1.1                          A bill for an act 
  1.2             relating to insurance; regulating agency terminations, 
  1.3             coverages, fees, forms, disclosures, reports, and 
  1.4             premiums; amending Minnesota Statutes 2002, sections 
  1.5             59A.12, subdivision 2; 60A.14, subdivision 1; 60A.171, 
  1.6             subdivision 11; 60A.23, subdivision 8; 60A.966; 
  1.7             60A.969; 62A.042; 62A.136; 62A.31, subdivision 1h; 
  1.8             62A.318; 62C.14, subdivision 14; 65A.29, subdivision 
  1.9             11; 65B.48, subdivision 3; 72A.20, subdivisions 13, 
  1.10            15; 72A.201, subdivisions 3, 4; 79.56, subdivisions 1, 
  1.11            3; 79.62, subdivision 3; 79A.06, subdivision 5; 
  1.12            79A.12, subdivision 2; 79A.22, subdivision 11, by 
  1.13            adding a subdivision; 176.191, subdivision 3; 
  1.14            Minnesota Statutes 2003 Supplement, sections 62A.021, 
  1.15            subdivision 1; 62A.316; 79A.04, subdivision 10; 
  1.16            proposing coding for new law in Minnesota Statutes, 
  1.17            chapters 62E; 79; repealing Minnesota Statutes 2002, 
  1.18            sections 61A.072, subdivision 2; 62E.05, subdivision 
  1.19            2, paragraph (a). 
  1.20  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.21     Section 1.  Minnesota Statutes 2002, section 59A.12, 
  1.22  subdivision 2, is amended to read: 
  1.23     Subd. 2.  In the event that a premium is subject to an 
  1.24  audit to determine the final premium amount, the gross unearned 
  1.25  premium will be calculated based upon the deposit audited 
  1.26  premium and the insurer shall return whatever gross unearned 
  1.27  premiums are due based upon the deposit rather than the actual 
  1.28  unearned premium under the contract to the finance company for 
  1.29  the account of the insured or insureds within 60 days after 
  1.30  receipt of the notice of cancellation. 
  1.31     Sec. 2.  Minnesota Statutes 2002, section 60A.14, 
  1.32  subdivision 1, is amended to read: 
  2.1      Subdivision 1.  [FEES OTHER THAN EXAMINATION FEES.] In 
  2.2   addition to the fees and charges provided for examinations, the 
  2.4   following fees must be paid to the commissioner for deposit in 
  2.5   the general fund: 
  2.6      (a) by township mutual fire insurance companies; 
  2.7      (1) for filing certificate of incorporation $25 and 
  2.8   amendments thereto, $10; 
  2.9      (2) for filing annual statements, $15; 
  2.10     (3) for each annual certificate of authority, $15; 
  2.11     (4) for filing bylaws $25 and amendments thereto, $10; 
  2.12     (b) by other domestic and foreign companies including 
  2.13  fraternals and reciprocal exchanges; 
  2.14     (1) for filing certified copy of certificate of articles of 
  2.15  incorporation, $100; 
  2.16     (2) for filing annual statement, $225; 
  2.17     (3) for filing certified copy of amendment to certificate 
  2.18  or articles of incorporation, $100; 
  2.19     (4) for filing bylaws, $75 or amendments thereto, $75; 
  2.20     (5) for each company's certificate of authority, $575, 
  2.21  annually; 
  2.22     (c) the following general fees apply: 
  2.23     (1) for each certificate, including certified copy of 
  2.24  certificate of authority, renewal, valuation of life policies, 
  2.25  corporate condition or qualification, $25; 
  2.26     (2) for each copy of paper on file in the commissioner's 
  2.27  office 50 cents per page, and $2.50 for certifying the same; 
  2.28     (3) for license to procure insurance in unadmitted foreign 
  2.29  companies, $575; 
  2.30     (4) for valuing the policies of life insurance companies, 
  2.31  one cent per $1,000 of insurance so valued, provided that the 
  2.32  fee shall not exceed $13,000 per year for any company.  The 
  2.33  commissioner may, in lieu of a valuation of the policies of any 
  2.34  foreign life insurance company admitted, or applying for 
  2.35  admission, to do business in this state, accept a certificate of 
  2.36  valuation from the company's own actuary or from the 
  2.37  commissioner of insurance of the state or territory in which the 
  3.1   company is domiciled; 
  3.2      (5) for receiving and filing certificates of policies by 
  3.3   the company's actuary, or by the commissioner of insurance of 
  3.4   any other state or territory, $50; 
  3.5      (6) for each appointment of an agent filed with the 
  3.6   commissioner, $10; 
  3.7      (7) for filing forms and rates, $75 $90 per filing, which 
  3.8   may be paid on a quarterly basis in response to an invoice.  
  3.9   Billing and payment may be made electronically; 
  3.10     (8) for annual renewal of surplus lines insurer license, 
  3.11  $300; 
  3.12     (9) $250 filing fee for a large risk alternative rating 
  3.13  option plan that meets the $250,000 threshold requirement. 
  3.14     The commissioner shall adopt rules to define filings that 
  3.15  are subject to a fee. 
  3.16     Sec. 3.  Minnesota Statutes 2002, section 60A.171, 
  3.17  subdivision 11, is amended to read: 
  3.18     Subd. 11.  Upon termination of an agency, a company is 
  3.19  prohibited from soliciting business in the notice of nonrenewal 
  3.20  required by section 60A.37.  If termination of an agency 
  3.21  contract is the ground for nonrenewal of a policy of homeowner's 
  3.22  insurance, as defined under section 65A.27, subdivision 4, the 
  3.23  company must provide notice to the policyholder that the policy 
  3.24  is not being renewed due to the termination of the company's 
  3.25  contract with the agency.  If the agency is unable to replace 
  3.26  the homeowner's insurance policy with a suitable policy from 
  3.27  another insurer, the agent must notify the policyholder of the 
  3.28  policyholder's right to renew with the company terminating the 
  3.29  agency contract.  The company must renew the policy if the 
  3.30  insured or the insured's agent makes a written request for the 
  3.31  renewal before the renewal date. 
  3.32     Sec. 4.  Minnesota Statutes 2002, section 60A.23, 
  3.33  subdivision 8, is amended to read: 
  3.34     Subd. 8.  [SELF-INSURANCE OR INSURANCE PLAN ADMINISTRATORS 
  3.35  WHO ARE VENDORS OF RISK MANAGEMENT SERVICES.] (1)  [SCOPE.] This 
  3.36  subdivision applies to any vendor of risk management services 
  4.1   and to any entity which administers, for compensation, a 
  4.2   self-insurance or insurance plan.  This subdivision does not 
  4.3   apply (a) to an insurance company authorized to transact 
  4.4   insurance in this state, as defined by section 60A.06, 
  4.5   subdivision 1, clauses (4) and (5); (b) to a service plan 
  4.6   corporation, as defined by section 62C.02, subdivision 6; (c) to 
  4.7   a health maintenance organization, as defined by section 62D.02, 
  4.8   subdivision 4; (d) to an employer directly operating a 
  4.9   self-insurance plan for its employees' benefits; (e) to an 
  4.10  entity which administers a program of health benefits 
  4.11  established pursuant to a collective bargaining agreement 
  4.12  between an employer, or group or association of employers, and a 
  4.13  union or unions; or (f) to an entity which administers a 
  4.14  self-insurance or insurance plan if a licensed Minnesota insurer 
  4.15  is providing insurance to the plan and if the licensed insurer 
  4.16  has appointed the entity administering the plan as one of its 
  4.17  licensed agents within this state. 
  4.18     (2)  [DEFINITIONS.] For purposes of this subdivision the 
  4.19  following terms have the meanings given them. 
  4.20     (a) "Administering a self-insurance or insurance plan" 
  4.21  means (i) processing, reviewing or paying claims, (ii) 
  4.22  establishing or operating funds and accounts, or (iii) otherwise 
  4.23  providing necessary administrative services in connection with 
  4.24  the operation of a self-insurance or insurance plan. 
  4.25     (b) "Employer" means an employer, as defined by section 
  4.26  62E.02, subdivision 2. 
  4.27     (c) "Entity" means any association, corporation, 
  4.28  partnership, sole proprietorship, trust, or other business 
  4.29  entity engaged in or transacting business in this state. 
  4.30     (d) "Self-insurance or insurance plan" means a plan 
  4.31  providing life, medical or hospital care, accident, sickness or 
  4.32  disability insurance for the benefit of employees or members of 
  4.33  an association, or a plan providing liability coverage for any 
  4.34  other risk or hazard, which is or is not directly insured or 
  4.35  provided by a licensed insurer, service plan corporation, or 
  4.36  health maintenance organization. 
  5.1      (e) "Vendor of risk management services" means an entity 
  5.2   providing for compensation actuarial, financial management, 
  5.3   accounting, legal or other services for the purpose of designing 
  5.4   and establishing a self-insurance or insurance plan for an 
  5.5   employer. 
  5.6      (3)  [LICENSE.] No vendor of risk management services or 
  5.7   entity administering a self-insurance or insurance plan may 
  5.8   transact this business in this state unless it is licensed to do 
  5.9   so by the commissioner.  An applicant for a license shall state 
  5.10  in writing the type of activities it seeks authorization to 
  5.11  engage in and the type of services it seeks authorization to 
  5.12  provide.  The license may be granted only when the commissioner 
  5.13  is satisfied that the entity possesses the necessary 
  5.14  organization, background, expertise, and financial integrity to 
  5.15  supply the services sought to be offered.  The commissioner may 
  5.16  issue a license subject to restrictions or limitations upon the 
  5.17  authorization, including the type of services which may be 
  5.18  supplied or the activities which may be engaged in.  The license 
  5.19  fee is $1,000 $1,500 for the initial application and 
  5.20  $1,000 $1,500 for each two-year three-year renewal.  All 
  5.21  licenses are for a period of two three years. 
  5.22     (4)  [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.] 
  5.23  To assure that self-insurance or insurance plans are financially 
  5.24  solvent, are administered in a fair and equitable fashion, and 
  5.25  are processing claims and paying benefits in a prompt, fair, and 
  5.26  honest manner, vendors of risk management services and entities 
  5.27  administering insurance or self-insurance plans are subject to 
  5.28  the supervision and examination by the commissioner.  Vendors of 
  5.29  risk management services, entities administering insurance or 
  5.30  self-insurance plans, and insurance or self-insurance plans 
  5.31  established or operated by them are subject to the trade 
  5.32  practice requirements of sections 72A.19 to 72A.30.  In lieu of 
  5.33  an unlimited guarantee from a parent corporation for a vendor of 
  5.34  risk management services or an entity administering insurance or 
  5.35  self-insurance plans, the commissioner may accept a surety bond 
  5.36  in a form satisfactory to the commissioner in an amount equal to 
  6.1   120 percent of the total amount of claims handled by the 
  6.2   applicant in the prior year.  If at any time the total amount of 
  6.3   claims handled during a year exceeds the amount upon which the 
  6.4   bond was calculated, the administrator shall immediately notify 
  6.5   the commissioner.  The commissioner may require that the bond be 
  6.6   increased accordingly. 
  6.7      No contract entered into after July 1, 2001, between a 
  6.8   licensed vendor of risk management services and a group 
  6.9   authorized to self-insure for workers' compensation liabilities 
  6.10  under section 79A.03, subdivision 6, may take effect until it 
  6.11  has been filed with the commissioner, and either (1) the 
  6.12  commissioner has approved it or (2) 60 days have elapsed and the 
  6.13  commissioner has not disapproved it as misleading or violative 
  6.14  of public policy. 
