1.1                          A bill for an act 
  1.2             relating to commerce; providing coverages, notice and 
  1.3             filing requirements related to insurance; regulating 
  1.4             motor vehicle insurance contracts; regulating workers' 
  1.5             compensation self-insurance; regulating the 
  1.6             registration of certain securities; amending Minnesota 
  1.7             Statutes 1998, sections 60A.085; 60A.09, subdivision 
  1.8             4a; 62A.105, subdivision 2; 62A.146; 62A.30, 
  1.9             subdivision 2; 62A.31, by adding subdivisions; 
  1.10            62A.315; 62A.316; 62A.65, subdivision 8; 62E.04, 
  1.11            subdivision 4; 62Q.107; 65B.16; 65B.29, subdivisions 2 
  1.12            and 3; 65B.55, subdivision 2; 79A.04, subdivisions 1, 
  1.13            2, 7, and 9; 79A.11, subdivision 2, and by adding a 
  1.14            subdivision; and 79A.22, subdivisions 3 and 11; 
  1.15            Minnesota Statutes 1999 Supplement, sections 65B.44, 
  1.16            subdivision 2; 79A.22, subdivision 2; 79A.23, 
  1.17            subdivisions 1, 2, and 3; 79A.24, subdivision 2; and 
  1.18            80A.15, subdivision 2. 
  1.19  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.20     Section 1.  Minnesota Statutes 1998, section 60A.085, is 
  1.21  amended to read: 
  1.22     60A.085 [CANCELLATION OF GROUP COVERAGE; NOTIFICATION TO 
  1.23  COVERED PERSONS.] 
  1.24     (a) No cancellation of any group life, group accidental 
  1.25  death and dismemberment, group disability income, or group 
  1.26  medical expense policy, plan, or contract regulated under 
  1.27  chapter 62A or, 62C, 62L, or 62Q is effective unless the insurer 
  1.28  has made a good faith effort to notify all covered persons of 
  1.29  the cancellation at least 30 days before the effective 
  1.30  cancellation date.  For purposes of this section, an insurer has 
  1.31  made a good faith effort to notify all covered persons if the 
  1.32  insurer has notified all the persons included on the list 
  2.1   required by paragraph (b) at the home address given and only if 
  2.2   the list has been updated within the last 12 months. 
  2.3      (b) At the time of the application for coverage subject to 
  2.4   paragraph (a), the insurer shall obtain an accurate list of the 
  2.5   names and home addresses of all persons to be covered.  
  2.6      (c) Paragraph (a) does not apply if the group policy, plan, 
  2.7   or contract is replaced, or if the insurer has reasonable 
  2.8   evidence to indicate that it will be replaced, by a 
  2.9   substantially similar policy, plan, or contract. 
  2.10     (d) In no event shall this section extend coverage under a 
  2.11  group policy, plan, or contract more than 120 days beyond the 
  2.12  date coverage would otherwise cancel based on the terms of the 
  2.13  group policy, plan, or contract.  
  2.14     (e) If coverage under the group policy, plan, or contract 
  2.15  is extended by this section, then the time period during which 
  2.16  affected members may exercise any conversion privilege provided 
  2.17  for in the group policy, plan, or contract is extended for the 
  2.18  same length of time, plus 30 days. 
  2.19     Sec. 2.  Minnesota Statutes 1998, section 60A.09, 
  2.20  subdivision 4a, is amended to read: 
  2.21     Subd. 4a.  [ASSUMPTION TRANSACTIONS REGULATED.] No company, 
  2.22  whether domestic, foreign, or alien, shall perform an assumption 
  2.23  transaction, including an assumption reinsurance agreement, with 
  2.24  respect to a policy issued to a Minnesota resident, unless: 
  2.25     (1) the assumption agreement has been filed with the 
  2.26  commissioner; 
  2.27     (2) the assumption agreement specifically provides that the 
  2.28  original insurer remains liable to the insured in the event the 
  2.29  assuming insurer is unable to fulfill its obligations or the 
  2.30  original insurer acknowledges in writing to the commissioner 
  2.31  that it remains liable to the insured in the event the assuming 
  2.32  insurer is unable to fulfill its obligations; 
  2.33     (3) the proposed certificate of assumption to be provided 
  2.34  to the policyholder has been filed with the commissioner for 
  2.35  review and approval as provided in section 61A.02; and 
  2.36     (4) the proposed certificate of assumption contains, in 
  3.1   bold face type, the following language: 
  3.2      "Policyholder:  Please be advised that you retain all 
  3.3   rights with respect to your policy against your original insurer 
  3.4   in the event the assuming insurer is unable to fulfill its 
  3.5   obligations.  In such event, your original insurer remains 
  3.6   liable to you notwithstanding the terms of its assumption 
  3.7   agreement." 
  3.8      With respect to residents of Minnesota, the notice to 
  3.9   policyholders shall also include a statement as to the effect on 
  3.10  guaranty fund coverage, if any, that will result from the 
  3.11  transfer. 
  3.12     Clauses (2) and (4) above do not apply if the policyholder 
  3.13  consents in a signed writing to a release of the original 
  3.14  insurer from liability and to a waiver of the protections 
  3.15  provided in clauses (2) and (4) after being informed in writing 
  3.16  by the insurer of the circumstances relating to and the effect 
  3.17  of the assumption, provided that the consent form signed by the 
  3.18  policyholder has been filed with and approved by the 
  3.19  commissioner. 
  3.20     If a company is deemed by the commissioner to be in a 
  3.21  hazardous condition or is under a court ordered supervision, 
  3.22  rehabilitation, liquidation, conservation or receivership, and 
  3.23  the transfer of policies is in the best interest of the 
  3.24  policyholders, as determined by the commissioner, a transfer may 
  3.25  be effected notwithstanding the provisions in this subdivision 
  3.26  by using a different form of consent by policyholders.  This may 
  3.27  include a form of implied consent and adequate notification to 
  3.28  the policyholder of the circumstances requiring the transfer as 
  3.29  approved by the commissioner.  This paragraph does not apply 
  3.30  when a policy is transferred to the Minnesota life and health 
  3.31  guaranty association or to the Minnesota insurance guaranty 
  3.32  association. 
  3.33     This subdivision applies to other agreements, plans, or 
  3.34  arrangements not otherwise specifically regulated by statute if 
  3.35  the effect on policyholder rights is substantially similar to 
  3.36  assumption reinsurance. 
  4.1      Sec. 3.  Minnesota Statutes 1998, section 62A.105, 
  4.2   subdivision 2, is amended to read: 
  4.3      Subd. 2.  [REQUIREMENT.] If an issuer of policies or plans 
  4.4   referred to in subdivision 1 ceases to offer a particular policy 
  4.5   or subscriber contract to the general public or otherwise stops 
  4.6   adding new insureds to the group of covered persons, the issuer 
  4.7   shall allow any covered person to transfer to another 
  4.8   substantially similar policy or contract currently being sold by 
  4.9   the issuer.  The insurer shall notify each covered person when 
  4.10  the insurer stops adding new insureds to the group of covered 
  4.11  persons, and explain how the person can transfer to a similar 
  4.12  policy or contract.  The issuer shall permit the transfer 
  4.13  without any preexisting condition limitation, waiting period, or 
  4.14  other restriction of any type other than those which applied to 
  4.15  the insured under the prior policy or contract.  This section 
  4.16  does not apply to persons who were covered under an individual 
  4.17  policy or contract prior to July 1, 1994. 
  4.18     Sec. 4.  Minnesota Statutes 1998, section 62A.146, is 
  4.19  amended to read: 
  4.20     62A.146 [CONTINUATION OF BENEFITS TO SURVIVORS.] 
  4.21     No policy, contract, or plan of accident and health 
  4.22  protection issued by an insurer, nonprofit health service plan 
  4.23  corporation, or health maintenance organization, providing 
  4.24  coverage of hospital or medical expense on either an expense 
  4.25  incurred basis or other than an expense incurred basis which in 
  4.26  addition to coverage of the insured, subscriber, or enrollee, 
  4.27  also provides coverage to dependents, shall, except upon the 
  4.28  written consent of the survivor or survivors of the deceased 
  4.29  insured, subscriber, or enrollee, terminate, suspend, or 
  4.30  otherwise restrict the participation in or the receipt of 
  4.31  benefits otherwise payable under the policy, contract, or plan 
  4.32  to the survivor or survivors until the earlier of the following 
  4.33  dates:  
  4.34     (a) the date the surviving spouse becomes covered under 
  4.35  another group health plan; or 
  4.36     (b) the date coverage would have terminated under the 
  5.1   policy, contract, or plan had the insured, subscriber, or 
  5.2   enrollee lived.  
  5.3      The survivor or survivors, in order to have the coverage 
  5.4   and benefits extended, may be required to pay the entire cost of 
  5.5   the protection on a monthly basis.  The policy, contract, or 
  5.6   plan must require the insurer, nonprofit health service plan 
  5.7   corporation, or health maintenance organization and the group 
  5.8   policyholder or contract holder to, upon request, provide the 
  5.9   insured, subscriber, or enrollee with written verification from 
  5.10  the insurer of the cost of this coverage promptly at the time of 
  5.11  eligibility for this coverage and at any time during the 
  5.12  continuation period.  In no event shall the amount of premium or 
  5.13  fee contributions charged exceed 102 percent of the cost to the 
  5.14  plan for such period of coverage for other similarly situated 
  5.15  spouses and dependent children who are not the survivors of a 
  5.16  deceased insured, without regard to whether such cost is paid by 
  5.17  the employer or employee.  Failure of the survivor to make 
  5.18  premium or fee payments within 90 days after notice of the 
  5.19  requirement to pay the premiums or fees shall be a basis for the 
  5.20  termination of the coverage without written consent.  In event 
  5.21  of termination by reason of the survivor's failure to make 
  5.22  required premium or fee contributions, written notice of 
  5.23  cancellation must be mailed to the survivor's last known address 
  5.24  at least 30 days before the cancellation.  If the coverage is 
  5.25  provided under a group policy, contract, or plan, any required 
  5.26  premium or fee contributions for the coverage shall be paid by 
  5.27  the survivor to the group policyholder or contract holder for 
  5.28  remittance to the insurer, nonprofit health service plan 
  5.29  corporation, or health maintenance organization.  
