1.1                          A bill for an act 
  1.2             relating to insurance; regulating coverages, fees, 
  1.3             forms, disclosures, reports, and premiums; regulating 
  1.4             the workers' compensation self-insurance security 
  1.5             fund; requiring a study; amending Minnesota Statutes 
  1.6             2002, sections 60A.14, subdivision 1; 60A.171, 
  1.7             subdivision 11; 60A.23, subdivision 8; 60A.966; 
  1.8             60A.969; 62A.136; 62A.31, subdivision 1h; 62A.318; 
  1.9             65A.29, subdivision 11; 65B.48, subdivision 3; 72A.20, 
  1.10            subdivisions 13, 15; 72A.201, subdivisions 3, 4; 
  1.11            79.56, subdivisions 1, 3; 79.62, subdivision 3; 
  1.12            79A.06, subdivision 5; 79A.12, subdivision 2; 79A.22, 
  1.13            subdivision 11, by adding a subdivision; 176.191, 
  1.14            subdivision 3; Minnesota Statutes 2003 Supplement, 
  1.15            sections 62A.021, subdivision 1; 62A.316; 79A.04, 
  1.16            subdivision 10; proposing coding for new law in 
  1.17            Minnesota Statutes, chapter 79; repealing Minnesota 
  1.18            Statutes 2002, sections 61A.072, subdivision 2; 
  1.19            62E.03; 62E.05, subdivision 2. 
  1.20  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.21     Section 1.  Minnesota Statutes 2002, section 60A.14, 
  1.22  subdivision 1, is amended to read: 
  1.23     Subdivision 1.  [FEES OTHER THAN EXAMINATION FEES.] In 
  1.24  addition to the fees and charges provided for examinations, the 
  1.25  following fees must be paid to the commissioner for deposit in 
  1.26  the general fund: 
  1.27     (a) by township mutual fire insurance companies; 
  1.28     (1) for filing certificate of incorporation $25 and 
  1.29  amendments thereto, $10; 
  1.30     (2) for filing annual statements, $15; 
  1.31     (3) for each annual certificate of authority, $15; 
  1.32     (4) for filing bylaws $25 and amendments thereto, $10; 
  2.1      (b) by other domestic and foreign companies including 
  2.2   fraternals and reciprocal exchanges; 
  2.3      (1) for filing certified copy of certificate of articles of 
  2.4   incorporation, $100; 
  2.5      (2) for filing annual statement, $225; 
  2.6      (3) for filing certified copy of amendment to certificate 
  2.7   or articles of incorporation, $100; 
  2.8      (4) for filing bylaws, $75 or amendments thereto, $75; 
  2.9      (5) for each company's certificate of authority, $575, 
  2.10  annually; 
  2.11     (c) the following general fees apply: 
  2.12     (1) for each certificate, including certified copy of 
  2.13  certificate of authority, renewal, valuation of life policies, 
  2.14  corporate condition or qualification, $25; 
  2.15     (2) for each copy of paper on file in the commissioner's 
  2.16  office 50 cents per page, and $2.50 for certifying the same; 
  2.17     (3) for license to procure insurance in unadmitted foreign 
  2.18  companies, $575; 
  2.19     (4) for valuing the policies of life insurance companies, 
  2.20  one cent per $1,000 of insurance so valued, provided that the 
  2.21  fee shall not exceed $13,000 per year for any company.  The 
  2.22  commissioner may, in lieu of a valuation of the policies of any 
  2.23  foreign life insurance company admitted, or applying for 
  2.24  admission, to do business in this state, accept a certificate of 
  2.25  valuation from the company's own actuary or from the 
  2.26  commissioner of insurance of the state or territory in which the 
  2.27  company is domiciled; 
  2.28     (5) for receiving and filing certificates of policies by 
  2.29  the company's actuary, or by the commissioner of insurance of 
  2.30  any other state or territory, $50; 
  2.31     (6) for each appointment of an agent filed with the 
  2.32  commissioner, $10; 
  2.33     (7) for filing forms and rates, $75 $90 per filing, which 
  2.34  may be paid on a quarterly basis in response to an invoice.  
  2.35  Billing and payment may be made electronically; 
  2.36     (8) for annual renewal of surplus lines insurer license, 
  3.1   $300; 
  3.2      (9) $250 filing fee for a large risk alternative rating 
  3.3   option plan that meets the $250,000 threshold requirement. 
  3.4      The commissioner shall adopt rules to define filings that 
  3.5   are subject to a fee. 
  3.6      Sec. 2.  Minnesota Statutes 2002, section 60A.171, 
  3.7   subdivision 11, is amended to read: 
  3.8      Subd. 11.  Upon termination of an agency, a company is 
  3.9   prohibited from soliciting business in the notice of nonrenewal 
  3.10  required by section 60A.37.  If termination of an agency 
  3.11  contract is the ground for nonrenewal of a policy of homeowner's 
  3.12  insurance, as defined under section 65A.27, subdivision 4, the 
  3.13  company must provide notice to the policyholder that the policy 
  3.14  is not being renewed due to the termination of the company's 
  3.15  contract with the agency.  If the agency is unable to replace 
  3.16  the homeowner's insurance policy with a suitable policy from 
  3.17  another insurer, the agent must notify the policyholder of the 
  3.18  policyholder's right to renew with the company terminating the 
  3.19  agency contract.  The company must renew the policy if the 
  3.20  insured or the insured's agent makes a written request for the 
  3.21  renewal before the renewal date. 
  3.22     Sec. 3.  Minnesota Statutes 2002, section 60A.23, 
  3.23  subdivision 8, is amended to read: 
  3.24     Subd. 8.  [SELF-INSURANCE OR INSURANCE PLAN ADMINISTRATORS 
  3.25  WHO ARE VENDORS OF RISK MANAGEMENT SERVICES.] (1)  [SCOPE.] This 
  3.26  subdivision applies to any vendor of risk management services 
  3.27  and to any entity which administers, for compensation, a 
  3.28  self-insurance or insurance plan.  This subdivision does not 
  3.29  apply (a) to an insurance company authorized to transact 
  3.30  insurance in this state, as defined by section 60A.06, 
  3.31  subdivision 1, clauses (4) and (5); (b) to a service plan 
  3.32  corporation, as defined by section 62C.02, subdivision 6; (c) to 
  3.33  a health maintenance organization, as defined by section 62D.02, 
  3.34  subdivision 4; (d) to an employer directly operating a 
  3.35  self-insurance plan for its employees' benefits; (e) to an 
  3.36  entity which administers a program of health benefits 
  4.1   established pursuant to a collective bargaining agreement 
  4.2   between an employer, or group or association of employers, and a 
  4.3   union or unions; or (f) to an entity which administers a 
  4.4   self-insurance or insurance plan if a licensed Minnesota insurer 
  4.5   is providing insurance to the plan and if the licensed insurer 
  4.6   has appointed the entity administering the plan as one of its 
  4.7   licensed agents within this state. 
  4.8      (2)  [DEFINITIONS.] For purposes of this subdivision the 
  4.9   following terms have the meanings given them. 
  4.10     (a) "Administering a self-insurance or insurance plan" 
  4.11  means (i) processing, reviewing or paying claims, (ii) 
  4.12  establishing or operating funds and accounts, or (iii) otherwise 
  4.13  providing necessary administrative services in connection with 
  4.14  the operation of a self-insurance or insurance plan. 
  4.15     (b) "Employer" means an employer, as defined by section 
  4.16  62E.02, subdivision 2. 
  4.17     (c) "Entity" means any association, corporation, 
  4.18  partnership, sole proprietorship, trust, or other business 
  4.19  entity engaged in or transacting business in this state. 
  4.20     (d) "Self-insurance or insurance plan" means a plan 
  4.21  providing life, medical or hospital care, accident, sickness or 
  4.22  disability insurance for the benefit of employees or members of 
  4.23  an association, or a plan providing liability coverage for any 
  4.24  other risk or hazard, which is or is not directly insured or 
  4.25  provided by a licensed insurer, service plan corporation, or 
  4.26  health maintenance organization. 
  4.27     (e) "Vendor of risk management services" means an entity 
  4.28  providing for compensation actuarial, financial management, 
  4.29  accounting, legal or other services for the purpose of designing 
  4.30  and establishing a self-insurance or insurance plan for an 
  4.31  employer. 
  4.32     (3)  [LICENSE.] No vendor of risk management services or 
  4.33  entity administering a self-insurance or insurance plan may 
  4.34  transact this business in this state unless it is licensed to do 
  4.35  so by the commissioner.  An applicant for a license shall state 
  4.36  in writing the type of activities it seeks authorization to 
  5.1   engage in and the type of services it seeks authorization to 
  5.2   provide.  The license may be granted only when the commissioner 
  5.3   is satisfied that the entity possesses the necessary 
  5.4   organization, background, expertise, and financial integrity to 
  5.5   supply the services sought to be offered.  The commissioner may 
  5.6   issue a license subject to restrictions or limitations upon the 
  5.7   authorization, including the type of services which may be 
  5.8   supplied or the activities which may be engaged in.  The license 
  5.9   fee is $1,000 $1,500 for the initial application and 
  5.10  $1,000 $1,500 for each two-year three-year renewal.  All 
  5.11  licenses are for a period of two three years. 
  5.12     (4)  [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.] 
  5.13  To assure that self-insurance or insurance plans are financially 
  5.14  solvent, are administered in a fair and equitable fashion, and 
  5.15  are processing claims and paying benefits in a prompt, fair, and 
  5.16  honest manner, vendors of risk management services and entities 
  5.17  administering insurance or self-insurance plans are subject to 
  5.18  the supervision and examination by the commissioner.  Vendors of 
  5.19  risk management services, entities administering insurance or 
  5.20  self-insurance plans, and insurance or self-insurance plans 
  5.21  established or operated by them are subject to the trade 
  5.22  practice requirements of sections 72A.19 to 72A.30.  In lieu of 
  5.23  an unlimited guarantee from a parent corporation for a vendor of 
  5.24  risk management services or an entity administering insurance or 
  5.25  self-insurance plans, the commissioner may accept a surety bond 
  5.26  in a form satisfactory to the commissioner in an amount equal to 
  5.27  120 percent of the total amount of claims handled by the 
  5.28  applicant in the prior year.  If at any time the total amount of 
  5.29  claims handled during a year exceeds the amount upon which the 
  5.30  bond was calculated, the administrator shall immediately notify 
  5.31  the commissioner.  The commissioner may require that the bond be 
  5.32  increased accordingly. 
  5.33     No contract entered into after July 1, 2001, between a 
  5.34  licensed vendor of risk management services and a group 
  5.35  authorized to self-insure for workers' compensation liabilities 
  5.36  under section 79A.03, subdivision 6, may take effect until it 
  6.1   has been filed with the commissioner, and either (1) the 
  6.2   commissioner has approved it or (2) 60 days have elapsed and the 
  6.3   commissioner has not disapproved it as misleading or violative 
  6.4   of public policy. 