  6.15     (5)  [RULEMAKING AUTHORITY.] To carry out the purposes of 
  6.16  this subdivision, the commissioner may adopt rules pursuant to 
  6.17  sections 14.001 to 14.69.  These rules may: 
  6.18     (a) establish reporting requirements for administrators of 
  6.19  insurance or self-insurance plans; 
  6.20     (b) establish standards and guidelines to assure the 
  6.21  adequacy of financing, reinsuring, and administration of 
  6.22  insurance or self-insurance plans; 
  6.23     (c) establish bonding requirements or other provisions 
  6.24  assuring the financial integrity of entities administering 
  6.25  insurance or self-insurance plans; or 
  6.26     (d) establish other reasonable requirements to further the 
  6.27  purposes of this subdivision. 
  6.28     Sec. 5.  Minnesota Statutes 2002, section 60A.966, is 
  6.29  amended to read: 
  6.30     60A.966 [APPROVAL OF VIATICAL SETTLEMENTS CONTRACT FORMS.] 
  6.31     A viatical settlement provider or broker may not use a 
  6.32  viatical settlement contract form in this state unless it has 
  6.33  been filed with and approved by the commissioner.  A viatical 
  6.34  settlement contract form filed with the commissioner is 
  6.35  considered to have been approved if it has not been disapproved 
  6.36  within 60 days of the filing.  The commissioner shall disapprove 
  7.1   a viatical settlement contract form if, in the commissioner's 
  7.2   opinion, the contract or contract provisions are unreasonable, 
  7.3   contrary to the interests of the public, or otherwise misleading 
  7.4   or unfair to the policy owner.  
  7.5      Sec. 6.  Minnesota Statutes 2002, section 60A.969, is 
  7.6   amended to read: 
  7.7      60A.969 [DISCLOSURE.] 
  7.8      A viatical settlement provider or a broker shall disclose 
  7.9   the following information to the viator no later than the 
  7.10  date the viatical settlement contract is signed by all 
  7.11  parties an application is given to the viator: 
  7.12     (1) possible alternatives to viatical settlement contracts 
  7.13  for persons with catastrophic or life threatening illnesses, 
  7.14  including accelerated benefits offered by the issuer of the life 
  7.15  insurance policy; 
  7.16     (2) the fact that some or all of the proceeds of the 
  7.17  viatical settlement may be taxable and that assistance should be 
  7.18  sought from a personal tax advisor; 
  7.19     (3) the fact that the viatical settlement may be subject to 
  7.20  the claims of creditors; 
  7.21     (4) the fact that receipt of a viatical settlement may 
  7.22  adversely affect the recipients' eligibility for Medicaid or 
  7.23  other government benefits or entitlements and that advice should 
  7.24  be obtained from the appropriate agencies; 
  7.25     (5) the policy owner's right to rescind a viatical 
  7.26  settlement contract within 30 days of the date it is executed by 
  7.27  all parties or 15 days of the receipt of the viatical settlement 
  7.28  proceeds by the viator, whichever is less, as provided in 
  7.29  section 60A.970, subdivision 3; and 
  7.30     (6) the date by which the funds will be available to the 
  7.31  viator and the source of the funds. 
  7.32     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
  7.33  62A.021, subdivision 1, is amended to read: 
  7.34     Subdivision 1.  [LOSS RATIO STANDARDS.] (a) Notwithstanding 
  7.35  section 62A.02, subdivision 3, relating to loss ratios, health 
  7.36  care policies or certificates shall not be delivered or issued 
  8.1   for delivery to an individual or to a small employer as defined 
  8.2   in section 62L.02, unless the policies or certificates can be 
  8.3   expected, as estimated for the entire period for which rates are 
  8.4   computed to provide coverage, to return to Minnesota 
  8.5   policyholders and certificate holders in the form of aggregate 
  8.6   benefits not including anticipated refunds or credits, provided 
  8.7   under the policies or certificates, (1) at least 75 percent of 
  8.8   the aggregate amount of premiums earned in the case of policies 
  8.9   issued in the small employer market, as defined in section 
  8.10  62L.02, subdivision 27, calculated on an aggregate basis; and 
  8.11  (2) at least 65 percent of the aggregate amount of premiums 
  8.12  earned in the case of each policy form or certificate form 
  8.13  issued in the individual market; calculated on the basis of 
  8.14  incurred claims experience or incurred health care expenses 
  8.15  where coverage is provided by a health maintenance organization 
  8.16  on a service rather than reimbursement basis and earned premiums 
  8.17  for the period and according to accepted actuarial principles 
  8.18  and practices.  Assessments by the reinsurance association 
  8.19  created in chapter 62L and all types of taxes, surcharges, or 
  8.20  assessments created by Laws 1992, chapter 549, or created on or 
  8.21  after April 23, 1992, or assessments made under section 62E.11, 
  8.22  subdivision 6, are included in the calculation of incurred 
  8.23  claims experience or incurred health care expenses.  The 
  8.24  applicable percentage for policies and certificates issued in 
  8.25  the small employer market, as defined in section 62L.02, 
  8.26  increases by one percentage point on July 1 of each year, 
  8.27  beginning on July 1, 1994, until an 82 percent loss ratio is 
  8.28  reached on July 1, 2000.  The applicable percentage for policy 
  8.29  forms and certificate forms issued in the individual market 
  8.30  increases by one percentage point on July 1 of each year, 
  8.31  beginning on July 1, 1994, until a 72 percent loss ratio is 
  8.32  reached on July 1, 2000.  A health carrier that enters a market 
  8.33  after July 1, 1993, does not start at the beginning of the 
  8.34  phase-in schedule and must instead comply with the loss ratio 
  8.35  requirements applicable to other health carriers in that market 
  8.36  for each time period.  Premiums earned and claims incurred in 
  9.1   markets other than the small employer and individual markets are 
  9.2   not relevant for purposes of this section. 
  9.3      (b) All filings of rates and rating schedules shall 
  9.4   demonstrate that actual expected claims in relation to premiums 
  9.5   comply with the requirements of this section when combined with 
  9.6   actual experience to date.  Filings of rate revisions shall also 
  9.7   demonstrate that the anticipated loss ratio over the entire 
  9.8   future period for which the revised rates are computed to 
  9.9   provide coverage can be expected to meet the appropriate loss 
  9.10  ratio standards, and aggregate loss ratio from inception of the 
  9.11  policy form or certificate form shall equal or exceed the 
  9.12  appropriate loss ratio standards. 
  9.13     (c) A health carrier that issues health care policies and 
  9.14  certificates to individuals or to small employers, as defined in 
  9.15  section 62L.02, in this state shall file annually its rates, 
  9.16  rating schedule, and supporting documentation including ratios 
  9.17  of incurred losses to earned premiums by policy form or 
  9.18  certificate form duration for approval by the commissioner 
  9.19  according to the filing requirements and procedures prescribed 
  9.20  by the commissioner.  The supporting documentation shall also 
  9.21  demonstrate in accordance with actuarial standards of practice 
  9.22  using reasonable assumptions that the appropriate loss ratio 
  9.23  standards can be expected to be met over the entire period for 
  9.24  which rates are computed.  The demonstration shall exclude 
  9.25  active life reserves.  If the data submitted does not confirm 
  9.26  that the health carrier has satisfied the loss ratio 
  9.27  requirements of this section, the commissioner shall notify the 
  9.28  health carrier in writing of the deficiency.  The health carrier 
  9.29  shall have 30 days from the date of the commissioner's notice to 
  9.30  file amended rates that comply with this section.  If the health 
  9.31  carrier fails to file amended rates within the prescribed time, 
  9.32  the commissioner shall order that the health carrier's filed 
  9.33  rates for the nonconforming policy form or certificate form be 
  9.34  reduced to an amount that would have resulted in a loss ratio 
  9.35  that complied with this section had it been in effect for the 
  9.36  reporting period of the supplement.  The health carrier's 
 10.1   failure to file amended rates within the specified time or the 
 10.2   issuance of the commissioner's order amending the rates does not 
 10.3   preclude the health carrier from filing an amendment of its 
 10.4   rates at a later time.  The commissioner shall annually make the 
 10.5   submitted data available to the public at a cost not to exceed 
 10.6   the cost of copying.  The data must be compiled in a form useful 
 10.7   for consumers who wish to compare premium charges and loss 
 10.8   ratios. 
 10.9      (d) Each sale of a policy or certificate that does not 
 10.10  comply with the loss ratio requirements of this section is an 
 10.11  unfair or deceptive act or practice in the business of insurance 
 10.12  and is subject to the penalties in sections 72A.17 to 72A.32. 
 10.13     (e)(1) For purposes of this section, health care policies 
 10.14  issued as a result of solicitations of individuals through the 
 10.15  mail or mass media advertising, including both print and 
 10.16  broadcast advertising, shall be treated as individual policies. 
 10.17     (2) For purposes of this section, (i) "health care policy" 
 10.18  or "health care certificate" is a health plan as defined in 
 10.19  section 62A.011; and (ii) "health carrier" has the meaning given 
 10.20  in section 62A.011 and includes all health carriers delivering 
 10.21  or issuing for delivery health care policies or certificates in 
 10.22  this state or offering these policies or certificates to 
 10.23  residents of this state.  
 10.24     (f) The loss ratio phase-in as described in paragraph (a) 
 10.25  does not apply to individual policies and small employer 
 10.26  policies issued by a health plan company that is assessed less 
 10.27  than three percent of the total annual amount assessed by the 
 10.28  Minnesota Comprehensive Health Association.  These policies must 
 10.29  meet a 68 percent loss ratio for individual policies, a 71 
 10.30  percent loss ratio for small employer policies with fewer than 
 10.31  ten employees, and a 75 percent loss ratio for all other small 
 10.32  employer policies.  
 10.33     (g) Notwithstanding paragraphs (a) and (f), the loss ratio 
 10.34  shall be 60 percent for a health plan as defined in section 
 10.35  62A.011, offered by an insurance company licensed under chapter 
 10.36  60A that is assessed less than ten percent of the total annual 
 11.1   amount assessed by the Minnesota Comprehensive Health 
 11.2   Association.  For purposes of the percentage calculation of the 
 11.3   association's assessments, an insurance company's assessments 
 11.4   include those of its affiliates. 
 11.5      (h) The commissioners of commerce and health shall each 
 11.6   annually issue a public report listing, by health plan company, 
 11.7   the actual loss ratios experienced in the individual and small 
 11.8   employer markets in this state by the health plan companies that 
 11.9   the commissioners respectively regulate.  The commissioners 
 11.10  shall coordinate release of these reports so as to release them 
 11.11  as a joint report or as separate reports issued the same day.  
 11.12  The report or reports shall be released no later than June 1 for 
 11.13  loss ratios experienced for the preceding calendar year.  Health 
 11.14  plan companies shall provide to the commissioners any 
 11.15  information requested by the commissioners for purposes of this 
 11.16  paragraph.  
 11.17     Sec. 8.  Minnesota Statutes 2002, section 62A.042, is 
 11.18  amended to read: 
 11.19     62A.042 [FAMILY COVERAGE; COVERAGE OF NEWBORN INFANTS.] 
 11.20     Subdivision 1.  [INDIVIDUAL FAMILY POLICIES.] (a) No policy 
 11.21  of individual accident and sickness insurance which provides for 
 11.22  insurance for more than one person under section 62A.03, 
 11.23  subdivision 1, clause (3), and no individual health maintenance 
 11.24  contract which provides for coverage for more than one person 
 11.25  under chapter 62D, shall be renewed to insure or cover any 
 11.26  person in this state or be delivered or issued for delivery to 
 11.27  any person in this state unless the policy or contract includes 
 11.28  as insured or covered members of the family any newborn infants 
 11.29  immediately from the moment of birth and thereafter which 
 11.30  insurance or contract shall provide coverage for illness, 
 11.31  injury, congenital malformation, or premature birth.  For 
 11.32  purposes of this paragraph, "newborn infants" includes 
 11.33  grandchildren who are financially dependent upon a covered 
 11.34  grandparent and who reside with that covered grandparent 
 11.35  continuously from birth.  No policy or contract covered by this 
 11.36  section may require notification to a health carrier as a 
 12.1   condition for this dependent coverage.  However, if the policy 
 12.2   or contract mandates an additional premium for each dependent, 
 12.3   the health carrier shall be entitled to all premiums that would 
 12.4   have been collected had the health carrier been aware of the 
 12.5   additional dependent.  The health carrier may withhold payment 
 12.6   of any health benefits for the new dependent until it has been 
 12.7   compensated with the applicable premium which would have been 
 12.8   owed if the health carrier had been informed of the additional 
 12.9   dependent immediately. 
