 
 66.10  footnote disclosures of individual members to the department of 
 66.11  commerce which indicate contingent liabilities that could 
 66.12  potentially exceed 30 percent of the combined net worth of all 
 66.13  members of the group, and provide the financial statement of any 
 66.14  individual member company whose premium exceeds 30 percent of 
 66.15  the total group premium. 
 66.16     (f) In addition to the financial statements required by 
 66.17  paragraphs (d) and (e), interim financial statements or 10Q 
 66.18  reports required by the Securities and Exchange Commission may 
 66.19  be required by the commissioner upon an indication that there 
 66.20  has been deterioration in the self-insurer's financial 
 66.21  condition, including a worsening of current ratio, lessening of 
 66.22  net worth, net loss of income, the downgrading of the company's 
 66.23  bond rating, or any other significant change that may adversely 
 66.24  affect the self-insurer's ability to pay expected losses.  Any 
 66.25  self-insurer that files an 8K report with the Securities and 
 66.26  Exchange Commission shall also file a copy of the report with 
 66.27  the commissioner within 30 days of the filing with the 
 66.28  Securities and Exchange Commission. 
 66.29     Sec. 10.  Minnesota Statutes 1994, section 79A.03, 
 66.30  subdivision 11, is amended to read: 
 66.31     Subd. 11.  [JOINT AND SEVERAL LIABILITY.] All members of a 
 66.32  private self-insurer group shall be jointly and severally liable 
 66.33  for the obligations incurred by any member of the same group 
 66.34  under chapter 176., except that preferred risk group members 
 66.35  shall also be individually and proportionally liable.  For 
 66.36  assessment purposes, the proportional liability of each 
 67.1   preferred risk member shall be based on the member's percentage 
 67.2   of the group's total obligations.  If a member of the group 
 67.3   becomes insolvent, the remaining member liability must be 
 67.4   adjusted upward, based on the member's proportion of the total 
 67.5   group obligation, to satisfy the obligation.  All preferred 
 67.6   group marketing materials shall explain that members are jointly 
 67.7   and severally liable, but individually and proportionally 
 67.8   assessed should the group become insolvent. 
 67.9      Sec. 11.  Minnesota Statutes 1994, section 79A.08, is 
 67.10  amended to read: 
 67.11     79A.08 [LEGISLATIVE INTENT.] 
 67.12     It is the intent of the legislature in enacting sections 
 67.13  79A.08 to 79A.10 to provide for the continuation of workers' 
 67.14  compensation benefits delayed due to the failure of a an 
 67.15  individual or group private self-insured employer to meet its 
 67.16  compensation obligations, whenever the commissioner of commerce 
 67.17  issues a certificate of default or there is a declaration of 
 67.18  bankruptcy or insolvency by a court of competent jurisdiction.  
 67.19  With respect to the continued liability of a surety for claims 
 67.20  that arise under a bond after termination of that bond and to a 
 67.21  surety's liability for the cost of administration of claims, it 
 67.22  is the intent of the legislature to provide that that liability 
 67.23  ceases upon lawful termination of that bond.  This applies to 
 67.24  all surety bonds which are purchased by the self-insured 
 67.25  employer after July 1, 1988.  The legislature finds and declares 
 67.26  that the establishment of the self-insurers' security fund is a 
 67.27  necessary component of a complete system of workers' 
 67.28  compensation, required by chapter 176, to have adequate 
 67.29  provisions for the comfort, health, safety, and general welfare 
 67.30  of any and all workers and their dependents to the extent of 
 67.31  relieving the consequences of any industrial injury or death, 
 67.32  and full provision for securing the payment of compensation. 
 67.33                             ARTICLE 10 
 67.34                              BENEFITS
 67.35     Section 1.  Minnesota Statutes 1994, section 176.011, 
 67.36  subdivision 18, is amended to read: 
 68.1      Subd. 18.  [WEEKLY WAGE.] "Weekly wage" is arrived at by 
 68.2   multiplying the daily wage by the number of days and fractional 
 68.3   days normally worked in the business of the employer for the 
 68.4   employment involved.  If the employee normally works less than 
 68.5   five days per week or works an irregular number of days per 
 68.6   week, the number of days normally worked shall be computed by 
 68.7   dividing the total number of days in which the employee actually 
 68.8   performed any of the duties of employment in the last 26 weeks 
 68.9   by the number of weeks in which the employee actually performed 
 68.10  such duties, provided that the weekly wage for part time 
 68.11  employment during a period of seasonal or temporary layoff shall 
 68.12  be computed on the number of days and fractional days normally 
 68.13  worked in the business of the employer for the employment 
 68.14  involved.  If, at the time of the injury, the employee was 
 68.15  regularly employed by two or more employers, the employee's days 
 68.16  of work for all such employments shall be included in the 
 68.17  computation of weekly wage.  Occasional overtime is not to be 
 68.18  considered in computing the weekly wage, but if overtime is 
 68.19  regular or frequent throughout the year it shall be taken into 
 68.20  consideration.  The maximum weekly compensation payable to an 
 68.21  employee, or to the employee's dependents in the event of death, 
 68.22  shall not exceed 66-2/3 percent of the product of the daily wage 
 68.23  times the number of days normally worked, provided that the 
 68.24  compensation payable for permanent partial disability under 
 68.25  section 176.101, subdivision 3 3w, and for permanent total 
 68.26  disability under section 176.101, subdivision 4, or death under 
 68.27  section 176.111, shall not be computed on less than the number 
 68.28  of hours normally worked in the employment or industry in which 
 68.29  the injury was sustained, subject also to such maximums as are 
 68.30  specifically otherwise provided. 
 68.31     Sec. 2.  Minnesota Statutes 1994, section 176.021, 
 68.32  subdivision 3, is amended to read: 
 68.33     Subd. 3.  [COMPENSATION, COMMENCEMENT OF PAYMENT.] All 
 68.34  employers shall commence payment of compensation at the time and 
 68.35  in the manner prescribed by this chapter without the necessity 
 68.36  of any agreement or any order of the division.  Except for 
 69.1   medical, burial, and other nonperiodic benefits, payments shall 
 69.2   be made as nearly as possible at the intervals when the wage was 
 69.3   payable, provided, however, that payments for permanent partial 
 69.4   disability shall be governed by section 176.101.  If doubt 
 69.5   exists as to the eventual permanent partial disability, payment 
 69.6   for the economic recovery compensation or impairment 
 69.7   compensation, whichever is due, pursuant to section 176.101, 
 69.8   shall be then made when due for the minimum permanent partial 
 69.9   disability ascertainable, and further payment shall be made upon 
 69.10  any later ascertainment of greater permanent partial 
 69.11  disability.  Prior to or at the time of commencement of the 
 69.12  payment of economic recovery compensation or lump sum or 
 69.13  periodic payment of impairment compensation, permanent partial 
 69.14  disability the employee and employer shall be furnished with a 
 69.15  copy of the medical report upon which the payment is based and 
 69.16  all other medical reports which the insurer has that indicate a 
 69.17  permanent partial disability rating, together with a statement 
 69.18  by the insurer as to whether the tendered payment is for minimum 
 69.19  permanent partial disability or final and eventual disability.  
 69.20  After receipt of all reports available to the insurer that 
 69.21  indicate a permanent partial disability rating, the employee 
 69.22  shall make available or permit the insurer to obtain any medical 
 69.23  report that the employee has or has knowledge of that contains a 
 69.24  permanent partial disability rating which the insurer does not 
 69.25  already have.  Economic recovery compensation or impairment 
 69.26  compensation Permanent partial disability compensation pursuant 
 69.27  to section 176.101, subdivision 3w, is payable in addition to 
 69.28  but not concurrently with compensation for temporary total 
 69.29  disability but is payable pursuant to section 
 69.30  176.101.  Impairment compensation Permanent partial disability 
 69.31  is payable concurrently and in addition to compensation for 
 69.32  permanent total disability pursuant to section 
 69.33  176.101.  Economic recovery compensation or impairment 
 69.34  compensation pursuant to section 176.101 shall be withheld 
 69.35  pending completion of payment for temporary total disability, 
 69.36  and No credit shall be taken for payment of economic recovery 
 70.1   compensation or impairment compensation permanent partial 
 70.2   disability compensation against liability for temporary total or 
 70.3   future permanent total disability.  Liability on the part of an 
 70.4   employer or the insurer for disability of a temporary total, 
 70.5   temporary partial, and permanent total nature shall be 
 70.6   considered as a continuing product and part of the employee's 
 70.7   inability to earn or reduction in earning capacity due to injury 
 70.8   or occupational disease and compensation is payable accordingly, 
 70.9   subject to section 176.101.  Economic recovery compensation or 
 70.10  impairment compensation Permanent partial disability 
 70.11  compensation is payable for functional loss of use or impairment 
 70.12  of function, permanent in nature, and payment therefore shall be 
 70.13  separate, distinct, and in addition to payment for any other 
 70.14  compensation, subject to section 176.101.  The right to receive 
 70.15  temporary total, temporary partial, or permanent total 
 70.16  disability payments vests in the injured employee or the 
 70.17  employee's dependents under this chapter or, if none, in the 
 70.18  employee's legal heirs at the time the disability can be 
 70.19  ascertained and the right is not abrogated by the employee's 
 70.20  death prior to the making of the payment. 
