1.1                          A bill for an act 
  1.2             relating to insurance; regulating insurers, agents, 
  1.3             coverages and benefits, costs, claims, investments, 
  1.4             and notifications and disclosures; prescribing powers 
  1.5             and duties of the commissioner; eliminating the 
  1.6             regulation of nonprofit legal services plans; amending 
  1.7             Minnesota Statutes 2000, sections 60A.06,subdivision 
  1.8             3; 60A.08, subdivision 13; 60A.11, subdivision 10; 
  1.9             60A.129, subdivision 2; 60A.14, subdivision 1; 60A.16, 
  1.10            subdivision 1; 60A.23, subdivision 8; 60K.14, 
  1.11            subdivision 2; 61A.072, by adding a subdivision; 
  1.12            61A.09, subdivision 1; 62A.04, subdivision 2; 62A.17, 
  1.13            subdivision 1; 62A.20, subdivision 1; 62A.21, 
  1.14            subdivision 2a; 62A.302; 62A.31, subdivisions 1a, 1i, 
  1.15            3; 62A.65, subdivision 8; 62E.04, subdivision 4; 
  1.16            62E.06, subdivision 1; 62I.07, subdivision 1; 62J.60, 
  1.17            subdivision 3; 62L.05, subdivisions 1, 2; 62M.02, by 
  1.18            adding a subdivision; 62M.03, subdivision 2; 62M.05, 
  1.19            subdivision 5; 62Q.01, subdivision 6; 62Q.73, 
  1.20            subdivision 3; 65A.29, subdivision 7; 65A.30; 65B.04, 
  1.21            subdivision 3; 65B.06, subdivisions 1, 4; 65B.16; 
  1.22            65B.19, subdivision 2; 65B.44, subdivision 3; 67A.20, 
  1.23            by adding a subdivision; 70A.07; 79A.02, subdivision 
  1.24            1; 79A.03, subdivision 7; 79A.04, subdivision 16; 
  1.25            79A.15; 471.617, subdivision 1; proposing coding for 
  1.26            new law in Minnesota Statutes, chapter 62Q; repealing 
  1.27            Minnesota Statutes 2000, sections 13.7191, subdivision 
  1.28            11; 60A.111; 62G.01; 62G.02; 62G.03; 62G.04; 62G.05; 
  1.29            62G.06; 62G.07; 62G.08; 62G.09; 62G.10; 62G.11; 
  1.30            62G.12; 62G.13; 62G.14; 62G.15; 62G.16; 62G.17; 
  1.31            62G.18; 62G.19; 62G.20; 62G.21; 62G.22; 62G.23; 
  1.32            62G.24; 62G.25. 
  1.33  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.34     Section 1.  Minnesota Statutes 2000, section 60A.06, 
  1.35  subdivision 3, is amended to read: 
  1.36     Subd. 3.  [LIMITATION ON COMBINATION POLICIES.] (a) Unless 
  1.37  specifically authorized by subdivision 1, clause (4), it is 
  1.38  unlawful to combine in one policy coverage permitted by 
  1.39  subdivision 1, clauses (4) and (5)(a).  This subdivision does 
  2.1   not prohibit the simultaneous sale of these products, but the 
  2.2   sale must involve two separate and distinct policies.  
  2.3      (b) This subdivision does not apply to group policies.  
  2.4      (c) This subdivision does not apply to policies permitted 
  2.5   by subdivision 1, clause (4), that contain benefits providing 
  2.6   acceleration of life, endowment, or annuity benefits in advance 
  2.7   of the time they would otherwise be payable, or to long-term 
  2.8   care policies as defined in section 62A.46, subdivision 2, or 
  2.9   chapter 62S.  
  2.10     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  2.11  following final enactment. 
  2.12     Sec. 2.  Minnesota Statutes 2000, section 60A.08, 
  2.13  subdivision 13, is amended to read: 
  2.14     Subd. 13.  [REDUCTION OF LIMITS BY COSTS OF DEFENSE 
  2.15  PROHIBITED.] (a) No insurer shall issue or renew a policy of 
  2.16  liability insurance in this state that reduces the limits of 
  2.17  liability stated in the policy by the costs of legal defense. 
  2.18     (b) This subdivision does not apply to:  
  2.19     (1) professional liability insurance with annual aggregate 
  2.20  limits of liability greater than of at least $100,000, including 
  2.21  directors' and officers' and errors and omissions liability 
  2.22  insurance; 
  2.23     (2) environmental impairment liability insurance; 
  2.24     (3) insurance policies issued to large commercial risks; or 
  2.25     (4) coverages that the commissioner determines to be 
  2.26  appropriate which will be published in the manner prescribed for 
  2.27  surplus lines insurance in section 60A.201, subdivision 4.  
  2.28     (c) For purposes of this subdivision, "large commercial 
  2.29  risks" means an insured whose gross annual revenues in the 
  2.30  fiscal year preceding issuance of the policy were at least 
  2.31  $10,000,000. 
  2.32     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  2.33  following final enactment. 
  2.34     Sec. 3.  Minnesota Statutes 2000, section 60A.11, 
  2.35  subdivision 10, is amended to read: 
  2.36     Subd. 10.  [DEFINITIONS.] The following terms have the 
  3.1   meaning assigned in this subdivision for purposes of this 
  3.2   section and section 60A.111: 
  3.3      (a) "Adequate evidence" means a written confirmation, 
  3.4   advice, or other verification issued by a depository, issuer, or 
  3.5   custodian bank which shows that the investment is held for the 
  3.6   company; 
  3.7      (b) "Adequate security" means a letter of credit qualifying 
  3.8   under subdivision 11, paragraph (f), cash, or the pledge of an 
  3.9   investment authorized by any subdivision of this section; 
  3.10     (c) "Admitted assets," for purposes of computing percentage 
  3.11  limitations on particular types of investments, means the assets 
  3.12  as shown by the company's annual statement, required by section 
  3.13  60A.13, as of the December 31 immediately preceding the date the 
  3.14  company acquires the investment; 
  3.15     (d) "Clearing corporation" means The Depository Trust 
  3.16  Company or any other clearing agency registered with the 
  3.17  securities and exchange commission pursuant to the Securities 
  3.18  Exchange Act of 1934, section 17A, Euro-clear Clearance System 
  3.19  Limited and CEDEL S.A., and, with the approval of the 
  3.20  commissioner, any other clearing corporation as defined in 
  3.21  section 336.8-102; 
  3.22     (e) "Control" has the meaning assigned to that term in, and 
  3.23  must be determined in accordance with, section 60D.15, 
  3.24  subdivision 4; 
  3.25     (f) "Custodian bank" means a bank or trust company or a 
  3.26  branch of a bank or trust company that is acting as custodian 
  3.27  and is supervised and examined by state or federal authority 
  3.28  having supervision over the bank or trust company or with 
  3.29  respect to a company's foreign investments only by the 
  3.30  regulatory authority having supervision over banks or trust 
  3.31  companies in the jurisdiction in which the bank, trust company, 
  3.32  or branch is located, and any banking institutions qualifying as 
  3.33  an "Eligible Foreign Custodian" under the Code of Federal 
  3.34  Regulations, section 270.17f-5, adopted under section 17(f) of 
  3.35  the Investment Company Act of 1940, and specifically including 
  3.36  Euro-clear Clearance System Limited and CEDEL S.A., acting as 
  4.1   custodians; 
  4.2      (g) "Evergreen clause" means a provision that automatically 
  4.3   renews a letter of credit for a time certain if the issuer of 
  4.4   the letter of credit fails to affirmatively signify its 
  4.5   intention to nonrenew upon expiration; 
  4.6      (h) "Government obligations" means direct obligations for 
  4.7   the payment of money, or obligations for the payment of money to 
  4.8   the extent guaranteed as to the payment of principal and 
  4.9   interest by any governmental issuer where the obligations are 
  4.10  payable from ad valorem taxes or guaranteed by the full faith, 
  4.11  credit, and taxing power of the issuer and are not secured 
  4.12  solely by special assessments for local improvements; 
  4.13     (i) "Noninvestment grade obligations" means obligations 
  4.14  which, at the time of acquisition, were rated below Baa/BBB or 
  4.15  the equivalent by a securities rating agency or which, at the 
  4.16  time of acquisition, were not in one of the two highest 
  4.17  categories established by the securities valuation office of the 
  4.18  National Association of Insurance Commissioners; 
  4.19     (j) "Issuer" means the corporation, business trust, 
  4.20  governmental unit, partnership, association, individual, or 
  4.21  other entity which issues or on behalf of which is issued any 
  4.22  form of obligation; 
  4.23     (k) "Licensed real estate appraiser" means a person who 
  4.24  develops and communicates real estate appraisals and who holds a 
  4.25  current, valid license under chapter 82B or a substantially 
  4.26  similar licensing requirement in another jurisdiction; 
  4.27     (l) "Member bank" means a national bank, state bank or 
  4.28  trust company which is a member of the Federal Reserve System; 
  4.29     (m) "National securities exchange" means an exchange 
  4.30  registered under section 6 of the Securities Exchange Act of 
  4.31  1934 or an exchange regulated under the laws of the Dominion of 
  4.32  Canada; 
  4.33     (n) "NASDAQ" means the reporting system for securities 
  4.34  meeting the definition of National Market System security as 
  4.35  provided under Part I to Schedule D of the National Association 
  4.36  of Securities Dealers Incorporated bylaws; 
  5.1      (o) "Obligations" include bonds, notes, debentures, 
  5.2   transportation equipment certificates, repurchase agreements, 
  5.3   bank certificates of deposit, time deposits, bankers' 
  5.4   acceptances, and other obligations for the payment of money not 
  5.5   in default as to payments of principal and interest on the date 
  5.6   of investment, whether constituting general obligations of the 
  5.7   issuer or payable only out of certain revenues or certain funds 
  5.8   pledged or otherwise dedicated for payment.  Leases are 
  5.9   considered obligations if the lease is assigned for the benefit 
  5.10  of the company and is nonterminable by the lessee or lessees 
  5.11  thereunder upon foreclosure of any lien upon the leased 
  5.12  property, and rental payments are sufficient to amortize the 
  5.13  investment over the primary lease term; 
  5.14     (p) "Qualified assets" means the sum of (1) all investments 
  5.15  qualified in accordance with this section other than investments 
  5.16  in affiliates and subsidiaries, (2) investments in obligations 
  5.17  of affiliates as defined in section 60D.15, subdivision 2, 
  5.18  secured by real or personal property sufficient to qualify the 
  5.19  investment under subdivision 19 or 23, (3) qualified investments 
  5.20  in subsidiaries, as defined in section 60D.15, subdivision 9, on 
  5.21  a consolidated basis with the insurance company without 
  5.22  allowance for goodwill or other intangible value, and (4) cash 
  5.23  on hand and on deposit, agent's balances or uncollected premiums 
  5.24  not due more than 90 days, assets held pursuant to section 
  5.25  60A.12, subdivision 2, investment income due and accrued, funds 
  5.26  due or on deposit or recoverable on loss payments under 
  5.27  contracts of reinsurance entered into pursuant to section 
  5.28  60A.09, premium bills and notes receivable, federal income taxes 
  5.29  recoverable, and equities and deposits in pools and 
  5.30  associations; 
  5.31     (q) "Qualified net earnings" means that the net earnings of 
  5.32  the issuer after elimination of extraordinary nonrecurring items 
  5.33  of income and expense and before income taxes and fixed charges 
  5.34  over the five immediately preceding completed fiscal years, or 
  5.35  its period of existence if less than five years, has averaged 
  5.36  not less than 1-1/4 times its average annual fixed charges 
  6.1   applicable to the period; 
  6.2      (r) "Required liabilities" means the sum of (1) total 
  6.3   liabilities as required to be reported in the company's most 
  6.4   recent annual report to the commissioner of commerce of this 
  6.5   state, (2) for companies operating under the stock plan, the 
  6.6   minimum paid-up capital and surplus required to be maintained 
  6.7   pursuant to section 60A.07, subdivision 5a, (3) for companies 
  6.8   operating under the mutual or reciprocal plan, the minimum 
  6.9   amount of surplus required to be maintained pursuant to section 
  6.10  60A.07, subdivision 5b, and (4) the amount, if any, by which the 
  6.11  company's loss and loss adjustment expense reserves exceed 350 
  6.12  percent of its surplus as it pertains to policyholders as of the 
  6.13  same date.  The commissioner may waive the requirement in clause 
  6.14  (4) unless the company's written premiums exceed 300 percent of 
  6.15  its surplus as it pertains to policyholders as of the same 
  6.16  date.  In addition to the required amounts pursuant to clauses 
  6.17  (1) to (4), the commissioner may require that the amount of any 
  6.18  apparent reserve deficiency that may be revealed by one to five 
  6.19  year loss and loss adjustment expense development analysis for 
  6.20  the five years reported in the company's most recent annual 
  6.21  statement to the commissioner be added to required liabilities; 
  6.22     (s) "Revenue obligations" means obligations for the payment 
  6.23  of money by a governmental issuer where the obligations are 
  6.24  payable from revenues, earnings, or special assessments on 
  6.25  properties benefited by local improvements of the issuer which 
  6.26  are specifically pledged therefor; 
  6.27     (t) "Security" has the meaning given in section 5 of the 
  6.28  Security Act of 1933 and specifically includes, but is not 
  6.29  limited to, stocks, stock equivalents, warrants, rights, 
  6.30  options, obligations, American Depository Receipts (ADR's), 
  6.31  repurchase agreements, and reverse repurchase agreements; and 
  6.32     (u) "Unrestricted surplus" means the amount by which 
  6.33  qualified assets exceed 110 percent of required liabilities.  
  6.34     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  6.35  following final enactment. 
  6.36     Sec. 4.  Minnesota Statutes 2000, section 60A.129, 
  7.1   subdivision 2, is amended to read: 
  7.2      Subd. 2.  [LOSS RESERVE CERTIFICATION.] (a) Each domestic 
  7.3   company engaged in providing the types of coverage described in 
  7.4   section 60A.06, subdivision 1, clause (1), (2), (3), (5)(b), 
  7.5   (6), (8), (9), (10), (11), (12), (13), or (14), must have its 
  7.6   loss reserves certified by a qualified actuary.  The company 
  7.7   must file the certification with the commissioner within 30 days 
  7.8   of completion of the certification, but not later than June 1.  