  5.30     Sec. 5.  Minnesota Statutes 1998, section 62A.30, 
  5.31  subdivision 2, is amended to read: 
  5.32     Subd. 2.  [REQUIRED COVERAGE.] Every policy, plan, 
  5.33  certificate, or contract referred to in subdivision 1 issued or 
  5.34  renewed after August 1, 1988, that provides coverage to a 
  5.35  Minnesota resident must provide coverage for routine screening 
  5.36  procedures for cancer, including mammograms and, pap smears, 
  6.1   digital rectal examinations, and prostate-specific antigen tests 
  6.2   (PSA), including the cost of any office visit during which the 
  6.3   screening is performed, when ordered or provided by a physician 
  6.4   in accordance with the standard practice of medicine.  
  6.5      Sec. 6.  Minnesota Statutes 1998, section 62A.31, is 
  6.6   amended by adding a subdivision to read: 
  6.7      Subd. 1v.  [NOTICE BEFORE LAPSE OR TERMINATION.] No 
  6.8   individual Medicare supplement policy or certificate shall be 
  6.9   issued until the insurer has received from the applicant either 
  6.10  a written designation of at least one person, in addition to the 
  6.11  applicant, who is to receive notice of lapse or termination of 
  6.12  the policy or certificate for nonpayment of premium or a written 
  6.13  waiver dated and signed by the applicant electing not to 
  6.14  designate additional persons to receive notice.  The applicant 
  6.15  has the right to designate at least one person who is to receive 
  6.16  the notice of termination in addition to the insured.  
  6.17  Designation shall not constitute acceptance of any liability on 
  6.18  the third party for services provided to the insured.  The form 
  6.19  used for the written designation must provide space clearly 
  6.20  designated for listing at least one person.  The designation 
  6.21  shall include each person's full name and home address.  In the 
  6.22  case of an applicant who elects not to designate an additional 
  6.23  person, the waiver must state:  "Protection against unintended 
  6.24  lapse.  I understand that I have the right to designate at least 
  6.25  one person other than myself to receive notice of lapse or 
  6.26  termination of this Medicare supplement insurance policy for 
  6.27  nonpayment of premium.  I understand that notice will not be 
  6.28  given until 30 days after a premium is due and unpaid.  I elect 
  6.29  NOT to designate any person to receive such notice."  
  6.30     The insurer shall notify the insured of the right to change 
  6.31  this written designation at least once every two years.  
  6.32     Sec. 7.  Minnesota Statutes 1998, section 62A.31, is 
  6.33  amended by adding a subdivision to read: 
  6.34     Subd. 1w.  [NOTICE REQUIREMENTS.] No individual Medicare 
  6.35  supplement policy or certificate shall lapse or be terminated 
  6.36  for nonpayment of premium unless the insurer, at least 30 days 
  7.1   before the effective date of the lapse or termination, has given 
  7.2   notice to the insured and to those persons designated under 
  7.3   subdivision 1v, at the address provided by the insured for 
  7.4   purposes of receiving notice of lapse or termination.  Notice 
  7.5   must be given by first class United States mail, postage 
  7.6   prepaid, and notice may not be given until 30 days after a 
  7.7   premium is due and unpaid.  Notice is considered to have been 
  7.8   given as of five days after the date of mailing. 
  7.9      Sec. 8.  Minnesota Statutes 1998, section 62A.315, is 
  7.10  amended to read: 
  7.11     62A.315 [EXTENDED BASIC MEDICARE SUPPLEMENT PLAN; 
  7.12  COVERAGE.] 
  7.13     The extended basic Medicare supplement plan must have a 
  7.14  level of coverage so that it will be certified as a qualified 
  7.15  plan pursuant to section 62E.07, and will provide: 
  7.16     (1) coverage for all of the Medicare part A inpatient 
  7.17  hospital deductible and coinsurance amounts, and 100 percent of 
  7.18  all Medicare part A eligible expenses for hospitalization not 
  7.19  covered by Medicare; 
  7.20     (2) coverage for the daily copayment amount of Medicare 
  7.21  part A eligible expenses for the calendar year incurred for 
  7.22  skilled nursing facility care; 
  7.23     (3) coverage for the copayment amount of Medicare eligible 
  7.24  expenses under Medicare part B regardless of hospital 
  7.25  confinement, and the Medicare part B deductible amount; 
  7.26     (4) 80 percent of the usual and customary hospital and 
  7.27  medical expenses and supplies described in section 62E.06, 
  7.28  subdivision 1, not to exceed any charge limitation established 
  7.29  by the Medicare program or state law, the usual and customary 
  7.30  hospital and medical expenses and supplies, described in section 
  7.31  62E.06, subdivision 1, while in a foreign country, and 
  7.32  prescription drug expenses, not covered by Medicare; 
  7.33     (5) coverage for the reasonable cost of the first three 
  7.34  pints of blood, or equivalent quantities of packed red blood 
  7.35  cells as defined under federal regulations under Medicare parts 
  7.36  A and B, unless replaced in accordance with federal regulations; 
  8.1      (6) 100 percent of the cost of immunizations and routine 
  8.2   screening procedures for cancer, including mammograms and pap 
  8.3   smears, digital rectal examinations, and prostate-specific 
  8.4   antigen tests (PSA); 
  8.5      (7) preventive medical care benefit:  coverage for the 
  8.6   following preventive health services: 
  8.7      (i) an annual clinical preventive medical history and 
  8.8   physical examination that may include tests and services from 
  8.9   clause (ii) and patient education to address preventive health 
  8.10  care measures; 
  8.11     (ii) any one or a combination of the following preventive 
  8.12  screening tests or preventive services, the frequency of which 
  8.13  is considered medically appropriate: 
  8.14     (A) fecal occult blood test and/or digital rectal 
  8.15  examination; 
  8.16     (B) dipstick urinalysis for hematuria, bacteriuria, and 
  8.17  proteinuria; 
  8.18     (C) pure tone (air only) hearing screening test 
  8.19  administered or ordered by a physician; 
  8.20     (D) serum cholesterol screening every five years; 
  8.21     (E) thyroid function test; 
  8.22     (F) diabetes screening; 
  8.23     (iii) any other tests or preventive measures determined 
  8.24  appropriate by the attending physician.  
  8.25     Reimbursement shall be for the actual charges up to 100 
  8.26  percent of the Medicare-approved amount for each service as if 
  8.27  Medicare were to cover the service as identified in American 
  8.28  Medical Association current procedural terminology (AMA CPT) 
  8.29  codes to a maximum of $120 annually under this benefit.  This 
  8.30  benefit shall not include payment for any procedure covered by 
  8.31  Medicare; 
  8.32     (8) at-home recovery benefit:  coverage for services to 
  8.33  provide short-term at-home assistance with activities of daily 
  8.34  living for those recovering from an illness, injury, or surgery: 
  8.35     (i) for purposes of this benefit, the following definitions 
  8.36  shall apply: 
  9.1      (A) "activities of daily living" include, but are not 
  9.2   limited to, bathing, dressing, personal hygiene, transferring, 
  9.3   eating, ambulating, assistance with drugs that are normally 
  9.4   self-administered, and changing bandages or other dressings; 
  9.5      (B) "care provider" means a duly qualified or licensed home 
  9.6   health aide/homemaker, personal care aide, or nurse provided 
  9.7   through a licensed home health care agency or referred by a 
  9.8   licensed referral agency or licensed nurses registry; 
  9.9      (C) "home" means a place used by the insured as a place of 
  9.10  residence, provided that the place would qualify as a residence 
  9.11  for home health care services covered by Medicare.  A hospital 
  9.12  or skilled nursing facility shall not be considered the 
  9.13  insured's place of residence; 
  9.14     (D) "at-home recovery visit" means the period of a visit 
  9.15  required to provide at-home recovery care, without limit on the 
  9.16  duration of the visit, except each consecutive four hours in a 
  9.17  24-hour period of services provided by a care provider is one 
  9.18  visit; 
  9.19     (ii) coverage requirements and limitations: 
  9.20     (A) at-home recovery services provided must be primarily 
  9.21  services that assist in activities of daily living; 
  9.22     (B) the insured's attending physician must certify that the 
  9.23  specific type and frequency of at-home recovery services are 
  9.24  necessary because of a condition for which a home care plan of 
  9.25  treatment was approved by Medicare; 
  9.26     (C) coverage is limited to: 
  9.27     (I) no more than the number and type of at-home recovery 
  9.28  visits certified as medically necessary by the insured's 
  9.29  attending physician.  The total number of at-home recovery 
  9.30  visits shall not exceed the number of Medicare-approved home 
  9.31  health care visits under a Medicare-approved home care plan of 
  9.32  treatment; 
  9.33     (II) the actual charges for each visit up to a maximum 
  9.34  reimbursement of $40 per visit; 
  9.35     (III) $1,600 per calendar year; 
  9.36     (IV) seven visits in any one week; 
 10.1      (V) care furnished on a visiting basis in the insured's 
 10.2   home; 
 10.3      (VI) services provided by a care provider as defined in 
 10.4   this section; 
 10.5      (VII) at-home recovery visits while the insured is covered 
 10.6   under the policy or certificate and not otherwise excluded; 
 10.7      (VIII) at-home recovery visits received during the period 
 10.8   the insured is receiving Medicare-approved home care services or 
 10.9   no more than eight weeks after the service date of the last 
 10.10  Medicare-approved home health care visit; 
 10.11     (iii) coverage is excluded for: 
 10.12     (A) home care visits paid for by Medicare or other 
 10.13  government programs; and 
 10.14     (B) care provided by family members, unpaid volunteers, or 
 10.15  providers who are not care providers. 
 10.16     Sec. 9.  Minnesota Statutes 1998, section 62A.316, is 
 10.17  amended to read: 
 10.18     62A.316 [BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.] 