 12.10     (b) The coverage under paragraph (a) includes benefits for 
 12.11  inpatient or outpatient expenses arising from medical and dental 
 12.12  treatment up to age 18 the limiting age for coverage of the 
 12.13  dependent, including orthodontic and oral surgery treatment, 
 12.14  involved in the management of birth defects known as cleft lip 
 12.15  and cleft palate.  Benefits for individuals age 19 up to the 
 12.16  limiting age for coverage of the dependent are limited to 
 12.17  inpatient or outpatient expenses arising from medical and dental 
 12.18  treatment that was scheduled or initiated prior to the dependent 
 12.19  turning age 19.  If orthodontic services are eligible for 
 12.20  coverage under a dental insurance plan and another policy or 
 12.21  contract, the dental plan shall be primary and the other policy 
 12.22  or contract shall be secondary in regard to the coverage 
 12.23  required under paragraph (a).  Payment for dental or orthodontic 
 12.24  treatment not related to the management of the congenital 
 12.25  condition of cleft lip and cleft palate shall not be covered 
 12.26  under this provision.  
 12.27     Subd. 2.  [GROUP POLICIES.] (a) No group accident and 
 12.28  sickness insurance policy and no group health maintenance 
 12.29  contract which provide for coverage of family members or other 
 12.30  dependents of an employee or other member of the covered group 
 12.31  shall be renewed to cover members of a group located in this 
 12.32  state or delivered or issued for delivery to any person in this 
 12.33  state unless the policy or contract includes as insured or 
 12.34  covered family members or dependents any newborn infants 
 12.35  immediately from the moment of birth and thereafter which 
 12.36  insurance or contract shall provide coverage for illness, 
 13.1   injury, congenital malformation, or premature birth.  For 
 13.2   purposes of this paragraph, "newborn infants" includes 
 13.3   grandchildren who are financially dependent upon a covered 
 13.4   grandparent and who reside with that covered grandparent 
 13.5   continuously from birth.  No policy or contract covered by this 
 13.6   section may require notification to a health carrier as a 
 13.7   condition for this dependent coverage.  However, if the policy 
 13.8   or contract mandates an additional premium for each dependent, 
 13.9   the health carrier shall be entitled to all premiums that would 
 13.10  have been collected had the health carrier been aware of the 
 13.11  additional dependent.  The health carrier may reduce the health 
 13.12  benefits owed to the insured, certificate holder, member, or 
 13.13  subscriber by the amount of past due premiums applicable to the 
 13.14  additional dependent. 
 13.15     (b) The coverage under paragraph (a) includes benefits for 
 13.16  inpatient or outpatient expenses arising from medical and dental 
 13.17  treatment up to age 18 the limiting age for coverage of the 
 13.18  dependent, including orthodontic and oral surgery treatment, 
 13.19  involved in the management of birth defects known as cleft lip 
 13.20  and cleft palate.  Benefits for individuals age 19 up to the 
 13.21  limiting age for coverage of the dependent are limited to 
 13.22  inpatient or outpatient expenses arising from medical and dental 
 13.23  treatment that was scheduled or initiated prior to the dependent 
 13.24  turning age 19.  If orthodontic services are eligible for 
 13.25  coverage under a dental insurance plan and another policy or 
 13.26  contract, the dental plan shall be primary and the other policy 
 13.27  or contract shall be secondary in regard to the coverage 
 13.28  required under paragraph (a).  Payment for dental or orthodontic 
 13.29  treatment not related to the management of the congenital 
 13.30  condition of cleft lip and cleft palate shall not be covered 
 13.31  under this provision. 
 13.32     Sec. 9.  Minnesota Statutes 2002, section 62A.136, is 
 13.33  amended to read: 
 13.34     62A.136 [DENTAL AND VISION PLAN COVERAGE.] 
 13.35     The following provisions do not apply to health plans as 
 13.36  defined in section 62A.011, subdivision 3, clause (6), providing 
 14.1   dental or vision coverage only:  sections 62A.041; 62A.0411; 
 14.2   62A.047; 62A.149; 62A.151; 62A.152; 62A.154; 62A.155; 62A.17, 
 14.3   subdivision 6; 62A.21, subdivision 2b; 62A.26; 62A.28; 62A.285; 
 14.4   62A.30; 62A.304; 62A.3093; and 62E.16. 
 14.5      Sec. 10.  Minnesota Statutes 2002, section 62A.31, 
 14.6   subdivision 1h, is amended to read: 
 14.7      Subd. 1h.  [LIMITATIONS ON DENIALS, CONDITIONS, AND PRICING 
 14.8   OF COVERAGE.] No health carrier issuing Medicare-related 
 14.9   coverage in this state may impose preexisting condition 
 14.10  limitations or otherwise deny or condition the issuance or 
 14.11  effectiveness of any such coverage available for sale in this 
 14.12  state, nor may it discriminate in the pricing of such coverage, 
 14.13  because of the health status, claims experience, receipt of 
 14.14  health care, medical condition, or age of an applicant where an 
 14.15  application for such coverage is submitted prior to or during 
 14.16  the six-month period beginning with the first day of the month 
 14.17  in which an individual first enrolled for benefits under 
 14.18  Medicare Part B.  This subdivision applies to each 
 14.19  Medicare-related coverage offered by a health carrier regardless 
 14.20  of whether the individual has attained the age of 65 years.  If 
 14.21  an individual who is enrolled in Medicare Part B due to 
 14.22  disability status is involuntarily disenrolled due to loss of 
 14.23  disability status, the individual is eligible for another 
 14.24  six-month enrollment period provided under this subdivision 
 14.25  beginning the first day of the month in which the individual 
 14.26  later becomes eligible for and enrolls again in Medicare Part 
 14.27  B.  An individual who is or was previously enrolled in Medicare 
 14.28  Part B due to disability status is eligible for another 
 14.29  six-month enrollment period under this subdivision beginning the 
 14.30  first day of the month in which the individual has attained the 
 14.31  age of 65 years and either maintains enrollment in, or enrolls 
 14.32  again in, Medicare Part B.  If an individual enrolled in 
 14.33  Medicare Part B voluntarily disenrolls from Medicare Part B 
 14.34  because the individual becomes reemployed and is enrolled under 
 14.35  an employee welfare benefit plan, the individual is eligible for 
 14.36  another six-month enrollment period, as provided in this 
 15.1   subdivision, beginning the first day of the month in which the 
 15.2   individual later becomes eligible for and enrolls again in 
 15.3   Medicare Part B. 
 15.4      Sec. 11.  Minnesota Statutes 2003 Supplement, section 
 15.5   62A.316, is amended to read: 
 15.6      62A.316 [BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.] 
 15.7      (a) The basic Medicare supplement plan must have a level of 
 15.8   coverage that will provide: 
 15.9      (1) coverage for all of the Medicare part A inpatient 
 15.10  hospital coinsurance amounts, and 100 percent of all Medicare 
 15.11  part A eligible expenses for hospitalization not covered by 
 15.12  Medicare, after satisfying the Medicare part A deductible; 
 15.13     (2) coverage for the daily co-payment amount of Medicare 
 15.14  part A eligible expenses for the calendar year incurred for 
 15.15  skilled nursing facility care; 
 15.16     (3) coverage for the coinsurance amount, or in the case of 
 15.17  outpatient department services paid under a prospective payment 
 15.18  system, the co-payment amount, of Medicare eligible expenses 
 15.19  under Medicare part B regardless of hospital confinement, 
 15.20  subject to the Medicare part B deductible amount; 
 15.21     (4) 80 percent of the hospital and medical expenses and 
 15.22  supplies incurred during travel outside the United States as a 
 15.23  result of a medical emergency; 
 15.24     (5) coverage for the reasonable cost of the first three 
 15.25  pints of blood, or equivalent quantities of packed red blood 
 15.26  cells as defined under federal regulations under Medicare parts 
 15.27  A and B, unless replaced in accordance with federal regulations; 
 15.28     (6) 100 percent of the cost of immunizations and routine 
 15.29  screening procedures for cancer screening including mammograms 
 15.30  and pap smears; and 
 15.31     (7) 80 percent of coverage for all physician prescribed 
 15.32  medically appropriate and necessary equipment and supplies used 
 15.33  in the management and treatment of diabetes.  Coverage must 
 15.34  include persons with gestational, type I, or type II diabetes. 
 15.35     (b) Only the following optional benefit riders may be added 
 15.36  to this plan: 
 16.1      (1) coverage for all of the Medicare part A inpatient 
 16.2   hospital deductible amount; 
 16.3      (2) a minimum of 80 percent of eligible medical expenses 
 16.4   and supplies not covered by Medicare part B, not to exceed any 
 16.5   charge limitation established by the Medicare program or state 
 16.6   law; 
 16.7      (3) coverage for all of the Medicare part B annual 
 16.8   deductible; 
 16.9      (4) coverage for at least 50 percent, or the equivalent of 
 16.10  50 percent, of usual and customary prescription drug expenses; 
 16.11     (5) coverage for the following preventive health services: 
 16.12     (i) an annual clinical preventive medical history and 
 16.13  physical examination that may include tests and services from 
 16.14  clause (ii) and patient education to address preventive health 
 16.15  care measures; 
 16.16     (ii) any one or a combination of the following preventive 
 16.17  screening tests or preventive services, the frequency of which 
 16.18  is considered medically appropriate: 
 16.19     (A) fecal occult blood test and/or digital rectal 
 16.20  examination; 
 16.21     (B) dipstick urinalysis for hematuria, bacteriuria, and 
 16.22  proteinuria; 
 16.23     (C) pure tone (air only) hearing screening test, 
 16.24  administered or ordered by a physician; 
 16.25     (D) serum cholesterol screening every five years; 
 16.26     (E) thyroid function test; 
 16.27     (F) diabetes screening; 
 16.28     (iii) any other tests or preventive measures determined 
 16.29  appropriate by the attending physician. 