  7.9   The actuary providing the certification must not may be an 
  7.10  employee of the company but the commissioner may still require 
  7.11  an independent actuarial certification as described in 
  7.12  subdivision 1.  This subdivision does not apply to township 
  7.13  mutual companies, or to other domestic insurers having less than 
  7.14  $1,000,000 of premiums written in any year and fewer than 1,000 
  7.15  policyholders.  The commissioner may allow an exception to the 
  7.16  stand alone certification where it can be demonstrated that a 
  7.17  company in a group has a pooling or 100 percent reinsurance 
  7.18  agreement used in a group which substantially affects the 
  7.19  solvency and integrity of the reserves of the company, or where 
  7.20  it is only the parent company of a group which is licensed to do 
  7.21  business in Minnesota.  If these circumstances exist, the 
  7.22  company may file a written request with the commissioner for an 
  7.23  exception.  Companies writing reinsurance alone are not exempt 
  7.24  from this requirement.  The certification must contain the 
  7.25  following statement:  "The loss reserves and loss expense 
  7.26  reserves have been examined and found to be calculated in 
  7.27  accordance with generally accepted actuarial principles and 
  7.28  practices In my opinion, the reserves described in this 
  7.29  certification are consistent with reserves computed in 
  7.30  accordance with standards and principles established by the 
  7.31  Actuarial Standards Board and are fairly stated."  
  7.32     (b) Each foreign company engaged in providing the types of 
  7.33  coverage described in section 60A.06, subdivision 1, clause (1), 
  7.34  (2), (3), (5)(b), (6), (8), (9), (10), (11), (12), (13), or 
  7.35  (14), required by this section to file an annual audited 
  7.36  financial report, whose total net earned premium for Schedule P, 
  8.1   Part 1A to Part 1H plus Part 1R, (Schedule P, Part 1A to Part 1H 
  8.2   plus Part 1R, Column 4, current year premiums earned, from the 
  8.3   company's most currently filed annual statement) is equal to 
  8.4   one-third or more of the company's total net earned premium 
  8.5   (Underwriting and Investment Exhibit, Part 2, Column 4, total 
  8.6   line, of the annual statement) must have a reserve certification 
  8.7   by a qualified actuary at least every three years.  In the year 
  8.8   that the certification is due, the company must file the 
  8.9   certification with the commissioner within 30 days of completion 
  8.10  of the certification, but not later than June 1.  The actuary 
  8.11  providing the certification must not be an employee of the 
  8.12  company.  Companies writing reinsurance alone are not exempt 
  8.13  from this requirement.  The certification must contain the 
  8.14  following statement:  "The loss reserves and loss expense 
  8.15  reserves have been examined and found to be calculated in 
  8.16  accordance with generally accepted actuarial principles and 
  8.17  practices and are fairly stated."  
  8.18     (c) Each company providing life and/or health insurance 
  8.19  coverages described in section 60A.06, subdivision 1, clause (4) 
  8.20  or (5)(a), required by this section to file an audited annual 
  8.21  financial report, whose premiums and annuity considerations (net 
  8.22  of reinsurance) from accident and health equal one-third or more 
  8.23  of the company's total premiums and annuity considerations (net 
  8.24  of reinsurance), as reported in the summary of operations, must 
  8.25  have its aggregate reserve for accident and health policies and 
  8.26  liability for policy and contract claims for accident and health 
  8.27  certified by a qualified actuary at least once every three 
  8.28  years.  The actuary providing the certification must not be an 
  8.29  employee of the company.  Companies writing reinsurance alone 
  8.30  are not exempt from this requirement.  The certification must 
  8.31  contain the following statement:  "The policy and contract 
  8.32  claims reserves for accident and health have been examined and 
  8.33  found to be calculated in accordance with generally accepted 
  8.34  actuarial principles and practices and are fairly stated." 
  8.35     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  8.36  following final enactment. 
  9.1      Sec. 5.  Minnesota Statutes 2000, section 60A.14, 
  9.2   subdivision 1, is amended to read: 
  9.3      Subdivision 1.  [FEES OTHER THAN EXAMINATION FEES.] In 
  9.4   addition to the fees and charges provided for examinations, the 
  9.5   following fees must be paid to the commissioner for deposit in 
  9.6   the general fund: 
  9.7      (a) by township mutual fire insurance companies: 
  9.8      (1) for filing certificate of incorporation $25 and 
  9.9   amendments thereto, $10; 
  9.10     (2) for filing annual statements, $15; 
  9.11     (3) for each annual certificate of authority, $15; 
  9.12     (4) for filing bylaws $25 and amendments thereto, $10. 
  9.13     (b) by other domestic and foreign companies including 
  9.14  fraternals and reciprocal exchanges: 
  9.15     (1) for filing certified copy of certificate of articles of 
  9.16  incorporation, $100; 
  9.17     (2) for filing annual statement, $225; 
  9.18     (3) for filing certified copy of amendment to certificate 
  9.19  or articles of incorporation, $100; 
  9.20     (4) for filing bylaws, $75 or amendments thereto, $75; 
  9.21     (5) for each company's certificate of authority, $575, 
  9.22  annually. 
  9.23     (c) the following general fees apply: 
  9.24     (1) for each certificate, including certified copy of 
  9.25  certificate of authority, renewal, valuation of life policies, 
  9.26  corporate condition or qualification, $25; 
  9.27     (2) for each copy of paper on file in the commissioner's 
  9.28  office 50 cents per page, and $2.50 for certifying the same; 
  9.29     (3) for license to procure insurance in unadmitted foreign 
  9.30  companies, $575; 
  9.31     (4) for valuing the policies of life insurance companies, 
  9.32  one cent per $1,000 of insurance so valued, provided that the 
  9.33  fee shall not exceed $13,000 per year for any company.  The 
  9.34  commissioner may, in lieu of a valuation of the policies of any 
  9.35  foreign life insurance company admitted, or applying for 
  9.36  admission, to do business in this state, accept a certificate of 
 10.1   valuation from the company's own actuary or from the 
 10.2   commissioner of insurance of the state or territory in which the 
 10.3   company is domiciled; 
 10.4      (5) for receiving and filing certificates of policies by 
 10.5   the company's actuary, or by the commissioner of insurance of 
 10.6   any other state or territory, $50; 
 10.7      (6) for each appointment of an agent filed with the 
 10.8   commissioner, a domestic insurer shall remit $5 and all other 
 10.9   insurers shall remit $3; 
 10.10     (7) for filing forms and rates, $75 per filing, to be paid 
 10.11  on a quarterly basis in response to an invoice.  Billing and 
 10.12  payment may be made electronically; 
 10.13     (8) for annual renewal of surplus lines insurer license, 
 10.14  $300. 
 10.15     The commissioner shall adopt rules to define filings that 
 10.16  are subject to a fee. 
 10.17     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
 10.18     Sec. 6.  Minnesota Statutes 2000, section 60A.16, 
 10.19  subdivision 1, is amended to read: 
 10.20     Subdivision 1.  [SCOPE.] (1) [DOMESTIC INSURANCE 
 10.21  CORPORATIONS.] Any two or more domestic insurance corporations, 
 10.22  formed for any of the purposes for which stock, mutual, or stock 
 10.23  and mutual insurance corporations, or reciprocal or 
 10.24  interinsurance contract exchanges might be formed under the laws 
 10.25  of this state, may be 
 10.26     (a) merged into one of such domestic insurance 
 10.27  corporations, or 
 10.28     (b) consolidated into a new insurance corporation to be 
 10.29  formed under the laws of this state. 
 10.30     (2) [DOMESTIC AND FOREIGN INSURANCE CORPORATIONS.] Any such 
 10.31  domestic insurance corporations and any foreign insurance 
 10.32  corporations formed to carry on any insurance business for the 
 10.33  conduct of which an insurance corporation might be organized 
 10.34  under the laws of this state, may be 
 10.35     (a) merged into one of such domestic insurance 
 10.36  corporations, or 
 11.1      (b) merged into one of such foreign insurance corporations, 
 11.2   or 
 11.3      (c) consolidated into a new insurance corporation to be 
 11.4   formed under the laws of this state, or 
 11.5      (d) consolidated into a new insurance corporation to be 
 11.6   formed under the laws of the government under which one of such 
 11.7   foreign insurance corporations was formed, provided that each of 
 11.8   such foreign insurance corporations is authorized by the laws of 
 11.9   the government under which it was formed to effect such merger 
 11.10  or consolidation. 
 11.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 11.12  following final enactment. 
 11.13     Sec. 7.  Minnesota Statutes 2000, section 60A.23, 
 11.14  subdivision 8, is amended to read: 
 11.15     Subd. 8.  [SELF-INSURANCE OR INSURANCE PLAN ADMINISTRATORS 
 11.16  WHO ARE VENDORS OF RISK MANAGEMENT SERVICES.] (1)  [SCOPE.] This 
 11.17  subdivision applies to any vendor of risk management services 
 11.18  and to any entity which administers, for compensation, a 
 11.19  self-insurance or insurance plan.  This subdivision does not 
 11.20  apply (a) to an insurance company authorized to transact 
 11.21  insurance in this state, as defined by section 60A.06, 
 11.22  subdivision 1, clauses (4) and (5); (b) to a service plan 
 11.23  corporation, as defined by section 62C.02, subdivision 6; (c) to 
 11.24  a health maintenance organization, as defined by section 62D.02, 
 11.25  subdivision 4; (d) to an employer directly operating a 
 11.26  self-insurance plan for its employees' benefits; (e) to an 
 11.27  entity which administers a program of health benefits 
 11.28  established pursuant to a collective bargaining agreement 
 11.29  between an employer, or group or association of employers, and a 
 11.30  union or unions; or (f) to an entity which administers a 
 11.31  self-insurance or insurance plan if a licensed Minnesota insurer 
 11.32  is providing insurance to the plan and if the licensed insurer 
 11.33  has appointed the entity administering the plan as one of its 
 11.34  licensed agents within this state. 
 11.35     (2)  [DEFINITIONS.] For purposes of this subdivision the 
 11.36  following terms have the meanings given them. 
 12.1      (a) "Administering a self-insurance or insurance plan" 
 12.2   means (i) processing, reviewing or paying claims, (ii) 
 12.3   establishing or operating funds and accounts, or (iii) otherwise 
 12.4   providing necessary administrative services in connection with 
 12.5   the operation of a self-insurance or insurance plan. 
 12.6      (b) "Employer" means an employer, as defined by section 
 12.7   62E.02, subdivision 2. 
 12.8      (c) "Entity" means any association, corporation, 
 12.9   partnership, sole proprietorship, trust, or other business 
 12.10  entity engaged in or transacting business in this state. 
 12.11     (d) "Self-insurance or insurance plan" means a plan 
 12.12  providing life, medical or hospital care, accident, sickness or 
 12.13  disability insurance for the benefit of employees or members of 
 12.14  an association, or a plan providing liability coverage for any 
 12.15  other risk or hazard, which is or is not directly insured or 
 12.16  provided by a licensed insurer, service plan corporation, or 
 12.17  health maintenance organization. 
 12.18     (e) "Vendor of risk management services" means an entity 
 12.19  providing for compensation actuarial, financial management, 
 12.20  accounting, legal or other services for the purpose of designing 
 12.21  and establishing a self-insurance or insurance plan for an 
 12.22  employer. 
 12.23     (3)  [LICENSE.] No vendor of risk management services or 
 12.24  entity administering a self-insurance or insurance plan may 
 12.25  transact this business in this state unless it is licensed to do 
 12.26  so by the commissioner.  An applicant for a license shall state 
 12.27  in writing the type of activities it seeks authorization to 
 12.28  engage in and the type of services it seeks authorization to 
 12.29  provide.  The license may be granted only when the commissioner 
 12.30  is satisfied that the entity possesses the necessary 
 12.31  organization, background, expertise, and financial integrity to 
 12.32  supply the services sought to be offered.  The commissioner may 
 12.33  issue a license subject to restrictions or limitations upon the 
 12.34  authorization, including the type of services which may be 
 12.35  supplied or the activities which may be engaged in.  The license 
 12.36  fee is $1,000 for the initial application and $1,000 for each 
 13.1   two-year renewal.  All licenses are for a period of two years. 
 13.2      (4)  [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.] 
 13.3   To assure that self-insurance or insurance plans are financially 
 13.4   solvent, are administered in a fair and equitable fashion, and 
 13.5   are processing claims and paying benefits in a prompt, fair, and 
 13.6   honest manner, vendors of risk management services and entities 
 13.7   administering insurance or self-insurance plans are subject to 
 13.8   the supervision and examination by the commissioner.  Vendors of 
 13.9   risk management services, entities administering insurance or 
 13.10  self-insurance plans, and insurance or self-insurance plans 
 13.11  established or operated by them are subject to the trade 
 13.12  practice requirements of sections 72A.19 to 72A.30.  In lieu of 
 13.13  an unlimited guarantee from a parent corporation for a vendor of 
 13.14  risk management services or an entity administering insurance or 
 13.15  self-insurance plans, the commissioner may accept a surety bond 
 13.16  in a form satisfactory to the commissioner in an amount equal to 
 13.17  120 percent of the total amount of claims handled by the 
 13.18  applicant in the prior year.  If at any time the total amount of 
 13.19  claims handled during a year exceeds the amount upon which the 
 13.20  bond was calculated, the administrator shall immediately notify 
 13.21  the commissioner.  The commissioner may require that the bond be 
 13.22  increased accordingly.  
 13.23     No contract entered into after July 1, 2001, between a 
 13.24  licensed vendor of risk management services and a group 
 13.25  authorized to self-insure for workers' compensation liabilities 
 13.26  under section 79A.03, subdivision 6, may take effect until it 
 13.27  has been filed with the commissioner, and either (1) the 
 13.28  commissioner has approved it or (2) 60 days have elapsed and the 
 13.29  commissioner has not disapproved it as misleading or violative 
 13.30  of public policy. 