 10.19     (a) The basic Medicare supplement plan must have a level of 
 10.20  coverage that will provide: 
 10.21     (1) coverage for all of the Medicare part A inpatient 
 10.22  hospital coinsurance amounts, and 100 percent of all Medicare 
 10.23  part A eligible expenses for hospitalization not covered by 
 10.24  Medicare, after satisfying the Medicare part A deductible; 
 10.25     (2) coverage for the daily copayment amount of Medicare 
 10.26  part A eligible expenses for the calendar year incurred for 
 10.27  skilled nursing facility care; 
 10.28     (3) coverage for the copayment amount of Medicare eligible 
 10.29  expenses under Medicare part B regardless of hospital 
 10.30  confinement, subject to the Medicare part B deductible amount; 
 10.31     (4) 80 percent of the hospital and medical expenses and 
 10.32  supplies incurred during travel outside the United States as a 
 10.33  result of a medical emergency; 
 10.34     (5) coverage for the reasonable cost of the first three 
 10.35  pints of blood, or equivalent quantities of packed red blood 
 10.36  cells as defined under federal regulations under Medicare parts 
 11.1   A and B, unless replaced in accordance with federal regulations; 
 11.2      (6) 100 percent of the cost of immunizations and routine 
 11.3   screening procedures for cancer screening including mammograms 
 11.4   and pap smears, digital rectal examinations, and 
 11.5   prostate-specific antigen tests (PSA); and 
 11.6      (7) 80 percent of coverage for all physician prescribed 
 11.7   medically appropriate and necessary equipment and supplies used 
 11.8   in the management and treatment of diabetes.  Coverage must 
 11.9   include persons with gestational, type I, or type II diabetes. 
 11.10     (b) Only the following optional benefit riders may be added 
 11.11  to this plan: 
 11.12     (1) coverage for all of the Medicare part A inpatient 
 11.13  hospital deductible amount; 
 11.14     (2) a minimum of 80 percent of eligible medical expenses 
 11.15  and supplies not covered by Medicare part B, not to exceed any 
 11.16  charge limitation established by the Medicare program or state 
 11.17  law; 
 11.18     (3) coverage for all of the Medicare part B annual 
 11.19  deductible; 
 11.20     (4) coverage for at least 50 percent, or the equivalent of 
 11.21  50 percent, of usual and customary prescription drug expenses; 
 11.22     (5) coverage for the following preventive health services: 
 11.23     (i) an annual clinical preventive medical history and 
 11.24  physical examination that may include tests and services from 
 11.25  clause (ii) and patient education to address preventive health 
 11.26  care measures; 
 11.27     (ii) any one or a combination of the following preventive 
 11.28  screening tests or preventive services, the frequency of which 
 11.29  is considered medically appropriate: 
 11.30     (A) fecal occult blood test and/or digital rectal 
 11.31  examination; 
 11.32     (B) dipstick urinalysis for hematuria, bacteriuria, and 
 11.33  proteinuria; 
 11.34     (C) pure tone (air only) hearing screening test, 
 11.35  administered or ordered by a physician; 
 11.36     (D) serum cholesterol screening every five years; 
 12.1      (E) thyroid function test; 
 12.2      (F) diabetes screening; 
 12.3      (iii) any other tests or preventive measures determined 
 12.4   appropriate by the attending physician. 
 12.5      Reimbursement shall be for the actual charges up to 100 
 12.6   percent of the Medicare-approved amount for each service, as if 
 12.7   Medicare were to cover the service as identified in American 
 12.8   Medical Association current procedural terminology (AMA CPT) 
 12.9   codes, to a maximum of $120 annually under this benefit.  This 
 12.10  benefit shall not include payment for a procedure covered by 
 12.11  Medicare; 
 12.12     (6) coverage for services to provide short-term at-home 
 12.13  assistance with activities of daily living for those recovering 
 12.14  from an illness, injury, or surgery: 
 12.15     (i) For purposes of this benefit, the following definitions 
 12.16  apply: 
 12.17     (A) "activities of daily living" include, but are not 
 12.18  limited to, bathing, dressing, personal hygiene, transferring, 
 12.19  eating, ambulating, assistance with drugs that are normally 
 12.20  self-administered, and changing bandages or other dressings; 
 12.21     (B) "care provider" means a duly qualified or licensed home 
 12.22  health aide/homemaker, personal care aid, or nurse provided 
 12.23  through a licensed home health care agency or referred by a 
 12.24  licensed referral agency or licensed nurses registry; 
 12.25     (C) "home" means a place used by the insured as a place of 
 12.26  residence, provided that the place would qualify as a residence 
 12.27  for home health care services covered by Medicare.  A hospital 
 12.28  or skilled nursing facility shall not be considered the 
 12.29  insured's place of residence; 
 12.30     (D) "at-home recovery visit" means the period of a visit 
 12.31  required to provide at-home recovery care, without limit on the 
 12.32  duration of the visit, except each consecutive four hours in a 
 12.33  24-hour period of services provided by a care provider is one 
 12.34  visit; 
 12.35     (ii) Coverage requirements and limitations: 
 12.36     (A) at-home recovery services provided must be primarily 
 13.1   services that assist in activities of daily living; 
 13.2      (B) the insured's attending physician must certify that the 
 13.3   specific type and frequency of at-home recovery services are 
 13.4   necessary because of a condition for which a home care plan of 
 13.5   treatment was approved by Medicare; 
 13.6      (C) coverage is limited to: 
 13.7      (I) no more than the number and type of at-home recovery 
 13.8   visits certified as necessary by the insured's attending 
 13.9   physician.  The total number of at-home recovery visits shall 
 13.10  not exceed the number of Medicare-approved home care visits 
 13.11  under a Medicare-approved home care plan of treatment; 
 13.12     (II) the actual charges for each visit up to a maximum 
 13.13  reimbursement of $40 per visit; 
 13.14     (III) $1,600 per calendar year; 
 13.15     (IV) seven visits in any one week; 
 13.16     (V) care furnished on a visiting basis in the insured's 
 13.17  home; 
 13.18     (VI) services provided by a care provider as defined in 
 13.19  this section; 
 13.20     (VII) at-home recovery visits while the insured is covered 
 13.21  under the policy or certificate and not otherwise excluded; 
 13.22     (VIII) at-home recovery visits received during the period 
 13.23  the insured is receiving Medicare-approved home care services or 
 13.24  no more than eight weeks after the service date of the last 
 13.25  Medicare-approved home health care visit; 
 13.26     (iii) Coverage is excluded for: 
 13.27     (A) home care visits paid for by Medicare or other 
 13.28  government programs; and 
 13.29     (B) care provided by family members, unpaid volunteers, or 
 13.30  providers who are not care providers; 
 13.31     (7) coverage for at least 50 percent, or the equivalent of 
 13.32  50 percent, of usual and customary prescription drug expenses to 
 13.33  a maximum of $1,200 paid by the issuer annually under this 
 13.34  benefit.  An issuer of Medicare supplement insurance policies 
 13.35  that elects to offer this benefit rider shall also make 
 13.36  available coverage that contains the rider specified in clause 
 14.1   (4). 
 14.2      Sec. 10.  Minnesota Statutes 1998, section 62A.65, 
 14.3   subdivision 8, is amended to read: 
 14.4      Subd. 8.  [CESSATION OF INDIVIDUAL BUSINESS.] 
 14.5   Notwithstanding the provisions of subdivisions 1 to 7, a health 
 14.6   carrier may elect to cease doing business in the individual 
 14.7   health plan market in this state if it complies with the 
 14.8   requirements of this subdivision.  For purposes of this section, 
 14.9   "cease doing business" means to discontinue issuing new 
 14.10  individual health plans and to refuse to renew all of the health 
 14.11  carrier's existing individual health plans issued in this state 
 14.12  whose terms permit refusal to renew under the circumstances 
 14.13  specified in this subdivision.  This subdivision does not permit 
 14.14  cancellation of an individual health plan, unless the terms of 
 14.15  the health plan permit cancellation under the circumstances 
 14.16  specified in this subdivision.  A health carrier electing to 
 14.17  cease doing business in the individual health plan market in 
 14.18  this state shall notify the commissioner 180 days prior to the 
 14.19  effective date of the cessation.  Within 30 days after the 
 14.20  termination, the health carrier shall submit to the commissioner 
 14.21  a complete list of policyholders that have been terminated.  The 
 14.22  cessation of business does not include the failure of a health 
 14.23  carrier to offer or issue new business in the individual health 
 14.24  plan market or continue an existing product line in that market, 
 14.25  provided that a health carrier does not terminate, cancel, or 
 14.26  fail to renew its current individual health plan business.  A 
 14.27  health carrier electing to cease doing business in the 
 14.28  individual health plan market shall provide 120 days' written 
 14.29  notice to each policyholder covered by an individual health plan 
 14.30  issued by the health carrier.  This notice must also inform each 
 14.31  policyholder of the existence of the Minnesota comprehensive 
 14.32  health association, the requirements for being accepted, the 
 14.33  procedures for applying for coverage, and the telephone numbers 
 14.34  at the department of health and the department of commerce for 
 14.35  information about private individual or family health coverage.  
 14.36  A health carrier that ceases to write new business in the 
 15.1   individual health plan market shall continue to be governed by 
 15.2   this section with respect to continuing individual health plan 
 15.3   business conducted by the health carrier.  A health carrier that 
 15.4   ceases to do business in the individual health plan market after 
 15.5   July 1, 1994, is prohibited from writing new business in the 
 15.6   individual health plan market in this state for a period of five 
 15.7   years from the date of notice to the commissioner.  This 
 15.8   subdivision applies to any health maintenance organization that 
 15.9   ceases to do business in the individual health plan market in 
 15.10  one service area with respect to that service area only.  
 15.11  Nothing in this subdivision prohibits an affiliated health 
 15.12  maintenance organization from continuing to do business in the 
 15.13  individual health plan market in that same service area.  The 
 15.14  right to refuse to renew an individual health plan under this 
 15.15  subdivision does not apply to individual health plans issued on 
 15.16  a guaranteed renewable basis that does not permit refusal to 
 15.17  renew under the circumstances specified in this subdivision.  