 16.30     Reimbursement shall be for the actual charges up to 100 
 16.31  percent of the Medicare-approved amount for each service, as if 
 16.32  Medicare were to cover the service as identified in American 
 16.33  Medical Association current procedural terminology (AMA CPT) 
 16.34  codes, to a maximum of $120 annually under this benefit.  This 
 16.35  benefit shall not include payment for a procedure covered by 
 16.36  Medicare; 
 17.1      (6) coverage for services to provide short-term at-home 
 17.2   assistance with activities of daily living for those recovering 
 17.3   from an illness, injury, or surgery: 
 17.4      (i) For purposes of this benefit, the following definitions 
 17.5   apply: 
 17.6      (A) "activities of daily living" include, but are not 
 17.7   limited to, bathing, dressing, personal hygiene, transferring, 
 17.8   eating, ambulating, assistance with drugs that are normally 
 17.9   self-administered, and changing bandages or other dressings; 
 17.10     (B) "care provider" means a duly qualified or licensed home 
 17.11  health aide/homemaker, personal care aid, or nurse provided 
 17.12  through a licensed home health care agency or referred by a 
 17.13  licensed referral agency or licensed nurses registry; 
 17.14     (C) "home" means a place used by the insured as a place of 
 17.15  residence, provided that the place would qualify as a residence 
 17.16  for home health care services covered by Medicare.  A hospital 
 17.17  or skilled nursing facility shall not be considered the 
 17.18  insured's place of residence; 
 17.19     (D) "at-home recovery visit" means the period of a visit 
 17.20  required to provide at-home recovery care, without limit on the 
 17.21  duration of the visit, except each consecutive four hours in a 
 17.22  24-hour period of services provided by a care provider is one 
 17.23  visit; 
 17.24     (ii) Coverage requirements and limitations: 
 17.25     (A) at-home recovery services provided must be primarily 
 17.26  services that assist in activities of daily living; 
 17.27     (B) the insured's attending physician must certify that the 
 17.28  specific type and frequency of at-home recovery services are 
 17.29  necessary because of a condition for which a home care plan of 
 17.30  treatment was approved by Medicare; 
 17.31     (C) coverage is limited to: 
 17.32     (I) no more than the number and type of at-home recovery 
 17.33  visits certified as necessary by the insured's attending 
 17.34  physician.  The total number of at-home recovery visits shall 
 17.35  not exceed the number of Medicare-approved home care visits 
 17.36  under a Medicare-approved home care plan of treatment; 
 18.1      (II) the actual charges for each visit up to a maximum 
 18.2   reimbursement of $40 $100 per visit; 
 18.3      (III) $1,600 $4,000 per calendar year; 
 18.4      (IV) seven visits in any one week; 
 18.5      (V) care furnished on a visiting basis in the insured's 
 18.6   home; 
 18.7      (VI) services provided by a care provider as defined in 
 18.8   this section; 
 18.9      (VII) at-home recovery visits while the insured is covered 
 18.10  under the policy or certificate and not otherwise excluded; 
 18.11     (VIII) at-home recovery visits received during the period 
 18.12  the insured is receiving Medicare-approved home care services or 
 18.13  no more than eight weeks after the service date of the last 
 18.14  Medicare-approved home health care visit; 
 18.15     (iii) Coverage is excluded for: 
 18.16     (A) home care visits paid for by Medicare or other 
 18.17  government programs; and 
 18.18     (B) care provided by family members, unpaid volunteers, or 
 18.19  providers who are not care providers; 
 18.20     (7) coverage for at least 50 percent, or the equivalent of 
 18.21  50 percent, of usual and customary prescription drug expenses to 
 18.22  a maximum of $1,200 paid by the issuer annually under this 
 18.23  benefit.  An issuer of Medicare supplement insurance policies 
 18.24  that elects to offer this benefit rider shall also make 
 18.25  available coverage that contains the rider specified in clause 
 18.26  (4). 
 18.27     Sec. 12.  Minnesota Statutes 2002, section 62A.318, is 
 18.28  amended to read: 
 18.29     62A.318 [MEDICARE SELECT POLICIES AND CERTIFICATES.] 
 18.30     (a) This section applies to Medicare select policies and 
 18.31  certificates, as defined in this section, including those issued 
 18.32  by health maintenance organizations.  No policy or certificate 
 18.33  may be advertised as a Medicare select policy or certificate 
 18.34  unless it meets the requirements of this section. 
 18.35     (b) For the purposes of this section: 
 18.36     (1) "complaint" means any dissatisfaction expressed by an 
 19.1   individual concerning a Medicare select issuer or its network 
 19.2   providers; 
 19.3      (2) "grievance" means dissatisfaction expressed in writing 
 19.4   by an individual insured under a Medicare select policy or 
 19.5   certificate with the administration, claims practices, or 
 19.6   provision of services concerning a Medicare select issuer or its 
 19.7   network providers; 
 19.8      (3) "Medicare select issuer" means an issuer offering, or 
 19.9   seeking to offer, a Medicare select policy or certificate; 
 19.10     (4) "Medicare select policy" or "Medicare select 
 19.11  certificate" means a Medicare supplement policy or certificate 
 19.12  that contains restricted network provisions; 
 19.13     (5) "network provider" means a provider of health care, or 
 19.14  a group of providers of health care, that has entered into a 
 19.15  written agreement with the issuer to provide benefits insured 
 19.16  under a Medicare select policy or certificate; 
 19.17     (6) "restricted network provision" means a provision that 
 19.18  conditions the payment of benefits, in whole or in part, on the 
 19.19  use of network providers; and 
 19.20     (7) "service area" means the geographic area approved by 
 19.21  the commissioner within which an issuer is authorized to offer a 
 19.22  Medicare select policy or certificate. 
 19.23     (c) The commissioner may authorize an issuer to offer a 
 19.24  Medicare select policy or certificate pursuant to this section 
 19.25  and section 4358 of the Omnibus Budget Reconciliation Act (OBRA) 
 19.26  of 1990, Public Law 101-508, if the commissioner finds that the 
 19.27  issuer has satisfied all of the requirements of Minnesota 
 19.28  Statutes. 
 19.29     (d) A Medicare select issuer shall not issue a Medicare 
 19.30  select policy or certificate in this state until its plan of 
 19.31  operation has been approved by the commissioner. 
 19.32     (e) A Medicare select issuer shall file a proposed plan of 
 19.33  operation with the commissioner, in a format prescribed by the 
 19.34  commissioner.  The plan of operation shall contain at least the 
 19.35  following information: 
 19.36     (1) evidence that all covered services that are subject to 
 20.1   restricted network provisions are available and accessible 
 20.2   through network providers, including a demonstration that: 
 20.3      (i) the services can be provided by network providers with 
 20.4   reasonable promptness with respect to geographic location, hours 
 20.5   of operation, and after-hour care.  The hours of operation and 
 20.6   availability of after-hour care shall reflect usual practice in 
 20.7   the local area.  Geographic availability shall reflect the usual 
 20.8   travel times within the community; 
 20.9      (ii) the number of network providers in the service area is 
 20.10  sufficient, with respect to current and expected policyholders, 
 20.11  either: 
 20.12     (A) to deliver adequately all services that are subject to 
 20.13  a restricted network provision; or 
 20.14     (B) to make appropriate referrals; 
 20.15     (iii) there are written agreements with network providers 
 20.16  describing specific responsibilities; 
 20.17     (iv) emergency care is available 24 hours per day and seven 
 20.18  days per week; and 
 20.19     (v) in the case of covered services that are subject to a 
 20.20  restricted network provision and are provided on a prepaid 
 20.21  basis, there are written agreements with network providers 
 20.22  prohibiting the providers from billing or otherwise seeking 
 20.23  reimbursement from or recourse against an individual insured 
 20.24  under a Medicare select policy or certificate.  This section 
 20.25  does not apply to supplemental charges or coinsurance amounts as 
 20.26  stated in the Medicare select policy or certificate; 
 20.27     (2) a statement or map providing a clear description of the 
 20.28  service area; 
 20.29     (3) a description of the grievance procedure to be used; 
 20.30     (4) a description of the quality assurance program, 
 20.31  including: 
 20.32     (i) the formal organizational structure; 
 20.33     (ii) the written criteria for selection, retention, and 
 20.34  removal of network providers; and 
 20.35     (iii) the procedures for evaluating quality of care 
 20.36  provided by network providers, and the process to initiate 
 21.1   corrective action when warranted; 
 21.2      (5) a list and description, by specialty, of the network 
 21.3   providers; 
 21.4      (6) copies of the written information proposed to be used 
 21.5   by the issuer to comply with paragraph (i); and 
 21.6      (7) any other information requested by the commissioner. 
 21.7      (f) A Medicare select issuer shall file proposed changes to 
 21.8   the plan of operation, except for changes to the list of network 
 21.9   providers, with the commissioner before implementing the 
 21.10  changes.  The changes shall be considered approved by the 
 21.11  commissioner after 30 days unless specifically disapproved. 
 21.12     An updated list of network providers shall be filed with 
 21.13  the commissioner at least quarterly. 
 21.14     (g) A Medicare select policy or certificate shall not 
 21.15  restrict payment for covered services provided by nonnetwork 
 21.16  providers if: 
 21.17     (1) the services are for symptoms requiring emergency care 
 21.18  or are immediately required for an unforeseen illness, injury, 
 21.19  or condition; and 
 21.20     (2) it is not reasonable to obtain the services through a 
 21.21  network provider. 
 21.22     (h) A Medicare select policy or certificate shall provide 
 21.23  payment for full coverage under the policy or certificate for 
 21.24  covered services that are not available through network 
 21.25  providers. 
 21.26     (i) A Medicare select issuer shall make full and fair 
 21.27  disclosure in writing of the provisions, restrictions, and 
 21.28  limitations of the Medicare select policy or certificate to each 
 21.29  applicant.  This disclosure must include at least the following: 
 21.30     (1) an outline of coverage sufficient to permit the 
 21.31  applicant to compare the coverage and premiums of the Medicare 
 21.32  select policy or certificate with: 
 21.33     (i) other Medicare supplement policies or certificates 
 21.34  offered by the issuer; and 
 21.35     (ii) other Medicare select policies or certificates; 
 21.36     (2) a description, including address, phone number, and 
 22.1   hours of operation, of the network providers, including primary 
 22.2   care physicians, specialty physicians, hospitals, and other 
 22.3   providers; 
 22.4      (3) a description of the restricted network provisions, 
 22.5   including payments for coinsurance and deductibles when 
 22.6   providers other than network providers are used; 
 22.7      (4) a description of coverage for emergency and urgently 
 22.8   needed care and other out-of-service area coverage; 
 22.9      (5) a description of limitations on referrals to restricted 
 22.10  network providers and to other providers; 
 22.11     (6) a description of the policyholder's rights to purchase 
 22.12  any other Medicare supplement policy or certificate otherwise 
 22.13  offered by the issuer; and 
 22.14     (7) a description of the Medicare select issuer's quality 
 22.15  assurance program and grievance procedure. 
 22.16     (j) Before the sale of a Medicare select policy or 
 22.17  certificate, a Medicare select issuer shall obtain from the 
 22.18  applicant a signed and dated form stating that the applicant has 
 22.19  received the information provided pursuant to paragraph (i) and 
 22.20  that the applicant understands the restrictions of the Medicare 
 22.21  select policy or certificate. 
 22.22     (k) A Medicare select issuer shall have and use procedures 
 22.23  for hearing complaints and resolving written grievances from the 
 22.24  subscribers.  The procedures shall be aimed at mutual agreement 
 22.25  for settlement and may include arbitration procedures.  
 22.26     (1) The grievance procedure must be described in the policy 
 22.27  and certificates and in the outline of coverage. 
 22.28     (2) At the time the policy or certificate is issued, the 
 22.29  issuer shall provide detailed information to the policyholder 
 22.30  describing how a grievance may be registered with the issuer. 
 22.31     (3) Grievances must be considered in a timely manner and 
 22.32  must be transmitted to appropriate decision makers who have 
 22.33  authority to fully investigate the issue and take corrective 
 22.34  action. 
 22.35     (4) If a grievance is found to be valid, corrective action 
 22.36  must be taken promptly. 
 23.1      (5) All concerned parties must be notified about the 
 23.2   results of a grievance. 
 23.3      (6) The issuer shall report no later than March 31 of each 
 23.4   year to the commissioner regarding the grievance procedure.  The 
 23.5   report shall be in a format prescribed by the commissioner and 
 23.6   shall contain the number of grievances filed in the past year 
 23.7   and a summary of the subject, nature, and resolution of the 
 23.8   grievances. 
 23.9      (l) At the time of initial purchase, a Medicare select 
 23.10  issuer shall make available to each applicant for a Medicare 
 23.11  select policy or certificate the opportunity to purchase a 
 23.12  Medicare supplement policy or certificate otherwise offered by 
 23.13  the issuer. 
 23.14     (m)(1) At the request of an individual insured under a 
 23.15  Medicare select policy or certificate, a Medicare select issuer 
 23.16  shall make available to the individual insured the opportunity 
 23.17  to purchase a Medicare supplement policy or certificate offered 
 23.18  by the issuer that has comparable or lesser benefits and that 
 23.19  does not contain a restricted network provision.  The issuer 
 23.20  shall make the policies or certificates available without 
 23.21  requiring evidence of insurability after the Medicare supplement 
 23.22  policy or certificate has been in force for six months.  If the 
 23.23  issuer does not have available for sale a policy or certificate 
 23.24  without restrictive network provisions, the issuer shall provide 
 23.25  enrollment information for the Minnesota comprehensive health 
 23.26  association Medicare supplement plans. 