  6.5      (5)  [RULEMAKING AUTHORITY.] To carry out the purposes of 
  6.6   this subdivision, the commissioner may adopt rules pursuant to 
  6.7   sections 14.001 to 14.69.  These rules may: 
  6.8      (a) establish reporting requirements for administrators of 
  6.9   insurance or self-insurance plans; 
  6.10     (b) establish standards and guidelines to assure the 
  6.11  adequacy of financing, reinsuring, and administration of 
  6.12  insurance or self-insurance plans; 
  6.13     (c) establish bonding requirements or other provisions 
  6.14  assuring the financial integrity of entities administering 
  6.15  insurance or self-insurance plans; or 
  6.16     (d) establish other reasonable requirements to further the 
  6.17  purposes of this subdivision. 
  6.18     Sec. 4.  Minnesota Statutes 2002, section 60A.966, is 
  6.19  amended to read: 
  6.20     60A.966 [APPROVAL OF VIATICAL SETTLEMENTS CONTRACT FORMS.] 
  6.21     A viatical settlement provider or broker may not use a 
  6.22  viatical settlement contract form in this state unless it has 
  6.23  been filed with and approved by the commissioner.  A viatical 
  6.24  settlement contract form filed with the commissioner is 
  6.25  considered to have been approved if it has not been disapproved 
  6.26  within 60 days of the filing.  The commissioner shall disapprove 
  6.27  a viatical settlement contract form if, in the commissioner's 
  6.28  opinion, the contract or contract provisions are unreasonable, 
  6.29  contrary to the interests of the public, or otherwise misleading 
  6.30  or unfair to the policy owner.  
  6.31     Sec. 5.  Minnesota Statutes 2002, section 60A.969, is 
  6.32  amended to read: 
  6.33     60A.969 [DISCLOSURE.] 
  6.34     A viatical settlement provider or a broker shall disclose 
  6.35  the following information to the viator no later than the 
  6.36  date the viatical settlement contract is signed by all 
  7.1   parties an application is given to the viator: 
  7.2      (1) possible alternatives to viatical settlement contracts 
  7.3   for persons with catastrophic or life threatening illnesses, 
  7.4   including accelerated benefits offered by the issuer of the life 
  7.5   insurance policy; 
  7.6      (2) the fact that some or all of the proceeds of the 
  7.7   viatical settlement may be taxable and that assistance should be 
  7.8   sought from a personal tax advisor; 
  7.9      (3) the fact that the viatical settlement may be subject to 
  7.10  the claims of creditors; 
  7.11     (4) the fact that receipt of a viatical settlement may 
  7.12  adversely affect the recipients' eligibility for Medicaid or 
  7.13  other government benefits or entitlements and that advice should 
  7.14  be obtained from the appropriate agencies; 
  7.15     (5) the policy owner's right to rescind a viatical 
  7.16  settlement contract within 30 days of the date it is executed by 
  7.17  all parties or 15 days of the receipt of the viatical settlement 
  7.18  proceeds by the viator, whichever is less, as provided in 
  7.19  section 60A.970, subdivision 3; and 
  7.20     (6) the date by which the funds will be available to the 
  7.21  viator and the source of the funds. 
  7.22     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
  7.23  62A.021, subdivision 1, is amended to read: 
  7.24     Subdivision 1.  [LOSS RATIO STANDARDS.] (a) Notwithstanding 
  7.25  section 62A.02, subdivision 3, relating to loss ratios, health 
  7.26  care policies or certificates shall not be delivered or issued 
  7.27  for delivery to an individual or to a small employer as defined 
  7.28  in section 62L.02, unless the policies or certificates can be 
  7.29  expected, as estimated for the entire period for which rates are 
  7.30  computed to provide coverage, to return to Minnesota 
  7.31  policyholders and certificate holders in the form of aggregate 
  7.32  benefits not including anticipated refunds or credits, provided 
  7.33  under the policies or certificates, (1) at least 75 percent of 
  7.34  the aggregate amount of premiums earned in the case of policies 
  7.35  issued in the small employer market, as defined in section 
  7.36  62L.02, subdivision 27, calculated on an aggregate basis; and 
  8.1   (2) at least 65 percent of the aggregate amount of premiums 
  8.2   earned in the case of each policy form or certificate form 
  8.3   issued in the individual market; calculated on the basis of 
  8.4   incurred claims experience or incurred health care expenses 
  8.5   where coverage is provided by a health maintenance organization 
  8.6   on a service rather than reimbursement basis and earned premiums 
  8.7   for the period and according to accepted actuarial principles 
  8.8   and practices.  Assessments by the reinsurance association 
  8.9   created in chapter 62L and all types of taxes, surcharges, or 
  8.10  assessments created by Laws 1992, chapter 549, or created on or 
  8.11  after April 23, 1992, or assessments made under section 62E.11, 
  8.12  subdivision 6, are included in the calculation of incurred 
  8.13  claims experience or incurred health care expenses.  The 
  8.14  applicable percentage for policies and certificates issued in 
  8.15  the small employer market, as defined in section 62L.02, 
  8.16  increases by one percentage point on July 1 of each year, 
  8.17  beginning on July 1, 1994, until an 82 percent loss ratio is 
  8.18  reached on July 1, 2000.  The applicable percentage for policy 
  8.19  forms and certificate forms issued in the individual market 
  8.20  increases by one percentage point on July 1 of each year, 
  8.21  beginning on July 1, 1994, until a 72 percent loss ratio is 
  8.22  reached on July 1, 2000.  A health carrier that enters a market 
  8.23  after July 1, 1993, does not start at the beginning of the 
  8.24  phase-in schedule and must instead comply with the loss ratio 
  8.25  requirements applicable to other health carriers in that market 
  8.26  for each time period.  Premiums earned and claims incurred in 
  8.27  markets other than the small employer and individual markets are 
  8.28  not relevant for purposes of this section. 
  8.29     (b) All filings of rates and rating schedules shall 
  8.30  demonstrate that actual expected claims in relation to premiums 
  8.31  comply with the requirements of this section when combined with 
  8.32  actual experience to date.  Filings of rate revisions shall also 
  8.33  demonstrate that the anticipated loss ratio over the entire 
  8.34  future period for which the revised rates are computed to 
  8.35  provide coverage can be expected to meet the appropriate loss 
  8.36  ratio standards, and aggregate loss ratio from inception of the 
  9.1   policy form or certificate form shall equal or exceed the 
  9.2   appropriate loss ratio standards. 
  9.3      (c) A health carrier that issues health care policies and 
  9.4   certificates to individuals or to small employers, as defined in 
  9.5   section 62L.02, in this state shall file annually its rates, 
  9.6   rating schedule, and supporting documentation including ratios 
  9.7   of incurred losses to earned premiums by policy form or 
  9.8   certificate form duration for approval by the commissioner 
  9.9   according to the filing requirements and procedures prescribed 
  9.10  by the commissioner.  The supporting documentation shall also 
  9.11  demonstrate in accordance with actuarial standards of practice 
  9.12  using reasonable assumptions that the appropriate loss ratio 
  9.13  standards can be expected to be met over the entire period for 
  9.14  which rates are computed.  The demonstration shall exclude 
  9.15  active life reserves.  If the data submitted does not confirm 
  9.16  that the health carrier has satisfied the loss ratio 
  9.17  requirements of this section, the commissioner shall notify the 
  9.18  health carrier in writing of the deficiency.  The health carrier 
  9.19  shall have 30 days from the date of the commissioner's notice to 
  9.20  file amended rates that comply with this section.  If the health 
  9.21  carrier fails to file amended rates within the prescribed time, 
  9.22  the commissioner shall order that the health carrier's filed 
  9.23  rates for the nonconforming policy form or certificate form be 
  9.24  reduced to an amount that would have resulted in a loss ratio 
  9.25  that complied with this section had it been in effect for the 
  9.26  reporting period of the supplement.  The health carrier's 
  9.27  failure to file amended rates within the specified time or the 
  9.28  issuance of the commissioner's order amending the rates does not 
  9.29  preclude the health carrier from filing an amendment of its 
  9.30  rates at a later time.  The commissioner shall annually make the 
  9.31  submitted data available to the public at a cost not to exceed 
  9.32  the cost of copying.  The data must be compiled in a form useful 
  9.33  for consumers who wish to compare premium charges and loss 
  9.34  ratios. 
  9.35     (d) Each sale of a policy or certificate that does not 
  9.36  comply with the loss ratio requirements of this section is an 
 10.1   unfair or deceptive act or practice in the business of insurance 
 10.2   and is subject to the penalties in sections 72A.17 to 72A.32. 
 10.3      (e)(1) For purposes of this section, health care policies 
 10.4   issued as a result of solicitations of individuals through the 
 10.5   mail or mass media advertising, including both print and 
 10.6   broadcast advertising, shall be treated as individual policies. 
 10.7      (2) For purposes of this section, (i) "health care policy" 
 10.8   or "health care certificate" is a health plan as defined in 
 10.9   section 62A.011; and (ii) "health carrier" has the meaning given 
 10.10  in section 62A.011 and includes all health carriers delivering 
 10.11  or issuing for delivery health care policies or certificates in 
 10.12  this state or offering these policies or certificates to 
 10.13  residents of this state.  
 10.14     (f) The loss ratio phase-in as described in paragraph (a) 
 10.15  does not apply to individual policies and small employer 
 10.16  policies issued by a health plan company that is assessed less 
 10.17  than three percent of the total annual amount assessed by the 
 10.18  Minnesota Comprehensive Health Association.  These policies must 
 10.19  meet a 68 percent loss ratio for individual policies, a 71 
 10.20  percent loss ratio for small employer policies with fewer than 
 10.21  ten employees, and a 75 percent loss ratio for all other small 
 10.22  employer policies.  
 10.23     (g) Notwithstanding paragraphs (a) and (f), the loss ratio 
 10.24  shall be 60 percent for a health plan as defined in section 
 10.25  62A.011, offered by an insurance company licensed under chapter 
 10.26  60A that is assessed less than ten percent of the total annual 
 10.27  amount assessed by the Minnesota Comprehensive Health 
 10.28  Association.  For purposes of the percentage calculation of the 
 10.29  association's assessments, an insurance company's assessments 
 10.30  include those of its affiliates. 
 10.31     (h) The commissioners of commerce and health shall each 
 10.32  annually issue a public report listing, by health plan company, 
 10.33  the actual loss ratios experienced in the individual and small 
 10.34  employer markets in this state by the health plan companies that 
 10.35  the commissioners respectively regulate.  The commissioners 
 10.36  shall coordinate release of these reports so as to release them 
 11.1   as a joint report or as separate reports issued the same day.  