 70.21     The right to receive economic recovery compensation or 
 70.22  impairment compensation permanent partial disability 
 70.23  compensation vests in an injured employee at the time the 
 70.24  disability can be ascertained provided that the employee lives 
 70.25  for at least 30 days beyond the date of the injury.  Upon the 
 70.26  death of an employee who is receiving economic recovery 
 70.27  compensation or impairment compensation, further compensation is 
 70.28  payable pursuant to section 176.101.  Impairment compensation is 
 70.29  payable under this paragraph if vesting has occurred, the 
 70.30  employee dies prior to reaching maximum medical improvement, and 
 70.31  the requirements and conditions under section 176.101, 
 70.32  subdivision 3e, are not met. from causes unrelated to the 
 70.33  injury, further permanent partial disability is payable to the 
 70.34  employee's dependents.  If the employee has no dependents, 
 70.35  permanent partial disability is payable to the employee's adult 
 70.36  children.  If an employee dies without dependents or adult 
 71.1   children, no further permanent partial disability is payable.  
 71.2   Upon the death of an employee from causes related to the injury 
 71.3   when permanent partial disability compensation is payable, no 
 71.4   further permanent partial disability compensation is due and 
 71.5   benefits are determined under section 176.111. 
 71.6      Disability ratings for permanent partial disability shall 
 71.7   be based on objective medical evidence.  
 71.8      Sec. 3.  Minnesota Statutes 1994, section 176.021, 
 71.9   subdivision 3a, is amended to read: 
 71.10     Subd. 3a.  [PERMANENT PARTIAL BENEFITS, PAYMENT.] Payments 
 71.11  for permanent partial disability as provided in section 176.101, 
 71.12  subdivision 3 3w, shall be made in the following manner:  
 71.13     (a) If the employee returns to work, payment shall be made 
 71.14  by lump sum; 
 71.15     (b) If begin after temporary total payments have ceased, 
 71.16  but the employee has not returned to work, payment and shall be 
 71.17  made at the same intervals as temporary total payments were 
 71.18  made;. 
 71.19     (c) If temporary total disability payments cease because 
 71.20  the employee is receiving payments for permanent total 
 71.21  disability or because the employee is retiring or has retired 
 71.22  from the work force, then payment shall be made by lump sum; 
 71.23     (d) If the employee completes a rehabilitation plan 
 71.24  pursuant to section 176.102, but the employer does not furnish 
 71.25  the employee with work the employee can do in a permanently 
 71.26  partially disabled condition, and the employee is unable to 
 71.27  procure such work with another employer, then payment shall be 
 71.28  made by lump sum. 
 71.29     Sec. 4.  Minnesota Statutes 1994, section 176.061, 
 71.30  subdivision 10, is amended to read: 
 71.31     Subd. 10.  [INDEMNITY.] Notwithstanding the provisions of 
 71.32  chapter 65B or any other law to the contrary, an employer has a 
 71.33  right of indemnity for any compensation paid or payable pursuant 
 71.34  to this chapter, including temporary total compensation, 
 71.35  temporary partial compensation, permanent partial 
 71.36  disability, economic recovery compensation, impairment 
 72.1   compensation permanent partial disability compensation, medical 
 72.2   compensation, rehabilitation, death, and permanent total 
 72.3   compensation.  
 72.4      Sec. 5.  Minnesota Statutes 1994, section 176.101, 
 72.5   subdivision 1, is amended to read: 
 72.6      Subdivision 1.  [TEMPORARY TOTAL DISABILITY.] (a) For 
 72.7   injury producing temporary total disability, the compensation is 
 72.8   66-2/3 percent of the weekly wage at the time of injury. 
 72.9      (b) During the year commencing on October 1, 1992, and each 
 72.10  year thereafter, the maximum weekly compensation payable is 105 
 72.11  percent of the statewide average weekly wage for the period 
 72.12  ending December 31 of the preceding year. 
 72.13     (c) The minimum weekly compensation payable is 20 percent 
 72.14  of the statewide average weekly wage for the period ending 
 72.15  December 31 of the preceding year or the injured employee's 
 72.16  actual weekly wage, whichever is less.  
 72.17     (d) Subject to subdivisions 3a to 3u This compensation 
 72.18  shall be paid during the period of disability, except as 
 72.19  provided in this section, payment to be made at the intervals 
 72.20  when the wage was payable, as nearly as may be. 
 72.21     (e) Except as provided in section 176.102, subdivision 11, 
 72.22  paragraph (b), temporary total disability compensation may be 
 72.23  paid during the period of disability, for up to a maximum of 100 
 72.24  weeks of actual payment, regardless of when payment is made.  
 72.25  Temporary total disability compensation may be extended and paid 
 72.26  beyond 100 weeks to an employee who is medically disabled 
 72.27  because of the injury.  Each week of temporary total disability 
 72.28  compensation extended beyond 100 weeks reduces the number of 
 72.29  weeks of temporary partial disability compensation available 
 72.30  under subdivision 2, by an equivalent amount.  In no event may 
 72.31  an employee receive more than 450 weeks of a combination of 
 72.32  temporary total disability and temporary partial disability. 
 72.33     Sec. 6.  Minnesota Statutes 1994, section 176.101, 
 72.34  subdivision 2, is amended to read: 
 72.35     Subd. 2.  [TEMPORARY PARTIAL DISABILITY.] (a) In all cases 
 72.36  of temporary partial disability the compensation shall be 66-2/3 
 73.1   percent of the difference between the weekly wage of the 
 73.2   employee at the time of injury and the wage the employee is able 
 73.3   to earn in the employee's partially disabled condition.  This 
 73.4   compensation shall be paid during the period of disability 
 73.5   except as provided in this section, payment to be made at the 
 73.6   intervals when the wage was payable, as nearly as may be, and 
 73.7   subject to the maximum rate for temporary total compensation.  
 73.8      (b) Except as provided under subdivision 3k in paragraph 
 73.9   (e), temporary partial compensation may be paid only while the 
 73.10  employee is employed, earning less than the employee's weekly 
 73.11  wage at the time of the injury, and the reduced wage the 
 73.12  employee is able to earn in the employee's partially disabled 
 73.13  condition is due to the injury.  An employer may establish that 
 73.14  an employee's ability to earn exceeds the employee's actual 
 73.15  wages. 
 73.16     (c) Except as provided in subdivision 1, paragraph (e), and 
 73.17  section 176.102, subdivision 11, paragraph (b), temporary 
 73.18  partial compensation may not be paid for more than 225 for up to 
 73.19  a maximum of 350 weeks, or after 450 weeks after the date of 
 73.20  injury, whichever occurs first of actual payment, regardless of 
 73.21  when payment is made.  
 73.22     (c) (d) Temporary partial compensation must be reduced to 
 73.23  the extent that the wage the employee is able to earn in the 
 73.24  employee's partially disabled condition plus the temporary 
 73.25  partial disability payment otherwise payable under this 
 73.26  subdivision exceeds 500 percent of the statewide average weekly 
 73.27  wage. 
 73.28     (e) An employee may receive temporary partial disability 
 73.29  based on the wage the employee is able to earn if the employee 
 73.30  is not eligible for temporary total disability because of the 
 73.31  100-week limitation of subdivision 1, paragraph (e); and the 
 73.32  employee is not earning a wage because the employer has not 
 73.33  furnished the employee with work the employee can perform in the 
 73.34  employee's partially disabled condition and the employee is 
 73.35  unable to find work after a reasonably diligent effort. 