 23.27     (2) For the purposes of this paragraph, a Medicare 
 23.28  supplement policy or certificate will be considered to have 
 23.29  comparable or lesser benefits unless it contains one or more 
 23.30  significant benefits not included in the Medicare select policy 
 23.31  or certificate being replaced.  For the purposes of this 
 23.32  paragraph, a significant benefit means coverage for the Medicare 
 23.33  Part A deductible, coverage for prescription drugs, coverage for 
 23.34  at-home recovery services, or coverage for part B excess charges.
 23.35     (n) Medicare select policies and certificates shall provide 
 23.36  for continuation of coverage if the secretary of health and 
 24.1   human services determines that Medicare select policies and 
 24.2   certificates issued pursuant to this section should be 
 24.3   discontinued due to either the failure of the Medicare select 
 24.4   program to be reauthorized under law or its substantial 
 24.5   amendment. 
 24.6      (1) Each Medicare select issuer shall make available to 
 24.7   each individual insured under a Medicare select policy or 
 24.8   certificate the opportunity to purchase a Medicare supplement 
 24.9   policy or certificate offered by the issuer that has comparable 
 24.10  or lesser benefits and that does not contain a restricted 
 24.11  network provision.  The issuer shall make the policies and 
 24.12  certificates available without requiring evidence of 
 24.13  insurability. 
 24.14     (2) For the purposes of this paragraph, a Medicare 
 24.15  supplement policy or certificate will be considered to have 
 24.16  comparable or lesser benefits unless it contains one or more 
 24.17  significant benefits not included in the Medicare select policy 
 24.18  or certificate being replaced.  For the purposes of this 
 24.19  paragraph, a significant benefit means coverage for the Medicare 
 24.20  Part A deductible, coverage for prescription drugs, coverage for 
 24.21  at-home recovery services, or coverage for part B excess charges.
 24.22     (o) A Medicare select issuer shall comply with reasonable 
 24.23  requests for data made by state or federal agencies, including 
 24.24  the United States Department of Health and Human Services, for 
 24.25  the purpose of evaluating the Medicare select program. 
 24.26     (p) Medicare select policies and certificates under this 
 24.27  section shall be regulated and approved by the Department of 
 24.28  Commerce. 
 24.29     (q) Medicare select policies and certificates must be 
 24.30  either a basic plan or an extended basic plan.  Before a 
 24.31  Medicare select policy or certificate is sold or issued in this 
 24.32  state, the applicant must be provided with an explanation of 
 24.33  coverage for both a Medicare select basic and a Medicare select 
 24.34  extended basic policy or certificate and must be provided with 
 24.35  the opportunity of purchasing either a Medicare select basic or 
 24.36  a Medicare select extended basic policy.  The basic plan may 
 25.1   also include any of the optional benefit riders authorized by 
 25.2   section 62A.316.  Preventive care provided by Medicare select 
 25.3   policies or certificates must be provided as set forth in 
 25.4   section 62A.315 or 62A.316, except that the benefits are as 
 25.5   defined in chapter 62D. 
 25.6      Sec. 13.  Minnesota Statutes 2002, section 62C.14, 
 25.7   subdivision 14, is amended to read: 
 25.8      Subd. 14.  [NEWBORN INFANT COVERAGE.] No subscriber's 
 25.9   individual contract or any group contract which provides for 
 25.10  coverage of family members or other dependents of a subscriber 
 25.11  or of an employee or other group member of a group subscriber, 
 25.12  shall be renewed, delivered, or issued for delivery in this 
 25.13  state unless such contract includes as covered family members or 
 25.14  dependents any newborn infants immediately from the moment of 
 25.15  birth and thereafter which insurance shall provide coverage for 
 25.16  illness, injury, congenital malformation or premature 
 25.17  birth.  The coverage described in this subdivision includes 
 25.18  coverage of cleft lip and cleft palate to the same extent 
 25.19  provided in section 62A.042, subdivisions 1, paragraph (b); and 
 25.20  2, paragraph (b).  For purposes of this paragraph, "newborn 
 25.21  infants" includes grandchildren who are financially dependent 
 25.22  upon a covered grandparent and who reside with that covered 
 25.23  grandparent continuously from birth.  No policy, contract, or 
 25.24  agreement covered by this section may require notification to a 
 25.25  health carrier as a condition for this dependent coverage.  
 25.26  However, if the policy, contract, or agreement mandates an 
 25.27  additional premium for each dependent, the health carrier shall 
 25.28  be entitled to all premiums that would have been collected had 
 25.29  the health carrier been aware of the additional dependent.  The 
 25.30  health carrier may withhold payment of any health benefits for 
 25.31  the new dependent until it has been compensated with the 
 25.32  applicable premium which would have been owed if the health 
 25.33  carrier had been informed of the additional dependent 
 25.34  immediately. 
 25.35     Sec. 14.  [62E.075] [HIGH DEDUCTIBLE HEALTH PLANS.] 
 25.36     Subdivision 1.  [QUALIFIED PLAN.] A high deductible health 
 26.1   plan shall be deemed a qualified plan under section 62E.06.  The 
 26.2   plan must meet all other requirements of state law except those 
 26.3   that are inconsistent with a high deductible health plan as 
 26.4   defined in sections 220 and 223 of the Internal Revenue Code of 
 26.5   1986, and implementing regulations, as amended from time to time.
 26.6      Subd. 2.  [DEFINITION.] For purposes of this section, "high 
 26.7   deductible health plans" shall mean those health coverage plans 
 26.8   issued by a health plan company as defined under the provisions 
 26.9   of sections 220 and 223 of the Internal Revenue Code of 1986, 
 26.10  and implementing regulations, as amended from time to time. 
 26.11     Sec. 15.  Minnesota Statutes 2002, section 65A.29, 
 26.12  subdivision 11, is amended to read: 
 26.13     Subd. 11.  [NONRENEWAL.] Every insurer shall establish a 
 26.14  plan that sets out the minimum number and amount of claims 
 26.15  during an experience period that may result in a 
 26.16  nonrenewal.  For purposes of the plan, the insurer may not 
 26.17  consider as a claim the insured's inquiry about a hypothetical 
 26.18  claim, or the insured's inquiry to the insured's agent regarding 
 26.19  a potential claim. 
 26.20     No homeowner's insurance policy may be nonrenewed based on 
 26.21  the insured's loss experience unless the insurer has sent a 
 26.22  written notice that any future losses may result in nonrenewal 
 26.23  due to loss experience. 
 26.24     Any nonrenewal of a homeowner's insurance policy must, at a 
 26.25  minimum, comply with the requirements of subdivision 8 and the 
 26.26  rules adopted by the commissioner. 
 26.27     Sec. 16.  Minnesota Statutes 2002, section 65B.48, 
 26.28  subdivision 3, is amended to read: 
 26.29     Subd. 3.  Self-insurance, subject to approval of the 
 26.30  commissioner, is effected by filing with the commissioner in 
 26.31  satisfactory form: 
 26.32     (1) a continuing undertaking by the owner or other 
 26.33  appropriate person to pay tort liabilities or basic economic 
 26.34  loss benefits, or both, and to perform all other obligations 
 26.35  imposed by sections 65B.41 to 65B.71; 
 26.36     (2) evidence that appropriate provision exists for prompt 
 27.1   administration of all claims, benefits, and obligations provided 
 27.2   by sections 65B.41 to 65B.71; 
 27.3      (3) evidence that reliable financial arrangements, 
 27.4   deposits, or commitments exist providing assurance, 
 27.5   substantially equivalent to that afforded by a policy of 
 27.6   insurance complying with sections 65B.41 to 65B.71, for payment 
 27.7   of tort liabilities, basic economic loss benefits, and all other 
 27.8   obligations imposed by sections 65B.41 to 65B.71; and 
 27.9      (4) a nonrefundable initial application fee 
 27.10  of $1,500 $2,500 and an annual a renewal fee of $400 $1,200 
 27.11  for political subdivisions and $500 $1,500 for nonpolitical 
 27.12  entities every three years.  
 27.13     Sec. 17.  Minnesota Statutes 2002, section 72A.20, 
 27.14  subdivision 13, is amended to read: 
 27.15     Subd. 13.  [REFUSAL TO RENEW.] Refusing to renew, declining 
 27.16  to offer or write, or charging differential rates for an 
 27.17  equivalent amount of homeowner's insurance coverage, as defined 
 27.18  by section 65A.27, for property located in a town or statutory 
 27.19  or home rule charter city, in which the insurer offers to sell 
 27.20  or writes homeowner's insurance, solely because:  
 27.21     (a) of the geographic area in which the property is 
 27.22  located; 
 27.23     (b) of the age of the primary structure sought to be 
 27.24  insured; 
 27.25     (c) the insured or prospective insured was denied coverage
 27.26  of the property by another insurer, whether by cancellation, 
 27.27  nonrenewal or declination to offer coverage, for a reason other 
 27.28  than those specified in section 65A.01, subdivision 3a, clauses 
 27.29  (a) to (e); or 
 27.30     (d) the property of the insured or prospective insured has
 27.31  been insured under the Minnesota FAIR Plan Act, shall constitute 
 27.32  an unfair method of competition and an unfair and deceptive act 
 27.33  or practice; or 
 27.34     (e) the insured has inquired about coverage for a 
 27.35  hypothetical claim or has made an inquiry to the insured's agent 
 27.36  regarding a potential claim.  
 28.1      This subdivision prohibits an insurer from filing or 
 28.2   charging different rates for different zip code areas within the 
 28.3   same town or statutory or home rule charter city. 
 28.4      This subdivision shall not prohibit the insurer from 
 28.5   applying underwriting or rating standards which the insurer 
 28.6   applies generally in all other locations in the state and which 
 28.7   are not specifically prohibited by clauses (a) to (d) (e).  Such 
 28.8   underwriting or rating standards shall specifically include but 
 28.9   not be limited to standards based upon the proximity of the 
 28.10  insured property to an extraordinary hazard or based upon the 
 28.11  quality or availability of fire protection services or based 
 28.12  upon the density or concentration of the insurer's risks.  
 28.13  Clause (b) shall not prohibit the use of rating standards based 
 28.14  upon the age of the insured structure's plumbing, electrical, 
 28.15  heating or cooling system or other part of the structure, the 
 28.16  age of which affects the risk of loss.  Any insurer's failure to 
 28.17  comply with section 65A.29, subdivisions 2 to 4, either (1) by 
 28.18  failing to give an insured or applicant the required notice or 
 28.19  statement or (2) by failing to state specifically a bona fide 
 28.20  underwriting or other reason for the refusal to write shall 
 28.21  create a presumption that the insurer has violated this 
 28.22  subdivision.  
 28.23     Sec. 18.  Minnesota Statutes 2002, section 72A.20, 
 28.24  subdivision 15, is amended to read: 
 28.25     Subd. 15.  [PRACTICES NOT HELD TO BE DISCRIMINATION OR 
 28.26  REBATES.] Nothing in subdivision 8, 9, or 10, or in section 
 28.27  72A.12, subdivisions 3 and 4, shall be construed as including 
 28.28  within the definition of discrimination or rebates any of the 
 28.29  following practices: 
 28.30     (1) in the case of any contract of life insurance or 
 28.31  annuity, paying bonuses to policyholders or otherwise abating 
 28.32  their premiums in whole or in part out of surplus accumulated 
 28.33  from nonparticipating insurance, provided that any bonuses or 
 28.34  abatement of premiums shall be fair and equitable to 
 28.35  policyholders and for the best interests of the company and its 
 28.36  policyholders; 
 29.1      (2) in the case of life insurance policies issued on the 
 29.2   industrial debit plan, making allowance, to policyholders who 
 29.3   have continuously for a specified period made premium payments 
 29.4   directly to an office of the insurer, in an amount which fairly 
 29.5   represents the saving in collection expense; 
 29.6      (3) readjustment of the rate of premium for a group 
 29.7   insurance policy based on the loss or expense experienced 
 29.8   thereunder, at the end of the first or any subsequent policy 
 29.9   year of insurance thereunder, which may be made retroactive only 
 29.10  for such policy year; 
 29.11     (4) in the case of an individual or group health insurance 
 29.12  policy, the payment of differing amounts of reimbursement to 
 29.13  insureds who elect to receive health care goods or services from 
 29.14  providers designated by the insurer, provided that each insurer 
 29.15  shall on or before August 1 of each year file with the 
 29.16  commissioner summary data regarding the financial reimbursement 
 29.17  offered to providers so designated.  