 11.2   The report or reports shall be released no later than June 1 for 
 11.3   loss ratios experienced for the preceding calendar year.  Health 
 11.4   plan companies shall provide to the commissioners any 
 11.5   information requested by the commissioners for purposes of this 
 11.6   paragraph. 
 11.7      Sec. 7.  Minnesota Statutes 2002, section 62A.136, is 
 11.8   amended to read: 
 11.9      62A.136 [DENTAL AND VISION PLAN COVERAGE.] 
 11.10     The following provisions do not apply to health plans as 
 11.11  defined in section 62A.011, subdivision 3, clause (6), providing 
 11.12  dental or vision coverage only:  sections 62A.041; 62A.0411; 
 11.13  62A.047; 62A.149; 62A.151; 62A.152; 62A.154; 62A.155; 62A.17, 
 11.14  subdivision 6; 62A.21, subdivision 2b; 62A.26; 62A.28; 62A.285; 
 11.15  62A.30; 62A.304; 62A.3093; and 62E.16. 
 11.16     Sec. 8.  Minnesota Statutes 2002, section 62A.31, 
 11.17  subdivision 1h, is amended to read: 
 11.18     Subd. 1h.  [LIMITATIONS ON DENIALS, CONDITIONS, AND PRICING 
 11.19  OF COVERAGE.] No health carrier issuing Medicare-related 
 11.20  coverage in this state may impose preexisting condition 
 11.21  limitations or otherwise deny or condition the issuance or 
 11.22  effectiveness of any such coverage available for sale in this 
 11.23  state, nor may it discriminate in the pricing of such coverage, 
 11.24  because of the health status, claims experience, receipt of 
 11.25  health care, medical condition, or age of an applicant where an 
 11.26  application for such coverage is submitted prior to or during 
 11.27  the six-month period beginning with the first day of the month 
 11.28  in which an individual first enrolled for benefits under 
 11.29  Medicare Part B.  This subdivision applies to each 
 11.30  Medicare-related coverage offered by a health carrier regardless 
 11.31  of whether the individual has attained the age of 65 years.  If 
 11.32  an individual who is enrolled in Medicare Part B due to 
 11.33  disability status is involuntarily disenrolled due to loss of 
 11.34  disability status, the individual is eligible for another 
 11.35  six-month enrollment period provided under this subdivision 
 11.36  beginning the first day of the month in which the individual 
 12.1   later becomes eligible for and enrolls again in Medicare Part 
 12.2   B.  An individual who is or was previously enrolled in Medicare 
 12.3   Part B due to disability status is eligible for another 
 12.4   six-month enrollment period under this subdivision beginning the 
 12.5   first day of the month in which the individual has attained the 
 12.6   age of 65 years and either maintains enrollment in, or enrolls 
 12.7   again in, Medicare Part B.  If an individual enrolled in 
 12.8   Medicare Part B voluntarily disenrolls from Medicare Part B 
 12.9   because the individual becomes reemployed and is enrolled under 
 12.10  an employee welfare benefit plan, the individual is eligible for 
 12.11  another six-month enrollment period, as provided in this 
 12.12  subdivision, beginning the first day of the month in which the 
 12.13  individual later becomes eligible for and enrolls again in 
 12.14  Medicare Part B. 
 12.15     Sec. 9.  Minnesota Statutes 2003 Supplement, section 
 12.16  62A.316, is amended to read: 
 12.17     62A.316 [BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.] 
 12.18     (a) The basic Medicare supplement plan must have a level of 
 12.19  coverage that will provide: 
 12.20     (1) coverage for all of the Medicare part A inpatient 
 12.21  hospital coinsurance amounts, and 100 percent of all Medicare 
 12.22  part A eligible expenses for hospitalization not covered by 
 12.23  Medicare, after satisfying the Medicare part A deductible; 
 12.24     (2) coverage for the daily co-payment amount of Medicare 
 12.25  part A eligible expenses for the calendar year incurred for 
 12.26  skilled nursing facility care; 
 12.27     (3) coverage for the coinsurance amount, or in the case of 
 12.28  outpatient department services paid under a prospective payment 
 12.29  system, the co-payment amount, of Medicare eligible expenses 
 12.30  under Medicare part B regardless of hospital confinement, 
 12.31  subject to the Medicare part B deductible amount; 
 12.32     (4) 80 percent of the hospital and medical expenses and 
 12.33  supplies incurred during travel outside the United States as a 
 12.34  result of a medical emergency; 
 12.35     (5) coverage for the reasonable cost of the first three 
 12.36  pints of blood, or equivalent quantities of packed red blood 
 13.1   cells as defined under federal regulations under Medicare parts 
 13.2   A and B, unless replaced in accordance with federal regulations; 
 13.3      (6) 100 percent of the cost of immunizations and routine 
 13.4   screening procedures for cancer screening including mammograms 
 13.5   and pap smears; and 
 13.6      (7) 80 percent of coverage for all physician prescribed 
 13.7   medically appropriate and necessary equipment and supplies used 
 13.8   in the management and treatment of diabetes.  Coverage must 
 13.9   include persons with gestational, type I, or type II diabetes. 
 13.10     (b) Only the following optional benefit riders may be added 
 13.11  to this plan: 
 13.12     (1) coverage for all of the Medicare part A inpatient 
 13.13  hospital deductible amount; 
 13.14     (2) a minimum of 80 percent of eligible medical expenses 
 13.15  and supplies not covered by Medicare part B, not to exceed any 
 13.16  charge limitation established by the Medicare program or state 
 13.17  law; 
 13.18     (3) coverage for all of the Medicare part B annual 
 13.19  deductible; 
 13.20     (4) coverage for at least 50 percent, or the equivalent of 
 13.21  50 percent, of usual and customary prescription drug expenses; 
 13.22     (5) coverage for the following preventive health services: 
 13.23     (i) an annual clinical preventive medical history and 
 13.24  physical examination that may include tests and services from 
 13.25  clause (ii) and patient education to address preventive health 
 13.26  care measures; 
 13.27     (ii) any one or a combination of the following preventive 
 13.28  screening tests or preventive services, the frequency of which 
 13.29  is considered medically appropriate: 
 13.30     (A) fecal occult blood test and/or digital rectal 
 13.31  examination; 
 13.32     (B) dipstick urinalysis for hematuria, bacteriuria, and 
 13.33  proteinuria; 
 13.34     (C) pure tone (air only) hearing screening test, 
 13.35  administered or ordered by a physician; 
 13.36     (D) serum cholesterol screening every five years; 
 14.1      (E) thyroid function test; 
 14.2      (F) diabetes screening; 
 14.3      (iii) any other tests or preventive measures determined 
 14.4   appropriate by the attending physician. 
 14.5      Reimbursement shall be for the actual charges up to 100 
 14.6   percent of the Medicare-approved amount for each service, as if 
 14.7   Medicare were to cover the service as identified in American 
 14.8   Medical Association current procedural terminology (AMA CPT) 
 14.9   codes, to a maximum of $120 annually under this benefit.  This 
 14.10  benefit shall not include payment for a procedure covered by 
 14.11  Medicare; 
 14.12     (6) coverage for services to provide short-term at-home 
 14.13  assistance with activities of daily living for those recovering 
 14.14  from an illness, injury, or surgery: 
 14.15     (i) For purposes of this benefit, the following definitions 
 14.16  apply: 
 14.17     (A) "activities of daily living" include, but are not 
 14.18  limited to, bathing, dressing, personal hygiene, transferring, 
 14.19  eating, ambulating, assistance with drugs that are normally 
 14.20  self-administered, and changing bandages or other dressings; 
 14.21     (B) "care provider" means a duly qualified or licensed home 
 14.22  health aide/homemaker, personal care aid, or nurse provided 
 14.23  through a licensed home health care agency or referred by a 
 14.24  licensed referral agency or licensed nurses registry; 
 14.25     (C) "home" means a place used by the insured as a place of 
 14.26  residence, provided that the place would qualify as a residence 
 14.27  for home health care services covered by Medicare.  A hospital 
 14.28  or skilled nursing facility shall not be considered the 
 14.29  insured's place of residence; 
 14.30     (D) "at-home recovery visit" means the period of a visit 
 14.31  required to provide at-home recovery care, without limit on the 
 14.32  duration of the visit, except each consecutive four hours in a 
 14.33  24-hour period of services provided by a care provider is one 
 14.34  visit; 
 14.35     (ii) Coverage requirements and limitations: 
 14.36     (A) at-home recovery services provided must be primarily 
 15.1   services that assist in activities of daily living; 
 15.2      (B) the insured's attending physician must certify that the 
 15.3   specific type and frequency of at-home recovery services are 
 15.4   necessary because of a condition for which a home care plan of 
 15.5   treatment was approved by Medicare; 
 15.6      (C) coverage is limited to: 
 15.7      (I) no more than the number and type of at-home recovery 
 15.8   visits certified as necessary by the insured's attending 
 15.9   physician.  The total number of at-home recovery visits shall 
 15.10  not exceed the number of Medicare-approved home care visits 
 15.11  under a Medicare-approved home care plan of treatment; 
 15.12     (II) the actual charges for each visit up to a maximum 
 15.13  reimbursement of $40 $100 per visit; 
 15.14     (III) $1,600 $4,000 per calendar year; 
 15.15     (IV) seven visits in any one week; 
 15.16     (V) care furnished on a visiting basis in the insured's 
 15.17  home; 
 15.18     (VI) services provided by a care provider as defined in 
 15.19  this section; 
 15.20     (VII) at-home recovery visits while the insured is covered 
 15.21  under the policy or certificate and not otherwise excluded; 
 15.22     (VIII) at-home recovery visits received during the period 
 15.23  the insured is receiving Medicare-approved home care services or 
 15.24  no more than eight weeks after the service date of the last 
 15.25  Medicare-approved home health care visit; 
 15.26     (iii) Coverage is excluded for: 
 15.27     (A) home care visits paid for by Medicare or other 
 15.28  government programs; and 
 15.29     (B) care provided by family members, unpaid volunteers, or 
 15.30  providers who are not care providers; 
 15.31     (7) coverage for at least 50 percent, or the equivalent of 
 15.32  50 percent, of usual and customary prescription drug expenses to 
 15.33  a maximum of $1,200 paid by the issuer annually under this 
 15.34  benefit.  An issuer of Medicare supplement insurance policies 
 15.35  that elects to offer this benefit rider shall also make 
 15.36  available coverage that contains the rider specified in clause 
 16.1   (4). 
 16.2      Sec. 10.  Minnesota Statutes 2002, section 62A.318, is 
 16.3   amended to read: 
 16.4      62A.318 [MEDICARE SELECT POLICIES AND CERTIFICATES.] 