 73.36     Sec. 7.  Minnesota Statutes 1994, section 176.101, is 
 74.1   amended by adding a subdivision to read: 
 74.2      Subd. 3w.  [PERMANENT PARTIAL DISABILITY COMPENSATION.] An 
 74.3   employee who suffers a permanent partial disability due to a 
 74.4   personal injury shall receive permanent partial disability 
 74.5   compensation in an amount provided by this subdivision.  The 
 74.6   amount shall be equal to the proportion that the loss of 
 74.7   function of the disabled part bears to the whole body multiplied 
 74.8   by $100,000.  
 74.9      Payments for permanent disability of more than one body 
 74.10  part due to a personal injury in a single occurrence may not 
 74.11  exceed 100 percent of the whole body.  
 74.12     Sec. 8.  Minnesota Statutes 1994, section 176.101, 
 74.13  subdivision 6, is amended to read: 
 74.14     Subd. 6.  [MINORS; APPRENTICES.] (a) If any employee 
 74.15  entitled to the benefits of this chapter is an apprentice of any 
 74.16  age and sustains a personal injury arising out of and in the 
 74.17  course of employment resulting in permanent total or a 
 74.18  compensable permanent partial disability, for the purpose of 
 74.19  computing the compensation to which the employee is entitled for 
 74.20  the injury, the compensation rate for temporary total, temporary 
 74.21  partial, or a permanent total disability or economic recovery 
 74.22  compensation shall be the maximum rate for temporary total 
 74.23  disability under subdivision 1. 
 74.24     (b) If any employee entitled to the benefits of this 
 74.25  chapter is a minor and sustains a personal injury arising out of 
 74.26  and in the course of employment resulting in permanent total 
 74.27  disability, for the purpose of computing the compensation to 
 74.28  which the employee is entitled for the injury, the compensation 
 74.29  rate for a permanent total disability shall be the maximum rate 
 74.30  for temporary total disability under subdivision 1. 
 74.31     Sec. 9.  Minnesota Statutes 1994, section 176.105, 
 74.32  subdivision 2, is amended to read: 
 74.33     Subd. 2.  [RULES; INTERNAL ORGANS.] The commissioner shall 
 74.34  by rule establish a schedule of internal organs that are 
 74.35  compensable and indicate in the schedule to what extent the 
 74.36  organs are compensable under section 176.101, subdivision 3 3w.  
 75.1      Sec. 10.  Minnesota Statutes 1994, section 176.105, 
 75.2   subdivision 4, is amended to read: 
 75.3      Subd. 4.  [LEGISLATIVE INTENT; RULES; LOSS OF MORE THAN ONE 
 75.4   BODY PART.] (a) For the purpose of establishing a disability 
 75.5   schedule pursuant to clause (b), the legislature declares its 
 75.6   intent that the commissioner establish a disability schedule 
 75.7   which, assuming the same number and distribution of severity of 
 75.8   injuries, the aggregate total of impairment compensation and 
 75.9   economic recovery compensation benefits under section 176.101, 
 75.10  subdivisions 3a to 3u be approximately equal to the total 
 75.11  aggregate amount payable for permanent partial disabilities 
 75.12  under section 176.101, subdivision 3, provided, however, that 
 75.13  awards for specific injuries under the proposed schedule need 
 75.14  not be the same as they were for the same injuries under the 
 75.15  schedule pursuant to section 176.101, subdivision 3.  The 
 75.16  schedule shall be determined by sound actuarial evaluation and 
 75.17  shall be based on the benefit level which exists on January 1, 
 75.18  1983.  
 75.19     (b) The commissioner shall by rulemaking adopt procedures 
 75.20  setting forth rules for the evaluation and rating of functional 
 75.21  disability and the schedule for permanent partial disability and 
 75.22  to determine the percentage of loss of function of a part of the 
 75.23  body based on the body as a whole, including internal organs, 
 75.24  described in section 176.101, subdivision 3, and any other body 
 75.25  part not listed in section 176.101, subdivision 3, which the 
 75.26  commissioner deems appropriate.  
 75.27     The rules shall promote objectivity and consistency in the 
 75.28  evaluation of permanent functional impairment due to personal 
 75.29  injury and in the assignment of a numerical rating to the 
 75.30  functional impairment.  
 75.31     Prior to adoption of rules the commissioner shall conduct 
 75.32  an analysis of the current permanent partial disability schedule 
 75.33  for the purpose of determining the number and distribution of 
 75.34  permanent partial disabilities and the average compensation for 
 75.35  various permanent partial disabilities.  The commissioner shall 
 75.36  consider setting the compensation under the proposed schedule 
 76.1   for the most serious conditions higher in comparison to the 
 76.2   current schedule and shall consider decreasing awards for minor 
 76.3   conditions in comparison to the current schedule.  
 76.4      The commissioner may consider, among other factors, and 
 76.5   shall not be limited to the following factors in developing 
 76.6   rules for the evaluation and rating of functional disability and 
 76.7   the schedule for permanent partial disability benefits:  
 76.8      (1) the workability and simplicity of the procedures with 
 76.9   respect to the evaluation of functional disability; 
 76.10     (2) the consistency of the procedures with accepted medical 
 76.11  standards; 
 76.12     (3) rules, guidelines, and schedules that exist in other 
 76.13  states that are related to the evaluation of permanent partial 
 76.14  disability or to a schedule of benefits for functional 
 76.15  disability provided that the commissioner is not bound by the 
 76.16  degree of disability in these sources but shall adjust the 
 76.17  relative degree of disability to conform to the expressed intent 
 76.18  of clause (a) this section; 
 76.19     (4) rules, guidelines, and schedules that have been 
 76.20  developed by associations of health care providers or 
 76.21  organizations provided that the commissioner is not bound by the 
 76.22  degree of disability in these sources but shall adjust the 
 76.23  relative degree of disability to conform to the expressed intent 
 76.24  of clause (a) this section; 
 76.25     (5) the effect the rules may have on reducing litigation; 
 76.26     (6) the treatment of preexisting disabilities with respect 
 76.27  to the evaluation of permanent functional disability provided 
 76.28  that any preexisting disabilities must be objectively determined 
 76.29  by medical evidence; and 
 76.30     (7) symptomatology and loss of function and use of the 
 76.31  injured member.  
 76.32     The factors in paragraphs (1) to (7) shall not be used in 
 76.33  any individual or specific workers' compensation claim under 
 76.34  this chapter but shall be used only in the adoption of rules 
 76.35  pursuant to this section.  
 76.36     Nothing listed in paragraphs (1) to (7) shall be used to 
 77.1   dispute or challenge a disability rating given to a part of the 
 77.2   body so long as the whole schedule conforms with the expressed 
 77.3   intent of clause (a) this section. 
 77.4      (c) If an employee suffers a permanent functional 
 77.5   disability of more than one body part due to a personal injury 
 77.6   incurred in a single occurrence, the percent of the whole body 
 77.7   which is permanently partially disabled shall be determined by 
 77.8   the following formula so as to ensure that the percentage for 
 77.9   all functional disability combined does not exceed the total for 
 77.10  the whole body:  
 77.11                           A + B (1 - A) 
 77.12     where:  A is the greater percentage whole body loss of the 
 77.13  first body part; and B is the lesser percentage whole body loss 
 77.14  otherwise payable for the second body part.  A + B (1-A) is 
 77.15  equivalent to A + B - AB.  
 77.16     For permanent partial disabilities to three body parts due 
 77.17  to a single occurrence or as the result of an occupational 
 77.18  disease, the above formula shall be applied, providing that A 
 77.19  equals the result obtained from application of the formula to 
 77.20  the first two body parts and B equals the percentage for the 
 77.21  third body part.  For permanent partial disability to four or 
 77.22  more body parts incurred as described above, A equals the result 
 77.23  obtained from the prior application of the formula, and B equals 
 77.24  the percentage for the fourth body part or more in arithmetic 
 77.25  progressions. 
 77.26     Sec. 11.  Minnesota Statutes 1994, section 176.106, 
 77.27  subdivision 7, is amended to read: 
 77.28     Subd. 7.  [REQUEST FOR HEARING.] Any party aggrieved by the 
 77.29  decision of the commissioner may request a formal hearing by 
 77.30  filing the request with the commissioner no later than 30 days 
 77.31  after the decision.  The request shall be referred to the office 
 77.32  of administrative hearings for a de novo hearing before a 
 77.33  compensation judge.  The commissioner shall refer a timely 
 77.34  request to the office of administrative hearings within five 
 77.35  working days after filing of the request and.  If the request 
 77.36  for hearing concerns a claim for rehabilitation services, 
 78.1   retraining, or surgery, the hearing at the office of 
 78.2   administrative hearings must be held on the first date that all 
 78.3   parties are available but not later than 60 days after the 
 78.4   office of administrative hearings receives the matter. Following 
 78.5   the hearing, the compensation judge must issue the decision 
 78.6   within 30 days.  The decision of the compensation judge is 
 78.7   appealable pursuant to section 176.421. 