 13.31     (5)  [RULEMAKING AUTHORITY.] To carry out the purposes of 
 13.32  this subdivision, the commissioner may adopt rules pursuant to 
 13.33  sections 14.001 to 14.69.  These rules may: 
 13.34     (a) establish reporting requirements for administrators of 
 13.35  insurance or self-insurance plans; 
 13.36     (b) establish standards and guidelines to assure the 
 14.1   adequacy of financing, reinsuring, and administration of 
 14.2   insurance or self-insurance plans; 
 14.3      (c) establish bonding requirements or other provisions 
 14.4   assuring the financial integrity of entities administering 
 14.5   insurance or self-insurance plans; or 
 14.6      (d) establish other reasonable requirements to further the 
 14.7   purposes of this subdivision. 
 14.8      <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
 14.9      Sec. 8.  Minnesota Statutes 2000, section 60K.14, 
 14.10  subdivision 2, is amended to read: 
 14.11     Subd. 2.  [FEES FOR SERVICES.] No person shall charge a fee 
 14.12  for any services rendered in connection with the solicitation, 
 14.13  negotiation, or servicing of any insurance contract unless: 
 14.14     (1) before rendering the services, a written statement is 
 14.15  provided disclosing: 
 14.16     (i) the services for which fees are charged; 
 14.17     (ii) the amount of the fees; 
 14.18     (iii) that the fees are charged in addition to premiums; 
 14.19  and 
 14.20     (iv) that premiums include a commission; and 
 14.21     (2) all fees charged are reasonable in relation to the 
 14.22  services rendered. 
 14.23     No person shall charge a fee from an individual in 
 14.24  connection with the submitting of a FAIR plan application on 
 14.25  residential property occupied by the individual. 
 14.26     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 14.27  following final enactment. 
 14.28     Sec. 9.  Minnesota Statutes 2000, section 61A.072, is 
 14.29  amended by adding a subdivision to read: 
 14.30     Subd. 6.  [ACCELERATED BENEFITS.] (a) "Accelerated benefits"
 14.31  covered under this section are benefits payable under the life 
 14.32  insurance contract: 
 14.33     (1) to a policyholder or certificate holder, during the 
 14.34  lifetime of the insured, in anticipation of death upon the 
 14.35  occurrence of a specified life-threatening or catastrophic 
 14.36  condition as defined by the policy or rider; 
 15.1      (2) that reduce the death benefit otherwise payable under 
 15.2   the life insurance contract; and 
 15.3      (3) that are payable upon the occurrence of a single 
 15.4   qualifying event that results in the payment of a benefit amount 
 15.5   fixed at the time of acceleration. 
 15.6      (b) "Qualifying event" means one or more of the following: 
 15.7      (1) a medical condition that would result in a drastically 
 15.8   limited life span as specified in the contract; 
 15.9      (2) a medical condition that has required or requires 
 15.10  extraordinary medical intervention, such as, but not limited to, 
 15.11  major organ transplant or continuous artificial life support 
 15.12  without which the insured would die; or 
 15.13     (3) a condition that requires continuous confinement in an 
 15.14  eligible institution as defined in the contract if the insured 
 15.15  is expected to remain there for the rest of the insured's life. 
 15.16     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
 15.17     Sec. 10.  Minnesota Statutes 2000, section 61A.09, 
 15.18  subdivision 1, is amended to read: 
 15.19     Subdivision 1.  No group life insurance policy or group 
 15.20  annuity shall be issued for delivery in this state until the 
 15.21  form thereof and the form of any certificates issued thereunder 
 15.22  have been filed in accordance with and subject to the provisions 
 15.23  of section 61A.02.  Each person insured under such a group life 
 15.24  insurance policy (excepting policies which insure the lives of 
 15.25  debtors of a creditor or vendor to secure payment of 
 15.26  indebtedness) shall be furnished a certificate of insurance 
 15.27  issued by the insurer and containing the following: 
 15.28     (a) Name and location of the insurance company; 
 15.29     (b) A statement as to the insurance protection to which the 
 15.30  certificate holder is entitled, including any changes in such 
 15.31  protection depending on the age of the person whose life is 
 15.32  insured; 
 15.33     (c) Any and all provisions regarding the termination or 
 15.34  reduction of the certificate holder's insurance protection; 
 15.35     (d) A statement that the master group policy may be 
 15.36  examined at a reasonably accessible place; 
 16.1      (e) The maximum rate of contribution to be paid by the 
 16.2   certificate holder; 
 16.3      (f) Beneficiary and method required to change such 
 16.4   beneficiary; 
 16.5      (g) A statement that alternative methods for the payment of 
 16.6   group life policy proceeds of $15,000 or more must be offered to 
 16.7   beneficiaries in lieu of a lump sum distribution, at their 
 16.8   request.  Alternative payment methods which must be offered at 
 16.9   the request of the beneficiaries must include, but are not 
 16.10  limited to, a life income option, an income option for fixed 
 16.11  amounts or fixed time periods, and the option to select an 
 16.12  interest-bearing account with the company with the right to 
 16.13  select another option at a later date; 
 16.14     (h) In the case of a group term insurance policy if the 
 16.15  policy provides that insurance of the certificate holder will 
 16.16  terminate, in case of a policy issued to an employer, by reason 
 16.17  of termination of the certificate holder's employment, or in 
 16.18  case of a policy issued to an organization of which the 
 16.19  certificate holder is a member, by reason of termination of 
 16.20  membership, a provision to the effect that in case of 
 16.21  termination of employment or membership, or in case of 
 16.22  termination of the group policy, the certificate holder shall be 
 16.23  entitled to have issued by the insurer, without evidence of 
 16.24  insurability, upon application made to the insurer within 31 
 16.25  days after the termination, and upon payment of the premium 
 16.26  applicable to the class of risk to which that person belongs and 
 16.27  to the form and amount of the policy at that person's then 
 16.28  attained age, a policy of life insurance only, in any one of the 
 16.29  forms customarily issued by the insurer except term insurance, 
 16.30  in an amount equal to the amount of the life insurance 
 16.31  protection under such group insurance policy at the time of such 
 16.32  termination; and shall contain a further provision to the effect 
 16.33  that upon the death of the certificate holder during such 31-day 
 16.34  period and before any such individual policy has become 
 16.35  effective, the amount of insurance for which the certificate 
 16.36  holder was entitled to make application shall be payable as a 
 17.1   death benefit by the insurer.  Any policy offered in compliance 
 17.2   with the requirements of this paragraph must be guaranteed 
 17.3   renewable.  Nothing in this subdivision requires an insurer to 
 17.4   offer term insurance as a conversion option.  
 17.5      This section applies to a policy, certificate of insurance, 
 17.6   or similar evidence of coverage issued to a Minnesota resident 
 17.7   or issued to provide coverage to a Minnesota resident.  This 
 17.8   section does not apply to a certificate of insurance or similar 
 17.9   evidence of coverage that meets the conditions of section 
 17.10  61A.093, subdivision 2. 
 17.11     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 17.12  following final enactment. 
 17.13     Sec. 11.  Minnesota Statutes 2000, section 62A.04, 
 17.14  subdivision 2, is amended to read: 
 17.15     Subd. 2.  [REQUIRED PROVISIONS.] Except as provided in 
 17.16  subdivision 4 each such policy delivered or issued for delivery 
 17.17  to any person in this state shall contain the provisions 
 17.18  specified in this subdivision in the words in which the same 
 17.19  appear in this section.  The insurer may, at its option, 
 17.20  substitute for one or more of such provisions corresponding 
 17.21  provisions of different wording approved by the commissioner 
 17.22  which are in each instance not less favorable in any respect to 
 17.23  the insured or the beneficiary.  Such provisions shall be 
 17.24  preceded individually by the caption appearing in this 
 17.25  subdivision or, at the option of the insurer, by such 
 17.26  appropriate individual or group captions or subcaptions as the 
 17.27  commissioner may approve. 
 17.28     (1) A provision as follows: 
 17.29     ENTIRE CONTRACT; CHANGES:  This policy, including the 
 17.30  endorsements and the attached papers, if any, constitutes the 
 17.31  entire contract of insurance.  No change in this policy shall be 
 17.32  valid until approved by an executive officer of the insurer and 
 17.33  unless such approval be endorsed hereon or attached hereto.  No 
 17.34  agent has authority to change this policy or to waive any of its 
 17.35  provisions. 
 17.36     (2) A provision as follows: 
 18.1      TIME LIMIT ON CERTAIN DEFENSES:  (a) After two years from 
 18.2   the date of issue of this policy no misstatements, except 
 18.3   fraudulent misstatements, made by the applicant in the 
 18.4   application for such policy shall be used to void the policy or 
 18.5   to deny a claim for loss incurred or disability (as defined in 
 18.6   the policy) commencing after the expiration of such two year 
 18.7   period. 
 18.8      The foregoing policy provision shall not be so construed as 
 18.9   to affect any legal requirement for avoidance of a policy or 
 18.10  denial of a claim during such initial two year period, nor to 
 18.11  limit the application of clauses (1), (2), (3), (4) and (5), in 
 18.12  the event of misstatement with respect to age or occupation or 
 18.13  other insurance.  A policy which the insured has the right to 
 18.14  continue in force subject to its terms by the timely payment of 
 18.15  premium (1) until at least age 50 or, (2) in the case of a 
 18.16  policy issued after age 44, for at least five years from its 
 18.17  date of issue, may contain in lieu of the foregoing the 
 18.18  following provisions (from which the clause in parentheses may 
 18.19  be omitted at the insurer's option) under the caption 
 18.20  "INCONTESTABLE": 
 18.21     After this policy has been in force for a period of two 
 18.22  years during the lifetime of the insured (excluding any period 
 18.23  during which the insured is disabled), it shall become 
 18.24  incontestable as to the statements contained in the application. 
 18.25     (b) No claim for loss incurred or disability (as defined in 
 18.26  the policy) commencing after two years from the date of issue of 
 18.27  this policy shall be reduced or denied on the ground that a 
 18.28  disease or physical condition not excluded from coverage by name 
 18.29  or specific description effective on the date of loss had 
 18.30  existed prior to the effective date of coverage of this policy. 
 18.31     In the absence of fraud, all claims for loss incurred or 
 18.32  disability beginning after two years from the date of issue of 
 18.33  the policy must be paid unless excluded from coverage by name or 
 18.34  specific description. 
 18.35     (3) A provision as follows: 
 18.36     GRACE PERIOD:  A grace period of ..... (insert a number not 
 19.1   less than "7" for weekly premium policies, "10" for monthly 
 19.2   premium policies and "31" for all other policies) days will be 
 19.3   granted for the payment of each premium falling due after the 
 19.4   first premium, during which grace period the policy shall 
 19.5   continue in force. 
 19.6      A policy which contains a cancellation provision may add, 
 19.7   at the end of the above provision, 
 19.8      subject to the right of the insurer to cancel in accordance 
 19.9   with the cancellation provision hereof. 
 19.10     A policy in which the insurer reserves the right to refuse 
 19.11  any renewal shall have, at the beginning of the above provision, 
 19.12     Unless not less than five days prior to the premium due 
 19.13  date the insurer has delivered to the insured or has mailed to 
 19.14  the insured's last address as shown by the records of the 
 19.15  insurer written notice of its intention not to renew this policy 
 19.16  beyond the period for which the premium has been accepted. 
 19.17     (4) A provision as follows: 
 19.18     REINSTATEMENT:  If any renewal premium be not paid within 
 19.19  the time granted the insured for payment, a subsequent 
 19.20  acceptance of premium by the insurer or by any agent duly 
 19.21  authorized by the insurer to accept such premium, without 
 19.22  requiring in connection therewith an application for 
 19.23  reinstatement, shall reinstate the policy.  If the insurer or 
 19.24  such agent requires an application for reinstatement and issues 
 19.25  a conditional receipt for the premium tendered, the policy will 
 19.26  be reinstated upon approval of such application by the insurer 
 19.27  or, lacking such approval, upon the forty-fifth day following 
 19.28  the date of such conditional receipt unless the insurer has 
 19.29  previously notified the insured in writing of its disapproval of 
 19.30  such application.  For health plans described in section 
 19.31  62A.011, subdivision 3, clause (10), an insurer must accept 
 19.32  payment of a renewal premium and reinstate the policy, if the 
 19.33  insured applies for reinstatement no later than 60 days after 
 19.34  the due date for the premium payment, unless: 
 19.35     (1) the insured has in the interim left the state or the 
 19.36  insurer's service area; or 
 20.1      (2) the insured has applied for reinstatement on two or 
 20.2   more prior occasions. 
 20.3      The reinstated policy shall cover only loss resulting from 
 20.4   such accidental injury as may be sustained after the date of 
 20.5   reinstatement and loss due to such sickness as may begin more 
 20.6   than ten days after such date.  In all other respects the 
 20.7   insured and insurer shall have the same rights thereunder as 
 20.8   they had under the policy immediately before the due date of the 
 20.9   defaulted premium, subject to any provisions endorsed hereon or 
 20.10  attached hereto in connection with the reinstatement.  Any 
 20.11  premium accepted in connection with a reinstatement shall be 
 20.12  applied to a period for which premium has not been previously 
 20.13  paid, but not to any period more than 60 days prior to the date 
 20.14  of reinstatement.  The last sentence of the above provision may 
 20.15  be omitted from any policy which the insured has the right to 
 20.16  continue in force subject to its terms by the timely payment of 
 20.17  premiums (1) until at least age 50, or, (2) in the case of a 
 20.18  policy issued after age 44, for at least five years from its 
 20.19  date of issue. 
 20.20     (5) A provision as follows: 
 20.21     NOTICE OF CLAIM:  Written notice of claim must be given to 
 20.22  the insurer within 20 days after the occurrence or commencement 
 20.23  of any loss covered by the policy, or as soon thereafter as is 
 20.24  reasonably possible.  Notice given by or on behalf of the 
 20.25  insured or the beneficiary to the insurer at ..... (insert the 
 20.26  location of such office as the insurer may designate for the 
 20.27  purpose), or to any authorized agent of the insurer, with 
 20.28  information sufficient to identify the insured, shall be deemed 
 20.29  notice to the insurer. 