 16.5      (a) This section applies to Medicare select policies and 
 16.6   certificates, as defined in this section, including those issued 
 16.7   by health maintenance organizations.  No policy or certificate 
 16.8   may be advertised as a Medicare select policy or certificate 
 16.9   unless it meets the requirements of this section. 
 16.10     (b) For the purposes of this section: 
 16.11     (1) "complaint" means any dissatisfaction expressed by an 
 16.12  individual concerning a Medicare select issuer or its network 
 16.13  providers; 
 16.14     (2) "grievance" means dissatisfaction expressed in writing 
 16.15  by an individual insured under a Medicare select policy or 
 16.16  certificate with the administration, claims practices, or 
 16.17  provision of services concerning a Medicare select issuer or its 
 16.18  network providers; 
 16.19     (3) "Medicare select issuer" means an issuer offering, or 
 16.20  seeking to offer, a Medicare select policy or certificate; 
 16.21     (4) "Medicare select policy" or "Medicare select 
 16.22  certificate" means a Medicare supplement policy or certificate 
 16.23  that contains restricted network provisions; 
 16.24     (5) "network provider" means a provider of health care, or 
 16.25  a group of providers of health care, that has entered into a 
 16.26  written agreement with the issuer to provide benefits insured 
 16.27  under a Medicare select policy or certificate; 
 16.28     (6) "restricted network provision" means a provision that 
 16.29  conditions the payment of benefits, in whole or in part, on the 
 16.30  use of network providers; and 
 16.31     (7) "service area" means the geographic area approved by 
 16.32  the commissioner within which an issuer is authorized to offer a 
 16.33  Medicare select policy or certificate. 
 16.34     (c) The commissioner may authorize an issuer to offer a 
 16.35  Medicare select policy or certificate pursuant to this section 
 16.36  and section 4358 of the Omnibus Budget Reconciliation Act (OBRA) 
 17.1   of 1990, Public Law 101-508, if the commissioner finds that the 
 17.2   issuer has satisfied all of the requirements of Minnesota 
 17.3   Statutes. 
 17.4      (d) A Medicare select issuer shall not issue a Medicare 
 17.5   select policy or certificate in this state until its plan of 
 17.6   operation has been approved by the commissioner. 
 17.7      (e) A Medicare select issuer shall file a proposed plan of 
 17.8   operation with the commissioner, in a format prescribed by the 
 17.9   commissioner.  The plan of operation shall contain at least the 
 17.10  following information: 
 17.11     (1) evidence that all covered services that are subject to 
 17.12  restricted network provisions are available and accessible 
 17.13  through network providers, including a demonstration that: 
 17.14     (i) the services can be provided by network providers with 
 17.15  reasonable promptness with respect to geographic location, hours 
 17.16  of operation, and after-hour care.  The hours of operation and 
 17.17  availability of after-hour care shall reflect usual practice in 
 17.18  the local area.  Geographic availability shall reflect the usual 
 17.19  travel times within the community; 
 17.20     (ii) the number of network providers in the service area is 
 17.21  sufficient, with respect to current and expected policyholders, 
 17.22  either: 
 17.23     (A) to deliver adequately all services that are subject to 
 17.24  a restricted network provision; or 
 17.25     (B) to make appropriate referrals; 
 17.26     (iii) there are written agreements with network providers 
 17.27  describing specific responsibilities; 
 17.28     (iv) emergency care is available 24 hours per day and seven 
 17.29  days per week; and 
 17.30     (v) in the case of covered services that are subject to a 
 17.31  restricted network provision and are provided on a prepaid 
 17.32  basis, there are written agreements with network providers 
 17.33  prohibiting the providers from billing or otherwise seeking 
 17.34  reimbursement from or recourse against an individual insured 
 17.35  under a Medicare select policy or certificate.  This section 
 17.36  does not apply to supplemental charges or coinsurance amounts as 
 18.1   stated in the Medicare select policy or certificate; 
 18.2      (2) a statement or map providing a clear description of the 
 18.3   service area; 
 18.4      (3) a description of the grievance procedure to be used; 
 18.5      (4) a description of the quality assurance program, 
 18.6   including: 
 18.7      (i) the formal organizational structure; 
 18.8      (ii) the written criteria for selection, retention, and 
 18.9   removal of network providers; and 
 18.10     (iii) the procedures for evaluating quality of care 
 18.11  provided by network providers, and the process to initiate 
 18.12  corrective action when warranted; 
 18.13     (5) a list and description, by specialty, of the network 
 18.14  providers; 
 18.15     (6) copies of the written information proposed to be used 
 18.16  by the issuer to comply with paragraph (i); and 
 18.17     (7) any other information requested by the commissioner. 
 18.18     (f) A Medicare select issuer shall file proposed changes to 
 18.19  the plan of operation, except for changes to the list of network 
 18.20  providers, with the commissioner before implementing the 
 18.21  changes.  The changes shall be considered approved by the 
 18.22  commissioner after 30 days unless specifically disapproved. 
 18.23     An updated list of network providers shall be filed with 
 18.24  the commissioner at least quarterly. 
 18.25     (g) A Medicare select policy or certificate shall not 
 18.26  restrict payment for covered services provided by nonnetwork 
 18.27  providers if: 
 18.28     (1) the services are for symptoms requiring emergency care 
 18.29  or are immediately required for an unforeseen illness, injury, 
 18.30  or condition; and 
 18.31     (2) it is not reasonable to obtain the services through a 
 18.32  network provider. 
 18.33     (h) A Medicare select policy or certificate shall provide 
 18.34  payment for full coverage under the policy or certificate for 
 18.35  covered services that are not available through network 
 18.36  providers. 
 19.1      (i) A Medicare select issuer shall make full and fair 
 19.2   disclosure in writing of the provisions, restrictions, and 
 19.3   limitations of the Medicare select policy or certificate to each 
 19.4   applicant.  This disclosure must include at least the following: 
 19.5      (1) an outline of coverage sufficient to permit the 
 19.6   applicant to compare the coverage and premiums of the Medicare 
 19.7   select policy or certificate with: 
 19.8      (i) other Medicare supplement policies or certificates 
 19.9   offered by the issuer; and 
 19.10     (ii) other Medicare select policies or certificates; 
 19.11     (2) a description, including address, phone number, and 
 19.12  hours of operation, of the network providers, including primary 
 19.13  care physicians, specialty physicians, hospitals, and other 
 19.14  providers; 
 19.15     (3) a description of the restricted network provisions, 
 19.16  including payments for coinsurance and deductibles when 
 19.17  providers other than network providers are used; 
 19.18     (4) a description of coverage for emergency and urgently 
 19.19  needed care and other out-of-service area coverage; 
 19.20     (5) a description of limitations on referrals to restricted 
 19.21  network providers and to other providers; 
 19.22     (6) a description of the policyholder's rights to purchase 
 19.23  any other Medicare supplement policy or certificate otherwise 
 19.24  offered by the issuer; and 
 19.25     (7) a description of the Medicare select issuer's quality 
 19.26  assurance program and grievance procedure. 
 19.27     (j) Before the sale of a Medicare select policy or 
 19.28  certificate, a Medicare select issuer shall obtain from the 
 19.29  applicant a signed and dated form stating that the applicant has 
 19.30  received the information provided pursuant to paragraph (i) and 
 19.31  that the applicant understands the restrictions of the Medicare 
 19.32  select policy or certificate. 
 19.33     (k) A Medicare select issuer shall have and use procedures 
 19.34  for hearing complaints and resolving written grievances from the 
 19.35  subscribers.  The procedures shall be aimed at mutual agreement 
 19.36  for settlement and may include arbitration procedures.  
 20.1      (1) The grievance procedure must be described in the policy 
 20.2   and certificates and in the outline of coverage. 
 20.3      (2) At the time the policy or certificate is issued, the 
 20.4   issuer shall provide detailed information to the policyholder 
 20.5   describing how a grievance may be registered with the issuer. 
 20.6      (3) Grievances must be considered in a timely manner and 
 20.7   must be transmitted to appropriate decision makers who have 
 20.8   authority to fully investigate the issue and take corrective 
 20.9   action. 
 20.10     (4) If a grievance is found to be valid, corrective action 
 20.11  must be taken promptly. 
 20.12     (5) All concerned parties must be notified about the 
 20.13  results of a grievance. 
 20.14     (6) The issuer shall report no later than March 31 of each 
 20.15  year to the commissioner regarding the grievance procedure.  The 
 20.16  report shall be in a format prescribed by the commissioner and 
 20.17  shall contain the number of grievances filed in the past year 
 20.18  and a summary of the subject, nature, and resolution of the 
 20.19  grievances. 
 20.20     (l) At the time of initial purchase, a Medicare select 
 20.21  issuer shall make available to each applicant for a Medicare 
 20.22  select policy or certificate the opportunity to purchase a 
 20.23  Medicare supplement policy or certificate otherwise offered by 
 20.24  the issuer. 
 20.25     (m)(1) At the request of an individual insured under a 
 20.26  Medicare select policy or certificate, a Medicare select issuer 
 20.27  shall make available to the individual insured the opportunity 
 20.28  to purchase a Medicare supplement policy or certificate offered 
 20.29  by the issuer that has comparable or lesser benefits and that 
 20.30  does not contain a restricted network provision.  The issuer 
 20.31  shall make the policies or certificates available without 
 20.32  requiring evidence of insurability after the Medicare supplement 
 20.33  policy or certificate has been in force for six months.  If the 
 20.34  issuer does not have available for sale a policy or certificate 
 20.35  without restrictive network provisions, the issuer shall provide 
 20.36  enrollment information for the Minnesota comprehensive health 
 21.1   association Medicare supplement plans. 
 21.2      (2) For the purposes of this paragraph, a Medicare 
 21.3   supplement policy or certificate will be considered to have 
 21.4   comparable or lesser benefits unless it contains one or more 
 21.5   significant benefits not included in the Medicare select policy 
 21.6   or certificate being replaced.  For the purposes of this 
 21.7   paragraph, a significant benefit means coverage for the Medicare 
 21.8   Part A deductible, coverage for prescription drugs, coverage for 
 21.9   at-home recovery services, or coverage for part B excess charges.
 21.10     (n) Medicare select policies and certificates shall provide 
 21.11  for continuation of coverage if the secretary of health and 
 21.12  human services determines that Medicare select policies and 
 21.13  certificates issued pursuant to this section should be 
 21.14  discontinued due to either the failure of the Medicare select 
 21.15  program to be reauthorized under law or its substantial 
 21.16  amendment. 
 21.17     (1) Each Medicare select issuer shall make available to 
 21.18  each individual insured under a Medicare select policy or 
 21.19  certificate the opportunity to purchase a Medicare supplement 
 21.20  policy or certificate offered by the issuer that has comparable 
 21.21  or lesser benefits and that does not contain a restricted 
 21.22  network provision.  The issuer shall make the policies and 
 21.23  certificates available without requiring evidence of 
 21.24  insurability. 