 78.8      Sec. 12.  Minnesota Statutes 1994, section 176.132, 
 78.9   subdivision 2, is amended to read: 
 78.10     Subd. 2.  [AMOUNT.] (a) The supplementary benefit payable 
 78.11  under this section shall be the difference between the amount 
 78.12  the employee receives on or after January 1, 1976, under section 
 78.13  176.101, subdivision 1 or 4, and 65 percent of the statewide 
 78.14  average weekly wage as computed annually.  For injuries that 
 78.15  occur on or after October 1, 1995, the supplementary benefit 
 78.16  payable under this section shall be the difference between the 
 78.17  amount the employee receives under section 176.101, subdivision 
 78.18  4, and 60 percent of the statewide average weekly wage as 
 78.19  computed annually.  For injuries that occur on or after October 
 78.20  1, 1997, the supplementary benefit payable under this section 
 78.21  shall be the difference between the amount the employee receives 
 78.22  under section 176.101, subdivision 4, and 55 percent at the 
 78.23  statewide average weekly wage as computed annually.  
 78.24     (b) In the event an eligible recipient is currently 
 78.25  receiving no compensation or is receiving a reduced level of 
 78.26  compensation because of a credit being applied as the result of 
 78.27  a third party liability or damages, the employer or insurer 
 78.28  shall compute the offset credit as if the individual were 
 78.29  entitled to the actual benefit or 65 percent of the statewide 
 78.30  average weekly wage as computed annually, whichever is greater.  
 78.31  If this results in the use of a higher credit than otherwise 
 78.32  would have been applied and the employer or insurer becomes 
 78.33  liable for compensation benefits which would otherwise not have 
 78.34  been paid, the additional benefits resulting shall be handled 
 78.35  according to this section. 
 78.36     (c) In the event an eligible recipient is receiving no 
 79.1   compensation or is receiving a reduced level of compensation 
 79.2   because of a valid agreement in settlement of a claim, no 
 79.3   supplementary benefit shall be payable under this section.  
 79.4   Attorney's fees shall be allowed in settlements of claims for 
 79.5   supplementary benefits in accordance with this chapter.  
 79.6      (d) In the event an eligible recipient is receiving no 
 79.7   compensation or is receiving a reduced level of compensation 
 79.8   because of prior limitations in the maximum amount payable for 
 79.9   permanent total disability or because of reductions resulting 
 79.10  from the simultaneous receipt of old age or disability benefits, 
 79.11  the supplementary benefit shall be payable for the difference 
 79.12  between the actual amount of compensation currently being paid 
 79.13  and 65 percent of the statewide average weekly wage as computed 
 79.14  annually. 
 79.15     (e) In the event that an eligible recipient is receiving 
 79.16  simultaneous benefits from any government disability program, 
 79.17  the amount of supplementary benefits payable under this section 
 79.18  shall be reduced by five percent.  If the individual does not 
 79.19  receive the maximum benefits for which the individual is 
 79.20  eligible under other governmental disability programs due to the 
 79.21  provisions of United States Code, title 42, section 424a(d), 
 79.22  this reduction shall not apply. 
 79.23     (f) Notwithstanding any other provision in this subdivision 
 79.24  to the contrary, if the individual does not receive the maximum 
 79.25  benefits for which the individual is eligible under other 
 79.26  governmental disability programs due to the provision of United 
 79.27  States Code, title 42, section 424a(d), the calculation of 
 79.28  supplementary benefits payable to the individual shall be as 
 79.29  provided under this section in Minnesota Statutes 1988. 
 79.30     Sec. 13.  Minnesota Statutes 1994, section 176.135, 
 79.31  subdivision 2, is amended to read: 
 79.32     Subd. 2.  [CHANGE OF PHYSICIANS, PODIATRISTS, OR 
 79.33  CHIROPRACTORS.] An employee is entitled to only one change of 
 79.34  physician, podiatrist, or chiropractor as a matter of right.  
 79.35  For employees receiving treatment under section 176.1351, the 
 79.36  change as a matter of right shall be to another provider within 
 80.1   the plan in accordance with the rules governing managed care.  
 80.2   The commissioner shall adopt rules establishing standards and 
 80.3   criteria to be used when a dispute arises over a change of 
 80.4   physicians, podiatrists, or chiropractors in the case that 
 80.5   either the employee or the employer desire a change.  If a 
 80.6   change is required as a matter of right, agreed upon, or 
 80.7   ordered, the medical expenses shall be borne by the employer 
 80.8   upon the same terms and conditions as provided in subdivision 1. 
 80.9      Sec. 14.  Minnesota Statutes 1994, section 176.179, is 
 80.10  amended to read: 
 80.11     176.179 [RECOVERY OF OVERPAYMENTS.] 
 80.12     Notwithstanding section 176.521, subdivision 3, or any 
 80.13  other provision of this chapter to the contrary, except as 
 80.14  provided in this section, no lump sum or weekly payment, or 
 80.15  settlement, which is voluntarily paid to an injured employee or 
 80.16  the survivors of a deceased employee in apparent or seeming 
 80.17  accordance with the provisions of this chapter by an employer or 
 80.18  insurer, or is paid pursuant to an order of the workers' 
 80.19  compensation division, a compensation judge, or court of appeals 
 80.20  relative to a claim by an injured employee or the employee's 
 80.21  survivors, and received in good faith by the employee or the 
 80.22  employee's survivors shall be refunded to the paying employer or 
 80.23  insurer in the event that it is subsequently determined that the 
 80.24  payment was made under a mistake in fact or law by the employer 
 80.25  or insurer.  When the payments have been made to a person who is 
 80.26  entitled to receive further payments of compensation for the 
 80.27  same injury, the mistaken compensation may be taken as a full 
 80.28  credit against future lump sum benefit entitlement and as a 
 80.29  partial credit against future weekly benefits.  The credit 
 80.30  applied against further payments of temporary total disability, 
 80.31  temporary partial disability, permanent total disability, 
 80.32  retraining benefits, death benefits, or weekly payments of 
 80.33  economic recovery or impairment compensation permanent partial 
 80.34  disability shall not exceed 20 percent of the amount that would 
 80.35  otherwise be payable. 
 80.36     A credit may not be applied against medical expenses due or 
 81.1   payable.  
 81.2      Where the commissioner or compensation judge determines 
 81.3   that the mistaken compensation was not received in good faith, 
 81.4   the commissioner or compensation judge may order reimbursement 
 81.5   of the compensation.  For purposes of this section, a payment is 
 81.6   not received in good faith if it is obtained through fraud, or 
 81.7   if the employee knew that the compensation was paid under 
 81.8   mistake of fact or law, and the employee has not refunded the 
 81.9   mistaken compensation. 
 81.10     Sec. 15.  Minnesota Statutes 1994, section 176.221, 
 81.11  subdivision 1, is amended to read: 
 81.12     Subdivision 1.  [COMMENCEMENT OF PAYMENT.] Within 14 days 
 81.13  of notice to or knowledge by the employer of an injury 
 81.14  compensable under this chapter the payment of temporary total 
 81.15  compensation shall commence.  Within 14 days of notice to or 
 81.16  knowledge by an employer of a new period of temporary total 
 81.17  disability which is caused by an old injury compensable under 
 81.18  this chapter, the payment of temporary total compensation shall 
 81.19  commence; provided that the employer or insurer may file for an 
 81.20  extension with the commissioner within this 14-day period, in 
 81.21  which case the compensation need not commence within the 14-day 
 81.22  period but shall commence no later than 30 days from the date of 
 81.23  the notice to or knowledge by the employer of the new period of 
 81.24  disability.  Commencement of payment by an employer or insurer 
 81.25  does not waive any rights to any defense the employer has on any 
 81.26  claim or incident either with respect to the compensability of 
 81.27  the claim under this chapter or the amount of the compensation 
 81.28  due.  Where there are multiple employers, the first employer 
 81.29  shall pay, unless it is shown that the injury has arisen out of 
 81.30  employment with the second or subsequent employer.  Liability 
 81.31  for compensation under this chapter may be denied by the 
 81.32  employer or insurer by giving the employee written notice of the 
 81.33  denial of liability.  If liability is denied for an injury which 
 81.34  is required to be reported to the commissioner under section 
 81.35  176.231, subdivision 1, the denial of liability must be filed 
 81.36  with the commissioner within 14 days after notice to or 
 82.1   knowledge by the employer of an injury which is alleged to be 
 82.2   compensable under this chapter.  If the employer or insurer has 
 82.3   commenced payment of compensation under this subdivision but 
 82.4   determines within 30 120 days of notice to or knowledge by the 
 82.5   employer of the injury that the disability is not a result of a 
 82.6   personal injury, payment of compensation may be terminated upon 
 82.7   the filing of a notice of denial of liability within 30 120 days 
 82.8   of notice or knowledge.  After the 30-day 120-day period, 
 82.9   payment may be terminated only by the filing of a notice as 
 82.10  provided under section 176.239.  Upon the termination, payments 
 82.11  made may be recovered by the employer if the commissioner or 
 82.12  compensation judge finds that the employee's claim of work 
 82.13  related disability was not made in good faith.  A notice of 
 82.14  denial of liability must state in detail the facts forming the 
 82.15  basis for the denial and specific reasons explaining why the 
 82.16  claimed injury or occupational disease was determined not to be 
 82.17  within the scope and course of employment and shall include the 
 82.18  name and telephone number of the person making this 
 82.19  determination.  