 29.18     Any insurer which proposes to offer an arrangement 
 29.19  authorized under this clause shall disclose prior to its initial 
 29.20  offering and on or before August 1 of each year thereafter as a 
 29.21  supplement to its annual statement submitted to the commissioner 
 29.22  pursuant to section 60A.13, subdivision 1, the following 
 29.23  information:  
 29.24     (a) the name which the arrangement intends to use and its 
 29.25  business address; 
 29.26     (b) the name, address, and nature of any separate 
 29.27  organization which administers the arrangement on the behalf of 
 29.28  the insurers; and 
 29.29     (c) the names and addresses of all providers designated by 
 29.30  the insurer under this clause and the terms of the agreements 
 29.31  with designated health care providers.  
 29.32     The commissioner shall maintain a record of arrangements 
 29.33  proposed under this clause, including a record of any complaints 
 29.34  submitted relative to the arrangements. 
 29.35     If the commissioner requests copies of contracts with a 
 29.36  provider under this clause and the provider requests a 
 30.1   determination, all information contained in the contracts that 
 30.2   the commissioner determines may place the provider or health 
 30.3   care plan at a competitive disadvantage is nonpublic data.  
 30.4      Sec. 19.  Minnesota Statutes 2002, section 72A.201, 
 30.5   subdivision 3, is amended to read: 
 30.6      Subd. 3.  [DEFINITIONS.] For the purposes of this section, 
 30.7   the following terms have the meanings given them.  
 30.8      (1) [ACCIDENT AND SICKNESS INSURANCE.] "Accident and 
 30.9   sickness insurance" means any policy covering the kind of 
 30.10  insurance described in section 60A.06, subdivision 1, clause 
 30.11  (5)(a). 
 30.12     (2) [ADJUSTER OR ADJUSTERS.] "Adjuster" or "adjusters" is 
 30.13  as defined in section 72B.02.  
 30.14     (2) (3) [AGENT.] "Agent" means insurance agents or 
 30.15  insurance agencies licensed pursuant to sections 60K.30 to 
 30.16  60K.56, and representatives of these agents or agencies.  
 30.17     (3) (4) [CLAIM.] "Claim" means a request or demand made 
 30.18  with an insurer for the payment of funds or the provision of 
 30.19  services under the terms of any policy, certificate, contract of 
 30.20  insurance, binder, or other contracts of temporary insurance. 
 30.21  The term does not include a claim under a health insurance 
 30.22  policy made by a participating provider with an insurer in 
 30.23  accordance with the participating provider's service agreement 
 30.24  with the insurer which has been filed with the commissioner of 
 30.25  commerce prior to its use.  
 30.26     (4) (5) [CLAIM SETTLEMENT.] "Claim settlement" means all 
 30.27  activities of an insurer related directly or indirectly to the 
 30.28  determination of the extent of liabilities due or potentially 
 30.29  due under coverages afforded by the policy, and which result in 
 30.30  claim payment, claim acceptance, compromise, or other 
 30.31  disposition.  
 30.32     (5) (6) [CLAIMANT.] "Claimant" means any individual, 
 30.33  corporation, association, partnership, or other legal entity 
 30.34  asserting a claim against any individual, corporation, 
 30.35  association, partnership, or other legal entity which is insured 
 30.36  under an insurance policy or insurance contract of an insurer.  
 31.1      (6) (7) [COMPLAINT.] "Complaint" means a communication 
 31.2   primarily expressing a grievance.  
 31.3      (7) (8) [INSURANCE POLICY.] "Insurance policy" means any 
 31.4   evidence of coverage issued by an insurer including all 
 31.5   policies, contracts, certificates, riders, binders, and 
 31.6   endorsements which provide or describe coverage.  The term 
 31.7   includes any contract issuing coverage under a self-insurance 
 31.8   plan, group self-insurance plan, or joint self-insurance 
 31.9   employee health plans.  
 31.10     (8) (9) [INSURED.] "Insured" means an individual, 
 31.11  corporation, association, partnership, or other legal entity 
 31.12  asserting a right to payment under their insurance policy or 
 31.13  insurance contract arising out of the occurrence of the 
 31.14  contingency or loss covered by the policy or contract.  The term 
 31.15  does not apply to a person who acquires rights under a mortgage. 
 31.16     (9) (10) [INSURER.] "Insurer" includes any individual, 
 31.17  corporation, association, partnership, reciprocal exchange, 
 31.18  Lloyds, fraternal benefits society, self-insurer, surplus line 
 31.19  insurer, self-insurance administrator, and nonprofit service 
 31.20  plans under the jurisdiction of the Department of Commerce.  
 31.21     (10) (11) [INVESTIGATION.] "Investigation" means a 
 31.22  reasonable procedure adopted by an insurer to determine whether 
 31.23  to accept or reject a claim.  
 31.24     (11) (12) [NOTIFICATION OF CLAIM.] "Notification of claim" 
 31.25  means any communication to an insurer by a claimant or an 
 31.26  insured which reasonably apprises the insurer of a claim brought 
 31.27  under an insurance contract or policy issued by the insurer. 
 31.28  Notification of claim to an agent of the insurer is notice to 
 31.29  the insurer.  
 31.30     (12) (13) [PROOF OF LOSS.] "Proof of loss" means the 
 31.31  necessary documentation required from the insured to establish 
 31.32  entitlement to payment under a policy.  
 31.33     (13) (14) [SELF-INSURANCE ADMINISTRATOR.] "Self-insurance 
 31.34  administrator" means any vendor of risk management services or 
 31.35  entities administering self-insurance plans, licensed pursuant 
 31.36  to section 60A.23, subdivision 8.  
 32.1      (14) (15) [SELF-INSURED OR SELF-INSURER.] "Self-insured" or 
 32.2   "self-insurer" means any entity authorized pursuant to section 
 32.3   65B.48, subdivision 3; chapter 62H; section 176.181, subdivision 
 32.4   2; Laws of Minnesota 1983, chapter 290, section 171; section 
 32.5   471.617; or section 471.981 and includes any entity which, for a 
 32.6   fee, employs the services of vendors of risk management services 
 32.7   in the administration of a self-insurance plan as defined by 
 32.8   section 60A.23, subdivision 8, clause (2), subclauses (a) and 
 32.9   (d). 
 32.10     Sec. 20.  Minnesota Statutes 2002, section 72A.201, 
 32.11  subdivision 4, is amended to read: 
 32.12     Subd. 4.  [STANDARDS FOR CLAIM FILING AND HANDLING.] The 
 32.13  following acts by an insurer, an adjuster, a self-insured, or a 
 32.14  self-insurance administrator constitute unfair settlement 
 32.15  practices:  
 32.16     (1) except for claims made under a health insurance policy 
 32.17  of accident and sickness insurance, after receiving notification 
 32.18  of claim from an insured or a claimant, failing to acknowledge 
 32.19  receipt of the notification of the claim within ten business 
 32.20  days, and failing to promptly provide all necessary claim forms 
 32.21  and instructions to process the claim, unless the claim is 
 32.22  settled within ten business days.  The acknowledgment must 
 32.23  include the telephone number of the company representative who 
 32.24  can assist the insured or the claimant in providing information 
 32.25  and assistance that is reasonable so that the insured or 
 32.26  claimant can comply with the policy conditions and the insurer's 
 32.27  reasonable requirements.  If an acknowledgment is made by means 
 32.28  other than writing, an appropriate notation of the 
 32.29  acknowledgment must be made in the claim file of the insurer and 
 32.30  dated.  An appropriate notation must include at least the 
 32.31  following information where the acknowledgment is by telephone 
 32.32  or oral contact:  
 32.33     (i) the telephone number called, if any; 
 32.34     (ii) the name of the person making the telephone call or 
 32.35  oral contact; 
 32.36     (iii) the name of the person who actually received the 
 33.1   telephone call or oral contact; 
 33.2      (iv) the time of the telephone call or oral contact; and 
 33.3      (v) the date of the telephone call or oral contact; 
 33.4      (2) failing to reply, within ten business days of receipt, 
 33.5   to all other communications about a claim from an insured or a 
 33.6   claimant that reasonably indicate a response is requested or 
 33.7   needed; 
 33.8      (3)(i) unless provided otherwise by clause (ii), other law, 
 33.9   or in the policy, failing to complete its investigation and 
 33.10  inform the insured or claimant of acceptance or denial of a 
 33.11  claim within 30 business days after receipt of notification of 
 33.12  claim unless the investigation cannot be reasonably completed 
 33.13  within that time. In the event that the investigation cannot 
 33.14  reasonably be completed within that time, the insurer shall 
 33.15  notify the insured or claimant within the time period of the 
 33.16  reasons why the investigation is not complete and the expected 
 33.17  date the investigation will be complete.  For claims made under 
 33.18  a health policy of accident and sickness insurance, the 
 33.19  notification of claim must be in writing; 
 33.20     (ii) for claims submitted under a health plan, as defined 
 33.21  in section 62Q.01, subdivision 3, which are accepted, the 
 33.22  insurer must notify the insured or claimant no less than 
 33.23  semiannually of the disposition of accepted claims of the 
 33.24  insured or claimant.  For purposes of this clause, acceptance of 
 33.25  a claim means that there is no additional financial liability 
 33.26  for the insured or claimant, either because there is a flat 
 33.27  co-payment amount specified in the health plan or because there 
 33.28  is no co-payment owed; 
 33.29     (4) where evidence of suspected fraud is present, the 
 33.30  requirement to disclose their reasons for failure to complete 
 33.31  the investigation within the time period set forth in clause (3) 
 33.32  need not be specific.  The insurer must make this evidence 
 33.33  available to the Department of Commerce if requested; 
 33.34     (5) failing to notify an insured who has made a 
 33.35  notification of claim of all available benefits or coverages 
 33.36  which the insured may be eligible to receive under the terms of 
 34.1   a policy and of the documentation which the insured must supply 
 34.2   in order to ascertain eligibility; 
 34.3      (6) unless otherwise provided by law or in the policy, 
 34.4   requiring an insured to give written notice of loss or proof of 
 34.5   loss within a specified time, and thereafter seeking to relieve 
 34.6   the insurer of its obligations if the time limit is not complied 
 34.7   with, unless the failure to comply with the time limit 
 34.8   prejudices the insurer's rights and then only if the insurer 
 34.9   gave prior notice to the insured of the potential prejudice; 
 34.10     (7) advising an insured or a claimant not to obtain the 
 34.11  services of an attorney or an adjuster, or representing that 
 34.12  payment will be delayed if an attorney or an adjuster is 
 34.13  retained by the insured or the claimant; 
 34.14     (8) failing to advise in writing an insured or claimant who 
 34.15  has filed a notification of claim known to be unresolved, and 
 34.16  who has not retained an attorney, of the expiration of a statute 
 34.17  of limitations at least 60 days prior to that expiration.  For 
 34.18  the purposes of this clause, any claim on which the insurer has 
 34.19  received no communication from the insured or claimant for a 
 34.20  period of two years preceding the expiration of the applicable 
 34.21  statute of limitations shall not be considered to be known to be 
 34.22  unresolved and notice need not be sent pursuant to this clause; 
 34.23     (9) demanding information which would not affect the 
 34.24  settlement of the claim; 
 34.25     (10) unless expressly permitted by law or the policy, 
 34.26  refusing to settle a claim of an insured on the basis that the 
 34.27  responsibility should be assumed by others; 
 34.28     (11) failing, within 60 business days after receipt of a 
 34.29  properly executed proof of loss, to advise the insured of the 
 34.30  acceptance or denial of the claim by the insurer.  No insurer 
 34.31  shall deny a claim on the grounds of a specific policy 
 34.32  provision, condition, or exclusion unless reference to the 
 34.33  provision, condition, or exclusion is included in the denial. 