 15.18     Sec. 11.  Minnesota Statutes 1998, section 62E.04, 
 15.19  subdivision 4, is amended to read: 
 15.20     Subd. 4.  [MAJOR MEDICAL COVERAGE.] Each insurer and 
 15.21  fraternal shall affirmatively offer coverage of major medical 
 15.22  expenses to every applicant who applies to the insurer or 
 15.23  fraternal for a new unqualified policy, which has a lifetime 
 15.24  benefit limit of less than $1,000,000, at the time of 
 15.25  application and annually to every holder of such an unqualified 
 15.26  policy of accident and health insurance renewed by the insurer 
 15.27  or fraternal.  The coverage shall provide that when a covered 
 15.28  individual incurs out-of-pocket expenses of $5,000 or more 
 15.29  within a calendar year for services covered in section 62E.06, 
 15.30  subdivision 1, benefits shall be payable, subject to any 
 15.31  copayment authorized by the commissioner, up to a maximum 
 15.32  lifetime limit of $500,000.  The offer of coverage of major 
 15.33  medical expenses may consist of the offer of a rider on an 
 15.34  existing unqualified policy or a new policy which is a qualified 
 15.35  plan. 
 15.36     Sec. 12.  Minnesota Statutes 1998, section 62Q.107, is 
 16.1   amended to read: 
 16.2      62Q.107 [PROHIBITED PROVISION; JUDICIAL REVIEW.] 
 16.3      Beginning January 1, 1999, no health plan, including the 
 16.4   coverages described in section 62A.011, subdivision 3, clauses 
 16.5   (1), (7), and (10), may specify a standard of review upon which 
 16.6   a court may review denial of a claim or of any other decision 
 16.7   made by a health plan company with respect to an enrollee.  This 
 16.8   section prohibits limiting court review to a determination of 
 16.9   whether the health plan company's decision is arbitrary and 
 16.10  capricious, an abuse of discretion, or any other standard less 
 16.11  favorable to the enrollee than a preponderance of the evidence.  
 16.12     Sec. 13.  Minnesota Statutes 1998, section 65B.16, is 
 16.13  amended to read: 
 16.14     65B.16 [STATEMENT OF REASONS FOR CANCELLATION OR 
 16.15  REDUCTION.] 
 16.16     No notice of cancellation or reduction in the limits of 
 16.17  liability of coverage of an automobile insurance policy under 
 16.18  section 65B.15 shall be effective unless the specific 
 16.19  underwriting or other reason or reasons for such cancellation or 
 16.20  reduction in the limits of liability of coverage are stated in 
 16.21  such notice and the notice is mailed or delivered by the insurer 
 16.22  to the named insured at least 30 days prior to the effective 
 16.23  date of cancellation; provided, however, that when nonpayment of 
 16.24  premium is the reason for cancellation or when the company is 
 16.25  exercising its right to cancel insurance which has been in 
 16.26  effect for less than 60 days the notice must be mailed or 
 16.27  delivered by the insurer to the named insured at least ten days' 
 16.28  notice 15 days before the effective date of cancellation, and 
 16.29  the reasons for the cancellation, shall be given.  Information 
 16.30  regarding moving traffic violations or motor vehicle accidents 
 16.31  must be specifically requested on the application in order for a 
 16.32  company to use those incidents to exercise its right to cancel 
 16.33  within the first 59 days of coverage.  When nonpayment of 
 16.34  premiums is the reason for cancellation, the reason must be 
 16.35  given to the insured with the notice of cancellation; and if the 
 16.36  company is exercising its right to cancel within the first 59 
 17.1   days of coverage and notice is given with less than ten 15 days 
 17.2   remaining in the 59-day period, the coverage must be extended, 
 17.3   to expire ten 15 days after notice was mailed.  
 17.4      Sec. 14.  Minnesota Statutes 1998, section 65B.29, 
 17.5   subdivision 2, is amended to read: 
 17.6      Subd. 2.  [INSURANCE REQUIRED.] No motor vehicle service 
 17.7   contract may be issued, sold, or offered for sale in this state 
 17.8   unless the provider of the service contract is insured under a 
 17.9   motor vehicle service contract reimbursement insurance policy 
 17.10  issued by an insurer authorized to do business in this 
 17.11  state.  Insurers issuing such a policy are required to have 
 17.12  capital and surplus equal to at least $10,000,000 at the end of 
 17.13  the preceding year.  Capital and surplus must be calculated 
 17.14  using the accounting standards required by section 60A.13. 
 17.15     Sec. 15.  Minnesota Statutes 1998, section 65B.29, 
 17.16  subdivision 3, is amended to read: 
 17.17     Subd. 3.  [FILING REQUIREMENTS.] No motor vehicle service 
 17.18  contract may be issued, sold, or offered for sale in this state 
 17.19  unless a true and correct copy of the service contract and the 
 17.20  provider's reimbursement insurance policy have been filed with 
 17.21  the commissioner and either (1) the commissioner has approved it 
 17.22  or (2) 60 days have elapsed and the commissioner has not 
 17.23  disapproved it as misleading or violative of public policy.  The 
 17.24  commissioner may, by written notice to the provider, extend the 
 17.25  review for an additional period not to exceed 60 days.  
 17.26     Sec. 16.  Minnesota Statutes 1999 Supplement, section 
 17.27  65B.44, subdivision 2, is amended to read: 
 17.28     Subd. 2.  [MEDICAL EXPENSE BENEFITS.] (a) Medical expense 
 17.29  benefits shall reimburse all reasonable expenses for necessary: 
 17.30     (1) medical, surgical, psychological, x-ray, optical, 
 17.31  dental, chiropractic, and rehabilitative services, including 
 17.32  prosthetic devices; 
 17.33     (2) prescription drugs; 
 17.34     (3) ambulance and all other transportation expenses 
 17.35  incurred in traveling to receive other covered medical expense 
 17.36  benefits; 
 18.1      (4) sign interpreting and language translation services, 
 18.2   other than such services provided by a family member of the 
 18.3   patient, related to the receipt of medical, surgical, x-ray, 
 18.4   optical, dental, chiropractic, hospital, extended care, nursing, 
 18.5   and rehabilitative services; and 
 18.6      (5) hospital, extended care, and nursing services.  
 18.7      (b) Hospital room and board benefits may be limited, except 
 18.8   for intensive care facilities, to the regular daily semiprivate 
 18.9   room rates customarily charged by the institution in which the 
 18.10  recipient of benefits is confined.  
 18.11     (c) Such benefits shall also include necessary remedial 
 18.12  treatment and services recognized and permitted under the laws 
 18.13  of this state for an injured person who relies upon spiritual 
 18.14  means through prayer alone for healing in accordance with that 
 18.15  person's religious beliefs.  
 18.16     (d) Medical expense loss includes medical expenses accrued 
 18.17  prior to the death of a person notwithstanding the fact that 
 18.18  benefits are paid or payable to the decedent's survivors.  
 18.19     (e) Medical expense benefits for rehabilitative services 
 18.20  shall be subject to the provisions of section 65B.45. 
 18.21     Sec. 17.  Minnesota Statutes 1998, section 65B.55, 
 18.22  subdivision 2, is amended to read: 
 18.23     Subd. 2.  A plan of reparation security may provide that in 
 18.24  any instance where a lapse occurs in the period of disability or 
 18.25  in the medical treatment of a person with respect to whose 
 18.26  injury basic economic loss benefits have been paid and a person 
 18.27  subsequently claims additional benefits based upon an alleged 
 18.28  recurrence of the injury for which the original claim for 
 18.29  benefits was made, the obligor may require reasonable medical 
 18.30  proof of such alleged recurrence; provided, that in no event 
 18.31  shall the aggregate benefits payable to any person exceed the 
 18.32  maximum limits specified in the plan of security, and provided 
 18.33  further that such coverages may contain a provision terminating 
 18.34  eligibility for benefits after a prescribed period of lapse of 
 18.35  disability and medical treatment, which period shall not be less 
 18.36  than one year.  Notification to the insured of the impending 
 19.1   termination of benefits must be provided from the reparation 
 19.2   obligor no sooner than 60 days, nor later than 30 days, before 
 19.3   the one-year lapse in treatment. 
 19.4      Sec. 18.  Minnesota Statutes 1998, section 79A.04, 
 19.5   subdivision 1, is amended to read: 
 19.6      Subdivision 1.  [ANNUAL SECURING OF LIABILITY.] Each year 
 19.7   every private self-insuring employer shall secure incurred 
 19.8   liabilities for the payment of compensation and the performance 
 19.9   of the its obligations and the obligations of all self-insuring 
 19.10  employers imposed under chapter 176 by renewing the prior year's 
 19.11  security deposit or by making a new deposit of security.  If a 
 19.12  new deposit is made, it must be posted within 60 days of the 
 19.13  filing of the self-insured employer's annual report with the 
 19.14  commissioner, but in no event later than July 1. 
 19.15     Sec. 19.  Minnesota Statutes 1998, section 79A.04, 
 19.16  subdivision 2, is amended to read: 
 19.17     Subd. 2.  [MINIMUM DEPOSIT.] The minimum deposit is 110 
 19.18  percent of the private self-insurer's estimated future liability.
 19.19  Up to ten percent of that The deposit may be used to secure 
 19.20  payment of all administrative and legal costs, and unpaid 
 19.21  assessments required by section 79A.12, subdivision 2, relating 
 19.22  to or arising from the employer's its or other employers' 
 19.23  self-insuring.  As used in this section, "private self-insurer" 
 19.24  includes both current and former members of the self-insurers' 
 19.25  security fund; and "private self-insurers' estimated future 
 19.26  liability" means the private self-insurers' total of estimated 
 19.27  future liability as determined by an Associate or Fellow of the 
 19.28  Casualty Actuarial Society every year for group member private 
 19.29  self-insurers and, for a nongroup member private self-insurer's 
 19.30  authority to self-insure, every year for the first five years.  
 19.31  After the first five years, the nongroup member's total shall be 
 19.32  as determined by an Associate or Fellow of the Casualty 
 19.33  Actuarial Society at least every two years, and each such 
 19.34  actuarial study shall include a projection of future losses 
 19.35  during the period until the next scheduled actuarial study, less 
 19.36  payments anticipated to be made during that time.  