 82.20     Sec. 16.  Minnesota Statutes 1994, section 176.221, 
 82.21  subdivision 6a, is amended to read: 
 82.22     Subd. 6a.  [MEDICAL, REHABILITATION, ECONOMIC RECOVERY, AND 
 82.23  IMPAIRMENT PERMANENT PARTIAL DISABILITY COMPENSATION.] The 
 82.24  penalties provided by this section apply in cases where payment 
 82.25  for treatment under section 176.135, rehabilitation expenses 
 82.26  under section 176.102, subdivisions 9 and 11, economic recovery 
 82.27  compensation or impairment or permanent partial disability 
 82.28  compensation are not made in a timely manner as required by law 
 82.29  or by rule adopted by the commissioner.  
 82.30     Sec. 17.  Minnesota Statutes 1994, section 176.238, 
 82.31  subdivision 6, is amended to read: 
 82.32     Subd. 6.  [EXPEDITED HEARING BEFORE A COMPENSATION JUDGE.] 
 82.33  A hearing before a compensation judge shall be held within 30 60 
 82.34  calendar days after the office receives the file from the 
 82.35  commissioner if:  
 82.36     (a) an objection to discontinuance has been filed under 
 83.1   subdivision 4 within 60 calendar days after the notice of 
 83.2   discontinuance was filed and where no administrative conference 
 83.3   has been held; 
 83.4      (b) an objection to discontinuance has been filed under 
 83.5   subdivision 4 within 60 calendar days after the commissioner's 
 83.6   decision under this section has been issued; 
 83.7      (c) a petition to discontinue has been filed by the insurer 
 83.8   in lieu of filing a notice of discontinuance; or 
 83.9      (d) a petition to discontinue has been filed within 60 
 83.10  calendar days after the commissioner's decision under this 
 83.11  section has been issued.  
 83.12     If the petition or objection is filed later than the 
 83.13  deadlines listed above, the expedited procedures in this section 
 83.14  apply only where the employee is unemployed at the time of 
 83.15  filing the objection and shows, to the satisfaction of the chief 
 83.16  administrative judge, by sworn affidavit, that the failure to 
 83.17  file the objection within the deadlines was due to some 
 83.18  infirmity or incapacity of the employee or to circumstances 
 83.19  beyond the employee's control.  The hearing shall be limited to 
 83.20  the issues raised by the notice or petition unless all parties 
 83.21  agree to expanding the issues.  If the issues are expanded, the 
 83.22  time limits for hearing and issuance of a decision by the 
 83.23  compensation judge under this subdivision shall not apply.  
 83.24     Once a hearing date has been set, a continuance of the 
 83.25  hearing date will be granted only under the following 
 83.26  circumstances:  
 83.27     (a) the employer has agreed, in writing, to a continuation 
 83.28  of the payment of benefits pending the outcome of the hearing; 
 83.29  or 
 83.30     (b) the employee has agreed, in a document signed by the 
 83.31  employee, that benefits may be discontinued pending the outcome 
 83.32  of the hearing.  
 83.33     Absent a clear showing of surprise at the hearing or the 
 83.34  unexpected unavailability of a crucial witness, all evidence 
 83.35  must be introduced at the hearing.  If it is necessary to accept 
 83.36  additional evidence or testimony after the scheduled hearing 
 84.1   date, it must be submitted no later than 14 days following the 
 84.2   hearing, unless the compensation judge, for good cause, 
 84.3   determines otherwise.  
 84.4      The compensation judge shall issue a decision pursuant to 
 84.5   this subdivision within 30 days following the close of the 
 84.6   hearing record.  
 84.7      Sec. 18.  Minnesota Statutes 1994, section 268.08, 
 84.8   subdivision 3, is amended to read: 
 84.9      Subd. 3.  [NOT ELIGIBLE.] An individual shall not be 
 84.10  eligible to receive benefits for any week with respect to which 
 84.11  the individual is receiving, has received, or has filed a claim 
 84.12  for remuneration in an amount equal to or in excess of the 
 84.13  individual's weekly benefit amount in the form of: 
 84.14     (1) termination, severance, or dismissal payment or wages 
 84.15  in lieu of notice whether legally required or not; provided that 
 84.16  if a termination, severance, or dismissal payment is made in a 
 84.17  lump sum, such lump sum payment shall be allocated over a period 
 84.18  equal to the lump sum divided by the employee's regular pay 
 84.19  while employed by such employer; provided such payment shall be 
 84.20  applied for a period immediately following the last day of 
 84.21  employment but not to exceed 28 calendar days provided that 50 
 84.22  percent of the total of any such payments in excess of eight 
 84.23  weeks shall be similarly allocated to the period immediately 
 84.24  following the 28 days; or 
 84.25     (2) vacation allowance paid directly by the employer for a 
 84.26  period of requested vacation, including vacation periods 
 84.27  assigned by the employer under the provisions of a collective 
 84.28  bargaining agreement, or uniform vacation shutdown; or 
 84.29     (3) compensation for loss of wages under the workers' 
 84.30  compensation law of this state or any other state or under a 
 84.31  similar law of the United States, or under other insurance or 
 84.32  fund established and paid for by the employer except that this 
 84.33  does not apply to an individual who is receiving temporary 
 84.34  partial compensation pursuant to section 176.101, subdivision 
 84.35  3k; or 
 84.36     (4) 50 percent of the pension payments from any fund, 
 85.1   annuity or insurance maintained or contributed to by a base 
 85.2   period employer including the armed forces of the United States 
 85.3   if the employee contributed to the fund, annuity or insurance 
 85.4   and all of the pension payments if the employee did not 
 85.5   contribute to the fund, annuity or insurance; or 
 85.6      (5) 50 percent of a primary insurance benefit under title 
 85.7   II of the Social Security Act, as amended, or similar old age 
 85.8   benefits under any act of Congress or this state or any other 
 85.9   state. 
 85.10     Provided, that if such remuneration is less than the 
 85.11  benefits which would otherwise be due under sections 268.03 to 
 85.12  268.231, the individual shall be entitled to receive for such 
 85.13  week, if otherwise eligible, benefits reduced by the amount of 
 85.14  such remuneration; provided, further, that if the appropriate 
 85.15  agency of such other state or the federal government finally 
 85.16  determines that the individual is not entitled to such benefits, 
 85.17  this provision shall not apply.  If the computation of reduced 
 85.18  benefits, required by this subdivision, is not a whole dollar 
 85.19  amount, it shall be rounded down to the next lower dollar amount.
 85.20     Sec. 19.  [REPEALER.] 
 85.21     Minnesota Statutes 1994, sections 176.011, subdivisions 25 
 85.22  and 26; and 176.101, subdivisions 3a, 3b, 3c, 3d, 3e, 3f, 3g, 
 85.23  3h, 3i, 3j, 3k, 3l, 3m, 3n, 3o, 3p, 3q, 3r, 3s, 3t, and 3u, are 
 85.24  repealed. 
 85.25     Sec. 20.  [EFFECTIVE DATE.] 
 85.26     Sections 1 to 9, and 16, are effective October 1, 1995, and 
 85.27  apply to injuries occurring on or after that date.  Sections 10, 
 85.28  11, 13 to 15, 17, and 18, are effective August 1, 1995. 