 21.25     (2) For the purposes of this paragraph, a Medicare 
 21.26  supplement policy or certificate will be considered to have 
 21.27  comparable or lesser benefits unless it contains one or more 
 21.28  significant benefits not included in the Medicare select policy 
 21.29  or certificate being replaced.  For the purposes of this 
 21.30  paragraph, a significant benefit means coverage for the Medicare 
 21.31  Part A deductible, coverage for prescription drugs, coverage for 
 21.32  at-home recovery services, or coverage for part B excess charges.
 21.33     (o) A Medicare select issuer shall comply with reasonable 
 21.34  requests for data made by state or federal agencies, including 
 21.35  the United States Department of Health and Human Services, for 
 21.36  the purpose of evaluating the Medicare select program. 
 22.1      (p) Medicare select policies and certificates under this 
 22.2   section shall be regulated and approved by the Department of 
 22.3   Commerce. 
 22.4      (q) Medicare select policies and certificates must be 
 22.5   either a basic plan or an extended basic plan.  Before a 
 22.6   Medicare select policy or certificate is sold or issued in this 
 22.7   state, the applicant must be provided with an explanation of 
 22.8   coverage for both a Medicare select basic and a Medicare select 
 22.9   extended basic policy or certificate and must be provided with 
 22.10  the opportunity of purchasing either a Medicare select basic or 
 22.11  a Medicare select extended basic policy.  The basic plan may 
 22.12  also include any of the optional benefit riders authorized by 
 22.13  section 62A.316.  Preventive care provided by Medicare select 
 22.14  policies or certificates must be provided as set forth in 
 22.15  section 62A.315 or 62A.316, except that the benefits are as 
 22.16  defined in chapter 62D. 
 22.17     Sec. 11.  Minnesota Statutes 2002, section 65A.29, 
 22.18  subdivision 11, is amended to read: 
 22.19     Subd. 11.  [NONRENEWAL.] Every insurer shall establish a 
 22.20  plan that sets out the minimum number and amount of claims 
 22.21  during an experience period that may result in a 
 22.22  nonrenewal.  For purposes of the plan, the insurer may not 
 22.23  consider as a claim the insured's inquiry about a hypothetical 
 22.24  claim, or the insured's inquiry to the insured's agent regarding 
 22.25  a potential claim. 
 22.26     No homeowner's insurance policy may be nonrenewed based on 
 22.27  the insured's loss experience unless the insurer has sent a 
 22.28  written notice that any future losses may result in nonrenewal 
 22.29  due to loss experience. 
 22.30     Any nonrenewal of a homeowner's insurance policy must, at a 
 22.31  minimum, comply with the requirements of subdivision 8 and the 
 22.32  rules adopted by the commissioner. 
 22.33     Sec. 12.  Minnesota Statutes 2002, section 65B.48, 
 22.34  subdivision 3, is amended to read: 
 22.35     Subd. 3.  Self-insurance, subject to approval of the 
 22.36  commissioner, is effected by filing with the commissioner in 
 23.1   satisfactory form: 
 23.2      (1) a continuing undertaking by the owner or other 
 23.3   appropriate person to pay tort liabilities or basic economic 
 23.4   loss benefits, or both, and to perform all other obligations 
 23.5   imposed by sections 65B.41 to 65B.71; 
 23.6      (2) evidence that appropriate provision exists for prompt 
 23.7   administration of all claims, benefits, and obligations provided 
 23.8   by sections 65B.41 to 65B.71; 
 23.9      (3) evidence that reliable financial arrangements, 
 23.10  deposits, or commitments exist providing assurance, 
 23.11  substantially equivalent to that afforded by a policy of 
 23.12  insurance complying with sections 65B.41 to 65B.71, for payment 
 23.13  of tort liabilities, basic economic loss benefits, and all other 
 23.14  obligations imposed by sections 65B.41 to 65B.71; and 
 23.15     (4) a nonrefundable initial application fee 
 23.16  of $1,500 $2,500 and an annual a renewal fee of $400 $1,200 
 23.17  for political subdivisions and $500 $1,500 for nonpolitical 
 23.18  entities every three years.  
 23.19     Sec. 13.  Minnesota Statutes 2002, section 72A.20, 
 23.20  subdivision 13, is amended to read: 
 23.21     Subd. 13.  [REFUSAL TO RENEW.] Refusing to renew, declining 
 23.22  to offer or write, or charging differential rates for an 
 23.23  equivalent amount of homeowner's insurance coverage, as defined 
 23.24  by section 65A.27, for property located in a town or statutory 
 23.25  or home rule charter city, in which the insurer offers to sell 
 23.26  or writes homeowner's insurance, solely because:  
 23.27     (a) of the geographic area in which the property is 
 23.28  located; 
 23.29     (b) of the age of the primary structure sought to be 
 23.30  insured; 
 23.31     (c) the insured or prospective insured was denied coverage
 23.32  of the property by another insurer, whether by cancellation, 
 23.33  nonrenewal or declination to offer coverage, for a reason other 
 23.34  than those specified in section 65A.01, subdivision 3a, clauses 
 23.35  (a) to (e); or 
 23.36     (d) the property of the insured or prospective insured has
 24.1   been insured under the Minnesota FAIR Plan Act, shall constitute 
 24.2   an unfair method of competition and an unfair and deceptive act 
 24.3   or practice; or 
 24.4      (e) the insured has inquired about coverage for a 
 24.5   hypothetical claim or has made an inquiry to the insured's agent 
 24.6   regarding a potential claim.  
 24.7      This subdivision prohibits an insurer from filing or 
 24.8   charging different rates for different zip code areas within the 
 24.9   same town or statutory or home rule charter city. 
 24.10     This subdivision shall not prohibit the insurer from 
 24.11  applying underwriting or rating standards which the insurer 
 24.12  applies generally in all other locations in the state and which 
 24.13  are not specifically prohibited by clauses (a) to (d) (e).  Such 
 24.14  underwriting or rating standards shall specifically include but 
 24.15  not be limited to standards based upon the proximity of the 
 24.16  insured property to an extraordinary hazard or based upon the 
 24.17  quality or availability of fire protection services or based 
 24.18  upon the density or concentration of the insurer's risks.  
 24.19  Clause (b) shall not prohibit the use of rating standards based 
 24.20  upon the age of the insured structure's plumbing, electrical, 
 24.21  heating or cooling system or other part of the structure, the 
 24.22  age of which affects the risk of loss.  Any insurer's failure to 
 24.23  comply with section 65A.29, subdivisions 2 to 4, either (1) by 
 24.24  failing to give an insured or applicant the required notice or 
 24.25  statement or (2) by failing to state specifically a bona fide 
 24.26  underwriting or other reason for the refusal to write shall 
 24.27  create a presumption that the insurer has violated this 
 24.28  subdivision.  
 24.29     Sec. 14.  Minnesota Statutes 2002, section 72A.20, 
 24.30  subdivision 15, is amended to read: 
 24.31     Subd. 15.  [PRACTICES NOT HELD TO BE DISCRIMINATION OR 
 24.32  REBATES.] Nothing in subdivision 8, 9, or 10, or in section 
 24.33  72A.12, subdivisions 3 and 4, shall be construed as including 
 24.34  within the definition of discrimination or rebates any of the 
 24.35  following practices: 
 24.36     (1) in the case of any contract of life insurance or 
 25.1   annuity, paying bonuses to policyholders or otherwise abating 
 25.2   their premiums in whole or in part out of surplus accumulated 
 25.3   from nonparticipating insurance, provided that any bonuses or 
 25.4   abatement of premiums shall be fair and equitable to 
 25.5   policyholders and for the best interests of the company and its 
 25.6   policyholders; 
 25.7      (2) in the case of life insurance policies issued on the 
 25.8   industrial debit plan, making allowance, to policyholders who 
 25.9   have continuously for a specified period made premium payments 
 25.10  directly to an office of the insurer, in an amount which fairly 
 25.11  represents the saving in collection expense; 
 25.12     (3) readjustment of the rate of premium for a group 
 25.13  insurance policy based on the loss or expense experienced 
 25.14  thereunder, at the end of the first or any subsequent policy 
 25.15  year of insurance thereunder, which may be made retroactive only 
 25.16  for such policy year; 
 25.17     (4) in the case of an individual or group health insurance 
 25.18  policy, the payment of differing amounts of reimbursement to 
 25.19  insureds who elect to receive health care goods or services from 
 25.20  providers designated by the insurer, provided that each insurer 
 25.21  shall on or before August 1 of each year file with the 
 25.22  commissioner summary data regarding the financial reimbursement 
 25.23  offered to providers so designated.  
 25.24     Any insurer which proposes to offer an arrangement 
 25.25  authorized under this clause shall disclose prior to its initial 
 25.26  offering and on or before August 1 of each year thereafter as a 
 25.27  supplement to its annual statement submitted to the commissioner 
 25.28  pursuant to section 60A.13, subdivision 1, the following 
 25.29  information:  
 25.30     (a) the name which the arrangement intends to use and its 
 25.31  business address; 
 25.32     (b) the name, address, and nature of any separate 
 25.33  organization which administers the arrangement on the behalf of 
 25.34  the insurers; and 
 25.35     (c) the names and addresses of all providers designated by 
 25.36  the insurer under this clause and the terms of the agreements 
 26.1   with designated health care providers.  
 26.2      The commissioner shall maintain a record of arrangements 
 26.3   proposed under this clause, including a record of any complaints 
 26.4   submitted relative to the arrangements. 
 26.5      If the commissioner requests copies of contracts with a 
 26.6   provider under this clause and the provider requests a 
 26.7   determination, all information contained in the contracts that 
 26.8   the commissioner determines may place the provider or health 
 26.9   care plan at a competitive disadvantage is nonpublic data.  
 26.10     Sec. 15.  Minnesota Statutes 2002, section 72A.201, 
 26.11  subdivision 3, is amended to read: 
 26.12     Subd. 3.  [DEFINITIONS.] For the purposes of this section, 
 26.13  the following terms have the meanings given them.  
 26.14     (1) [ACCIDENT AND SICKNESS INSURANCE.] "Accident and 
 26.15  sickness insurance" means any policy covering the kind of 
 26.16  insurance described in section 60A.06, subdivision 1, clause 
 26.17  (5)(a). 
 26.18     (2) [ADJUSTER OR ADJUSTERS.] "Adjuster" or "adjusters" is 
 26.19  as defined in section 72B.02.  
 26.20     (2) (3) [AGENT.] "Agent" means insurance agents or 
 26.21  insurance agencies licensed pursuant to sections 60K.30 to 
 26.22  60K.56, and representatives of these agents or agencies.  