 20.1      All data and information furnished by a private 
 20.2   self-insurer to an Associate or Fellow of the Casualty Actuarial 
 20.3   Society for purposes of determining private self-insurers' 
 20.4   estimated future liability must be certified by an officer of 
 20.5   the private self-insurer to be true and correct with respect to 
 20.6   payroll and paid losses, and must be certified, upon information 
 20.7   and belief, to be true and correct with respect to reserves.  
 20.8   The certification must be made by sworn affidavit.  In addition 
 20.9   to any other remedies provided by law, the certification of 
 20.10  false data or information pursuant to this subdivision may 
 20.11  result in a fine imposed by the commissioner of commerce on the 
 20.12  private self-insurer up to the amount of $5,000, and termination 
 20.13  of the private self-insurers' authority to self-insure.  The 
 20.14  determination of private self-insurers' estimated future 
 20.15  liability by an Associate or Fellow of the Casualty Actuarial 
 20.16  Society shall be conducted in accordance with standards and 
 20.17  principles for establishing loss and loss adjustment expense 
 20.18  reserves by the Actuarial Standards Board, an affiliate of the 
 20.19  American Academy of Actuaries.  The commissioner may reject an 
 20.20  actuarial report that does not meet the standards and principles 
 20.21  of the Actuarial Standards Board, and may further disqualify the 
 20.22  actuary who prepared the report from submitting any future 
 20.23  actuarial reports pursuant to this chapter.  Within 30 days 
 20.24  after the actuary has been served by the commissioner with a 
 20.25  notice of disqualification, an actuary who is aggrieved by the 
 20.26  disqualification may request a hearing to be conducted in 
 20.27  accordance with chapter 14.  Based on a review of the actuarial 
 20.28  report, the commissioner of commerce may require an increase in 
 20.29  the minimum security deposit in an amount the commissioner 
 20.30  considers sufficient. 
 20.31     Estimated future liability is determined by first taking 
 20.32  the total amount of the self-insured's future liability of 
 20.33  workers' compensation claims and then deducting the total amount 
 20.34  which is estimated to be returned to the self-insurer from any 
 20.35  specific excess insurance coverage, aggregate excess insurance 
 20.36  coverage, and any supplementary benefits or second injury 
 21.1   benefits which are estimated to be reimbursed by the special 
 21.2   compensation fund. Supplementary benefits or second injury 
 21.3   benefits will not be reimbursed by the special compensation fund 
 21.4   unless the special compensation fund assessment pursuant to 
 21.5   section 176.129 is paid and the reports required thereunder are 
 21.6   filed with the special compensation fund.  In the case of surety 
 21.7   bonds, bonds shall secure administrative and legal costs in 
 21.8   addition to the liability for payment of compensation reflected 
 21.9   on the face of the bond.  In no event shall the security be less 
 21.10  than the last retention limit selected by the self-insurer with 
 21.11  the workers' compensation reinsurance association, provided that 
 21.12  the commissioner may allow former members to post less than the 
 21.13  workers' compensation reinsurance association retention level if 
 21.14  that amount is adequate to secure payment of the self-insurers' 
 21.15  estimated future liability, as defined in this subdivision, 
 21.16  including payment of claims, administrative and legal costs, and 
 21.17  unpaid assessments required by section 79A.12, subdivision 2.  
 21.18  The posting or depositing of security pursuant to this section 
 21.19  shall release all previously posted or deposited security from 
 21.20  any obligations under the posting or depositing and any surety 
 21.21  bond so released shall be returned to the surety.  Any other 
 21.22  security shall be returned to the depositor or the person 
 21.23  posting the bond. 
 21.24     As a condition for the granting or renewing of a 
 21.25  certificate to self-insure, the commissioner may require a 
 21.26  private self-insurer to furnish any additional security the 
 21.27  commissioner considers sufficient to insure payment of all 
 21.28  claims under chapter 176. 
 21.29     Sec. 20.  Minnesota Statutes 1998, section 79A.04, 
 21.30  subdivision 7, is amended to read: 
 21.31     Subd. 7.  [PERFECTION OF SECURITY.] Upon the commissioner 
 21.32  sending a request to renew, request to post, or request to 
 21.33  increase a security deposit, a perfected security interest is 
 21.34  created in the private self-insured's assets in favor of the 
 21.35  commissioner to the extent of any then unsecured portion of the 
 21.36  self-insured's incurred liabilities.  That perfected security 
 22.1   interest is transferred to any cash or securities thereafter 
 22.2   posted by the private self-insured with the state treasurer and 
 22.3   is released only upon either of the following: 
 22.4      (1) the acceptance by the commissioner of a surety bond or 
 22.5   irrevocable letter of credit for the full amount of the incurred 
 22.6   liabilities for the payment of compensation; or 
 22.7      (2) the return of cash or securities by the commissioner. 
 22.8      The private self-insured employer loses all right, title, 
 22.9   and interest in and any right to control all assets or 
 22.10  obligations posted or left on deposit as security.  In the event 
 22.11  of a declaration of bankruptcy or insolvency by a court of 
 22.12  competent jurisdiction that a private self-insurer is the 
 22.13  subject of a voluntary or involuntary petition under the United 
 22.14  States Bankruptcy Code, title 11, or a court of competent 
 22.15  jurisdiction has declared the private self-insurer to be 
 22.16  bankrupt or insolvent, or in the event of the issuance of a 
 22.17  certificate of default by the commissioner, the commissioner 
 22.18  shall liquidate the deposit as provided in this chapter, and 
 22.19  transfer it to the self-insurer's security fund for application 
 22.20  to the self-insured employer's incurred liability and other 
 22.21  current or future obligations of the self-insurers' security 
 22.22  fund.  In the event that a private self-insurer is the subject 
 22.23  of a voluntary or involuntary petition under the United States 
 22.24  Bankruptcy Code, title 11, or a court of competent jurisdiction 
 22.25  has declared the private self-insurer to be bankrupt or 
 22.26  insolvent, or in the event of the issuance of a certificate of 
 22.27  default by the commissioner, all right, title, and interest in 
 22.28  and any right to control all assets or obligations which have 
 22.29  been posted or deposited as security must be transferred to the 
 22.30  self-insurers' security fund. 
 22.31     Sec. 21.  Minnesota Statutes 1998, section 79A.04, 
 22.32  subdivision 9, is amended to read: 
 22.33     Subd. 9.  [INSOLVENCY, BANKRUPTCY, OR DEFAULT; UTILIZATION 
 22.34  OF SECURITY DEPOSIT.] The commissioner of labor and industry 
 22.35  shall notify the commissioner and the security fund if the 
 22.36  commissioner of labor and industry has knowledge that any 
 23.1   private self-insurer has failed to pay workers' compensation 
 23.2   benefits as required by chapter 176.  If the commissioner 
 23.3   determines that a private self-insurer is the subject of a 
 23.4   voluntary or involuntary petition under the United States 
 23.5   Bankruptcy Code, title 11, or the commissioner determines that a 
 23.6   court of competent jurisdiction has declared the private 
 23.7   self-insurer to be bankrupt or insolvent, and the private 
 23.8   self-insurer has failed to pay workers' compensation as required 
 23.9   by chapter 176 or, if the commissioner issues a certificate of 
 23.10  default against a private self-insurer for failure to pay 
 23.11  workers' compensation as required by chapter 176, or failure to 
 23.12  pay an assessment to the self-insurers' security fund when due, 
 23.13  then the security deposit shall be utilized to administer and 
 23.14  pay the private self-insurers' workers' compensation or 
 23.15  assessment obligations or any other current or future 
 23.16  obligations of the self-insurers' security fund.  
 23.17     Sec. 22.  Minnesota Statutes 1998, section 79A.11, 
 23.18  subdivision 2, is amended to read: 
 23.19     Subd. 2.  [SECURITY DEPOSITS.] The security fund shall have 
 23.20  the right and obligation to obtain from and retain the security 
 23.21  deposit of an insolvent private self-insurer the amount of to 
 23.22  apply to the private self-insurer's current or future 
 23.23  compensation obligations, including reasonable administrative 
 23.24  and legal costs, paid or assumed by the security fund and to 
 23.25  other current or future obligations of the security fund.  
 23.26  Reimbursement of administrative costs, including legal costs, 
 23.27  shall be subject to approval by a majority of the security 
 23.28  fund's voting trustees.  The security fund shall be a party in 
 23.29  interest in any action to obtain the security deposit for the 
 23.30  payment of compensation obligations of an insolvent self-insurer.
 23.31     Sec. 23.  Minnesota Statutes 1998, section 79A.11, is 
 23.32  amended by adding a subdivision to read: 
 23.33     Subd. 2a.  [REPLACEMENT INSURANCE POLICY.] The insolvent 
 23.34  self-insurer may obtain an insurance policy as described in 
 23.35  section 79A.06, subdivision 5, to discharge further workers' 
 23.36  compensation obligations assumed by the self-insurers' security 
 24.1   fund on behalf of the insolvent insurer.  At the self-insurers' 
 24.2   security fund's option and in its sole discretion, any part of 
 24.3   the insolvent self-insurers' security deposit may be used to 
 24.4   fund the acquisition of this policy.  After the security deposit 
 24.5   has been used to:  (1) fund the acquisition of this policy; (2) 
 24.6   pay all direct and indirect administrative and professional 
 24.7   expenses of the fund related to the insolvent self-insurer; and 
 24.8   (3) to the extent not covered by the insurance policy, pay the 
 24.9   insolvent self-insurers' losses, allocated loss expense and 
 24.10  unallocated loss expense, any part of the insolvent 
 24.11  self-insurers' security deposit that remains must be promptly 
 24.12  returned to the insolvent self-insurer. 