 85.29                             ARTICLE 11
 85.30                           MISCELLANEOUS
 85.31     Section 1.  Minnesota Statutes 1994, section 79.211, 
 85.32  subdivision 1, is amended to read: 
 85.33     Subdivision 1.  [CERTAIN WAGES EXCLUDED INCLUDED FOR 
 85.34  RATEMAKING.] The rating association or an insurer shall not 
 85.35  include wages paid for a vacation, holiday, or sick leave in the 
 85.36  determination of a workers' compensation insurance premium. 
 86.1      An insurer, including the assigned risk plan, shall not 
 86.2   include wages paid for work performed in an adjacent state in 
 86.3   the determination of a workers' compensation premium if the 
 86.4   employer paid a workers' compensation insurance premium to the 
 86.5   exclusive state fund of the adjacent state on the wages earned 
 86.6   in the adjacent state. 
 86.7      Sec. 2.  [176.187] [RETURN TO WORK.] 
 86.8      All employers must develop and maintain an inventory of 
 86.9   temporary alternative work opportunities for injured employees.  
 86.10  The alternative work opportunities can be with the employer or 
 86.11  with other employers. 
 86.12     Sec. 3.  [REPEALER.] 
 86.13     Laws 1990, chapter 521, section 4, is repealed. 
 86.14     Sec. 4.  [EFFECTIVE DATE.] 
 86.15     Section 2 is effective the day following final enactment. 
 86.16                             ARTICLE 12
 86.17                        INSURANCE REGULATION
 86.18     Section 1.  [79.64] [DEFINITIONS.] 
 86.19     Subdivision 1.  [SCOPE.] For the purpose of sections 79.64 
 86.20  to 79.78, the terms defined in this section have the meanings 
 86.21  given them. 
 86.22     Subd. 2.  [ASSOCIATION.] "Association" or "rating 
 86.23  association" means the Minnesota Workers' Compensation Insurers 
 86.24  Association. 
 86.25     Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
 86.26  commissioner of commerce. 
 86.27     Subd. 4.  [INTERESTED PARTY.] "Interested party" means any 
 86.28  person or association acting on behalf of its members who is 
 86.29  directly affected by a change in the schedule of rates and 
 86.30  includes the staff of the department of commerce.  
 86.31     Subd. 5.  [RATE SERVICE ORGANIZATION.] "Rate service 
 86.32  organization" means any person, other than an employee of an 
 86.33  insurer, who assists insurers in ratemaking or filing by: 
 86.34     (1) collecting, compiling, and furnishing loss or expense 
 86.35  statistics; 
 86.36     (2) recommending, making, or filing rates or supplementary 
 87.1   rate information; or 
 87.2      (3) advising about rate questions, except as an attorney 
 87.3   giving legal advice. 
 87.4      Sec. 2.  [79.65] [SCOPE OF APPLICATION.] 
 87.5      Sections 79.64 to 79.78 apply to all workers' compensation 
 87.6   insurance written on risks or operations in this state, 
 87.7   employer's liability insurance when written in connection with 
 87.8   workers' compensation insurance, or insurance covering any part 
 87.9   of the liability of an employer exempted from insuring the 
 87.10  employer's liability for compensation under section 176.181. 
 87.11     Sec. 3.  [79.66] [RATING ASSOCIATION.] 
 87.12     The rating association is continued and every insurer, 
 87.13  including the assigned risk plan, writing any insurance 
 87.14  specified under section 79.65 is a member of it. 
 87.15     Sec. 4.  [79.67] [GENERAL PROVISIONS CONCERNING THE 
 87.16  ASSOCIATION.] 
 87.17     The association has the following purposes: 
 87.18     (1) to establish, maintain, and administer rules, 
 87.19  regulations, classifications, rates, and rating plans to govern 
 87.20  the transaction of insurance included in section 79.65; 
 87.21     (2) to cooperate with other rate service organizations and 
 87.22  with insurers in the development of rules, rates, and rating 
 87.23  plans and insurance policies and forms; 
 87.24     (3) to secure and analyze statistical and other data 
 87.25  required to accomplish these purposes; 
 87.26     (4) to inspect and classify risks; 
 87.27     (5) to file with the commissioner on behalf of its members 
 87.28  every manual of classifications, rules, and rates, every rating 
 87.29  plan and every modification of any of them proposed for use in 
 87.30  this state; 
 87.31     (6) to assist the commissioner and insurers in the 
 87.32  promotion of safety in industry; and 
 87.33     (7) to assist in any matter necessary for the 
 87.34  accomplishment of these purposes. 
 87.35     Sec. 5.  [79.68] [RATE STANDARDS.] 
 87.36     Subdivision 1.  [GENERAL.] Rates determined under sections 
 88.1   79.64 to 79.78 shall not be excessive, inadequate, or unfairly 
 88.2   discriminatory. 
 88.3      Subd. 2.  [EXCESSIVENESS.] Rates determined under sections 
 88.4   79.64 to 79.78 are not excessive merely because a reasonable 
 88.5   margin is allowed for a profit.  Premiums are excessive if the 
 88.6   expected underwriting profit, together with expected income from 
 88.7   invested reserves for the market in question, that would accrue 
 88.8   to an insurer would be unreasonably high in relation to the risk 
 88.9   undertaken by the insurer in transacting the business. 
 88.10     Subd. 3.  [UNFAIR DISCRIMINATION.] Premiums are unfairly 
 88.11  discriminatory if differentials for insureds fail to reasonably 
 88.12  reflect the differences in expected losses and expenses to the 
 88.13  insurer attributable to the insureds. 
 88.14     Subd. 4.  [INADEQUACY.] Premiums are inadequate if, 
 88.15  together with the investment income associated with an insurer's 
 88.16  Minnesota workers' compensation insurance business, they are 
 88.17  clearly insufficient to sustain projected losses and expenses of 
 88.18  the insurer and (a) if their continued use could lead to an 
 88.19  insolvent situation for the insurer; or (b) if their use 
 88.20  destroys or lessens competition or is likely to destroy or 
 88.21  lessen competition. 
 88.22     Sec. 6.  [79.69] [RATING METHODS.] 
 88.23     Subdivision 1.  [CRITERIA.] In determining whether rates 
 88.24  comply with the standards under section 79.68, the criteria in 
 88.25  this section shall be applied. 
 88.26     Subd. 2.  [BASIC FACTORS IN RATES.] Due consideration must 
 88.27  be given to past and prospective loss and expense experience 
 88.28  within and outside this state, to catastrophe hazards and 
 88.29  contingencies, to a reasonable margin for profit, to dividends, 
 88.30  savings, or unabsorbed premium deposits allowed or returned by 
 88.31  insurers to their policyholders, members or subscribers, and to 
 88.32  all other relevant factors. 
 88.33     Subd. 3.  [CLASSIFICATION.] Risks may be classified in any 
 88.34  reasonable way for the establishment of rates.  Classification 
 88.35  rates may be modified to produce rates for individual risks in 
 88.36  accordance with rating plans which established standards for 
 89.1   measuring variations in hazards or expense provisions, or both.  
 89.2   The standards may measure any differences among risks that can 
 89.3   be demonstrated to have a probable effect upon losses or 
 89.4   expenses. 
 89.5      Subd. 4.  [PHYSICAL IMPAIRMENT.] Rates or rating plans may 
 89.6   not take into account the physical impairment of employees.  Any 
 89.7   employer who applies or promotes any oppressive plan of physical 
 89.8   examination and rejection of employees or applicants for 
 89.9   employment shall forfeit the right to experience rating.  If the 
 89.10  commissioner determines that grounds exist for forfeiture, it 
 89.11  shall suspend any experience rating credit for the employer.  
 89.12  Restoration of an employer to the advantages of experience 
 89.13  rating may be allowed upon cessation of the oppressive plan. 
 89.14     Sec. 7.  [79.70] [APPROVAL OF RATES AND RATING PLANS.] 
 89.15     The association must file with the commissioner on behalf 
 89.16  of its members every manual of classifications, rules, and every 
 89.17  rating plan and every modification of any of them proposed for 
 89.18  use in this state.  Modifications allowed include dividends, 
 89.19  merit or experience rating, retrospective rating, and premium 
 89.20  discounts.  Every filing shall state a proposed effective date.  
 89.21  The association shall also file the information upon which it 
 89.22  supports the filings.  All filings must comply with law and 
 89.23  shall not be effective nor used until approved by the 
 89.24  commissioner.  A filing that has been on file for 30 days is 
 89.25  deemed to meet the requirements of sections 79.68 and 79.69 
 89.26  unless the commissioner earlier disapproves in a written order. 