 34.34  The denial must be given to the insured in writing with a copy 
 34.35  filed in the claim file; 
 34.36     (12) denying or reducing a claim on the basis of an 
 35.1   application which was altered or falsified by the agent or 
 35.2   insurer without the knowledge of the insured; 
 35.3      (13) failing to notify the insured of the existence of the 
 35.4   additional living expense coverage when an insured under a 
 35.5   homeowners policy sustains a loss by reason of a covered 
 35.6   occurrence and the damage to the dwelling is such that it is not 
 35.7   habitable; 
 35.8      (14) failing to inform an insured or a claimant that the 
 35.9   insurer will pay for an estimate of repair if the insurer 
 35.10  requested the estimate and the insured or claimant had 
 35.11  previously submitted two estimates of repair. 
 35.12     Sec. 21.  [79.097] [PREMIUM SURCHARGE RATE CALCULATION.] 
 35.13     On or before July 1 of each year, the commissioner shall 
 35.14  establish the special compensation fund premium surcharge rate 
 35.15  to be used by all insurers for policies with an effective date 
 35.16  on or after January 1 of the following year.  The premium 
 35.17  surcharge rate must be sufficient to generate revenue necessary 
 35.18  to satisfy the pro rata share of the assessment obligations 
 35.19  attributable to insured employers that must be paid on the 
 35.20  assessment. 
 35.21     Sec. 22.  Minnesota Statutes 2002, section 79.56, 
 35.22  subdivision 1, is amended to read: 
 35.23     Subdivision 1.  [PREFILING OF RATES.] (a) Each insurer 
 35.24  shall file with the commissioner a complete copy of its rates 
 35.25  and rating plan, and all changes and amendments thereto, and 
 35.26  such supporting data and information that the commissioner may 
 35.27  by rule require, at least 60 days prior to its effective date.  
 35.28  The commissioner shall advise an insurer within 30 days of the 
 35.29  filing if its submission is not accompanied with such supporting 
 35.30  data and information that the commissioner by rule may require.  
 35.31  The commissioner may extend the filing review period and 
 35.32  effective date for an additional 30 days if an insurer, after 
 35.33  having been advised of what supporting data and information is 
 35.34  necessary to complete its filing, does not provide such 
 35.35  information within 15 days of having been so notified.  If any 
 35.36  rate or rating plan filing or amendment thereto is not 
 36.1   disapproved by the commissioner within the filing review period, 
 36.2   the insurer may implement it.  For the period August 1, 1995, to 
 36.3   December 31, 1995, the filing shall be made at least 90 days 
 36.4   prior to the effective date and the department shall advise an 
 36.5   insurer within 60 days of such filing if the filing is 
 36.6   insufficient under this section. 
 36.7      (b) A rating plan or rates are not subject to the 
 36.8   requirements of paragraph (a), where the insurer files a 
 36.9   certification verifying that it will use the mutually agreed 
 36.10  upon rating plan or rates only to write a specific employer that 
 36.11  generates $250,000 in annual written workers' compensation 
 36.12  premiums before the application of any large deductible rating 
 36.13  plan.  The certification must be refiled upon each renewal of 
 36.14  the employer's policy.  The $250,000 threshold includes premiums 
 36.15  generated in any state.  The designation and certification must 
 36.16  be submitted in substantially the following form: 
 36.17  Name and address of insurer:................................. 
 36.18  Name and address of insured employer:........................ 
 36.19  Policy period:............................................... 
 36.20  I certify that the employer named above generates $250,000 or 
 36.21  more in annual countrywide written workers' compensation 
 36.22  premiums, and that the calculation of this threshold is based on 
 36.23  the rates and rating plans that have been approved by the 
 36.24  appropriate state regulatory authority.  The filing of this 
 36.25  certification authorizes the use of this rate or rating plan 
 36.26  only for the named employer. 
 36.27  Name of responsible officer:................................. 
 36.28  Title:....................................................... 
 36.29  Signature:................................................... 
 36.30     Sec. 23.  Minnesota Statutes 2002, section 79.56, 
 36.31  subdivision 3, is amended to read: 
 36.32     Subd. 3.  [PENALTIES.] (a) Any insurer using a rate or a 
 36.33  rating plan which has not been filed or certified under 
 36.34  subdivision 1 shall be subject to a fine of up to $100 for each 
 36.35  day the failure to file continues.  The commissioner may, after 
 36.36  a hearing on the record, find that the failure is willful.  A 
 37.1   willful failure to meet filing requirements shall be punishable 
 37.2   by a fine of up to $500 for each day during which a willful 
 37.3   failure continues.  These penalties shall be in addition to any 
 37.4   other penalties provided by law.  
 37.5      (b) Notwithstanding this subdivision, an employer that 
 37.6   generates $250,000 in annual written workers' compensation 
 37.7   premium under the rates and rating plan of an insurer before the 
 37.8   application of any large deductible rating plans, may be written 
 37.9   by that insurer using rates or rating plans that are not subject 
 37.10  to disapproval but which have been filed.  For the purposes of 
 37.11  this paragraph, written workers' compensation premiums generated 
 37.12  from states other than Minnesota are included in calculating the 
 37.13  $250,000 threshold for large risk alternative rating option 
 37.14  plans.  
 37.15     Sec. 24.  Minnesota Statutes 2002, section 79.62, 
 37.16  subdivision 3, is amended to read: 
 37.17     Subd. 3.  [ISSUANCE.] The commissioner, upon finding that 
 37.18  the applicant organization is qualified to provide the services 
 37.19  required and proposed, or has contracted with a licensed data 
 37.20  service organization to purchase these services which are 
 37.21  required by this chapter but are not provided directly by the 
 37.22  applicant, and that all requirements of law are met, shall issue 
 37.23  a license.  Each license is subject to annual renewal effective 
 37.24  June 30.  Each new or renewal license application must be 
 37.25  accompanied by a fee of $50 $1,000.  
 37.26     Sec. 25.  Minnesota Statutes 2003 Supplement, section 
 37.27  79A.04, subdivision 10, is amended to read: 
 37.28     Subd. 10.  [NOTICE; OBLIGATION OF FUND.] In the event of 
 37.29  bankruptcy, insolvency, or certificate of default, the 
 37.30  commissioner shall immediately notify by certified mail the 
 37.31  commissioner of finance, the surety, the issuer of an 
 37.32  irrevocable letter of credit, and any custodian of the security 
 37.33  required in this chapter.  At the time of notification, the 
 37.34  commissioner shall also call the security and transfer and 
 37.35  assign it to the self-insurers' security fund.  The commissioner 
 37.36  shall also immediately notify by certified mail the 
 38.1   self-insurers' security fund, and order the security fund to 
 38.2   assume the insolvent self-insurers' obligations for which it is 
 38.3   liable under chapter 176.  The security fund shall commence 
 38.4   payment of these obligations within 14 days of receipt of this 
 38.5   notification and order.  Payments shall be made to claimants 
 38.6   whose entitlement to benefits can be ascertained by the security 
 38.7   fund, with or without proceedings before the Department of Labor 
 38.8   and Industry, the Office of Administrative Hearings, the 
 38.9   Workers' Compensation Court of Appeals, or the Minnesota Supreme 
 38.10  Court.  Upon the assumption of obligations by the security fund 
 38.11  pursuant to the commissioner's notification and order, the 
 38.12  security fund has the right to immediate possession of any 
 38.13  posted or deposited security and the custodian, surety, or 
 38.14  issuer of any irrevocable letter of credit or the commissioner, 
 38.15  if in possession of it, shall turn over the security, proceeds 
 38.16  of the surety bond, or letter of credit to the security fund 
 38.17  together with the interest that has accrued since the date of 
 38.18  the self-insured employer's insolvency.  The security fund has 
 38.19  the right to the immediate possession of all relevant worker's 
 38.20  compensation claim files and data of the self-insurer, and the 
 38.21  possessor of the files and data must turn the files and data, or 
 38.22  complete copies of them, over to the security fund within five 
 38.23  days of the notification provided under this subdivision.  If 
 38.24  the possessor of the files and data fails to timely turn over 
 38.25  the files and data to the security fund, it is liable to the 
 38.26  security fund for a penalty of $500 per day for each day after 
 38.27  the five-day period has expired.  The security fund is entitled 
 38.28  to recover its reasonable attorney fees and costs in any action 
 38.29  brought to obtain possession of the worker's compensation claim 
 38.30  files and data of the self-insurer, and for any action to 
 38.31  recover the penalties provided by this subdivision.  The 
 38.32  self-insurers' security fund may administer payment of benefits 
 38.33  or it may retain a third-party administrator to do so.  
 38.34     Sec. 26.  Minnesota Statutes 2002, section 79A.06, 
 38.35  subdivision 5, is amended to read: 
 38.36     Subd. 5.  [PRIVATE EMPLOYERS WHO HAVE CEASED TO BE 
 39.1   SELF-INSURED.] (a) Private employers who have ceased to be 
 39.2   private self-insurers shall discharge their continuing 
 39.3   obligations to secure the payment of compensation which is 
 39.4   accrued during the period of self-insurance, for purposes of 
 39.5   Laws 1988, chapter 674, sections 1 to 21, by compliance with all 
 39.6   of the following obligations of current certificate holders: 
 39.7      (1) Filing reports with the commissioner to carry out the 
 39.8   requirements of this chapter; 
 39.9      (2) Depositing and maintaining a security deposit for 
 39.10  accrued liability for the payment of any compensation which may 
 39.11  become due, pursuant to chapter 176.  However, if a private 
 39.12  employer who has ceased to be a private self-insurer purchases 
 39.13  an insurance policy from an insurer authorized to transact 
 39.14  workers' compensation insurance in this state which provides 
 39.15  coverage of all claims for compensation arising out of injuries 
 39.16  occurring during the entire period the employer was 
 39.17  self-insured, whether or not reported during that period, the 
 39.18  policy will: 
 39.19     (i) discharge the obligation of the employer to maintain a 
 39.20  security deposit for the payment of the claims covered under the 
 39.21  policy; 
 39.22     (ii) discharge any obligation which the self-insurers' 
 39.23  security fund has or may have for payment of all claims for 
 39.24  compensation arising out of injuries occurring during the period 
 39.25  the employer was self-insured, whether or not reported during 
 39.26  that period; and 
 39.27     (iii) discharge the obligations of the employer to pay any 
 39.28  future assessments to the self-insurers' security fund.  
 39.29     A private employer who has ceased to be a private 
 39.30  self-insurer may instead buy an insurance policy described 
 39.31  above, except that it covers only a portion of the period of 
 39.32  time during which the private employer was self-insured; 
 39.33  purchase of such a policy discharges any obligation that the 
 39.34  self-insurers' security fund has or may have for payment of all 
 39.35  claims for compensation arising out of injuries occurring during 
 39.36  the period for which the policy provides coverage, whether or 
 40.1   not reported during that period.  
 40.2      A policy described in this clause may not be issued by an 
 40.3   insurer unless it has previously been approved as to form and 
 40.4   substance by the commissioner; and 
 40.5      (3) Paying within 30 days all assessments of which notice 
 40.6   is sent by the security fund, for a period of seven years from 
 40.7   the last day its certificate of self-insurance was in effect.  