 24.13     Sec. 24.  Minnesota Statutes 1999 Supplement, section 
 24.14  79A.22, subdivision 2, is amended to read: 
 24.15     Subd. 2.  [FINANCIAL STANDARDS.] Commercial self-insurance 
 24.16  groups shall have and maintain: 
 24.17     (1) combined net worth of all of the members in an amount 
 24.18  at least equal to 12 10 times the group's selected retention 
 24.19  level of the workers' compensation reinsurance association.  For 
 24.20  purposes of this clause, the amount of any retained surplus by 
 24.21  the group is considered part of the combined net worth of all 
 24.22  the members; 
 24.23     (2) sufficient assets and liquidity in the group's common 
 24.24  claims fund to promptly and completely meet all obligations of 
 24.25  its members under this chapter and chapter 176. 
 24.26     Sec. 25.  Minnesota Statutes 1998, section 79A.22, 
 24.27  subdivision 3, is amended to read: 
 24.28     Subd. 3.  [NEW MEMBERSHIP.] The commercial self-insurance 
 24.29  group shall file with the commissioner the name of any new 
 24.30  employer that has been accepted in the group prior to the 
 24.31  initiation date of membership along with the member's signed 
 24.32  indemnity agreement and evidence the member has deposited 
 24.33  sufficient premiums with the group as required by the commercial 
 24.34  self-insurance group's bylaws or plan of operation.  The 
 24.35  security deposit of the group will shall be increased quarterly 
 24.36  to an amount equal to 50 percent of the new member's premium 
 25.1   members' premiums for that quarter.  If the total increase of 
 25.2   new members' premiums for the first quarter is less than five 
 25.3   percent of the total annual premium of the group, no quarterly 
 25.4   increase is necessary until the cumulative quarterly increases 
 25.5   for that calendar year exceed five percent of the total premium 
 25.6   of the group.  The department of commerce commissioner may, at 
 25.7   its the commissioner's option, review the financial statement of 
 25.8   any applicant whose premium equals 25 percent or more of the 
 25.9   group's total premium. 
 25.10     Sec. 26.  Minnesota Statutes 1998, section 79A.22, 
 25.11  subdivision 11, is amended to read: 
 25.12     Subd. 11.  [DISBURSEMENT OF FUND SURPLUS.] (a) One hundred 
 25.13  percent of any surplus money for a fund year in excess of 125 
 25.14  percent of the amount necessary to fulfill all obligations under 
 25.15  the Workers' Compensation Act, chapter 176, for that fund year 
 25.16  may be declared refundable to a member at any time.  The date 
 25.17  shall be no earlier than 18 months following the end of such 
 25.18  fund year.  The first disbursement of fund surplus may not be 
 25.19  made prior to the completion of an operational audit by the 
 25.20  commissioner written approval of the commissioner.  There can be 
 25.21  no more than one refund made in any 12-month period.  When all 
 25.22  the claims of any one fund year have been fully paid, as 
 25.23  certified by an actuary, all surplus money from that fund year 
 25.24  may be declared refundable. 
 25.25     (b) The commercial self-insurance group shall give notice 
 25.26  to the commissioner of any refund.  Said notice shall be 
 25.27  accompanied by a statement from the commercial self-insurer 
 25.28  group's certified public accountant certifying that the proposed 
 25.29  refund is in compliance with paragraph (a). 
 25.30     Sec. 27.  Minnesota Statutes 1999 Supplement, section 
 25.31  79A.23, subdivision 1, is amended to read: 
 25.32     Subdivision 1.  [REQUIRED REPORTS TO COMMISSIONER.] Each 
 25.33  commercial self-insurance group shall submit the following 
 25.34  documents to the commissioner.  
 25.35     (a) An annual report shall be submitted by April 1 showing 
 25.36  the incurred losses, paid and unpaid, specifying indemnity and 
 26.1   medical losses by classification, payroll by classification, and 
 26.2   current estimated outstanding liability for workers' 
 26.3   compensation on a calendar year basis, in a manner and on forms 
 26.4   available from the commissioner.  In addition each group will 
 26.5   submit a quarterly interim loss report showing incurred losses 
 26.6   for all its membership. 
 26.7      (b) Each commercial self-insurance group shall submit 
 26.8   within 45 days of the end of each quarter:  
 26.9      (1) a schedule showing all the members who participate in 
 26.10  the group, their date of inception, and date of withdrawal, if 
 26.11  applicable; 
 26.12     (2) a separate section identifying which members were added 
 26.13  or withdrawn during that quarter; and 
 26.14     (3) an internal financial statement and copies of the 
 26.15  fiscal agent's statements supporting the balances in the common 
 26.16  claims fund. 
 26.17     (c) The commercial self-insurance group shall submit an 
 26.18  annual certified financial audit report of the commercial 
 26.19  self-insurance group fund by April 1 of the following year.  The 
 26.20  report must be accompanied by an expense schedule showing the 
 26.21  commercial self-insurance group's operational costs for the same 
 26.22  year including service company charges, accounting and actuarial 
 26.23  fees, fund administration charges, reinsurance premiums, 
 26.24  commissions, and any other costs associated with the 
 26.25  administration of the group program. 
 26.26     (d) An officer of the commercial self-insurance group 
 26.27  shall, under oath, attest to the accuracy of each report 
 26.28  submitted under paragraphs (a), (b), and (c).  Upon sufficient 
 26.29  cause, the commissioner shall require the commercial 
 26.30  self-insurance group to submit a certified audit of payroll and 
 26.31  claim records conducted by an independent auditor approved by 
 26.32  the commissioner, based on generally accepted accounting 
 26.33  principles and generally accepted auditing standards, and 
 26.34  supported by an actuarial review and opinion of the future 
 26.35  contingent liabilities.  The basis for sufficient cause shall 
 26.36  include the following factors: 
 27.1      (1) where the losses reported appear significantly 
 27.2   different from similar types of groups; 
 27.3      (2) where major changes in the reports exist from year to 
 27.4   year, which are not solely attributable to economic factors; or 
 27.5      (3) where the commissioner has reason to believe that the 
 27.6   losses and payroll in the report do not accurately reflect the 
 27.7   losses and payroll of the commercial self-insurance group.  
 27.8   If any discrepancy is found, the commissioner shall require 
 27.9   changes in the commercial self-insurance group's business plan 
 27.10  or service company recordkeeping practices. 
 27.11     (e) Each commercial self-insurance group shall submit by 
 27.12  September 15 a copy of the group's annual federal and state 
 27.13  income tax returns or provide proof that it has received an 
 27.14  exemption from these filings. 
 27.15     (f) With the annual loss report each commercial 
 27.16  self-insurance group shall report to the commissioner any 
 27.17  worker's compensation claim where the full, undiscounted value 
 27.18  is estimated to exceed $50,000, in a manner and on forms 
 27.19  prescribed by the commissioner. 
 27.20     (g) Each commercial self-insurance group shall submit by 
 27.21  May 1 a list of all members and the percentage of premium each 
 27.22  represents to the total group's premium for the previous 
 27.23  calendar year.  
 27.24     (h) Each commercial self-insurance group shall submit by 
 27.25  October 15 the following documents prepared by the group's 
 27.26  certified public accountant:  
 27.27     (1) a compiled combined financial statement of group 
 27.28  members and a list of members included in this statement.  An 
 27.29  "Agreed Upon Procedures" report, as determined by the 
 27.30  commissioner, indicating combined net worth, total assets, cash 
 27.31  flow, and net income of the group members may be filed in lieu 
 27.32  of the compiled combined financial statement; and 
 27.33     (2) a report that the statements which were combined have 
 27.34  met the requirements of subdivision 2.  
 27.35     (i) If any group member comprises over 25 percent of total 
 27.36  group premium, that member's financial statement must be 
 28.1   reviewed or audited, and, at the commissioner's option, must be 
 28.2   filed with the department of commerce commissioner by October 15 
 28.3   of the following year. 
 28.4      (j) Each commercial self-insurance group shall submit a 
 28.5   copy of each member's accountant's report letter from the 
 28.6   reports used in compiling the combined financial 
 28.7   statements.  This requirement does not apply to any group that 
 28.8   has been in existence for at least three years. 
 28.9      Sec. 28.  Minnesota Statutes 1999 Supplement, section 
 28.10  79A.23, subdivision 2, is amended to read: 
 28.11     Subd. 2.  [REQUIRED REPORTS FROM MEMBERS TO GROUP.] (a) 
 28.12  Each member of the commercial self-insurance group shall, by 
 28.13  September 15, submit to the group its most recent annual 
 28.14  financial statement, together with other financial information 
 28.15  the group may require.  These financial statements submitted 
 28.16  must not have a fiscal year end date older than January 15 of 
 28.17  the group's calendar year end.  Individual group members 
 28.18  constituting at least 25 percent of the group's annual premium 
 28.19  shall submit to the group reviewed or audited financial 
 28.20  statements.  The remaining members must submit compilation level 
 28.21  statements.  
 28.22     (b) For groups that have been in existence for at least 
 28.23  three years, individual group members may satisfy the 
 28.24  requirements of paragraph (a) by submitting compiled, reviewed, 
 28.25  or audited statements or the most recent federal income tax 
 28.26  return filed by the member. 
 28.27     Sec. 29.  Minnesota Statutes 1999 Supplement, section 
 28.28  79A.23, subdivision 3, is amended to read: 
 28.29     Subd. 3.  [OPERATIONAL AUDIT.] (a) The commissioner, prior 
 28.30  to authorizing surplus distribution of a commercial 
 28.31  self-insurance group's first fund year or no later than after 
 28.32  the third anniversary of the group's authority to self-insure, 
 28.33  shall may conduct an operational audit of the commercial 
 28.34  self-insurance group's claim handling and reserve practices as 
 28.35  well as its underwriting procedures to determine if they adhere 
 28.36  to the group's business plan.  The commissioner may select 
 29.1   outside consultants to assist in conducting the audit.  After 
 29.2   completion of the audit, the commissioner shall either renew or 
 29.3   revoke the commercial self-insurance group's authority to 
 29.4   self-insure.  The commissioner may also order any changes deemed 
 29.5   necessary in the claims handling, reserving practices, or 
 29.6   underwriting procedures of the group. 
 29.7      (b) The cost of the operational audit shall be borne by the 
 29.8   commercial self-insurance group. 