 26.23     (3) (4) [CLAIM.] "Claim" means a request or demand made 
 26.24  with an insurer for the payment of funds or the provision of 
 26.25  services under the terms of any policy, certificate, contract of 
 26.26  insurance, binder, or other contracts of temporary insurance. 
 26.27  The term does not include a claim under a health insurance 
 26.28  policy made by a participating provider with an insurer in 
 26.29  accordance with the participating provider's service agreement 
 26.30  with the insurer which has been filed with the commissioner of 
 26.31  commerce prior to its use.  
 26.32     (4) (5) [CLAIM SETTLEMENT.] "Claim settlement" means all 
 26.33  activities of an insurer related directly or indirectly to the 
 26.34  determination of the extent of liabilities due or potentially 
 26.35  due under coverages afforded by the policy, and which result in 
 26.36  claim payment, claim acceptance, compromise, or other 
 27.1   disposition.  
 27.2      (5) (6) [CLAIMANT.] "Claimant" means any individual, 
 27.3   corporation, association, partnership, or other legal entity 
 27.4   asserting a claim against any individual, corporation, 
 27.5   association, partnership, or other legal entity which is insured 
 27.6   under an insurance policy or insurance contract of an insurer.  
 27.7      (6) (7) [COMPLAINT.] "Complaint" means a communication 
 27.8   primarily expressing a grievance.  
 27.9      (7) (8) [INSURANCE POLICY.] "Insurance policy" means any 
 27.10  evidence of coverage issued by an insurer including all 
 27.11  policies, contracts, certificates, riders, binders, and 
 27.12  endorsements which provide or describe coverage.  The term 
 27.13  includes any contract issuing coverage under a self-insurance 
 27.14  plan, group self-insurance plan, or joint self-insurance 
 27.15  employee health plans.  
 27.16     (8) (9) [INSURED.] "Insured" means an individual, 
 27.17  corporation, association, partnership, or other legal entity 
 27.18  asserting a right to payment under their insurance policy or 
 27.19  insurance contract arising out of the occurrence of the 
 27.20  contingency or loss covered by the policy or contract.  The term 
 27.21  does not apply to a person who acquires rights under a mortgage. 
 27.22     (9) (10) [INSURER.] "Insurer" includes any individual, 
 27.23  corporation, association, partnership, reciprocal exchange, 
 27.24  Lloyds, fraternal benefits society, self-insurer, surplus line 
 27.25  insurer, self-insurance administrator, and nonprofit service 
 27.26  plans under the jurisdiction of the Department of Commerce.  
 27.27     (10) (11) [INVESTIGATION.] "Investigation" means a 
 27.28  reasonable procedure adopted by an insurer to determine whether 
 27.29  to accept or reject a claim.  
 27.30     (11) (12) [NOTIFICATION OF CLAIM.] "Notification of claim" 
 27.31  means any communication to an insurer by a claimant or an 
 27.32  insured which reasonably apprises the insurer of a claim brought 
 27.33  under an insurance contract or policy issued by the insurer. 
 27.34  Notification of claim to an agent of the insurer is notice to 
 27.35  the insurer.  
 27.36     (12) (13) [PROOF OF LOSS.] "Proof of loss" means the 
 28.1   necessary documentation required from the insured to establish 
 28.2   entitlement to payment under a policy.  
 28.3      (13) (14) [SELF-INSURANCE ADMINISTRATOR.] "Self-insurance 
 28.4   administrator" means any vendor of risk management services or 
 28.5   entities administering self-insurance plans, licensed pursuant 
 28.6   to section 60A.23, subdivision 8.  
 28.7      (14) (15) [SELF-INSURED OR SELF-INSURER.] "Self-insured" or 
 28.8   "self-insurer" means any entity authorized pursuant to section 
 28.9   65B.48, subdivision 3; chapter 62H; section 176.181, subdivision 
 28.10  2; Laws of Minnesota 1983, chapter 290, section 171; section 
 28.11  471.617; or section 471.981 and includes any entity which, for a 
 28.12  fee, employs the services of vendors of risk management services 
 28.13  in the administration of a self-insurance plan as defined by 
 28.14  section 60A.23, subdivision 8, clause (2), subclauses (a) and 
 28.15  (d). 
 28.16     Sec. 16.  Minnesota Statutes 2002, section 72A.201, 
 28.17  subdivision 4, is amended to read: 
 28.18     Subd. 4.  [STANDARDS FOR CLAIM FILING AND HANDLING.] The 
 28.19  following acts by an insurer, an adjuster, a self-insured, or a 
 28.20  self-insurance administrator constitute unfair settlement 
 28.21  practices:  
 28.22     (1) except for claims made under a health insurance policy 
 28.23  of accident and sickness, after receiving notification of claim 
 28.24  from an insured or a claimant, failing to acknowledge receipt of 
 28.25  the notification of the claim within ten business days, and 
 28.26  failing to promptly provide all necessary claim forms and 
 28.27  instructions to process the claim, unless the claim is settled 
 28.28  within ten business days.  The acknowledgment must include the 
 28.29  telephone number of the company representative who can assist 
 28.30  the insured or the claimant in providing information and 
 28.31  assistance that is reasonable so that the insured or claimant 
 28.32  can comply with the policy conditions and the insurer's 
 28.33  reasonable requirements.  If an acknowledgment is made by means 
 28.34  other than writing, an appropriate notation of the 
 28.35  acknowledgment must be made in the claim file of the insurer and 
 28.36  dated.  An appropriate notation must include at least the 
 29.1   following information where the acknowledgment is by telephone 
 29.2   or oral contact:  
 29.3      (i) the telephone number called, if any; 
 29.4      (ii) the name of the person making the telephone call or 
 29.5   oral contact; 
 29.6      (iii) the name of the person who actually received the 
 29.7   telephone call or oral contact; 
 29.8      (iv) the time of the telephone call or oral contact; and 
 29.9      (v) the date of the telephone call or oral contact; 
 29.10     (2) failing to reply, within ten business days of receipt, 
 29.11  to all other communications about a claim from an insured or a 
 29.12  claimant that reasonably indicate a response is requested or 
 29.13  needed; 
 29.14     (3) unless provided otherwise by law or in the policy, 
 29.15  failing to complete its investigation and inform the insured or 
 29.16  claimant of acceptance or denial of a claim within 30 business 
 29.17  days after receipt of notification of claim unless the 
 29.18  investigation cannot be reasonably completed within that time. 
 29.19  In the event that the investigation cannot reasonably be 
 29.20  completed within that time, the insurer shall notify the insured 
 29.21  or claimant within the time period of the reasons why the 
 29.22  investigation is not complete and the expected date the 
 29.23  investigation will be complete.  For claims made under a health 
 29.24  policy of accident and sickness insurance, the notification of 
 29.25  claim must be in writing; 
 29.26     (4) where evidence of suspected fraud is present, the 
 29.27  requirement to disclose their reasons for failure to complete 
 29.28  the investigation within the time period set forth in clause (3) 
 29.29  need not be specific.  The insurer must make this evidence 
 29.30  available to the Department of Commerce if requested; 
 29.31     (5) failing to notify an insured who has made a 
 29.32  notification of claim of all available benefits or coverages 
 29.33  which the insured may be eligible to receive under the terms of 
 29.34  a policy and of the documentation which the insured must supply 
 29.35  in order to ascertain eligibility; 
 29.36     (6) unless otherwise provided by law or in the policy, 
 30.1   requiring an insured to give written notice of loss or proof of 
 30.2   loss within a specified time, and thereafter seeking to relieve 
 30.3   the insurer of its obligations if the time limit is not complied 
 30.4   with, unless the failure to comply with the time limit 
 30.5   prejudices the insurer's rights and then only if the insurer 
 30.6   gave prior notice to the insured of the potential prejudice; 
 30.7      (7) advising an insured or a claimant not to obtain the 
 30.8   services of an attorney or an adjuster, or representing that 
 30.9   payment will be delayed if an attorney or an adjuster is 
 30.10  retained by the insured or the claimant; 
 30.11     (8) failing to advise in writing an insured or claimant who 
 30.12  has filed a notification of claim known to be unresolved, and 
 30.13  who has not retained an attorney, of the expiration of a statute 
 30.14  of limitations at least 60 days prior to that expiration.  For 
 30.15  the purposes of this clause, any claim on which the insurer has 
 30.16  received no communication from the insured or claimant for a 
 30.17  period of two years preceding the expiration of the applicable 
 30.18  statute of limitations shall not be considered to be known to be 
 30.19  unresolved and notice need not be sent pursuant to this clause; 
 30.20     (9) demanding information which would not affect the 
 30.21  settlement of the claim; 
 30.22     (10) unless expressly permitted by law or the policy, 
 30.23  refusing to settle a claim of an insured on the basis that the 
 30.24  responsibility should be assumed by others; 
 30.25     (11) failing, within 60 business days after receipt of a 
 30.26  properly executed proof of loss, to advise the insured of the 
 30.27  acceptance or denial of the claim by the insurer.  No insurer 
 30.28  shall deny a claim on the grounds of a specific policy 
 30.29  provision, condition, or exclusion unless reference to the 
 30.30  provision, condition, or exclusion is included in the denial. 
 30.31  The denial must be given to the insured in writing with a copy 
 30.32  filed in the claim file; 
 30.33     (12) denying or reducing a claim on the basis of an 
 30.34  application which was altered or falsified by the agent or 
 30.35  insurer without the knowledge of the insured; 
 30.36     (13) failing to notify the insured of the existence of the 
 31.1   additional living expense coverage when an insured under a 
 31.2   homeowners policy sustains a loss by reason of a covered 
 31.3   occurrence and the damage to the dwelling is such that it is not 
 31.4   habitable; 
 31.5      (14) failing to inform an insured or a claimant that the 
 31.6   insurer will pay for an estimate of repair if the insurer 
 31.7   requested the estimate and the insured or claimant had 
 31.8   previously submitted two estimates of repair.  
 31.9      Sec. 17.  [79.097] [PREMIUM SURCHARGE RATE CALCULATION.] 
 31.10     On or before July 1 of each year, the commissioner shall 
 31.11  establish the special compensation fund premium surcharge rate 
 31.12  to be used by all insurers for policies with an effective date 
 31.13  on or after January 1.  The premium surcharge rate must be 
 31.14  sufficient to generate revenue necessary to satisfy the pro rata 
 31.15  share of the assessment obligations attributable to insured 
 31.16  employers that must be paid on the assessment. 
 31.17     Sec. 18.  Minnesota Statutes 2002, section 79.56, 
 31.18  subdivision 1, is amended to read: 
 31.19     Subdivision 1.  [PREFILING OF RATES.] (a) Each insurer 
 31.20  shall file with the commissioner a complete copy of its rates 
 31.21  and rating plan, and all changes and amendments thereto, and 
 31.22  such supporting data and information that the commissioner may 
 31.23  by rule require, at least 60 days prior to its effective date.  