 20.30     In a policy providing a loss-of-time benefit which may be 
 20.31  payable for at least two years, an insurer may at its option 
 20.32  insert the following between the first and second sentences of 
 20.33  the above provision: 
 20.34     Subject to the qualifications set forth below, if the 
 20.35  insured suffers loss of time on account of disability for which 
 20.36  indemnity may be payable for at least two years, the insured 
 21.1   shall, at least once in every six months after having given 
 21.2   notice of claim, give to the insurer notice of continuance of 
 21.3   said disability, except in the event of legal incapacity.  The 
 21.4   period of six months following any filing of proof by the 
 21.5   insured or any payment by the insurer on account of such claim 
 21.6   or any denial of liability in whole or in part by the insurer 
 21.7   shall be excluded in applying this provision.  Delay in the 
 21.8   giving of such notice shall not impair the insured's right to 
 21.9   any indemnity which would otherwise have accrued during the 
 21.10  period of six months preceding the date on which such notice is 
 21.11  actually given. 
 21.12     (6) A provision as follows: 
 21.13     CLAIM FORMS:  The insurer, upon receipt of a notice of 
 21.14  claim, will furnish to the claimant such forms as are usually 
 21.15  furnished by it for filing proofs of loss.  If such forms are 
 21.16  not furnished within 15 days after the giving of such notice the 
 21.17  claimant shall be deemed to have complied with the requirements 
 21.18  of this policy as to proof of loss upon submitting, within the 
 21.19  time fixed in the policy for filing proofs of loss, written 
 21.20  proof covering the occurrence, the character and the extent of 
 21.21  the loss for which claim is made. 
 21.22     (7) A provision as follows: 
 21.23     PROOFS OF LOSS:  Written proof of loss must be furnished to 
 21.24  the insurer at its said office in case of claim for loss for 
 21.25  which this policy provides any periodic payment contingent upon 
 21.26  continuing loss within 90 days after the termination of the 
 21.27  period for which the insurer is liable and in case of claim for 
 21.28  any other loss within 90 days after the date of such loss.  
 21.29  Failure to furnish such proof within the time required shall not 
 21.30  invalidate nor reduce any claim if it was not reasonably 
 21.31  possible to give proof within such time, provided such proof is 
 21.32  furnished as soon as reasonably possible and in no event, except 
 21.33  in the absence of legal capacity, later than one year from the 
 21.34  time proof is otherwise required. 
 21.35     (8) A provision as follows: 
 21.36     TIME OF PAYMENT OF CLAIMS:  Indemnities payable under this 
 22.1   policy for any loss other than loss for which this policy 
 22.2   provides periodic payment will be paid immediately upon receipt 
 22.3   of due written proof of such loss.  Subject to due written proof 
 22.4   of loss, all accrued indemnities for loss for which this policy 
 22.5   provides periodic payment will be paid ..... (insert period for 
 22.6   payment which must not be less frequently than monthly) and any 
 22.7   balance remaining unpaid upon the termination of liability will 
 22.8   be paid immediately upon receipt of due written proof. 
 22.9      (9) A provision as follows: 
 22.10     PAYMENT OF CLAIMS:  Indemnity for loss of life will be 
 22.11  payable in accordance with the beneficiary designation and the 
 22.12  provisions respecting such payment which may be prescribed 
 22.13  herein and effective at the time of payment.  If no such 
 22.14  designation or provision is then effective, such indemnity shall 
 22.15  be payable to the estate of the insured. Any other accrued 
 22.16  indemnities unpaid at the insured's death may, at the option of 
 22.17  the insurer, be paid either to such beneficiary or to such 
 22.18  estate.  All other indemnities will be payable to the insured. 
 22.19     The following provisions, or either of them, may be 
 22.20  included with the foregoing provision at the option of the 
 22.21  insurer: 
 22.22     If any indemnity of this policy shall be payable to the 
 22.23  estate of the insured, or to an insured or beneficiary who is a 
 22.24  minor or otherwise not competent to give a valid release, the 
 22.25  insurer may pay such indemnity, up to an amount not exceeding 
 22.26  $..... (insert an amount which shall not exceed $1,000), to any 
 22.27  relative by blood or connection by marriage of the insured or 
 22.28  beneficiary who is deemed by the insurer to be equitably 
 22.29  entitled thereto.  Any payment made by the insurer in good faith 
 22.30  pursuant to this provision shall fully discharge the insurer to 
 22.31  the extent of such payment. 
 22.32     Subject to any written direction of the insured in the 
 22.33  application or otherwise all or a portion of any indemnities 
 22.34  provided by this policy on account of hospital, nursing, 
 22.35  medical, or surgical services may, at the insurer's option and 
 22.36  unless the insured requests otherwise in writing not later than 
 23.1   the time of filing proofs of such loss, be paid directly to the 
 23.2   hospital or person rendering such services; but it is not 
 23.3   required that the service be rendered by a particular hospital 
 23.4   or person. 
 23.5      (10) A provision as follows: 
 23.6      PHYSICAL EXAMINATIONS AND AUTOPSY:  The insurer at its own 
 23.7   expense shall have the right and opportunity to examine the 
 23.8   person of the insured when and as often as it may reasonably 
 23.9   require during the pendency of a claim hereunder and to make an 
 23.10  autopsy in case of death where it is not forbidden by law. 
 23.11     (11) A provision as follows: 
 23.12     LEGAL ACTIONS:  No action at law or in equity shall be 
 23.13  brought to recover on this policy prior to the expiration of 60 
 23.14  days after written proof of loss has been furnished in 
 23.15  accordance with the requirements of this policy.  No such action 
 23.16  shall be brought after the expiration of three years after the 
 23.17  time written proof of loss is required to be furnished. 
 23.18     (12) A provision as follows: 
 23.19     CHANGE OF BENEFICIARY:  Unless the insured makes an 
 23.20  irrevocable designation of beneficiary, the right to change of 
 23.21  beneficiary is reserved to the insured and the consent of the 
 23.22  beneficiary or beneficiaries shall not be requisite to surrender 
 23.23  or assignment of this policy or to any change of beneficiary or 
 23.24  beneficiaries, or to any other changes in this policy.  The 
 23.25  first clause of this provision, relating to the irrevocable 
 23.26  designation of beneficiary, may be omitted at the insurer's 
 23.27  option. 
 23.28     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 23.29  following final enactment. 
 23.30     Sec. 12.  Minnesota Statutes 2000, section 62A.17, 
 23.31  subdivision 1, is amended to read: 
 23.32     Subdivision 1.  [CONTINUATION OF COVERAGE.] Every group 
 23.33  insurance policy, group subscriber contract, and health care 
 23.34  plan included within the provisions of section 62A.16, except 
 23.35  policies, contracts, or health care plans covering employees of 
 23.36  an agency of the federal government, shall contain a provision 
 24.1   which permits every covered employee who is voluntarily or 
 24.2   involuntarily terminated or laid off from employment, if the 
 24.3   policy, contract, or health care plan remains in force for 
 24.4   active employees of the employer, to elect to continue the 
 24.5   coverage for the employee and dependents. 
 24.6      An employee shall be considered to be laid off from 
 24.7   employment if there is a reduction in hours to the point where 
 24.8   the employee is no longer eligible under the policy, contract, 
 24.9   or health care plan.  Termination shall not include discharge 
 24.10  for gross misconduct.  
 24.11     Upon request by the terminated or laid off employee, a 
 24.12  health carrier must provide the instructions necessary to enable 
 24.13  the employee to elect continuation of coverage. 
 24.14     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 24.15  following final enactment. 
 24.16     Sec. 13.  Minnesota Statutes 2000, section 62A.20, 
 24.17  subdivision 1, is amended to read: 
 24.18     Subdivision 1.  [REQUIREMENT.] Every policy of accident and 
 24.19  health insurance providing coverage of hospital or medical 
 24.20  expense on either an expense-incurred basis or other than an 
 24.21  expense-incurred basis, which in addition to covering the 
 24.22  insured also provides coverage to the spouse and dependent 
 24.23  children of the insured shall contain: 
 24.24     (1) a provision which permits allows the spouse and 
 24.25  dependent children to elect to continue coverage when the 
 24.26  insured becomes enrolled for benefits under Title XVIII of the 
 24.27  Social Security Act (Medicare); and 
 24.28     (2) a provision which permits allows the dependent children 
 24.29  to continue coverage when they cease to be dependent children 
 24.30  under the generally applicable requirement of the plan. 
 24.31     Upon request by the insured or the insured's spouse or 
 24.32  dependent child, a health carrier must provide the instructions 
 24.33  necessary to enable the spouse or child to elect continuation of 
 24.34  coverage. 
 24.35     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 24.36  following final enactment. 
 25.1      Sec. 14.  Minnesota Statutes 2000, section 62A.21, 
 25.2   subdivision 2a, is amended to read: 
 25.3      Subd. 2a.  [CONTINUATION PRIVILEGE.] Every policy described 
 25.4   in subdivision 1 shall contain a provision which permits 
 25.5   continuation of coverage under the policy for the insured's 
 25.6   former spouse and dependent children upon entry of a valid 
 25.7   decree of dissolution of marriage.  The coverage shall be 
 25.8   continued until the earlier of the following dates: 
 25.9      (a) the date the insured's former spouse becomes covered 
 25.10  under any other group health plan; or 
 25.11     (b) the date coverage would otherwise terminate under the 
 25.12  policy. 
 25.13     If the coverage is provided under a group policy, any 
 25.14  required premium contributions for the coverage shall be paid by 
 25.15  the insured on a monthly basis to the group policyholder for 
 25.16  remittance to the insurer.  The policy must require the group 
 25.17  policyholder to, upon request, provide the insured with written 
 25.18  verification from the insurer of the cost of this coverage 
 25.19  promptly at the time of eligibility for this coverage and at any 
 25.20  time during the continuation period.  In no event shall the 
 25.21  amount of premium charged exceed 102 percent of the cost to the 
 25.22  plan for such period of coverage for other similarly situated 
 25.23  spouses and dependent children with respect to whom the marital 
 25.24  relationship has not dissolved, without regard to whether such 
 25.25  cost is paid by the employer or employee. 
 25.26     Upon request by the insured's former spouse or dependent 
 25.27  child, a health carrier must provide the instructions necessary 
 25.28  to enable the child or former spouse to elect continuation of 
 25.29  coverage. 
 25.30     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 25.31  following final enactment. 
 25.32     Sec. 15.  Minnesota Statutes 2000, section 62A.302, is 
 25.33  amended to read: 
 25.34     62A.302 [COVERAGE OF DEPENDENTS.] 
 25.35     Subdivision 1.  [SCOPE OF COVERAGE.] This section applies 
 25.36  to all health plans as defined in section 62A.011: 
 26.1      (1) a health plan as defined in section 62A.011; 
 26.2      (2) coverage described in section 62A.011, subdivision 3, 
 26.3   clauses (4), (6), (7), (8), (9), and (10); and 
 26.4      (3) a policy, contract, or certificate issued by a 
 26.5   community integrated service network licensed under chapter 62N. 
 26.6      Subd. 2.  [REQUIRED COVERAGE.] Every health plan included 
 26.7   in subdivision 1 that provides dependent coverage must define 
 26.8   "dependent" no more restrictively than the definition provided 
 26.9   in section 62L.02. 
 26.10     Sec. 16.  Minnesota Statutes 2000, section 62A.31, 
 26.11  subdivision 1a, is amended to read: 
 26.12     Subd. 1a.  [MINIMUM COVERAGE.] The policy must provide a 
 26.13  minimum of the coverage set out in subdivision 2 and for an 
 26.14  extended basic plan, the additional requirements of section 
 26.15  62E.07. 
 26.16     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 26.17  following final enactment. 
 26.18     Sec. 17.  Minnesota Statutes 2000, section 62A.31, 
 26.19  subdivision 1i, is amended to read: 
 26.20     Subd. 1i.  [REPLACEMENT COVERAGE.] If a Medicare supplement 
 26.21  policy or certificate replaces another Medicare supplement 
 26.22  policy or certificate, the issuer of the replacing policy or 
 26.23  certificate shall waive any time periods applicable to 
 26.24  preexisting conditions, waiting periods, elimination periods, 
 26.25  and probationary periods in the new Medicare supplement policy 
 26.26  or certificate for benefits to the extent the time was spent 
 26.27  under the original policy or certificate.  For purposes of this 
 26.28  subdivision, "Medicare supplement policy or certificate" means 
 26.29  all coverage described in section 62A.011, subdivision 4 3, 
 26.30  clause (10). 
 26.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 26.32  following final enactment. 
 26.33     Sec. 18.  Minnesota Statutes 2000, section 62A.31, 
 26.34  subdivision 3, is amended to read: 
 26.35     Subd. 3.  [DEFINITIONS.] (a) The definitions provided in 
 26.36  this subdivision apply to sections 62A.31 to 62A.44. 
 27.1      (b) "Accident," "accidental injury," or "accidental means" 
 27.2   means to employ "result" language and does not include words 
 27.3   that establish an accidental means test or use words such as 
 27.4   "external," "violent," "visible wounds," or similar words of 
 27.5   description or characterization. 
 27.6      (1) The definition shall not be more restrictive than the 
 27.7   following:  "Injury or injuries for which benefits are provided 
 27.8   means accidental bodily injury sustained by the insured person 
 27.9   which is the direct result of an accident, independent of 
 27.10  disease or bodily infirmity or any other cause, and occurs while 
 27.11  insurance coverage is in force." 
 27.12     (2) The definition may provide that injuries shall not 
 27.13  include injuries for which benefits are provided or available 
 27.14  under a workers' compensation, employer's liability or similar 
 27.15  law, or motor vehicle no-fault plan, unless prohibited by law. 
 27.16     (c) "Applicant" means: 
 27.17     (1) in the case of an individual Medicare supplement policy 
 27.18  or certificate, the person who seeks to contract for insurance 
 27.19  benefits; and 
 27.20     (2) in the case of a group Medicare supplement policy or 
 27.21  certificate, the proposed certificate holder. 
 27.22     (d) "Bankruptcy" means a situation in which a 
 27.23  Medicare+Choice organization that is not an issuer has filed, or 
 27.24  has had filed against it, a petition for declaration of 
 27.25  bankruptcy and has ceased doing business in the state. 