 29.9      Sec. 30.  Minnesota Statutes 1999 Supplement, section 
 29.10  79A.24, subdivision 2, is amended to read: 
 29.11     Subd. 2.  [MINIMUM DEPOSIT.] The minimum deposit is 125 
 29.12  percent of the commercial self-insurance group's estimated 
 29.13  future liability for the payment of compensation as determined 
 29.14  by an actuary.  If all the members of the commercial 
 29.15  self-insurance group have submitted reviewed or audited 
 29.16  financial statements to the group's accountant has been in 
 29.17  existence for three years, this minimum deposit shall be 110 
 29.18  percent of the commercial self-insurance group's estimated 
 29.19  future liability for the payment of workers' compensation as 
 29.20  determined by an actuary.  The group must file a letter with the 
 29.21  commissioner from the group's accountant which confirms that the 
 29.22  compiled combined financial statements were prepared from 
 29.23  members reviewed or audited financial statements only before the 
 29.24  lower security deposit is allowed.  Each actuarial study shall 
 29.25  include a projection of future losses during a one-year period 
 29.26  until the next scheduled actuarial study, less payments 
 29.27  anticipated to be made during that time.  Deduction should be 
 29.28  made for the total amount which is estimated to be returned to 
 29.29  the commercial self-insurance group from any specific excess 
 29.30  insurance coverage, aggregate excess insurance coverage, and any 
 29.31  supplementary benefits which are estimated to be reimbursed by 
 29.32  the special compensation fund.  Supplementary benefits will not 
 29.33  be reimbursed by the special compensation fund unless the 
 29.34  special compensation fund assessment pursuant to section 176.129 
 29.35  is paid and the required reports are filed with the special 
 29.36  compensation fund.  In the case of surety bonds, bonds shall 
 30.1   secure administrative and legal costs in addition to the 
 30.2   liability for payment of compensation reflected on the face of 
 30.3   the bond.  In no event shall the security be less than the 
 30.4   group's selected retention limit of the workers' compensation 
 30.5   reinsurance association.  The posting or depositing of security 
 30.6   under this section shall release all previously posted or 
 30.7   deposited security from any obligations under the posting or 
 30.8   depositing and any surety bond so released shall be returned to 
 30.9   the surety.  Any other security shall be returned to the 
 30.10  depositor or the person posting the bond. 
 30.11     Sec. 31.  Minnesota Statutes 1999 Supplement, section 
 30.12  80A.15, subdivision 2, is amended to read: 
 30.13     Subd. 2.  The following transactions are exempted from 
 30.14  sections 80A.08 and 80A.16: 
 30.15     (a) Any sales, whether or not effected through a 
 30.16  broker-dealer, provided that: 
 30.17     (1) no person shall make more than ten sales of securities 
 30.18  of the same issuer pursuant to this exemption, exclusive of 
 30.19  sales according to clause (2), during any period of 12 
 30.20  consecutive months; provided further, that in the case of sales 
 30.21  by an issuer, except sales of securities registered under the 
 30.22  Securities Act of 1933 or exempted by section 3(b) of that act, 
 30.23  (i) the seller reasonably believes that all buyers are 
 30.24  purchasing for investment, and (ii) the securities are not 
 30.25  advertised for sale to the general public in newspapers or other 
 30.26  publications of general circulation or otherwise, or by radio, 
 30.27  television, electronic means or similar communications media, or 
 30.28  through a program of general solicitation by means of mail or 
 30.29  telephone; and 
 30.30     (2) no issuer shall make more than 25 sales of its 
 30.31  securities according to this exemption, exclusive of sales 
 30.32  pursuant to clause (1), during any period of 12 consecutive 
 30.33  months; provided further, that the issuer meets the conditions 
 30.34  in clause (1) and, in addition meets the following additional 
 30.35  conditions:  (i) files with the commissioner, ten days before a 
 30.36  sale according to this clause, a statement of issuer on a form 
 31.1   prescribed by the commissioner; and (ii) no commission or other 
 31.2   remuneration is paid or given directly or indirectly for 
 31.3   soliciting any prospective buyers in this state in connection 
 31.4   with a sale according to this clause except reasonable and 
 31.5   customary commissions paid by the issuer to a broker-dealer 
 31.6   licensed under this chapter. 
 31.7      (b) Any nonissuer distribution of an outstanding security 
 31.8   if (1) either Moody's, Fitch's, or Standard & Poor's Securities 
 31.9   Manuals, or other recognized manuals approved by the 
 31.10  commissioner contains the names of the issuer's officers and 
 31.11  directors, a balance sheet of the issuer as of a date not more 
 31.12  than 18 months prior to the date of the sale, and a profit and 
 31.13  loss statement for the fiscal year preceding the date of the 
 31.14  balance sheet, and (2) the issuer or its predecessor has been in 
 31.15  active, continuous business operation for the five-year period 
 31.16  next preceding the date of sale, and (3) if the security has a 
 31.17  fixed maturity or fixed interest or dividend provision, the 
 31.18  issuer has not, within the three preceding fiscal years, 
 31.19  defaulted in payment of principal, interest, or dividends on the 
 31.20  securities. 
 31.21     (c) The execution of any orders by a licensed broker-dealer 
 31.22  for the purchase or sale of any security, pursuant to an 
 31.23  unsolicited offer to purchase or sell; provided that the 
 31.24  broker-dealer acts as agent for the purchaser or seller, and has 
 31.25  no direct material interest in the sale or distribution of the 
 31.26  security, receives no commission, profit, or other compensation 
 31.27  from any source other than the purchaser and seller and delivers 
 31.28  to the purchaser and seller written confirmation of the 
 31.29  transaction which clearly itemizes the commission, or other 
 31.30  compensation. 
 31.31     (d) Any nonissuer sale of notes or bonds secured by a 
 31.32  mortgage lien if the entire mortgage, together with all notes or 
 31.33  bonds secured thereby, is sold to a single purchaser at a single 
 31.34  sale. 
 31.35     (e) Any judicial sale, exchange, or issuance of securities 
 31.36  made pursuant to an order of a court of competent jurisdiction. 
 32.1      (f) The sale, by a pledge holder, of a security pledged in 
 32.2   good faith as collateral for a bona fide debt. 
 32.3      (g) Any offer or sale to a bank, savings institution, trust 
 32.4   company, insurance company, investment company as defined in the 
 32.5   Investment Company Act of 1940, or other financial institution 
 32.6   or institutional buyer, or to a broker-dealer, whether the 
 32.7   purchaser is acting for itself or in some fiduciary capacity. 
 32.8      (h) An offer or sale of securities by an issuer made in 
 32.9   reliance on the exemptions provided by Rule 505 or 506 of 
 32.10  Regulation D promulgated by the Securities and Exchange 
 32.11  Commission, Code of Federal Regulations, title 17, sections 
 32.12  230.501 to 230.508, subject to the conditions and definitions 
 32.13  provided by Rules 501 to 503 of Regulation D, if the offer and 
 32.14  sale also satisfies the conditions and limitations in clauses 
 32.15  (1) to (10). 
 32.16     (1) The exemption under this paragraph is not available for 
 32.17  the securities of an issuer if any of the persons described in 
 32.18  Rule 252(c) to (f) of Regulation A promulgated by the Securities 
 32.19  and Exchange Commission, Code of Federal Regulations, title 17, 
 32.20  sections 230.251 to 230.263:  
 32.21     (i) has filed a registration statement that is the subject 
 32.22  of a currently effective order entered against the issuer, its 
 32.23  officers, directors, general partners, controlling persons, or 
 32.24  affiliates, according to any state's law within five years 
 32.25  before the filing of the notice required under clause (5), 
 32.26  denying effectiveness to, or suspending or revoking the 
 32.27  effectiveness of, the registration statement; 
 32.28     (ii) has been convicted, within five years before the 
 32.29  filing of the notice required under clause (5), of a felony or 
 32.30  misdemeanor in connection with the offer, sale, or purchase of a 
 32.31  security or franchise, or a felony involving fraud or deceit, 
 32.32  including but not limited to forgery, embezzlement, obtaining 
 32.33  money under false pretenses, larceny, or conspiracy to defraud; 
 32.34     (iii) is subject to an effective administrative order or 
 32.35  judgment entered by a state securities administrator within five 
 32.36  years before the filing of the notice required under clause (5), 
 33.1   that prohibits, denies, or revokes the use of an exemption from 
 33.2   securities registration, that prohibits the transaction of 
 33.3   business by the person as a broker-dealer or agent, or that is 
 33.4   based on fraud, deceit, an untrue statement of a material fact, 
 33.5   or an omission to state a material fact; or 
 33.6      (iv) is subject to an order, judgment, or decree of a court 
 33.7   entered within five years before the filing of the notice 
 33.8   required under clause (5), temporarily, preliminarily, or 
 33.9   permanently restraining or enjoining the person from engaging in 
 33.10  or continuing any conduct or practice in connection with the 
 33.11  offer, sale, or purchase of a security, or the making of a false 
 33.12  filing with a state. 
 33.13     A disqualification under paragraph (h) involving a 
 33.14  broker-dealer or agent is waived if the broker-dealer or agent 
 33.15  is or continues to be licensed in the state in which the 
 33.16  administrative order or judgment was entered against the person 
 33.17  or if the broker-dealer or agent is or continues to be licensed 
 33.18  in this state as a broker-dealer or agent after notifying the 
 33.19  commissioner of the act or event causing disqualification. 
 33.20     The commissioner may waive a disqualification under 
 33.21  paragraph (h) upon a showing of good cause that it is not 
 33.22  necessary under the circumstances that use of the exemption be 
 33.23  denied. 
 33.24     A disqualification under paragraph (h) may be waived if the 
 33.25  state securities administrator or agency of the state that 
 33.26  created the basis for disqualification has determined, upon a 
 33.27  showing of good cause, that it is not necessary under the 
 33.28  circumstances that an exemption from registration of securities 
 33.29  under the state's laws be denied. 
 33.30     It is a defense to a violation of paragraph (h) based upon 
 33.31  a disqualification if the issuer sustains the burden of proof to 
 33.32  establish that the issuer did not know, and in the exercise of 
 33.33  reasonable care could not have known, that a disqualification 
 33.34  under paragraph (h) existed. 