 89.27     Sec. 8.  [79.71] [FILINGS OPEN TO INSPECTION.] 
 89.28     Rate filings are open for public inspection. 
 89.29     Sec. 9.  [79.72] [DISAPPROVAL OF RATES.] 
 89.30     Subdivision 1.  [ORDER IN EVENT OF VIOLATION.] If the 
 89.31  commissioner finds after a hearing that a filing already in 
 89.32  effect under section 79.70 fails to meet the requirements of 
 89.33  law, the commissioner shall order that its use be discontinued 
 89.34  for any policy issued or renewed after a date specified in the 
 89.35  order. 
 89.36     Subd. 2.  [TIMING OF ORDER.] The commissioner shall issue 
 90.1   an order under subdivision 1 within 30 days after the close of 
 90.2   the hearing.  In either case, the commissioner may extend the 
 90.3   period for a reasonable time by written order prior to the 
 90.4   expiration of the time limit. 
 90.5      Subd. 3.  [INTERIM RATES.] Whenever an insurer has no 
 90.6   legally effective rates as a result of an order by the 
 90.7   commissioner under subdivision 1 or section 79.70, the 
 90.8   commissioner shall on request specify interim rates for the 
 90.9   insurer and may order that a specified portion of the premiums 
 90.10  be placed in an escrow account approved by the commissioner.  
 90.11  When new rates become legally effective, the commissioner shall 
 90.12  order the escrowed funds or any overcharge in the interim rates 
 90.13  to be distributed appropriately, except that refunds that are 
 90.14  trifling shall not be required. 
 90.15     Subd. 4.  [HEARING.] If negotiations between the 
 90.16  association and the commissioner fail to result in the approval 
 90.17  of all or part of a filing under section 79.70, the association 
 90.18  may at any time after the disapproval, request a contested case 
 90.19  hearing to address issues in dispute.  An interested party may 
 90.20  intervene in the hearing.  The burden is on the association to 
 90.21  demonstrate that a proposed filing meets the requirements of 
 90.22  sections 79.68 and 79.69. 
 90.23     Sec. 10.  [79.73] [USE OF RATES.] 
 90.24     Subdivision 1.  [APPROVAL REQUIRED.] An insurer writing any 
 90.25  insurance specified under section 79.65 may not use a rate, 
 90.26  rating plan, classification, or an expense loading unless 
 90.27  approved by the commissioner. 
 90.28     Subd. 2.  [UNFAIR DISCRIMINATION.] No insurer writing any 
 90.29  insurance specified under section 79.65 may make or charge any 
 90.30  rate which discriminates unfairly between risks or classes, nor 
 90.31  discriminates unfairly between risks in the application of 
 90.32  rating plans, nor discriminates by granting to any employer 
 90.33  insurance against other hazards except in accordance with its 
 90.34  rates and rating plans filed and which are in effect for the 
 90.35  insurer. 
 90.36     Sec. 11.  [79.74] [OPERATION AND CONTROL OF ASSOCIATION.] 
 91.1      Subdivision 1.  [ASSOCIATION ADMINISTRATION.] The 
 91.2   association shall make bylaws for its government which, with 
 91.3   amendments thereto, shall be filed with and approved by the 
 91.4   commissioner before they are effective. 
 91.5      One-half of the members of the managing committee and of 
 91.6   the rating committee shall be chosen by stock insurers and 
 91.7   one-half by mutual insurers.  Both classes of insurers shall be 
 91.8   represented on all other committees.  Each committee member 
 91.9   shall have one vote, with the commissioner deciding the matter 
 91.10  in the event of a tie. 
 91.11     The services of the association must be supplied to members 
 91.12  without discrimination.  Each member of the association shall 
 91.13  pay an equitable share of the cost of operating the association 
 91.14  including assessments by the commissioner against the 
 91.15  association. 
 91.16     Subd. 2.  [INFORMATION TO BE SUPPLIED.] Upon demand the 
 91.17  association must furnish to any employer upon whose risk a 
 91.18  survey has been made under section 79.75 and to any insurer full 
 91.19  information about the survey. 
 91.20     The association must, within a reasonable time after 
 91.21  receiving a written request and upon payment of a reasonable 
 91.22  charge, furnish information as to any rate to the insured 
 91.23  affected by it or to an authorized representative. 
 91.24     Subd. 3.  [REVIEW BY ASSOCIATION.] The following persons or 
 91.25  their authorized representatives shall be heard by the 
 91.26  association upon written request: 
 91.27     (1) any insurer or employer on any matter affecting the 
 91.28  risk in connection with a survey under section 79.75, 
 91.29  subdivision 2; 
 91.30     (2) any person or employer aggrieved by the application of 
 91.31  the association's rating system to the person; and 
 91.32     (3) any member alleging discrimination as to services or 
 91.33  charges of the association. 
 91.34     The association shall provide within this state a specified 
 91.35  procedure for review of the matters under this subdivision. 
 91.36     The commissioner may disapprove the review procedure if the 
 92.1   commissioner finds that it does not provide adequate notice and 
 92.2   fair hearing to the person asking for review. 
 92.3      The person asking for review may appeal to the commissioner 
 92.4   under subdivision 4 from a decision of the association or from 
 92.5   its failure to provide a review and decision within 30 days 
 92.6   after a written request. 
 92.7      Subd. 4.  [APPEALS FROM THE ASSOCIATION.] The following 
 92.8   persons or their authorized representatives may petition the 
 92.9   commissioner in writing for review of an association action or 
 92.10  decision: 
 92.11     (1) any member aggrieved by an apportionment of costs made 
 92.12  by the association under subdivision 1, or by the association's 
 92.13  failure to make an apportionment; 
 92.14     (2) any member aggrieved by discrimination in the supplying 
 92.15  of services by the association; 
 92.16     (3) any member aggrieved by the association's rejection of 
 92.17  proposed changes in or additions to its filings that would 
 92.18  affect the member; 
 92.19     (4) any insurer or employer aggrieved by findings made in a 
 92.20  survey under subdivision 2; and 
 92.21     (5) any insurer or employer aggrieved by the application of 
 92.22  the association's rating system to that person or agency. 
 92.23     Subd. 5.  [PROCEDURE FOR APPEAL.] An appeal is initiated by 
 92.24  a written petition to the commissioner, which must be filed 
 92.25  within 30 days after the adverse decision of the association on 
 92.26  review or, if the association has not announced a decision 
 92.27  within the specified 30 days, within 60 days after the written 
 92.28  request for review.  If the association announces a decision 
 92.29  after the specified 30 days but before filing of the petition, 
 92.30  the petitioner has 30 days after announcement of the decision to 
 92.31  petition the commissioner. 
 92.32     The commissioner shall give not less than ten days' notice 
 92.33  of hearing to the appellant and the association, and in cases 
 92.34  under subdivision 4, clause (1), to all other members of the 
 92.35  association. 
 92.36     Procedure in the hearing shall be as provided for other 
 93.1   hearings before the commissioner or as provided by rule. 
 93.2      The commissioner shall mail a copy of the commissioner's 
 93.3   decision to the appellant and the association. 
 93.4      Subd. 6.  [RELIEF AUTHORIZED.] The commissioner's decision 
 93.5   shall be by order, with findings or fact and conclusions of law, 
 93.6   which order may: 
 93.7      (1) approve the action or decision of the association; 
 93.8      (2) direct the association within a reasonable time the 
 93.9   commissioner designates to give further consideration to the 
 93.10  matter and to reach a conclusion consistent with the 
 93.11  commissioner's order; or 
 93.12     (3) direct the association within a reasonable time the 
 93.13  commissioner designates to take specified action consistent with 
 93.14  the commissioner's findings. 
 93.15     Sec. 12.  [79.75] [DEVELOPMENT OF RATES BY ASSOCIATION.] 
 93.16     Subdivision 1.  [ACQUISITION OF INFORMATION.] (a) Every 
 93.17  insurer writing any insurance specified under section 79.65 
 93.18  shall report its insurance in this state to the association at 
 93.19  least annually, on forms and under rules prescribed by the 
 93.20  association.  The association must file, pursuant to rules 
 93.21  adopted by the commissioner, a record of its reports with the 
 93.22  department.  No such information may be made public by the 
 93.23  association or any of its employees except as required by law 
 93.24  and in accordance with its rules. 
 93.25     (b) Payroll audits by insurers shall show information 
 93.26  classified under the statistical plan and shall be correct as to 
 93.27  amount in each classification.  The commissioner or the 
 93.28  association may check any payroll audit and upon written 
 93.29  complaint alleging facts that if true would create serious doubt 
 93.30  about the accuracy of the payroll audit shall check it. 