 27.26     (e) "Benefit period" or "Medicare benefit period" shall not 
 27.27  be defined more restrictively than as defined in the Medicare 
 27.28  program. 
 27.29     (f) "Certificate" means a certificate delivered or issued 
 27.30  for delivery in this state or offered to a resident of this 
 27.31  state under a group Medicare supplement policy or certificate. 
 27.32     (g) "Certificate form" means the form on which the 
 27.33  certificate is delivered or issued for delivery by the issuer. 
 27.34     (h) "Convalescent nursing home," "extended care facility," 
 27.35  or "skilled nursing facility" shall not be defined more 
 27.36  restrictively than as defined in the Medicare program. 
 28.1      (i) "Employee welfare benefit plan" means a plan, fund, or 
 28.2   program of employee benefits as defined in United States Code, 
 28.3   title 29, section 1002 (Employee Retirement Income Security Act).
 28.4      (j) "Health care expenses" means expenses of health 
 28.5   maintenance organizations associated with the delivery of health 
 28.6   care services which are analogous to incurred losses of 
 28.7   insurers.  The expenses shall not include: 
 28.8      (1) home office and overhead costs; 
 28.9      (2) advertising costs; 
 28.10     (3) commissions and other acquisition costs; 
 28.11     (4) taxes; 
 28.12     (5) capital costs; 
 28.13     (6) administrative costs; and 
 28.14     (7) claims processing costs. 
 28.15     (k) "Hospital" may be defined in relation to its status, 
 28.16  facilities, and available services or to reflect its 
 28.17  accreditation by the joint commission on accreditation of 
 28.18  hospitals, but not more restrictively than as defined in the 
 28.19  Medicare program. 
 28.20     (l) "Insolvency" means a situation in which an issuer, 
 28.21  licensed to transact the business of insurance in this state, 
 28.22  including the right to transact business as any type of issuer, 
 28.23  has had a final order of liquidation entered against it with a 
 28.24  finding of insolvency by a court of competent jurisdiction in 
 28.25  the issuer's state of domicile. 
 28.26     (m) "Issuer" includes insurance companies, fraternal 
 28.27  benefit societies, health service plan corporations, health 
 28.28  maintenance organizations, and any other entity delivering or 
 28.29  issuing for delivery Medicare supplement policies or 
 28.30  certificates in this state or offering these policies or 
 28.31  certificates to residents of this state. 
 28.32     (n) "Medicare" shall be defined in the policy and 
 28.33  certificate.  Medicare may be defined as the Health Insurance 
 28.34  for the Aged Act, title XVIII of the Social Security Amendments 
 28.35  of 1965, as amended, or title I, part I, of Public Law Number 
 28.36  89-97, as enacted by the 89th Congress of the United States of 
 29.1   America and popularly known as the Health Insurance for the Aged 
 29.2   Act, as amended. 
 29.3      (o) "Medicare eligible expenses" means health care expenses 
 29.4   covered by Medicare, to the extent recognized as reasonable and 
 29.5   medically necessary by Medicare. 
 29.6      (p) "Medicare+Choice plan" means a plan of coverage for 
 29.7   health benefits under Medicare part C as defined in section 1859 
 29.8   of the federal Social Security Act, United States Code, title 
 29.9   42, section 1395w-28, and includes: 
 29.10     (1) coordinated care plans which provide health care 
 29.11  services, including, but not limited to, health maintenance 
 29.12  organization plans, with or without a point-of-service option, 
 29.13  plans offered by provider-sponsored organizations, and preferred 
 29.14  provider organization plans; 
 29.15     (2) medical savings account plans coupled with a 
 29.16  contribution into a Medicare+Choice medical savings account; and 
 29.17     (3) Medicare+Choice private fee-for-service plans. 
 29.18     (q) "Medicare-related coverage" means a policy, contract, 
 29.19  or certificate issued as a supplement to Medicare, regulated 
 29.20  under sections 62A.31 to 62A.44, including Medicare select 
 29.21  coverage; policies, contracts, or certificates that supplement 
 29.22  Medicare issued by health maintenance organizations; or 
 29.23  policies, contracts, or certificates governed by section 1833 
 29.24  (known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA" 
 29.25  or "risk" contracts) of the federal Social Security Act, United 
 29.26  States Code, title 42, section 1395, et seq., as amended.; or 
 29.27  Section 4001 of the Balanced Budget Act of 1997 (BBA)(Public Law 
 29.28  105-33), Sections 1851 to 1859 of the Social Security Act 
 29.29  establishing Part C of the Medicare program, known as the 
 29.30  "Medicare+Choice program." 
 29.31     (r) "Medicare supplement policy or certificate" means a 
 29.32  group or individual policy of accident and sickness insurance or 
 29.33  a subscriber contract of hospital and medical service 
 29.34  associations or health maintenance organizations, or those 
 29.35  policies or certificates covered by section 1833 of the federal 
 29.36  Social Security Act, United States Code, title 42, section 1395, 
 30.1   et seq., or an issued policy under a demonstration project 
 30.2   specified under amendments to the federal Social Security Act, 
 30.3   which is advertised, marketed, or designed primarily as a 
 30.4   supplement to reimbursements under Medicare for the hospital, 
 30.5   medical, or surgical expenses of persons eligible for Medicare. 
 30.6      (s) "Physician" shall not be defined more restrictively 
 30.7   than as defined in the Medicare program or section 62A.04, 
 30.8   subdivision 1, or 62A.15, subdivision 3a. 
 30.9      (t) "Policy form" means the form on which the policy is 
 30.10  delivered or issued for delivery by the issuer. 
 30.11     (u) "Secretary" means the Secretary of the United States 
 30.12  Department of Health and Human Services. 
 30.13     (v) "Sickness" shall not be defined more restrictively than 
 30.14  the following: 
 30.15     "Sickness means illness or disease of an insured person 
 30.16     which first manifests itself after the effective date of 
 30.17     insurance and while the insurance is in force." 
 30.18     The definition may be further modified to exclude 
 30.19  sicknesses or diseases for which benefits are provided under a 
 30.20  workers' compensation, occupational disease, employer's 
 30.21  liability, or similar law. 
 30.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 30.23  following final enactment. 
 30.24     Sec. 19.  Minnesota Statutes 2000, section 62A.65, 
 30.25  subdivision 8, is amended to read: 
 30.26     Subd. 8.  [CESSATION OF INDIVIDUAL BUSINESS.] 
 30.27  Notwithstanding the provisions of subdivisions 1 to 7, a health 
 30.28  carrier may elect to cease doing business in the individual 
 30.29  health plan market in this state if it complies with the 
 30.30  requirements of this subdivision.  For purposes of this section, 
 30.31  "cease doing business" means to discontinue issuing new 
 30.32  individual health plans and to refuse to renew all of the health 
 30.33  carrier's existing individual health plans issued in this state 
 30.34  whose terms permit refusal to renew under the circumstances 
 30.35  specified in this subdivision.  This subdivision does not permit 
 30.36  cancellation of an individual health plan, unless the terms of 
 31.1   the health plan permit cancellation under the circumstances 
 31.2   specified in this subdivision.  A health carrier electing to 
 31.3   cease doing business in the individual health plan market in 
 31.4   this state shall notify the commissioner 180 days prior to the 
 31.5   effective date of the cessation.  Within 30 days after the 
 31.6   termination, the health carrier shall submit to the commissioner 
 31.7   a complete list of policyholders that have been terminated.  The 
 31.8   cessation of business does not include the failure of a health 
 31.9   carrier to offer or issue new business in the individual health 
 31.10  plan market or continue an existing product line in that market, 
 31.11  provided that a health carrier does not terminate, cancel, or 
 31.12  fail to renew its current individual health plan business.  A 
 31.13  health carrier electing to cease doing business in the 
 31.14  individual health plan market shall provide 120 days' written 
 31.15  notice to each policyholder covered by an individual health plan 
 31.16  issued by the health carrier.  This notice must also inform each 
 31.17  policyholder of the existence of the Minnesota Comprehensive 
 31.18  Health Association, the requirements for being accepted, the 
 31.19  procedures for applying for coverage, and the telephone numbers 
 31.20  at the department of health and the department of commerce for 
 31.21  information about private individual or family health coverage.  
 31.22  A health carrier that ceases to write new business in the 
 31.23  individual health plan market shall continue to be governed by 
 31.24  this section with respect to continuing individual health plan 
 31.25  business conducted by the health carrier.  A health carrier that 
 31.26  ceases to do business in the individual health plan market after 
 31.27  July 1, 1994, is prohibited from writing new business in the 
 31.28  individual health plan market in this state for a period of five 
 31.29  years from the date of notice to the commissioner.  This 
 31.30  subdivision applies to any health maintenance organization that 
 31.31  ceases to do business in the individual health plan market in 
 31.32  one service area with respect to that service area only.  
 31.33  Nothing in this subdivision prohibits an affiliated health 
 31.34  maintenance organization from continuing to do business in the 
 31.35  individual health plan market in that same service area.  The 
 31.36  right to refuse to renew an individual health plan under this 
 32.1   subdivision does not apply to individual health plans issued on 
 32.2   a guaranteed renewable basis that does not permit refusal to 
 32.3   renew under the circumstances specified in this subdivision.  
 32.4      Sec. 20.  Minnesota Statutes 2000, section 62E.04, 
 32.5   subdivision 4, is amended to read: 
 32.6      Subd. 4.  [MAJOR MEDICAL COVERAGE.] Each insurer and 
 32.7   fraternal shall affirmatively offer coverage of major medical 
 32.8   expenses to every applicant who applies to the insurer or 
 32.9   fraternal for a new unqualified policy, which has a lifetime 
 32.10  benefit limit of less than $1,000,000, at the time of 
 32.11  application and annually to every holder of such an unqualified 
 32.12  policy of accident and health insurance renewed by the insurer 
 32.13  or fraternal.  The coverage shall provide that when a covered 
 32.14  individual incurs out-of-pocket expenses of $5,000 or more 
 32.15  within a calendar year for services covered in section 62E.06, 
 32.16  subdivision 1, benefits shall be payable, subject to any 
 32.17  copayment authorized by the commissioner, up to a maximum 
 32.18  lifetime limit of $500,000 not less than $1,000,000.  The offer 
 32.19  of coverage of major medical expenses may consist of the offer 
 32.20  of a rider on an existing unqualified policy or a new policy 
 32.21  which is a qualified plan. 
 32.22     Sec. 21.  Minnesota Statutes 2000, section 62E.06, 
 32.23  subdivision 1, is amended to read: 
 32.24     Subdivision 1.  [NUMBER THREE PLAN.] A plan of health 
 32.25  coverage shall be certified as a number three qualified plan if 
 32.26  it otherwise meets the requirements established by chapters 62A 
 32.27  and, 62C, and 62Q, and the other laws of this state, whether or 
 32.28  not the policy is issued in Minnesota, and meets or exceeds the 
 32.29  following minimum standards: 
 32.30     (a) The minimum benefits for a covered individual shall, 
 32.31  subject to the other provisions of this subdivision, be equal to 
 32.32  at least 80 percent of the cost of covered services in excess of 
 32.33  an annual deductible which does not exceed $150 per person.  The 
 32.34  coverage shall include a limitation of $3,000 per person on 
 32.35  total annual out-of-pocket expenses for services covered under 
 32.36  this subdivision.  The coverage shall be subject to a maximum 
 33.1   lifetime benefit of not less than $500,000 $1,000,000. 
 33.2      The $3,000 limitation on total annual out-of-pocket 
 33.3   expenses and the $500,000 $1,000,000 maximum lifetime benefit 
 33.4   shall not be subject to change or substitution by use of an 
 33.5   actuarially equivalent benefit. 
 33.6      (b) Covered expenses shall be the usual and customary 
 33.7   charges for the following services and articles when prescribed 
 33.8   by a physician: 
 33.9      (1) hospital services; 
 33.10     (2) professional services for the diagnosis or treatment of 
 33.11  injuries, illnesses, or conditions, other than dental, which are 
 33.12  rendered by a physician or at the physician's direction; 
 33.13     (3) drugs requiring a physician's prescription; 
 33.14     (4) services of a nursing home for not more than 120 days 
 33.15  in a year if the services would qualify as reimbursable services 
 33.16  under Medicare; 
 33.17     (5) services of a home health agency if the services would 
 33.18  qualify as reimbursable services under Medicare; 
 33.19     (6) use of radium or other radioactive materials; 
 33.20     (7) oxygen; 
 33.21     (8) anesthetics; 
 33.22     (9) prostheses other than dental but including scalp hair 
 33.23  prostheses worn for hair loss suffered as a result of alopecia 
 33.24  areata; 
 33.25     (10) rental or purchase, as appropriate, of durable medical 
 33.26  equipment other than eyeglasses and hearing aids; 
 33.27     (11) diagnostic X-rays and laboratory tests; 
 33.28     (12) oral surgery for partially or completely unerupted 
 33.29  impacted teeth, a tooth root without the extraction of the 
 33.30  entire tooth, or the gums and tissues of the mouth when not 
 33.31  performed in connection with the extraction or repair of teeth; 
 33.32     (13) services of a physical therapist; 
 33.33     (14) transportation provided by licensed ambulance service 
 33.34  to the nearest facility qualified to treat the condition; or a 
 33.35  reasonable mileage rate for transportation to a kidney dialysis 
 33.36  center for treatment; and 
 34.1      (15) services of an occupational therapist. 