 31.24  The commissioner shall advise an insurer within 30 days of the 
 31.25  filing if its submission is not accompanied with such supporting 
 31.26  data and information that the commissioner by rule may require.  
 31.27  The commissioner may extend the filing review period and 
 31.28  effective date for an additional 30 days if an insurer, after 
 31.29  having been advised of what supporting data and information is 
 31.30  necessary to complete its filing, does not provide such 
 31.31  information within 15 days of having been so notified.  If any 
 31.32  rate or rating plan filing or amendment thereto is not 
 31.33  disapproved by the commissioner within the filing review period, 
 31.34  the insurer may implement it.  For the period August 1, 1995, to 
 31.35  December 31, 1995, the filing shall be made at least 90 days 
 31.36  prior to the effective date and the department shall advise an 
 32.1   insurer within 60 days of such filing if the filing is 
 32.2   insufficient under this section. 
 32.3      (b) A rating plan or rates are not subject to the 
 32.4   requirements of paragraph (a), where the insurer files a 
 32.5   certification verifying that it will use the mutually agreed 
 32.6   upon rating plan or rates only to write a specific employer that 
 32.7   generates $250,000 in annual written workers' compensation 
 32.8   premiums before the application of any large deductible rating 
 32.9   plan.  The certification must be refiled upon each renewal of 
 32.10  the employer's policy.  The $250,000 threshold includes premiums 
 32.11  generated in any state.  The designation and certification must 
 32.12  be submitted in substantially the following form: 
 32.13  Name and address of insurer:................................. 
 32.14  Name and address of insured employer:........................ 
 32.15  Policy period:............................................... 
 32.16  I certify that the employer named above generates $250,000 or 
 32.17  more in annual countrywide written workers' compensation 
 32.18  premiums, and that the calculation of this threshold is based on 
 32.19  the rates and rating plans that have been approved by the 
 32.20  appropriate state regulatory authority.  The filing of this 
 32.21  certification authorizes the use of this rate or rating plan 
 32.22  only for the named employer. 
 32.23  Name of responsible officer:................................. 
 32.24  Title:....................................................... 
 32.25  Signature:................................................... 
 32.26     Sec. 19.  Minnesota Statutes 2002, section 79.56, 
 32.27  subdivision 3, is amended to read: 
 32.28     Subd. 3.  [PENALTIES.] (a) Any insurer using a rate or a 
 32.29  rating plan which has not been filed or certified under 
 32.30  subdivision 1 shall be subject to a fine of up to $100 for each 
 32.31  day the failure to file continues.  The commissioner may, after 
 32.32  a hearing on the record, find that the failure is willful.  A 
 32.33  willful failure to meet filing requirements shall be punishable 
 32.34  by a fine of up to $500 for each day during which a willful 
 32.35  failure continues.  These penalties shall be in addition to any 
 32.36  other penalties provided by law.  
 33.1      (b) Notwithstanding this subdivision, an employer that 
 33.2   generates $250,000 in annual written workers' compensation 
 33.3   premium under the rates and rating plan of an insurer before the 
 33.4   application of any large deductible rating plans, may be written 
 33.5   by that insurer using rates or rating plans that are not subject 
 33.6   to disapproval but which have been filed.  For the purposes of 
 33.7   this paragraph, written workers' compensation premiums generated 
 33.8   from states other than Minnesota are included in calculating the 
 33.9   $250,000 threshold for large risk alternative rating option 
 33.10  plans.  
 33.11     Sec. 20.  Minnesota Statutes 2002, section 79.62, 
 33.12  subdivision 3, is amended to read: 
 33.13     Subd. 3.  [ISSUANCE.] The commissioner, upon finding that 
 33.14  the applicant organization is qualified to provide the services 
 33.15  required and proposed, or has contracted with a licensed data 
 33.16  service organization to purchase these services which are 
 33.17  required by this chapter but are not provided directly by the 
 33.18  applicant, and that all requirements of law are met, shall issue 
 33.19  a license.  Each license is subject to annual renewal effective 
 33.20  June 30.  Each new or renewal license application must be 
 33.21  accompanied by a fee of $50 $1,000.  
 33.22     Sec. 21.  Minnesota Statutes 2003 Supplement, section 
 33.23  79A.04, subdivision 10, is amended to read: 
 33.24     Subd. 10.  [NOTICE; OBLIGATION OF FUND.] In the event of 
 33.25  bankruptcy, insolvency, or certificate of default, the 
 33.26  commissioner shall immediately notify by certified mail the 
 33.27  commissioner of finance, the surety, the issuer of an 
 33.28  irrevocable letter of credit, and any custodian of the security 
 33.29  required in this chapter.  At the time of notification, the 
 33.30  commissioner shall also call the security and transfer and 
 33.31  assign it to the self-insurers' security fund.  The commissioner 
 33.32  shall also immediately notify by certified mail the 
 33.33  self-insurers' security fund, and order the security fund to 
 33.34  assume the insolvent self-insurers' obligations for which it is 
 33.35  liable under chapter 176.  The security fund shall commence 
 33.36  payment of these obligations within 14 days of receipt of this 
 34.1   notification and order.  Payments shall be made to claimants 
 34.2   whose entitlement to benefits can be ascertained by the security 
 34.3   fund, with or without proceedings before the Department of Labor 
 34.4   and Industry, the Office of Administrative Hearings, the 
 34.5   Workers' Compensation Court of Appeals, or the Minnesota Supreme 
 34.6   Court.  Upon the assumption of obligations by the security fund 
 34.7   pursuant to the commissioner's notification and order, the 
 34.8   security fund has the right to immediate possession of any 
 34.9   posted or deposited security and the custodian, surety, or 
 34.10  issuer of any irrevocable letter of credit or the commissioner, 
 34.11  if in possession of it, shall turn over the security, proceeds 
 34.12  of the surety bond, or letter of credit to the security fund 
 34.13  together with the interest that has accrued since the date of 
 34.14  the self-insured employer's insolvency.  The security fund has 
 34.15  the right to the immediate possession of all of the worker's 
 34.16  compensation claim files and data of the self-insurer, and the 
 34.17  possessor of the files and data must turn the files and data, or 
 34.18  complete copies of them, over to the security fund within five 
 34.19  days of the notification provided under this subdivision.  If 
 34.20  the possessor of the files and data fails to timely turn over 
 34.21  the files and data to the security fund, it is liable to the 
 34.22  security fund for a penalty of $500 per day for each day after 
 34.23  the five-day period has expired.  The security fund is entitled 
 34.24  to recover its reasonable attorney fees and costs in any action 
 34.25  brought to obtain possession of the worker's compensation claim 
 34.26  files and data of the self-insurer, and for any action to 
 34.27  recover the penalties provided by this subdivision.  The 
 34.28  self-insurers' security fund may administer payment of benefits 
 34.29  or it may retain a third-party administrator to do so.  
 34.30     Sec. 22.  Minnesota Statutes 2002, section 79A.06, 
 34.31  subdivision 5, is amended to read: 
 34.32     Subd. 5.  [PRIVATE EMPLOYERS WHO HAVE CEASED TO BE 
 34.33  SELF-INSURED.] (a) Private employers who have ceased to be 
 34.34  private self-insurers shall discharge their continuing 
 34.35  obligations to secure the payment of compensation which is 
 34.36  accrued during the period of self-insurance, for purposes of 
 35.1   Laws 1988, chapter 674, sections 1 to 21, by compliance with all 
 35.2   of the following obligations of current certificate holders: 
 35.3      (1) Filing reports with the commissioner to carry out the 
 35.4   requirements of this chapter; 
 35.5      (2) Depositing and maintaining a security deposit for 
 35.6   accrued liability for the payment of any compensation which may 
 35.7   become due, pursuant to chapter 176.  However, if a private 
 35.8   employer who has ceased to be a private self-insurer purchases 
 35.9   an insurance policy from an insurer authorized to transact 
 35.10  workers' compensation insurance in this state which provides 
 35.11  coverage of all claims for compensation arising out of injuries 
 35.12  occurring during the entire period the employer was 
 35.13  self-insured, whether or not reported during that period, the 
 35.14  policy will: 
 35.15     (i) discharge the obligation of the employer to maintain a 
 35.16  security deposit for the payment of the claims covered under the 
 35.17  policy; 
 35.18     (ii) discharge any obligation which the self-insurers' 
 35.19  security fund has or may have for payment of all claims for 
 35.20  compensation arising out of injuries occurring during the period 
 35.21  the employer was self-insured, whether or not reported during 
 35.22  that period; and 
 35.23     (iii) discharge the obligations of the employer to pay any 
 35.24  future assessments to the self-insurers' security fund.  
 35.25     A private employer who has ceased to be a private 
 35.26  self-insurer may instead buy an insurance policy described 
 35.27  above, except that it covers only a portion of the period of 
 35.28  time during which the private employer was self-insured; 
 35.29  purchase of such a policy discharges any obligation that the 
 35.30  self-insurers' security fund has or may have for payment of all 
 35.31  claims for compensation arising out of injuries occurring during 
 35.32  the period for which the policy provides coverage, whether or 
 35.33  not reported during that period.  
 35.34     A policy described in this clause may not be issued by an 
 35.35  insurer unless it has previously been approved as to form and 
 35.36  substance by the commissioner; and 
 36.1      (3) Paying within 30 days all assessments of which notice 
 36.2   is sent by the security fund, for a period of seven years from 
 36.3   the last day its certificate of self-insurance was in effect.  
 36.4   Thereafter, the private employer who has ceased to be a private 
 36.5   self-insurer may either:  (i) continue to pay within 30 days all 
 36.6   assessments of which notice is sent by the security fund until 
 36.7   it has no incurred liabilities for the payment of compensation 
 36.8   arising out of injuries during the period of self-insurance; or 
 36.9   (ii) pay the security fund a cash payment equal to four percent 
 36.10  of the net present value of all remaining incurred liabilities 
 36.11  for the payment of compensation under sections 176.101 and 
 36.12  176.111 as certified by a member of the casualty actuarial 
 36.13  society.  Assessments shall be based on the benefits paid by the 
 36.14  employer during the calendar year immediately preceding the 
 36.15  calendar year in which the employer's right to self-insure is 
 36.16  terminated or withdrawn. 