 33.35     (2) This exemption must not be available to an issuer with 
 33.36  respect to a transaction that, although in technical compliance 
 34.1   with this exemption, is part of a plan or scheme to evade 
 34.2   registration or the conditions or limitations explicitly stated 
 34.3   in paragraph (h). 
 34.4      (3) No commission, finder's fee, or other remuneration 
 34.5   shall be paid or given, directly or indirectly, for soliciting a 
 34.6   prospective purchaser, unless the recipient is appropriately 
 34.7   licensed, or exempt from licensure, in this state as a 
 34.8   broker-dealer. 
 34.9      (4) Nothing in this exemption is intended to or should be 
 34.10  in any way construed as relieving issuers or persons acting on 
 34.11  behalf of issuers from providing disclosure to prospective 
 34.12  investors adequate to satisfy the antifraud provisions of the 
 34.13  securities law of Minnesota.  
 34.14     (5) The issuer shall file with the commissioner a notice on 
 34.15  form D as adopted by the Securities and Exchange Commission 
 34.16  according to Regulation D, Code of Federal Regulations, title 
 34.17  17, section 230.502.  The notice must be filed not later than 15 
 34.18  days after the first sale in this state of securities in an 
 34.19  offering under this exemption.  Every notice on form D must be 
 34.20  manually signed by a person duly authorized by the issuer and 
 34.21  must be accompanied by a consent to service of process on a form 
 34.22  prescribed by the commissioner.  
 34.23     (6) A failure to comply with a term, condition, or 
 34.24  requirement of paragraph (h) will not result in loss of the 
 34.25  exemption for an offer or sale to a particular individual or 
 34.26  entity if the person relying on the exemption shows that:  (i) 
 34.27  the failure to comply did not pertain to a term, condition, or 
 34.28  requirement directly intended to protect that particular 
 34.29  individual or entity, and the failure to comply was 
 34.30  insignificant with respect to the offering as a whole; and (ii) 
 34.31  a good faith and reasonable attempt was made to comply with all 
 34.32  applicable terms, conditions, and requirements of paragraph (h), 
 34.33  except that, where an exemption is established only through 
 34.34  reliance upon this provision, the failure to comply shall 
 34.35  nonetheless constitute a violation of section 80A.08 and be 
 34.36  actionable by the commissioner.  
 35.1      (7) The issuer, upon request by the commissioner, shall, 
 35.2   within ten days of the request, furnish to the commissioner a 
 35.3   copy of any and all information, documents, or materials 
 35.4   furnished to investors or offerees in connection with the offer 
 35.5   and sale according to paragraph (h).  
 35.6      (8) Neither compliance nor attempted compliance with the 
 35.7   exemption provided by paragraph (h), nor the absence of an 
 35.8   objection or order by the commissioner with respect to an offer 
 35.9   or sale of securities undertaken according to this exemption, 
 35.10  shall be considered to be a waiver of a condition of the 
 35.11  exemption or considered to be a confirmation by the commissioner 
 35.12  of the availability of this exemption.  
 35.13     (9) The commissioner may, by rule or order, increase the 
 35.14  number of purchasers or waive any other condition of this 
 35.15  exemption.  
 35.16     (10) The determination whether offers and sales made in 
 35.17  reliance on the exemption set forth in paragraph (h) shall be 
 35.18  integrated with offers and sales according to other paragraphs 
 35.19  of this subdivision shall be made according to the integration 
 35.20  standard set forth in Rule 502 of Regulation D promulgated by 
 35.21  the Securities and Exchange Commission, Code of Federal 
 35.22  Regulations, title 17, section 230.502.  If not subject to 
 35.23  integration according to that rule, offers and sales according 
 35.24  to paragraph (h) shall not otherwise be integrated with offers 
 35.25  and sales according to other exemptions set forth in this 
 35.26  subdivision. 
 35.27     (i) Any offer (but not a sale) of a security for which a 
 35.28  registration statement has been filed under sections 80A.01 to 
 35.29  80A.31, if no stop order or refusal order is in effect and no 
 35.30  public proceeding or examination looking toward an order is 
 35.31  pending; and any offer of a security if the sale of the security 
 35.32  is or would be exempt under this section.  The commissioner may 
 35.33  by rule exempt offers (but not sales) of securities for which a 
 35.34  registration statement has been filed as the commissioner deems 
 35.35  appropriate, consistent with the purposes of sections 80A.01 to 
 35.36  80A.31. 
 36.1      (j) The offer and sale by a cooperative organized under 
 36.2   chapter 308A or under the laws of another state, of its 
 36.3   securities when the securities are offered and sold only to its 
 36.4   members, or when the purchase of the securities is necessary or 
 36.5   incidental to establishing membership in the cooperative, or 
 36.6   when such securities are issued as patronage dividends.  This 
 36.7   paragraph applies to a cooperative organized under the laws of 
 36.8   another state only if the cooperative has filed with the 
 36.9   commissioner a consent to service of process under section 
 36.10  80A.27, subdivision 7, and has, not less than ten days prior to 
 36.11  the issuance or delivery, furnished the commissioner with a 
 36.12  written general description of the transaction and any other 
 36.13  information that the commissioner requires by rule or otherwise. 
 36.14  This exemption only applies when the issuing cooperative is 
 36.15  seeking to raise up to $1,000,000. 
 36.16     (l) The issuance and delivery of any securities of one 
 36.17  corporation to another corporation or its security holders in 
 36.18  connection with a merger, exchange of shares, or transfer of 
 36.19  assets whereby the approval of stockholders of the other 
 36.20  corporation is required to be obtained, provided, that the 
 36.21  commissioner has been furnished with a general description of 
 36.22  the transaction and with other information as the commissioner 
 36.23  by rule prescribes not less than ten days prior to the issuance 
 36.24  and delivery. 
 36.25     (m) Any transaction between the issuer or other person on 
 36.26  whose behalf the offering is made and an underwriter or among 
 36.27  underwriters. 
 36.28     (n) The distribution by a corporation of its or other 
 36.29  securities to its own security holders as a stock dividend or as 
 36.30  a dividend from earnings or surplus or as a liquidating 
 36.31  distribution; or upon conversion of an outstanding convertible 
 36.32  security; or pursuant to a stock split or reverse stock split. 
 36.33     (o) Any offer or sale of securities by an affiliate of the 
 36.34  issuer thereof if:  (1) a registration statement is in effect 
 36.35  with respect to securities of the same class of the issuer and 
 36.36  (2) the offer or sale has been exempted from registration by 
 37.1   rule or order of the commissioner.  
 37.2      (p) Any transaction pursuant to an offer to existing 
 37.3   security holders of the issuer, including persons who at the 
 37.4   time of the transaction are holders of convertible securities, 
 37.5   nontransferable warrants, or transferable warrants exercisable 
 37.6   within not more than 90 days of their issuance, if:  (1) no 
 37.7   commission or other remuneration (other than a standby 
 37.8   commission) is paid or given directly or indirectly for 
 37.9   soliciting any security holder in this state; and (2) the 
 37.10  commissioner has been furnished with a general description of 
 37.11  the transaction and with other information as the commissioner 
 37.12  may by rule prescribe no less than ten days prior to the 
 37.13  transaction. 
 37.14     (q) Any nonissuer sales of any security, including a 
 37.15  revenue obligation, issued by the state of Minnesota or any of 
 37.16  its political or governmental subdivisions, municipalities, 
 37.17  governmental agencies, or instrumentalities. 
 37.18     (r) Any transaction as to which the commissioner by rule or 
 37.19  order finds that registration is not necessary in the public 
 37.20  interest and for the protection of investors. 
 37.21     (s) An offer or sale of a security issued in connection 
 37.22  with an employee's stock purchase, savings, option, profit 
 37.23  sharing, pension, or similar employee benefit plan, if the 
 37.24  following conditions are met:  
 37.25     (1) the issuer, its parent corporation or any of its 
 37.26  majority-owned subsidiaries offers or sells the security 
 37.27  according to a written benefit plan or written contract relating 
 37.28  to the compensation of the purchaser; and 
 37.29     (2) the class of securities offered according to the plan 
 37.30  or contract, or if an option or right to purchase a security, 
 37.31  the class of securities to be issued upon the exercise of the 
 37.32  option or right, is registered under section 12 of the 
 37.33  Securities Exchange Act of 1934, or is a class of securities 
 37.34  with respect to which the issuer files reports according to 
 37.35  section 15(d) of the Securities Exchange Act of 1934; or 
 37.36     (3) the issuer fully complies with the provisions of Rule 
 38.1   701 as adopted by the Securities and Exchange Commission, Code 
 38.2   of Federal Regulations, title 12, section 230.701. 
 38.3      The issuer shall file not less than ten days before the 
 38.4   transaction, a general description of the transaction and any 
 38.5   other information that the commissioner requires by rule or 
 38.6   otherwise or, if applicable, a Securities and Exchange Form S-8. 
 38.7   Annually, within 90 days after the end of the issuer's fiscal 
 38.8   year, the issuer shall file a notice as provided with the 
 38.9   commissioner. 
 38.10     (t) Any sale of a security of an issuer that is a pooled 
 38.11  income fund, a charitable remainder trust, or a charitable lead 
 38.12  trust that has a qualified charity as the only charitable 
 38.13  beneficiary. 
 38.14     (u) Any sale by a qualified charity of a security that is a 
 38.15  charitable gift annuity if the issuer has a net worth, otherwise 
 38.16  defined as unrestricted fund balance, of not less than $300,000 
 38.17  and either:  (1) has been in continuous operation for not less 
 38.18  than three years; or (2) is a successor or affiliate of a 
 38.19  qualified charity that has been in continuous operation for not 
 38.20  less than three years. 
 38.21     Sec. 32.  [EFFECTIVE DATES.] 
 38.22     Sections 2, 5, 8, 9, and 24 to 30 are effective the day 
 38.23  after final enactment.  Section 14 is effective December 1, 
 38.24  1999.  Section 31 is effective retroactively from July 1, 1999.