 34.2      (c) Covered expenses for the services and articles 
 34.3   specified in this subdivision do not include the following: 
 34.4      (1) any charge for care for injury or disease either (i) 
 34.5   arising out of an injury in the course of employment and subject 
 34.6   to a workers' compensation or similar law, (ii) for which 
 34.7   benefits are payable without regard to fault under coverage 
 34.8   statutorily required to be contained in any motor vehicle, or 
 34.9   other liability insurance policy or equivalent self-insurance, 
 34.10  or (iii) for which benefits are payable under another policy of 
 34.11  accident and health insurance, Medicare, or any other 
 34.12  governmental program except as otherwise provided by section 
 34.13  62A.04, subdivision 3, clause (4); 
 34.14     (2) any charge for treatment for cosmetic purposes other 
 34.15  than for reconstructive surgery when such service is incidental 
 34.16  to or follows surgery resulting from injury, sickness, or other 
 34.17  diseases of the involved part or when such service is performed 
 34.18  on a covered dependent child because of congenital disease or 
 34.19  anomaly which has resulted in a functional defect as determined 
 34.20  by the attending physician; 
 34.21     (3) care which is primarily for custodial or domiciliary 
 34.22  purposes which would not qualify as eligible services under 
 34.23  Medicare; 
 34.24     (4) any charge for confinement in a private room to the 
 34.25  extent it is in excess of the institution's charge for its most 
 34.26  common semiprivate room, unless a private room is prescribed as 
 34.27  medically necessary by a physician, provided, however, that if 
 34.28  the institution does not have semiprivate rooms, its most common 
 34.29  semiprivate room charge shall be considered to be 90 percent of 
 34.30  its lowest private room charge; 
 34.31     (5) that part of any charge for services or articles 
 34.32  rendered or prescribed by a physician, dentist, or other health 
 34.33  care personnel which exceeds the prevailing charge in the 
 34.34  locality where the service is provided; and 
 34.35     (6) any charge for services or articles the provision of 
 34.36  which is not within the scope of authorized practice of the 
 35.1   institution or individual rendering the services or articles. 
 35.2      (d) The minimum benefits for a qualified plan shall 
 35.3   include, in addition to those benefits specified in clauses (a) 
 35.4   and (e), benefits for well baby care, effective July 1, 1980, 
 35.5   subject to applicable deductibles, coinsurance provisions, and 
 35.6   maximum lifetime benefit limitations. 
 35.7      (e) Effective July 1, 1979, the minimum benefits of a 
 35.8   qualified plan shall include, in addition to those benefits 
 35.9   specified in clause (a), a second opinion from a physician on 
 35.10  all surgical procedures expected to cost a total of $500 or more 
 35.11  in physician, laboratory, and hospital fees, provided that the 
 35.12  coverage need not include the repetition of any diagnostic tests.
 35.13     (f) Effective August 1, 1985, the minimum benefits of a 
 35.14  qualified plan must include, in addition to the benefits 
 35.15  specified in clauses (a), (d), and (e), coverage for special 
 35.16  dietary treatment for phenylketonuria when recommended by a 
 35.17  physician. 
 35.18     (g) Outpatient mental health coverage is subject to section 
 35.19  62A.152, subdivision 2. 
 35.20     Sec. 22.  Minnesota Statutes 2000, section 62I.07, 
 35.21  subdivision 1, is amended to read: 
 35.22     Subdivision 1.  [GENERAL ASSESSMENT.] Each member of the 
 35.23  association that is authorized to write property and casualty 
 35.24  insurance in the state shall participate in its losses and 
 35.25  expenses in the proportion that the direct written premiums of 
 35.26  the member on the kinds of insurance in that account bears to 
 35.27  the total aggregate direct written premiums written in this 
 35.28  state by all members on the kinds of insurance in that account.  
 35.29  The members' participation in the association shall be 
 35.30  determined annually on the direct written premiums written 
 35.31  during the preceding calendar year as reported on the annual 
 35.32  statements and other reports filed by the member with the 
 35.33  commissioner.  Direct written premiums mean that amount at page 
 35.34  14 15, column (2), lines 5.1 5.2, 8, 9, 17, 21.2, 22, 23, 24, 
 35.35  25, 26, and 27 of the annual statement filed annually with the 
 35.36  department of commerce under section 60A.13. 
 36.1      Sec. 23.  Minnesota Statutes 2000, section 62J.60, 
 36.2   subdivision 3, is amended to read: 
 36.3      Subd. 3.  [HUMAN READABLE DATA ELEMENTS.] (a) The following 
 36.4   are the minimum human readable data elements that must be 
 36.5   present on the front side of the Minnesota health care 
 36.6   identification card: 
 36.7      (1) card issuer name or logo, which is the name or logo 
 36.8   that identifies the card issuer.  The card issuer name or logo 
 36.9   may be the card's front background.  No standard label is 
 36.10  required for this data element; 
 36.11     (2) claim submission number.  The standardized label for 
 36.12  this element is "Clm Subm #"; 
 36.13     (3) identification number, which is the unique 
 36.14  identification number of the individual card holder established 
 36.15  and defined under this section.  The standardized label for the 
 36.16  data element is "ID"; 
 36.17     (4) identification name, which is the name of the 
 36.18  individual card holder.  The identification name must be 
 36.19  formatted as follows:  first name, space, optional middle 
 36.20  initial, space, last name, optional space and name suffix.  The 
 36.21  standardized label for this data element is "Name"; 
 36.22     (5) account number(s), which is any other number, such as a 
 36.23  group number, if required for part of the identification or 
 36.24  claims process.  The standardized label for this data element is 
 36.25  "Account"; 
 36.26     (6) care type, which is the description of the group 
 36.27  purchaser's plan product under which the beneficiary is 
 36.28  covered.  The description shall include the health plan company 
 36.29  name and the plan or product name.  The standardized label for 
 36.30  this data element is "Care Type"; 
 36.31     (7) service type, which is the description of coverage 
 36.32  provided such as hospital, dental, vision, prescription, or 
 36.33  mental health.  The standard label for this data element is "Svc 
 36.34  Type"; and 
 36.35     (8) provider/clinic name, which is the name of the primary 
 36.36  care clinic the card holder is assigned to by the health plan 
 37.1   company.  The standard label for this field is "PCP."  This 
 37.2   information is mandatory only if the health plan company assigns 
 37.3   a specific primary care provider to the card holder. 
 37.4      (b) The following human readable data elements shall be 
 37.5   present on the back side of the Minnesota health identification 
 37.6   card.  These elements must be left justified, and no optional 
 37.7   data elements may be interspersed between them:  
 37.8      (1) claims submission name(s) and address(es), which are 
 37.9   the name(s) and address(es) of the entity or entities to which 
 37.10  claims should be submitted.  If different destinations are 
 37.11  required for different types of claims, this must be labeled; 
 37.12  and 
 37.13     (2) telephone number(s) and name(s); which are the 
 37.14  telephone number(s) and name(s) of the following contact(s) with 
 37.15  a standardized label describing the service function as 
 37.16  applicable:  
 37.17     (i) eligibility and benefit information; 
 37.18     (ii) utilization review; 
 37.19     (iii) precertification; or 
 37.20     (iv) customer services. 
 37.21     (c) The following human readable data elements are 
 37.22  mandatory on the back side of the card for health maintenance 
 37.23  organizations plan companies: 
 37.24     (1) emergency care authorization telephone number or 
 37.25  instruction on how to receive authorization for emergency care.  
 37.26  There is no standard label required for this information; and 
 37.27     (2) one of the following: 
 37.28     (i) telephone number to call to appeal to or file a 
 37.29  complaint with the commissioner of commerce or health; or 
 37.30     (ii) for persons enrolled under section 256B.69, 256D.03, 
 37.31  or 256L.12, the telephone number to call to file a complaint 
 37.32  with the ombudsperson designated by the commissioner of human 
 37.33  services under section 256B.69 and the address to appeal to the 
 37.34  commissioner of human services.  There is no standard label 
 37.35  required for this information. 
 37.36     (d) All human readable data elements not required under 
 38.1   paragraphs (a) to (c) are optional and may be used at the 
 38.2   issuer's discretion. 
 38.3      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2003.
 38.4      Sec. 24.  Minnesota Statutes 2000, section 62L.05, 
 38.5   subdivision 1, is amended to read: 
 38.6      Subdivision 1.  [TWO SMALL EMPLOYER PLANS.] Each health 
 38.7   carrier in the small employer market must make available, on a 
 38.8   guaranteed issue basis, to any small employer that satisfies the 
 38.9   contribution and participation requirements of section 62L.03, 
 38.10  subdivision 3, both of the small employer plans described in 
 38.11  subdivisions 2 and 3.  Under subdivisions 2 and 3, coinsurance 
 38.12  and deductibles do not apply to child health supervision 
 38.13  services and prenatal services, as defined by section 62A.047.  
 38.14  The maximum out-of-pocket costs for covered services must be 
 38.15  $3,000 per individual and $6,000 per family per year.  The 
 38.16  maximum lifetime benefit must be $500,000 not less than 
 38.17  $1,000,000.  
 38.18     Sec. 25.  Minnesota Statutes 2000, section 62L.05, 
 38.19  subdivision 2, is amended to read: 
 38.20     Subd. 2.  [DEDUCTIBLE-TYPE SMALL EMPLOYER PLAN.] The 
 38.21  benefits of the deductible-type small employer plan offered by a 
 38.22  health carrier must be equal to 80 percent of the charges, as 
 38.23  specified in subdivision 10, for health care services, supplies, 
 38.24  or other articles covered under the small employer plan, in 
 38.25  excess of an annual deductible which must be $500 $2,250 per 
 38.26  individual and $1,000 $4,500 per family. 
 38.27     Sec. 26.  Minnesota Statutes 2000, section 62M.02, is 
 38.28  amended by adding a subdivision to read: 
 38.29     Subd. 12b.  [HEALTH CARE SERVICES.] "Health care services" 
 38.30  means services for the diagnosis, prevention, treatment, cure, 
 38.31  or relief of a health condition, illness, injury, or disease. 
 38.32     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 38.33  following final enactment. 
 38.34     Sec. 27.  Minnesota Statutes 2000, section 62M.03, 
 38.35  subdivision 2, is amended to read: 
 38.36     Subd. 2.  [NONLICENSED UTILIZATION REVIEW ORGANIZATION.] An 
 39.1   organization that meets the definition of a utilization review 
 39.2   organization under section 62M.02, subdivision 21, that is not 
 39.3   licensed in this state that performs utilization review services 
 39.4   for Minnesota residents must register with the commissioner of 
 39.5   commerce and must certify compliance with sections 62M.01 to 
 39.6   62M.16. 
 39.7      Initial registration must occur no later than January 1, 
 39.8   1993.  The registration is effective for two years and may be 
 39.9   renewed for another two years by written request.  Each 
 39.10  utilization review organization registered under this chapter 
 39.11  shall notify the commissioner of commerce within 30 days of any 
 39.12  change in the name, address, or ownership of the 
 39.13  organization.  The organization shall pay to the commissioner of 
 39.14  commerce a fee of $1,000 for the initial registration 
 39.15  application and $1,000 for each two-year renewal. 
 39.16     Sec. 28.  Minnesota Statutes 2000, section 62M.05, 
 39.17  subdivision 5, is amended to read: 
 39.18     Subd. 5.  [NOTIFICATION TO CLAIMS ADMINISTRATOR.] If the 
 39.19  utilization review organization and the claims administrator are 
 39.20  separate entities, the utilization review organization must 
 39.21  forward, electronically or in writing, a notification of 
 39.22  certification or determination not to certify to the appropriate 
 39.23  claims administrator for the health benefit plan.  If it is 
 39.24  determined by the claims administrator that the certified health 
 39.25  care service is not covered by the health benefit plan, the 
 39.26  claims administrator must promptly notify the claimant and 
 39.27  provider of this information. 
 39.28     Sec. 29.  Minnesota Statutes 2000, section 62Q.01, 
 39.29  subdivision 6, is amended to read: 
 39.30     Subd. 6.  [MEDICARE-RELATED COVERAGE.] "Medicare-related 
 39.31  coverage" means a policy, contract, or certificate issued as a 
 39.32  supplement to Medicare, regulated under sections 62A.31 to 
 39.33  62A.44, including Medicare select coverage; policies, contracts, 
 39.34  or certificates that supplement Medicare issued by health 
 39.35  maintenance organizations; or policies, contracts, or 
 39.36  certificates governed by section 1833 (known as "cost" or "HCPP" 
 40.1   contracts) or 1876 (known as "TEFRA" or "risk" contracts) of the 
 40.2   federal Social Security Act, United States Code, title 42, 
 40.3   section 1395, et seq., as amended.; or Section 4001 of the 
 40.4   Balanced Budget Act of 1997 (BBA)(Public Law 105-33), Sections 
 40.5   1851 to 1859 of the Social Security Act establishing Part C of 
 40.6   the Medicare program, known as the "Medicare+Choice program." 
 40.7      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 40.8   following final enactment. 
 40.9      Sec. 30.  Minnesota Statutes 2000, section 62Q.73, 
 40.10  subdivision 3, is amended to read: 
 40.11     Subd. 3.  [RIGHT TO EXTERNAL REVIEW.] (a) Any enrollee or 
 40.12  anyone acting on behalf of an enrollee who has received an 
 40.13  adverse determination may submit a written request for an 
 40.14  external review of the adverse determination, if applicable 
 40.15  under section 62Q.68, subdivision 1, or 62M.06, to the 
 40.16  commissioner of health if the request involves a health plan 
 40.17  company regulated by that commissioner or to the commissioner of 
 40.18  commerce if the request involves a health plan company regulated 
 40.19  by that commissioner.  Notification of the enrollee's right to 
 40.20  external review must accompany the denial issued by the insurer.
 40.21  The written request must be accompanied by a filing fee of $25.  
 40.22  The fee may be waived by the commissioner of health or commerce 
 40.23  in cases of financial hardship. 
 40.24     (b) Nothing in this section requires the commissioner of 
 40.25  health or commerce to independently investigate an adverse 
 40.26  determination referred for independent external review. 
 40.27     (c) If an enrollee requests an external review, the health 
 40.28  plan company must participate in the external review.  The cost 
 40.29  of the external review in excess of the filing fee described in 
 40.30  paragraph (a) shall be borne by the health plan company.  
 40.31     Sec. 31.  [62Q.80] [BOARD FEES LIMITATION.] 
 40.32     No health plan company operated on a nonprofit basis shall 
 40.33  pay a salary, fee, or other remuneration to any member of a 
 40.34  board of directors in excess of $66 per meeting. 
 40.35     Sec. 32.  Minnesota Statutes 2000, section 65A.29, 
 40.36  subdivision 7, is amended to read: 
 41.1      Subd. 7.  [RENEWAL; NOTICE REQUIREMENT.] No insurer shall 
 41.2   refuse to renew, or reduce limits of coverage, or eliminate any 
 41.3   coverage in a homeowner's insurance policy unless it mails or 
 41.4   delivers to the insured, at the address shown in the policy, at 
 41.5   least 60 days' advance notice of its intention.  The notice must 
 41.6   contain the specific underwriting or other reason or reasons for 
 41.7   the indicated action and must state the name of the insurer and 
 41.8   the date the notice is issued.  