 93.31     Subd. 2.  [CLASSIFICATIONS AND PLANS.] The commissioner 
 93.32  shall promulgate a statistical plan, which shall give due 
 93.33  consideration to the rating system on file with the commissioner 
 93.34  and seek to make the plan as uniform among the several states as 
 93.35  is practicable.  The statistical plan may be modified from time 
 93.36  to time.  It shall be used thereafter by each insurer in the 
 94.1   recording and reporting under subdivision 1 of its Minnesota 
 94.2   loss and countrywide expense experience.  The rules and 
 94.3   statistical plan may also provide for the recording and 
 94.4   reporting of expense experience items which are specially 
 94.5   applicable to this state.  The association shall assign each 
 94.6   compensation risk to its proper class, and its classification 
 94.7   shall be used by all insurers writing any insurance specified 
 94.8   under section 79.65.  On behalf of all members the association 
 94.9   shall inspect and make a written survey of compensation risks to 
 94.10  determine their proper classifications, shall maintain a record 
 94.11  of its classification of risks, and the written surveys of all 
 94.12  risks inspected by it showing such facts as are material in the 
 94.13  writing of insurance thereon. 
 94.14     Subd. 3.  [AIDS IN RATEMAKING.] The commissioner and every 
 94.15  insurer and rate service organization may exchange information 
 94.16  and experience data with insurance supervisory officials, 
 94.17  insurers, and rate service organizations in other states and may 
 94.18  consult with them with respect to ratemaking and the application 
 94.19  of rates.  The commissioner may designate one or more rate 
 94.20  service organizations to assist the commissioner in gathering 
 94.21  experience and making compilations thereof, and the compilations 
 94.22  shall be made available to insurers and rating organizations. 
 94.23     Sec. 13.  [79.76] [OTHER RATE SERVICE ORGANIZATIONS.] 
 94.24     Any group, association, or other organization which assists 
 94.25  the association in ratemaking by the collection and furnishing 
 94.26  of loss and expense statistics or by the submission of 
 94.27  recommendations is a rate service organization and shall be 
 94.28  governed by sections 79.74 and 79.75. 
 94.29     Sec. 14.  [79.77] [COSTS OF REGULATION.] 
 94.30     The costs for carrying out the commissioner's duties under 
 94.31  sections 79.64 to 79.78, including the costs of any hearings and 
 94.32  hearing officers, shall be paid by the special compensation fund 
 94.33  and assessed to the association quarterly.  The assessment must 
 94.34  be paid to the commissioner within 30 days and deposited into 
 94.35  the special compensation fund. 
 94.36     Sec. 15.  [79.78] [RULES.] 
 95.1      The commissioner may adopt rules necessary to implement and 
 95.2   administer sections 79.64 to 79.77. 
 95.3      Sec. 16.  Minnesota Statutes 1994, section 176.185, 
 95.4   subdivision 1, is amended to read: 
 95.5      Subdivision 1.  [NOTICE OF COVERAGE, TERMINATION, 
 95.6   CANCELLATION.] (a) Within ten days after the issuance of a 
 95.7   policy of insurance covering the liability to pay compensation 
 95.8   under this chapter written by an insurer licensed to insure such 
 95.9   liability in this state, the insurer shall file notice of 
 95.10  coverage with the commissioner under rules and on forms 
 95.11  prescribed by the commissioner.  No policy shall be canceled by 
 95.12  the insurer within the policy period nor terminated upon its 
 95.13  expiration date until a notice in writing is delivered or mailed 
 95.14  to the insured and filed with the commissioner, fixing the date 
 95.15  on which it is proposed to cancel it, or declaring that the 
 95.16  insurer does not intend to renew the policy upon the expiration 
 95.17  date.  A cancellation or termination is not effective until 30 
 95.18  days after written notice has been filed with the commissioner 
 95.19  in a manner prescribed by the commissioner unless prior to the 
 95.20  expiration of the 30-day period the employer obtains other 
 95.21  insurance coverage or an order exempting the employer from 
 95.22  carrying insurance as provided in section 176.181.  Upon receipt 
 95.23  of the notice, the commissioner shall notify the insured that 
 95.24  the insured must obtain coverage from some other licensed 
 95.25  carrier and that, if unable to do so, the insured shall request 
 95.26  the commissioner of commerce to require the issuance of a policy 
 95.27  as provided in section 79.251, subdivision 4.  Upon a 
 95.28  cancellation or termination of a policy by the insurer, the 
 95.29  employer is entitled to be assigned a policy in accordance with 
 95.30  sections 79.251 and 79.252.  
 95.31     (b) Notice of cancellation or termination by the insured 
 95.32  shall be served upon the insurer by written statement mailed or 
 95.33  delivered to the insurer.  Upon receipt of the notice, the 
 95.34  insurer shall notify the commissioner of the cancellation or 
 95.35  termination and the commissioner shall ask the employer for the 
 95.36  reasons for the cancellation or termination and notify the 
 96.1   employer of the duty under this chapter to insure the employer's 
 96.2   employees.  
 96.3      (c) In addition to the requirements under paragraphs (a) 
 96.4   and (b), with respect to any trucker employer in classification 
 96.5   7219, 7230, 7231, or 7360 pursuant to the classification plan 
 96.6   required to be filed under section 79.61 chapter 79, if the 
 96.7   insurer or its agent has delivered or mailed a written 
 96.8   certificate of insurance certifying that a policy in the name of 
 96.9   a trucker employer under this paragraph is in force, then the 
 96.10  insurer or its agent shall also deliver or mail written notice 
 96.11  of any midterm cancellation to the trucker employer recipient of 
 96.12  the certificate of insurance at the address listed on the 
 96.13  certificate.  If an insurer or its agent fails to mail or 
 96.14  deliver notice of any midterm cancellation of the trucker 
 96.15  employer's policy to the trucker employer recipient of the 
 96.16  certificate of insurance, then the special compensation fund 
 96.17  shall indemnify and hold harmless the recipient from any award 
 96.18  of benefits or other damages under this chapter resulting from 
 96.19  the failure to give notice. 
 96.20     Sec. 17.  [PRIOR RATES; PRESUMPTION.] 
 96.21     Unless disapproved by the commissioner, rates, schedules of 
 96.22  rates, and rating plans that have been filed with the 
 96.23  commissioner of commerce before April 1, 1995, are conclusively 
 96.24  presumed to satisfy the requirements of this article. 
 96.25     Sec. 18.  [REPEALER.] 
 96.26     Minnesota Statutes 1994, sections 79.01, subdivision 8; 
 96.27  79.50; 79.51; 79.52; 79.53; 79.54; 79.55; 79.56; 79.57; 79.58; 
 96.28  79.59; 79.60; 79.61; and 79.62, are repealed. 
 96.29     Sec. 19.  [EFFECTIVE DATE.] 
 96.30     This article is effective the day following final enactment.
 96.31                             ARTICLE 13
 96.32                           APPROPRIATIONS
 96.33     Section 1.  [DEPARTMENT OF COMMERCE.] 
 96.34     Subdivision 1.  [SPECIAL COMPENSATION FUND.] $926,000 for 
 96.35  fiscal year 1996 and $961,000 for fiscal year 1997 are 
 96.36  appropriated from the special compensation fund to the 
 97.1   department of commerce for the purposes of this act. 
 97.2      Subd. 2.  [ASSIGNED RISK SAFETY ACCOUNT.] $300,000 is 
 97.3   appropriated from the assigned risk safety account in the 
 97.4   special compensation fund to the commissioner of commerce for 
 97.5   the biennium ending June 30, 1997, for the purpose of article 3, 
 97.6   section 5. 
 97.7      Sec. 2.  [DEPARTMENT OF LABOR AND INDUSTRY.] 
 97.8      $151,000 in fiscal year 1996 and $136,000 in fiscal year 
 97.9   1997 are appropriated from the special compensation fund to the 
 97.10  department of labor and industry for the purposes of this act. 
 97.11     Sec. 3.  [OFFICE OF ATTORNEY GENERAL.] 
 97.12     $105,000 in fiscal year 1996 and $105,000 in fiscal year 
 97.13  1997 are appropriated from the special compensation fund to the 
 97.14  office of attorney general for the purposes of this act. 
 97.15     Sec. 4.  [UNIVERSITY OF MINNESOTA.] 
 97.16     $200,000 is appropriated for the biennium ending June 30, 
 97.17  1997, from the assigned risk safety account in the special 
 97.18  compensation fund to the board of regents of the University of 
 97.19  Minnesota for the purpose of article 3, section 6.