 40.8   Thereafter, the private employer who has ceased to be a private 
 40.9   self-insurer may either:  (i) continue to pay within 30 days all 
 40.10  assessments of which notice is sent by the security fund until 
 40.11  it has no incurred liabilities for the payment of compensation 
 40.12  arising out of injuries during the period of self-insurance; or 
 40.13  (ii) pay the security fund a cash payment equal to four percent 
 40.14  of the net present value of all remaining incurred liabilities 
 40.15  for the payment of compensation under sections 176.101 and 
 40.16  176.111 as certified by a member of the casualty actuarial 
 40.17  society.  Assessments shall be based on the benefits paid by the 
 40.18  employer during the calendar year immediately preceding the 
 40.19  calendar year in which the employer's right to self-insure is 
 40.20  terminated or withdrawn. 
 40.21     (b) With respect to a self-insurer who terminates its 
 40.22  self-insurance authority after April 1, 1998, that member shall 
 40.23  obtain and file with the commissioner an actuarial opinion of 
 40.24  its outstanding liabilities as determined by an associate or 
 40.25  fellow of the Casualty Actuarial Society within 120 days of the 
 40.26  date of its termination.  If the actuarial opinion is not timely 
 40.27  filed, the self-insurers' security fund may, at its discretion, 
 40.28  engage the services of an actuary for this purpose.  The expense 
 40.29  of this actuarial opinion shall be assessed against and be the 
 40.30  obligation of the self-insurer.  The commissioner may issue a 
 40.31  certificate of default against the self-insurer for failure to 
 40.32  pay this assessment to the self-insurers' security fund as 
 40.33  provided by section 79A.04, subdivision 9.  The opinion must 
 40.34  separate liability for indemnity benefits from liability from 
 40.35  medical benefits, and must discount each up to four percent per 
 40.36  annum to net present value.  Within 30 days after notification 
 41.1   of approval of the actuarial opinion by the commissioner, the 
 41.2   member shall pay to the security fund an amount equal to 120 
 41.3   percent of that discounted outstanding indemnity liability, 
 41.4   multiplied by the greater of the average annualized assessment 
 41.5   rate since inception of the security fund or the annual rate at 
 41.6   the time of the most recent assessment before termination.  If 
 41.7   the payment is not made within 30 days of the notification, 
 41.8   interest on it at the rate prescribed by section 549.09 shall be 
 41.9   paid by the former member to the security fund until the 
 41.10  principal amount is paid in full. 
 41.11     (c) A former member who terminated its self-insurance 
 41.12  authority before April 1, 1998, who has paid assessments to the 
 41.13  self-insurers' security fund for seven years, and whose 
 41.14  annualized assessment is $500 or less, may buy out of its 
 41.15  outstanding liabilities to the self-insurers' security fund by 
 41.16  an amount calculated as follows:  1.35 multiplied by the 
 41.17  indemnity case reserves at the time of the calculation, 
 41.18  multiplied by the then current self-insurers' security fund 
 41.19  annualized assessment rate. 
 41.20     (d) A former member who terminated its self-insurance 
 41.21  authority before April 1, 1998, and who is paying assessments 
 41.22  within the first seven years after ceasing to be self-insured 
 41.23  under paragraph (a), clause (3), may elect to buy out its 
 41.24  outstanding liabilities to the self-insurers' security fund by 
 41.25  obtaining and filing with the commissioner an actuarial opinion 
 41.26  of its outstanding liabilities as determined by an associate or 
 41.27  fellow of the Casualty Actuarial Society.  The opinion must 
 41.28  separate liability for indemnity benefits from liability for 
 41.29  medical benefits, and must discount each up to four percent per 
 41.30  annum to net present value.  Within 30 days after notification 
 41.31  of approval of the actuarial opinion by the commissioner, the 
 41.32  member shall pay to the security fund an amount equal to 120 
 41.33  percent of that discounted outstanding indemnity liability, 
 41.34  multiplied by the greater of the average annualized assessment 
 41.35  rate since inception of the security fund or the annual rate at 
 41.36  the time of the most recent assessment. 
 42.1      (e) A former member who has paid the security fund 
 42.2   according to paragraphs (b) to (d) and subsequently receives 
 42.3   authority from the commissioner to again self-insure shall be 
 42.4   assessed under section 79A.12, subdivision 2, only on indemnity 
 42.5   benefits paid on injuries that occurred after the former member 
 42.6   received authority to self-insure again; provided that the 
 42.7   member furnishes verified data regarding those benefits to the 
 42.8   security fund. 
 42.9      (f) In addition to proceedings to establish liabilities and 
 42.10  penalties otherwise provided, a failure to comply may be the 
 42.11  subject of a proceeding before the commissioner.  An appeal from 
 42.12  the commissioner's determination may be taken pursuant to the 
 42.13  contested case procedures of chapter 14 within 30 days of the 
 42.14  commissioner's written determination. 
 42.15     Any current or past member of the self-insurers' security 
 42.16  fund is subject to service of process on any claim arising out 
 42.17  of chapter 176 or this chapter in the manner provided by section 
 42.18  5.25, or as otherwise provided by law.  The issuance of a 
 42.19  certificate to self-insure to the private self-insured employer 
 42.20  shall be deemed to be the agreement that any process which is 
 42.21  served in accordance with this section shall be of the same 
 42.22  legal force and effect as if served personally within this state.
 42.23     Sec. 27.  Minnesota Statutes 2002, section 79A.12, 
 42.24  subdivision 2, is amended to read: 
 42.25     Subd. 2.  [ASSESSMENT.] The security fund may assess each 
 42.26  of its members a pro rata share of the funding necessary to 
 42.27  carry out its obligation and the purposes of this chapter.  
 42.28  Total annual assessments in any calendar year shall not exceed 
 42.29  ten percent of the workers' compensation benefits paid under 
 42.30  sections 176.101 and 176.111 during the previous paid indemnity 
 42.31  losses, as defined in section 176.129, made by the self-insured 
 42.32  employer during the preceding calendar year.  The annual 
 42.33  assessment calculation shall not include supplementary benefits 
 42.34  paid which will be reimbursed by the special compensation fund.  
 42.35  Funds obtained by assessments pursuant to this subdivision may 
 42.36  only be used for the purposes of this chapter.  The trustees 
 43.1   shall certify to the commissioner the collection and receipt of 
 43.2   all money from assessments, noting any delinquencies.  The 
 43.3   trustees shall take any action deemed appropriate to collect any 
 43.4   delinquent assessments. 
 43.5      Sec. 28.  Minnesota Statutes 2002, section 79A.22, 
 43.6   subdivision 11, is amended to read: 
 43.7      Subd. 11.  [DISBURSEMENT OF FUND SURPLUS.] (a) One 
 43.8   hundred Except as otherwise provided in paragraphs (b) and (c), 
 43.9   100 percent of any surplus money for a fund year in excess of 
 43.10  125 percent of the amount necessary to fulfill all obligations 
 43.11  under the Workers' Compensation Act, chapter 176, for that fund 
 43.12  year may be declared refundable to a member eligible members at 
 43.13  any time.  The date shall be no earlier than 18 months following 
 43.14  the end of such fund year.  The first disbursement of fund 
 43.15  surplus may not be made prior to the written approval of the 
 43.16  commissioner.  There can be no more than one refund made in any 
 43.17  12-month period. 
 43.18     (b) Except as otherwise provided in paragraph (c), for 
 43.19  groups that have been in existence for five years or more, 100 
 43.20  percent of any surplus money for a fund year in excess of 110 
 43.21  percent of the amount necessary to fulfill all obligations under 
 43.22  the Workers' Compensation Act, chapter 176, for that fund year 
 43.23  may be declared refundable to eligible members at any time. 
 43.24     (c) Excess surplus distributions under paragraphs (a) and 
 43.25  (b) may not be greater than the combined surplus of the group at 
 43.26  the time of the distribution. 
 43.27     (d) When all the claims of any one fund year have been 
 43.28  fully paid, as certified by an actuary, all surplus money from 
 43.29  that fund year may be declared refundable. 
 43.30     (b) (e) The commercial self-insurance group shall give ten 
 43.31  days' prior notice to the commissioner of any refund.  Said The 
 43.32  notice shall must be accompanied by a statement from the 
 43.33  commercial self-insurer group's certified public accountant 
 43.34  certifying that the proposed refund is in compliance 
 43.35  with paragraph (a) this subdivision. 
 43.36     Sec. 29.  Minnesota Statutes 2002, section 79A.22, is 
 44.1   amended by adding a subdivision to read: 
 44.2      Subd. 14.  [ALL STATES COVERAGE.] Policies issued by 
 44.3   commercial self-insurance groups pursuant to this chapter may 
 44.4   also provide workers' compensation coverage required under the 
 44.5   laws of states other than Minnesota, commonly known as "all 
 44.6   states coverage."  The coverage shall be provided to members of 
 44.7   the group which are temporarily performing work in another state.
 44.8      Sec. 30.  Minnesota Statutes 2002, section 176.191, 
 44.9   subdivision 3, is amended to read: 
 44.10     Subd. 3.  [INSURER PAYMENT.] If a dispute exists as to 
 44.11  whether an employee's injury is compensable under this chapter 
 44.12  and the employee is otherwise covered by an insurer or entity 
 44.13  pursuant to chapters 62A, 62C and, 62D, 62E, 62R, and 62T, that 
 44.14  insurer or entity shall pay any medical costs incurred by the 
 44.15  employee for the injury up to the limits of the applicable 
 44.16  coverage and shall make any disability payments otherwise 
 44.17  payable by that insurer or entity in the absence of or in 
 44.18  addition to workers' compensation liability.  If the injury is 
 44.19  subsequently determined to be compensable pursuant to this 
 44.20  chapter, the workers' compensation insurer shall be ordered to 
 44.21  reimburse the insurer or entity that made the payments for all 
 44.22  payments made under this subdivision by the insurer or entity, 
 44.23  including interest at a rate of 12 percent a year.  If a payment 
 44.24  pursuant to this subdivision exceeds the reasonable value as 
 44.25  permitted by sections 176.135 and 176.136, the provider shall 
 44.26  reimburse the workers' compensation insurer for all the excess 
 44.27  as provided by rules promulgated by the commissioner. 
 44.28     Sec. 31.  [MEDICARE SUPPLEMENT WORKING GROUP.] 
 44.29     The commissioner of commerce shall convene an informal 
 44.30  working group of interested parties to address issues related to 
 44.31  the stabilization of the Medicare supplemental coverage market 
 44.32  in the state.  The group must, at a minimum, identify necessary 
 44.33  changes to state statutes and regulations resulting from changes 
 44.34  made to the Medicare program by Congress; address the 
 44.35  implications of regional designations on Minnesota seniors, 
 44.36  providers, and health plans; analyze the benefits and 
 45.1   limitations of National Association of Insurance Commissioners 
 45.2   policy standardization; review the rating structure and approval 
 45.3   process for supplemental policies; analyze the implications on 
 45.4   policyholders of closed books of business; review extended basic 
 45.5   offer requirements and market practices; recommend 
 45.6   implementation strategies for the inclusion of innovative 
 45.7   benefits into policies; review the role of the Minnesota 
 45.8   Comprehensive Health Association in the supplemental market; and 
 45.9   identify coordination strategies with long-term care policies.  
 45.10  The working group must consult with the Department of Human 
 45.11  Services to assure coordination of the subsidy provisions of the 
 45.12  legislation.  Interested parties include health plan companies, 
 45.13  insurance agents, representatives of senior organizations, and 
 45.14  health care providers.  The working group must present its 
 45.15  findings and recommendations to the legislature by January 15, 
 45.16  2005. 
 45.17     Sec. 32.  [REPEALER.] 
 45.18     Minnesota Statutes 2002, sections 61A.072, subdivision 2; 
 45.19  and 62E.05, subdivision 2, paragraph (a), are repealed. 
 45.20     Sec. 33.  [EFFECTIVE DATE.] 
 45.21     Sections 8 and 13 are effective January 1, 2005, and apply 
 45.22  to coverage issued or renewed on or after that date.  Section 21 
 45.23  is effective for policies written on or after January 1, 2005.