 41.9      Proof of mailing this notice to the insured at the address 
 41.10  shown in the policy is sufficient proof that the notice required 
 41.11  by this section has been given. 
 41.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 41.13  following final enactment. 
 41.14     Sec. 33.  Minnesota Statutes 2000, section 65A.30, is 
 41.15  amended to read: 
 41.16     65A.30 [DAY CARE SERVICES; COVERAGE.] 
 41.17     There shall be no coverage under the liability coverage 
 41.18  provisions of a day care provider's homeowner's insurance for 
 41.19  losses or damages arising out of the operation of day care 
 41.20  services unless: 
 41.21     (1) specifically covered in a policy; or 
 41.22     (2) covered by a rider for business coverage attached to a 
 41.23  policy. 
 41.24     For purposes of this section, "day care" means "family day 
 41.25  care" and "group family day care" as defined in Minnesota Rules, 
 41.26  part 9502.0315.  "Day care" does not include care provided by an 
 41.27  individual who is related, as defined in Minnesota Rules, part 
 41.28  9502.0315, to the person being cared for or care provided by an 
 41.29  unrelated individual to persons from a single family of persons 
 41.30  related to each other. 
 41.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 41.32  following final enactment. 
 41.33     Sec. 34.  Minnesota Statutes 2000, section 65B.04, 
 41.34  subdivision 3, is amended to read: 
 41.35     Subd. 3.  [AMENDMENTS.] The plan of operation may be 
 41.36  amended by a majority vote of the governing committee, and the 
 42.1   approval of the commissioner and ratification by a majority of 
 42.2   the members.  An order by the commissioner disapproving an 
 42.3   amendment to the plan of operation must be issued within 30 days 
 42.4   of receipt by the commissioner of the proposed amendment, 
 42.5   certified by the governing committee as having been adopted by 
 42.6   that committee by a majority vote, or the amendment shall be 
 42.7   deemed approved by the commissioner.  An order of disapproval 
 42.8   may be appealed as provided in chapter 14.  
 42.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 42.10  following final enactment. 
 42.11     Sec. 35.  Minnesota Statutes 2000, section 65B.06, 
 42.12  subdivision 1, is amended to read: 
 42.13     Subdivision 1.  With respect to private passenger, nonfleet 
 42.14  automobiles, the facility shall provide for the equitable 
 42.15  distribution of qualified applicants to members in accordance 
 42.16  with the participation ratio or among these insurance companies 
 42.17  as selected under the provisions of the plan of operation. 
 42.18     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 42.19  following final enactment. 
 42.20     Sec. 36.  Minnesota Statutes 2000, section 65B.06, 
 42.21  subdivision 4, is amended to read: 
 42.22     Subd. 4.  Coverage made available under this section shall 
 42.23  be the standard automobile policy and endorsement forms, as 
 42.24  approved by the commissioner, with such changes, additions and 
 42.25  amendments as are adopted by the governing committee and 
 42.26  approved by the commissioner. 
 42.27     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 42.28  following final enactment. 
 42.29     Sec. 37.  Minnesota Statutes 2000, section 65B.16, is 
 42.30  amended to read: 
 42.31     65B.16 [STATEMENT OF REASONS FOR CANCELLATION OR 
 42.32  REDUCTION.] 
 42.33     No notice of cancellation or reduction in the limits of 
 42.34  liability of coverage of an automobile insurance policy under 
 42.35  section 65B.15 shall be effective unless the specific 
 42.36  underwriting or other reason or reasons for such cancellation or 
 43.1   reduction in the limits of liability of coverage are stated in 
 43.2   such notice and the notice is mailed or delivered by the insurer 
 43.3   so as to provide the named insured with at least 30 days days' 
 43.4   notice prior to the effective date of cancellation; provided, 
 43.5   however, that when nonpayment of premium is the reason for 
 43.6   cancellation or when the company is exercising its right to 
 43.7   cancel insurance which has been in effect for less than 60 days 
 43.8   at least ten days' notice of cancellation, and the reasons for 
 43.9   the cancellation, shall be given.  Information regarding moving 
 43.10  traffic violations or motor vehicle accidents must be 
 43.11  specifically requested on the application in order for a company 
 43.12  to use those incidents to exercise its right to cancel within 
 43.13  the first 59 days of coverage.  When nonpayment of premiums is 
 43.14  the reason for cancellation, the reason must be given to the 
 43.15  insured with the notice of cancellation; and if the company is 
 43.16  exercising its right to cancel within the first 59 days of 
 43.17  coverage and notice is given with less than ten days remaining 
 43.18  in the 59-day period, the coverage must be extended, to expire 
 43.19  ten days after notice was mailed.  
 43.20     Sec. 38.  Minnesota Statutes 2000, section 65B.19, 
 43.21  subdivision 2, is amended to read: 
 43.22     Subd. 2.  [NOTICE OF RIGHT TO COMPLAIN.] When the insurer 
 43.23  notifies the policyholder of nonrenewal, cancellation or 
 43.24  reduction in the limits of liability of coverage under section 
 43.25  65B.16 or 65B.17, the insurer shall also notify the named 
 43.26  insured of the right to complain within 30 days of receipt by 
 43.27  the named insured of notice of nonrenewal, cancellation or 
 43.28  reduction in the limits of liability to the commissioner of such 
 43.29  action and of the nature of and possible eligibility for 
 43.30  insurance through the Minnesota automobile insurance plan.  Such 
 43.31  notice shall be included in the notice of nonrenewal, 
 43.32  cancellation or reduction in the limits of liability of 
 43.33  coverage, and shall state that such notice of the insured's 
 43.34  right of complaint to the commissioner and of the availability 
 43.35  of insurance through the Minnesota automobile insurance plan is 
 43.36  given pursuant to sections 65B.14 to 65B.21.  The notice must 
 44.1   state the name of the insurer and the date the notice is issued. 
 44.2      Sec. 39.  Minnesota Statutes 2000, section 65B.44, 
 44.3   subdivision 3, is amended to read: 
 44.4      Subd. 3.  [DISABILITY AND INCOME LOSS BENEFITS.] Disability 
 44.5   and income loss benefits shall provide compensation for 85 
 44.6   percent of the injured person's loss of present and future gross 
 44.7   income from inability to work proximately caused by the nonfatal 
 44.8   injury subject to a maximum of $250 $500 per week.  Loss of 
 44.9   income includes the costs incurred by a self-employed person to 
 44.10  hire substitute employees to perform tasks which are necessary 
 44.11  to maintain the income of the injured person, which are normally 
 44.12  performed by the injured person, and which cannot be performed 
 44.13  because of the injury.  
 44.14     If the injured person is unemployed at the time of injury 
 44.15  and is receiving or is eligible to receive unemployment benefits 
 44.16  under chapter 268, but the injured person loses eligibility for 
 44.17  those benefits because of inability to work caused by the 
 44.18  injury, disability and income loss benefits shall provide 
 44.19  compensation for the lost benefits in an amount equal to the 
 44.20  unemployment benefits which otherwise would have been payable, 
 44.21  subject to a maximum of $250 $500 per week.  
 44.22     Compensation under this subdivision shall be reduced by any 
 44.23  income from substitute work actually performed by the injured 
 44.24  person or by income the injured person would have earned in 
 44.25  available appropriate substitute work which the injured person 
 44.26  was capable of performing but unreasonably failed to undertake. 
 44.27     For the purposes of this section "inability to work" means 
 44.28  disability which prevents the injured person from engaging in 
 44.29  any substantial gainful occupation or employment on a regular 
 44.30  basis, for wage or profit, for which the injured person is or 
 44.31  may by training become reasonably qualified.  If the injured 
 44.32  person returns to employment and is unable by reason of the 
 44.33  injury to work continuously, compensation for lost income shall 
 44.34  be reduced by the income received while the injured person is 
 44.35  actually able to work.  The weekly maximums may not be prorated 
 44.36  to arrive at a daily maximum, even if the injured person does 
 45.1   not incur loss of income for a full week.  
 45.2      For the purposes of this section, an injured person who is 
 45.3   "unable by reason of the injury to work continuously" includes, 
 45.4   but is not limited to, a person who misses time from work, 
 45.5   including reasonable travel time, and loses income, vacation, or 
 45.6   sick leave benefits, to obtain medical treatment for an injury 
 45.7   arising out of the maintenance or use of a motor vehicle. 
 45.8      Sec. 40.  Minnesota Statutes 2000, section 67A.20, is 
 45.9   amended by adding a subdivision to read: 
 45.10     Subd. 3.  [WITH LICENSED INSURERS.] Township mutual fire 
 45.11  insurance companies may enter into reinsurance agreements with 
 45.12  any Minnesota licensed insurer authorized to write the same 
 45.13  lines of business. 
 45.14     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 45.15  following final enactment. 
 45.16     Sec. 41.  Minnesota Statutes 2000, section 70A.07, is 
 45.17  amended to read: 
 45.18     70A.07 [RATES AND FORMS OPEN TO INSPECTION.] 
 45.19     All rates and, supplementary rate information, and forms, 
 45.20  furnished to the commissioner under this chapter shall, as soon 
 45.21  as the rates are reviewed by the commissioner as the 
 45.22  commissioner's review has been completed, be open to public 
 45.23  inspection at any reasonable time.  
 45.24     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 45.25  following final enactment. 
 45.26     Sec. 42.  Minnesota Statutes 2000, section 79A.02, 
 45.27  subdivision 1, is amended to read: 
 45.28     Subdivision 1.  [MEMBERSHIP.] For the purposes of assisting 
 45.29  the commissioner, there is established a workers' compensation 
 45.30  self-insurers' advisory committee of five members that are 
 45.31  employers authorized to self-insure in Minnesota.  Three of the 
 45.32  members and three alternates shall be elected by the 
 45.33  self-insurers' security fund board of trustees and two members 
 45.34  and two alternates shall be appointed by the 
 45.35  commissioner.  Notwithstanding section 15.059, subdivision 5a, 
 45.36  the advisory committee does not expire June 30, 2001. 
 46.1      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 46.2   following final enactment. 
 46.3      Sec. 43.  Minnesota Statutes 2000, section 79A.03, 
 46.4   subdivision 7, is amended to read: 
 46.5      Subd. 7.  [FINANCIAL STANDARDS.] A self-insurer group shall 
 46.6   have and maintain: 
 46.7      (a) A combined net worth of all of the members of an amount 
 46.8   at least equal to the greater of ten times the retention 
 46.9   selected with the workers' compensation reinsurance association 
 46.10  or one-third of the current annual modified premium of the 
 46.11  members.  
 46.12     (b) Sufficient assets, net worth, and liquidity to promptly 
 46.13  and completely meet all obligations of its members under chapter 
 46.14  176 or this chapter.  In determining whether a group is in sound 
 46.15  financial condition, consideration shall be given to the 
 46.16  combined net worth of the member companies; the consolidated 
 46.17  long-term and short-term debt to equity ratios of the member 
 46.18  companies; any excess insurance other than reinsurance with the 
 46.19  workers' compensation reinsurance association, purchased by the 
 46.20  group from an insurer licensed in Minnesota or from an 
 46.21  authorized surplus line carrier; other financial data requested 
 46.22  by the commissioner or submitted by the group; and the combined 
 46.23  workers' compensation experience of the group for the last four 
 46.24  years. 
 46.25     No authority to self-insure will be granted unless, over 
 46.26  the term of the policy year, at least 65 percent of total 
 46.27  revenues from all sources for the year are available for the 
 46.28  payment of its claim and assessment obligations, and insurance 
 46.29  premiums for stop loss coverage.  For purposes of this 
 46.30  calculation, claim and assessment obligations include the cost 
 46.31  of allocated loss expenses as well as special compensation fund 
 46.32  and self-insurers' security fund assessments but exclude the 
 46.33  cost of unallocated loss expenses. 
 46.34     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2001. 
 46.35     Sec. 44.  Minnesota Statutes 2000, section 79A.04, 
 46.36  subdivision 16, is amended to read: 
 47.1      Subd. 16.  [CERTIFICATE TO SELF-INSURE; REVOCATION.] If, 
 47.2   following a private self-insurer's bankruptcy, insolvency, or 
 47.3   certificate of default, the commissioner calls its security and 
 47.4   proceeds in accordance with this section, the commissioner shall 
 47.5   revoke the certificate to self-insure of the private 
 47.6   self-insurer as soon as practicable but no later than 30 days 
 47.7   after its security has been called.  No insolvent self-insurer, 
 47.8   as defined in section 79A.01, subdivision 4, shall be eligible 
 47.9   to receive another grant of authority to self-insure unless 
 47.10  either:  (1) the insolvent self-insurer's posted security was 
 47.11  sufficient to pay all direct and indirect administrative and 
 47.12  professional expenses of the security fund related to the 
 47.13  insolvent self-insurer, and all losses, including estimated 
 47.14  future liability, allocated loss expense, and unallocated loss 
 47.15  expense of the insolvent self-insurer; or (2) the insolvent 
 47.16  self-insurer pays the security fund an amount equal to all such 
 47.17  losses and expenses the security fund has paid or will be 
 47.18  required to pay related to this insolvent self-insurer. 
 47.19     Sec. 45.  Minnesota Statutes 2000, section 79A.15, is 
 47.20  amended to read: 
 47.21     79A.15 [SURETY BOND FORM.] 
 47.22     The form for the surety bond under this chapter shall be: 
 47.23                         STATE OF MINNESOTA 
 47.24                       DEPARTMENT OF COMMERCE 
 47.25        SURETY BOND OF SELF-INSURER OF WORKERS' COMPENSATION 
 47.26   
 47.27  IN THE MATTER OF THE CERTIFICATE OF      )
 47.28                                           )
 47.29                                           )    SURETY BOND 
 47.30                                           )    NO. .............
 47.31                                           )    PREMIUM: ........