 36.17     (b) With respect to a self-insurer who terminates its 
 36.18  self-insurance authority after April 1, 1998, that member shall 
 36.19  obtain and file with the commissioner an actuarial opinion of 
 36.20  its outstanding liabilities as determined by an associate or 
 36.21  fellow of the Casualty Actuarial Society within 120 days of the 
 36.22  date of its termination.  If the actuarial opinion is not timely 
 36.23  filed, the self-insurers' security fund may, at its discretion, 
 36.24  engage the services of an actuary for this purpose.  The expense 
 36.25  of this actuarial opinion shall be assessed against and be the 
 36.26  obligation of the self-insurer.  The commissioner may issue a 
 36.27  certificate of default against the self-insurer for failure to 
 36.28  pay this assessment to the self-insurers' security fund as 
 36.29  provided by section 79A.04, subdivision 9.  The opinion must 
 36.30  separate liability for indemnity benefits from liability from 
 36.31  medical benefits, and must discount each up to four percent per 
 36.32  annum to net present value.  Within 30 days after notification 
 36.33  of approval of the actuarial opinion by the commissioner, the 
 36.34  member shall pay to the security fund an amount equal to 120 
 36.35  percent of that discounted outstanding indemnity liability, 
 36.36  multiplied by the greater of the average annualized assessment 
 37.1   rate since inception of the security fund or the annual rate at 
 37.2   the time of the most recent assessment before termination.  If 
 37.3   the payment is not made within 30 days of the notification, 
 37.4   interest on it at the rate prescribed by section 549.09 shall be 
 37.5   paid by the former member to the security fund until the 
 37.6   principal amount is paid in full. 
 37.7      (c) A former member who terminated its self-insurance 
 37.8   authority before April 1, 1998, who has paid assessments to the 
 37.9   self-insurers' security fund for seven years, and whose 
 37.10  annualized assessment is $500 or less, may buy out of its 
 37.11  outstanding liabilities to the self-insurers' security fund by 
 37.12  an amount calculated as follows:  1.35 multiplied by the 
 37.13  indemnity case reserves at the time of the calculation, 
 37.14  multiplied by the then current self-insurers' security fund 
 37.15  annualized assessment rate. 
 37.16     (d) A former member who terminated its self-insurance 
 37.17  authority before April 1, 1998, and who is paying assessments 
 37.18  within the first seven years after ceasing to be self-insured 
 37.19  under paragraph (a), clause (3), may elect to buy out its 
 37.20  outstanding liabilities to the self-insurers' security fund by 
 37.21  obtaining and filing with the commissioner an actuarial opinion 
 37.22  of its outstanding liabilities as determined by an associate or 
 37.23  fellow of the Casualty Actuarial Society.  The opinion must 
 37.24  separate liability for indemnity benefits from liability for 
 37.25  medical benefits, and must discount each up to four percent per 
 37.26  annum to net present value.  Within 30 days after notification 
 37.27  of approval of the actuarial opinion by the commissioner, the 
 37.28  member shall pay to the security fund an amount equal to 120 
 37.29  percent of that discounted outstanding indemnity liability, 
 37.30  multiplied by the greater of the average annualized assessment 
 37.31  rate since inception of the security fund or the annual rate at 
 37.32  the time of the most recent assessment. 
 37.33     (e) A former member who has paid the security fund 
 37.34  according to paragraphs (b) to (d) and subsequently receives 
 37.35  authority from the commissioner to again self-insure shall be 
 37.36  assessed under section 79A.12, subdivision 2, only on indemnity 
 38.1   benefits paid on injuries that occurred after the former member 
 38.2   received authority to self-insure again; provided that the 
 38.3   member furnishes verified data regarding those benefits to the 
 38.4   security fund. 
 38.5      (f) In addition to proceedings to establish liabilities and 
 38.6   penalties otherwise provided, a failure to comply may be the 
 38.7   subject of a proceeding before the commissioner.  An appeal from 
 38.8   the commissioner's determination may be taken pursuant to the 
 38.9   contested case procedures of chapter 14 within 30 days of the 
 38.10  commissioner's written determination. 
 38.11     Any current or past member of the self-insurers' security 
 38.12  fund is subject to service of process on any claim arising out 
 38.13  of chapter 176 or this chapter in the manner provided by section 
 38.14  5.25, or as otherwise provided by law.  The issuance of a 
 38.15  certificate to self-insure to the private self-insured employer 
 38.16  shall be deemed to be the agreement that any process which is 
 38.17  served in accordance with this section shall be of the same 
 38.18  legal force and effect as if served personally within this state.
 38.19     Sec. 23.  Minnesota Statutes 2002, section 79A.12, 
 38.20  subdivision 2, is amended to read: 
 38.21     Subd. 2.  [ASSESSMENT.] The security fund may assess each 
 38.22  of its members a pro rata share of the funding necessary to 
 38.23  carry out its obligation and the purposes of this chapter.  
 38.24  Total annual assessments in any calendar year shall not exceed 
 38.25  ten percent of the workers' compensation benefits paid under 
 38.26  sections 176.101 and 176.111 during the previous paid indemnity 
 38.27  losses, as defined in section 176.129, made by the self-insured 
 38.28  employer during the preceding calendar year.  The annual 
 38.29  assessment calculation shall not include supplementary benefits 
 38.30  paid which will be reimbursed by the special compensation fund.  
 38.31  Funds obtained by assessments pursuant to this subdivision may 
 38.32  only be used for the purposes of this chapter.  The trustees 
 38.33  shall certify to the commissioner the collection and receipt of 
 38.34  all money from assessments, noting any delinquencies.  The 
 38.35  trustees shall take any action deemed appropriate to collect any 
 38.36  delinquent assessments. 
 39.1      Sec. 24.  Minnesota Statutes 2002, section 79A.22, 
 39.2   subdivision 11, is amended to read: 
 39.3      Subd. 11.  [DISBURSEMENT OF FUND SURPLUS.] (a) One 
 39.4   hundred Except as otherwise provided in paragraphs (b) and (c), 
 39.5   100 percent of any surplus money for a fund year in excess of 
 39.6   125 percent of the amount necessary to fulfill all obligations 
 39.7   under the Workers' Compensation Act, chapter 176, for that fund 
 39.8   year may be declared refundable to a member eligible members at 
 39.9   any time.  The date shall be no earlier than 18 months following 
 39.10  the end of such fund year.  The first disbursement of fund 
 39.11  surplus may not be made prior to the written approval of the 
 39.12  commissioner.  There can be no more than one refund made in any 
 39.13  12-month period. 
 39.14     (b) Except as otherwise provided in paragraph (c), for 
 39.15  groups that have been in existence for five years or more, 100 
 39.16  percent of any surplus money for a fund year in excess of 110 
 39.17  percent of the amount necessary to fulfill all obligations under 
 39.18  the Workers' Compensation Act, chapter 176, for that fund year 
 39.19  may be declared refundable to eligible members at any time. 
 39.20     (c) Excess surplus distributions under paragraphs (a) and 
 39.21  (b) may not be greater than the combined surplus of the group at 
 39.22  the time of the distribution. 
 39.23     (d) When all the claims of any one fund year have been 
 39.24  fully paid, as certified by an actuary, all surplus money from 
 39.25  that fund year may be declared refundable. 
 39.26     (b) (e) The commercial self-insurance group shall give ten 
 39.27  days' prior notice to the commissioner of any refund.  Said The 
 39.28  notice shall must be accompanied by a statement from the 
 39.29  commercial self-insurer group's certified public accountant 
 39.30  certifying that the proposed refund is in compliance 
 39.31  with paragraph (a) this subdivision. 
 39.32     Sec. 25.  Minnesota Statutes 2002, section 79A.22, is 
 39.33  amended by adding a subdivision to read: 
 39.34     Subd. 14.  [ALL STATES COVERAGE.] Policies issued by 
 39.35  commercial self-insurance groups pursuant to this chapter may 
 39.36  also provide workers' compensation coverage required under the 
 40.1   laws of states other than Minnesota, commonly known as "all 
 40.2   states coverage."  The coverage shall be provided to members of 
 40.3   the group which are temporarily performing work in another state.
 40.4      Sec. 26.  Minnesota Statutes 2002, section 176.191, 
 40.5   subdivision 3, is amended to read: 
 40.6      Subd. 3.  [INSURER PAYMENT.] If a dispute exists as to 
 40.7   whether an employee's injury is compensable under this chapter 
 40.8   and the employee is otherwise covered by an insurer or entity 
 40.9   pursuant to chapters 62A, 62C and, 62D, 62E, 62R, and 62T, that 
 40.10  insurer or entity shall pay any medical costs incurred by the 
 40.11  employee for the injury up to the limits of the applicable 
 40.12  coverage and shall make any disability payments otherwise 
 40.13  payable by that insurer or entity in the absence of or in 
 40.14  addition to workers' compensation liability.  If the injury is 
 40.15  subsequently determined to be compensable pursuant to this 
 40.16  chapter, the workers' compensation insurer shall be ordered to 
 40.17  reimburse the insurer or entity that made the payments for all 
 40.18  payments made under this subdivision by the insurer or entity, 
 40.19  including interest at a rate of 12 percent a year.  If a payment 
 40.20  pursuant to this subdivision exceeds the reasonable value as 
 40.21  permitted by sections 176.135 and 176.136, the provider shall 
 40.22  reimburse the workers' compensation insurer for all the excess 
 40.23  as provided by rules promulgated by the commissioner. 
 40.24     Sec. 27.  [MEDICARE SUPPLEMENT WORKING GROUP.] 
 40.25     The commissioner of commerce shall convene an informal 
 40.26  working group of interested parties to address issues related to 
 40.27  the stabilization of the Medicare supplemental coverage market 
 40.28  in the state.  The group must, at a minimum, identify necessary 
 40.29  changes to state statutes and regulations resulting from changes 
 40.30  made to the Medicare program by Congress; address the 
 40.31  implications of regional designations on Minnesota seniors, 
 40.32  providers, and health plans; analyze the benefits and 
 40.33  limitations of National Association of Insurance Commissioners 
 40.34  policy standardization; review the rating structure and approval 
 40.35  process for supplemental policies; analyze the implications on 
 40.36  policyholders of closed books of business; review extended basic 
 41.1   offer requirements and market practices; recommend 
 41.2   implementation strategies for the inclusion of innovative 
 41.3   benefits into policies; review the role of the Minnesota 
 41.4   Comprehensive Health Association in the supplemental market; and 
 41.5   identify coordination strategies with long-term care policies.  
 41.6   The working group must consult with the Department of Human 
 41.7   Services to ensure coordination of the subsidy provisions of the 
 41.8   legislation.  Interested parties include health plan companies, 
 41.9   insurance agents, representatives of senior organizations, and 
 41.10  health care providers.  The working group must present its 
 41.11  findings and recommendations to the legislature by January 15, 
 41.12  2005. 
 41.13     Sec. 28.  [REPEALER.] 
 41.14     Minnesota Statutes 2002, sections 61A.072, subdivision 2; 
 41.15  62E.03; and 62E.05, subdivision 2, are repealed. 
 41.16     Sec. 29.  [EFFECTIVE DATE.] 
 41.17     Section 17 is effective for assessments due after January 
 41.18  1, 2003.