 47.32                                           )
 47.33  Employer, Certificate No: .............. )
 47.34  KNOW ALL PERSONS BY THESE PRESENTS:
 47.35       That ..................................................... 
 47.36                            (Employer)
 47.37  whose address is ..............................................
 47.38  as Principal, and .............................................
 47.39                            (Surety) 
 47.40  a corporation organized under the laws of ..................... 
 48.1   and authorized to transact a general surety business in the 
 48.2   State of Minnesota, as Surety, are held and firmly bound to the 
 48.3   State of Minnesota in the penal sum of 
 48.4   ...........................dollars ($..........) for which 
 48.5   payment we bind ourselves, our heirs, executors, administrators, 
 48.6   successors, and assigns, jointly and severally, firmly by these 
 48.7   presents. 
 48.8      WHEREAS in accordance with Minnesota Statutes, chapter 176, 
 48.9   the principal elected to self-insure, and made application for, 
 48.10  or received from the commissioner of commerce of the state of 
 48.11  Minnesota, a certificate to self-insure, upon furnishing of 
 48.12  proof satisfactory to the commissioner of commerce of ability to 
 48.13  self-insure and to compensate any or all employees of said 
 48.14  principal for injury or disability, and their dependents for 
 48.15  death incurred or sustained by said employees pursuant to the 
 48.16  terms, provisions, and limitations of said statute; 
 48.17     NOW THEREFORE, the conditions of this bond or obligation 
 48.18  are such that if principal shall pay and furnish compensation, 
 48.19  pursuant to the terms, provisions, and limitations of said 
 48.20  statute to its employees for injury or disability, and to the 
 48.21  dependents of its employees, then this bond or obligation shall 
 48.22  be null and void; otherwise to remain in full force and effect.  
 48.23     FURTHERMORE, it is understood and agreed that: 
 48.24     1.  This bond may be amended, by agreement between the 
 48.25  parties hereto and the commissioner of commerce as to the 
 48.26  identity of the principal herein named; and, by agreement of the 
 48.27  parties hereto, as to the premium or rate of premium.  Such 
 48.28  amendment must be by endorsement upon, or rider to, this bond, 
 48.29  executed by the surety and delivered to or filed with the 
 48.30  commissioner. 
 48.31     2.  The surety does, by these presents, undertake and agree 
 48.32  that the obligation of this bond shall cover and extend to all 
 48.33  past, present, existing, and potential liability of said 
 48.34  principal, as a self-insurer, to the extent of the penal sum 
 48.35  herein named without regard to specific injuries, date or dates 
 48.36  of injuries, happenings or events.  
 49.1      3.  The penal sum of this bond may be increased or 
 49.2   decreased, by agreement between the parties hereto and the 
 49.3   commissioner of commerce, without impairing the obligation 
 49.4   incurred under this bond for the overall coverage of the said 
 49.5   principal, for all past, present, existing, and potential 
 49.6   liability, as a self-insurer, without regard to specific 
 49.7   injuries, date or dates of injuries, happenings or events, to 
 49.8   the extent, in the aggregate, of the penal sum as increased or 
 49.9   decreased.  Such amendment must be by endorsement. 
 49.10     4.  The aggregate liability of the surety hereunder on all 
 49.11  claims whatsoever shall not exceed the penal sum of this bond in 
 49.12  any event. 
 49.13     5.  This bond shall be continuous in form and shall remain 
 49.14  in full force and effect unless terminated as follows: 
 49.15     (a) The obligation of this bond shall terminate upon 
 49.16  written notice of cancellation from the surety, given by 
 49.17  registered or certified mail to the commissioner of commerce, 
 49.18  state of Minnesota, save and except as to all past, present, 
 49.19  existing, and potential liability of the principal incurred, 
 49.20  including obligations resulting from claims which are incurred 
 49.21  but not yet reported, as a self-insurer prior to effective date 
 49.22  of termination.  This termination is effective 60 days after 
 49.23  receipt of notice of cancellation by the commissioner of 
 49.24  commerce, state of Minnesota. 
 49.25     (b) This bond shall also terminate upon the revocation of 
 49.26  the certificate to self-insure, save and except as to all past, 
 49.27  present, existing, and potential liability of the principal 
 49.28  incurred, including obligations resulting from claims which are 
 49.29  incurred but not yet reported, as a self-insurer prior to 
 49.30  effective date of termination.  The principal and the surety, 
 49.31  herein named, shall be immediately notified in writing by said 
 49.32  commissioner, in the event of such revocation. 
 49.33     6.  Where the principal posts with the commissioner of 
 49.34  commerce, state of Minnesota, or the state treasurer, state of 
 49.35  Minnesota, a replacement security deposit, in the form of a 
 49.36  surety bond, irrevocable letter of credit, cash, securities, or 
 50.1   any combination thereof, in the full amount as may be required 
 50.2   by the commissioner of commerce, state of Minnesota, to secure 
 50.3   all incurred liabilities for the payment of compensation of said 
 50.4   principal under Minnesota Statutes, chapter 176, the surety is 
 50.5   released from obligations under the surety bond upon the date of 
 50.6   acceptance by the commissioner of commerce, state of Minnesota, 
 50.7   of said replacement security deposit. 
 50.8      7.  If the said principal shall suspend payment of workers' 
 50.9   compensation benefits or shall become insolvent or a receiver 
 50.10  shall be appointed for its business, or the commissioner of 
 50.11  commerce, state of Minnesota, issues a certificate of default, 
 50.12  the undersigned surety will become liable for the workers' 
 50.13  compensation obligations of the principal on the date benefits 
 50.14  are suspended.  The surety shall begin payments within 14 days 
 50.15  under paragraph 8, or 30 days under paragraph 10, after receipt 
 50.16  of written notification by certified mail from the commissioner 
 50.17  of commerce, state of Minnesota, to begin payments under the 
 50.18  terms of this bond. 
 50.19     8.  If the surety exercises its option to administer 
 50.20  claims, it shall pay benefits due to the principal's injured 
 50.21  workers within 14 days of the receipt of the notification by the 
 50.22  commissioner of commerce, state of Minnesota, pursuant to 
 50.23  paragraph 7, without a formal award of a compensation judge, the 
 50.24  commissioner of labor and industry, any intermediate appellate 
 50.25  court, or the Minnesota supreme court and such payment will be a 
 50.26  charge against the penal sum of the bond.  Administrative and 
 50.27  legal costs and payment of assessments incurred by the surety in 
 50.28  discharging its obligations and payment of the principal's 
 50.29  obligations for administration and legal expenses and payment of 
 50.30  assessments under Minnesota Statutes, chapters 79A and 176, 
 50.31  shall also be a charge against the penal sum of the bond; 
 50.32  however, the total amount of this surety bond set aside for the 
 50.33  payment of said administrative and legal expenses and payment of 
 50.34  assessments shall be limited to a maximum ten percent of the 
 50.35  total penal sum of the bond unless otherwise authorized by the 
 50.36  security fund. 
 51.1      9.  If any part or provision of this bond shall be declared 
 51.2   unenforceable or held to be invalid by a court of proper 
 51.3   jurisdiction, such determination shall not affect the validity 
 51.4   or enforceability of the other provisions or parts of this bond. 
 51.5      10.  If the surety does not give notice to the 
 51.6   (self-insurer's security fund) (commercial self-insurance group 
 51.7   security fund) and the commissioner of commerce, state of 
 51.8   Minnesota, within two business days of receipt of written 
 51.9   notification from the commissioner of commerce, state of 
 51.10  Minnesota, pursuant to paragraph 7, to exercise its option to 
 51.11  administer claims pursuant to paragraph 8, then the 
 51.12  (self-insurer's security fund) (commercial self-insurance 
 51.13  security fund) will assume the payments of the workers' 
 51.14  compensation obligations of the principal pursuant to Minnesota 
 51.15  Statutes, chapter 176.  Administrative, legal, actuarial, and 
 51.16  other direct costs attributed to the principal shall also be a 
 51.17  charge against the penal sum of the bond.  The surety shall pay, 
 51.18  within 30 days of the receipt of the notification by the 
 51.19  commissioner of commerce, state of Minnesota, pursuant to 
 51.20  paragraph 7, to the (self-insurer's security fund) (commercial 
 51.21  self-insurance group security fund) as an initial deposit an 
 51.22  amount equal to ten 50 percent of the penal sum of the bond, and 
 51.23  shall thereafter, upon notification from the (self-insurer's 
 51.24  security fund) (commercial self-insurance group security fund) 
 51.25  that the balance of the initial deposit, including interest 
 51.26  earned as provided below with respect to the segregated account, 
 51.27  had fallen to one ten percent of the penal sum of the bond, 
 51.28  remit to the (self-insurer's security fund) (commercial 
 51.29  self-insurance group security fund) an amount equal to the 
 51.30  payments made by the (self-insurer's security fund) (commercial 
 51.31  self-insurance group security fund) in the three calendar months 
 51.32  immediately preceding said notification. an additional ten 
 51.33  percent of the penal sum of the bond.  All such payments will be 
 51.34  a charge against the penal sum of the bond.  The initial deposit 
 51.35  and all subsequent deposits shall be deposited by the 
 51.36  (self-insurer's security fund) (commercial self-insurance group 
 52.1   security fund) into a segregated, interest-bearing account.  
 52.2   These deposits, together with any interest earned thereon, shall 
 52.3   be used to satisfy all obligations of the surety hereunder.  
 52.4   Upon determination that there are no remaining reserves for any 
 52.5   known claims covered under the bond, the balance of the account, 
 52.6   including any interest earned thereon, shall be paid to the 
 52.7   surety. 
 52.8      Said repayment of the funds to the surety will not 
 52.9   discharge the bond, which shall remain in full force and effect 
 52.10  as to all past, present, existing, and potential liability of 
 52.11  the principal incurred, including obligations resulting from 
 52.12  claims which are incurred but not yet reported, as a 
 52.13  self-insurer prior to the effective date of termination of the 
 52.14  bond. 
 52.15     11.  Disputes concerning the posting, renewal, termination, 
 52.16  exoneration, or return of all or any portion of the principal's 
 52.17  security deposit or any liability arising out of the posting or 
 52.18  failure to post security, or the adequacy of the security or the 
 52.19  reasonableness of administrative costs, including legal costs, 
 52.20  arising between or among a surety, the issuer of an agreement of 
 52.21  assumption and guarantee of workers' compensation liabilities, 
 52.22  the issuer of a letter of credit, any custodian of the security 
 52.23  deposit, the principal, or the (self-insurer's security fund) 
 52.24  (commercial self-insurance group security fund) shall be 
 52.25  resolved by the commissioner of commerce pursuant to Minnesota 
 52.26  Statutes, chapters 79A and 176.  
 52.27     12.  Written notification to the surety required by this 
 52.28  bond shall be sent to: 
 52.29                                   .........................
 52.30                                   Name of Surety 
 52.31                                   .........................
 52.32                                   To the attention of Person or
 52.33                                     Position
 52.34                                   .........................
 52.35                                   Address 
 52.36                                   .........................
 52.37                                   City, State, Zip 
 52.38     Written notification to the principal required by this bond 
 53.1   shall be sent to: 
 53.2                                    .........................
 53.3                                    Name of Principal
 53.4                                    .........................
 53.5                                    To the attention of Person or
 53.6                                      Position
 53.7                                    .........................
 53.8                                    Address
 53.9                                    .........................
 53.10                                   City, State, Zip
 53.11     13.  This bond is executed by the surety to comply with 
 53.12  Minnesota Statutes, chapter 176, and said bond shall be subject 
 53.13  to all terms and provisions thereof. 
 53.14                                   .........................
 53.15                                   Name of Surety
 53.16                                   .........................
 53.17                                   Address
 53.18                                   .........................
 53.19                                   City, State, Zip
 53.20     THIS bond is executed under an unrevoked appointment or 
 53.21  power of attorney.  
 53.22     I certify (or declare) under penalty of perjury under the 
 53.23  laws of the state of Minnesota that the foregoing is true and 
 53.24  correct.  
 53.25     
 53.26  ..............                   .............................
 53.27  Date                             Signature of Attorney-In-Fact 
 53.29                                   .............................
 53.30                                   Printed or Typed Name of  
 53.31                                   Attorney-In-Fact 
 53.32     A copy of the transcript or record of the unrevoked 
 53.33  appointment, power of attorney, bylaws, or other instrument, 
 53.34  duly certified by the proper authority and attested by the seal 
 53.35  of the insurer entitling or authorizing the person who executed 
 53.36  the bond to do so for and in behalf of the insurer, must be 
 53.37  filed in the office of the commissioner of commerce or must be 
 53.38  included with this bond for such filing. 
 53.39     <b>[EFFECTIVE DATE.]</b> This section is effective for bonds 
 53.40  posted on or after January 1, 2002. 
 53.41     Sec. 46.  Minnesota Statutes 2000, section 471.617, 
 53.42  subdivision 1, is amended to read: 
 54.1      Subdivision 1.  [IF MORE THAN 100 EMPLOYEES; CONDITIONS.] A 
 54.2   statutory or home rule charter city, county, school district, or 
 54.3   instrumentality thereof which has more than 100 employees, may 
 54.4   by ordinance or resolution self-insure for any employee health 
 54.5   benefits including long-term disability, but not for employee 
 54.6   life benefits.  Any self-insurance plan shall provide all 
 54.7   benefits which are required by law to be provided by group 
 54.8   health insurance policies.  Self-insurance plans shall must be 
 54.9   certified as provided by section 62E.05 and must be filed and 
 54.10  certified by the department of commerce before they are issued 
 54.11  or delivered to any person in this state.  
 54.12     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 54.13  following final enactment. 
 54.14     Sec. 47.  [REPEALER.] 
 54.15     Minnesota Statutes 2000, sections 13.7191, subdivision 11; 
 54.16  60A.111; 62G.01; 62G.02; 62G.03; 62G.04; 62G.05; 62G.06; 62G.07; 
 54.17  62G.08; 62G.09; 62G.10; 62G.11; 62G.12; 62G.13; 62G.14; 62G.15; 
 54.18  62G.16; 62G.17; 62G.18; 62G.19; 62G.20; 62G.21; 62G.22; 62G.23; 
 54.19  62G.24; and 62G.25, are repealed. 
 54.20     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 54.21  following final enactment.