SF 2391

Introduction - 94th Legislature (2025 - 2026)

Posted on 03/11/2025 10:20 a.m.

A bill for an act
relating to insurance; establishing the Minnesota patients' compensation fund to
recover certain damages from medical malpractice; creating a board to manage
and operate the Minnesota patients' compensation fund; requiring provider
participation in the fund; establishing procedures for fund governance and recovery
from the fund; requiring a report; authorizing rulemaking; proposing coding for
new law as Minnesota Statutes, chapter 62X.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [62X.01] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin As used in this chapter, the following terms have the meanings
given.
new text end

new text begin Subd. 2. new text end

new text begin Board. new text end

new text begin "Board" means the Patients' Compensation Board established under
section 62X.03.
new text end

new text begin Subd. 3. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of commerce.
new text end

new text begin Subd. 4. new text end

new text begin Fund. new text end

new text begin "Fund" means the Minnesota patients' compensation fund established
under section 62X.02.
new text end

new text begin Subd. 5. new text end

new text begin Health care provider. new text end

new text begin "Health care provider" has the meaning given in section
145B.02. Health care provider does not include a person, facility, organization, or corporation
that relies on spiritual or divine intervention as the only means of care or treatment.
new text end

new text begin Subd. 6. new text end

new text begin Insurer. new text end

new text begin "Insurer" means any insurance company, as defined in section 60A.02,
that writes medical malpractice insurance in Minnesota.
new text end

new text begin Subd. 7. new text end

new text begin Medical malpractice insurance. new text end

new text begin "Medical malpractice insurance" means
insurance coverage against the insured's legal liability for loss, damage, or expense incident
to a claim arising out of the death or injury of a person as a result of a health care provider's
negligence or malpractice in rendering a professional health care service.
new text end

Sec. 2.

new text begin [62X.02] MINNESOTA PATIENTS' COMPENSATION FUND.
new text end

new text begin Subdivision 1. new text end

new text begin Minnesota patients' compensation fund account established. new text end

new text begin The
Minnesota patients' compensation fund account is created in the special revenue fund in the
state treasury. Money in the account is appropriated to the commissioner for the purposes
of this chapter and to administer the account. Membership fees and premium surcharges
collected under section 62X.05 are credited to the account. Earnings, including interest,
dividends, and any other earnings arising from assets of the account, are credited to the
account. Money remaining in the account at the end of a fiscal year does not cancel to the
general fund, but remains in the account until expended.
new text end

new text begin Subd. 2. new text end

new text begin Fund obligations. new text end

new text begin (a) Money in the fund must be used to pay the portion of a
medical malpractice claim, settlement, or judgment that exceeds the greater of: (1) the
minimum liability limits set forth under section 62X.07; or (2) the maximum amount for
which the health care provider is insured with respect to a claim, settlement, or judgment.
new text end

new text begin (b) The fund is liable only to pay claims against a licensed health care provider, and
against an employee of a licensed health care provider, in compliance with this chapter.
new text end

new text begin (c) The fund is liable for reasonable and necessary expenses incurred to pay claims and
the fund's administrative expenses.
new text end

new text begin (d) The fund is not liable for damages for injury or death caused by an intentional crime
committed by a health care provider or an employee of a health care provider, regardless
of whether the criminal conduct is the basis for a medical malpractice claim.
new text end

new text begin (e) The fund is not liable for punitive damages rendered in a judgment.
new text end

new text begin (f) Except as otherwise provided in this subdivision, the state is not liable for costs,
expenses, liabilities, judgments, or other obligations of the fund.
new text end

new text begin Subd. 3. new text end

new text begin Rulemaking authorized. new text end

new text begin The commissioner may adopt rules necessary to carry
out the provisions of this chapter.
new text end

Sec. 3.

new text begin [62X.03] PATIENTS' COMPENSATION BOARD.
new text end

new text begin Subdivision 1. new text end

new text begin Patients' Compensation Board established. new text end

new text begin A Patients' Compensation
Board is established within the Department of Commerce. The Patients' Compensation
Board is composed of the commissioner and nine members appointed by the commissioner.
The board members appointed by the commissioner must include:
new text end

new text begin (1) one member who is licensed to practice medicine and surgery in Minnesota who is
a doctor of medicine and who is on a list of nominees submitted to the commissioner by an
organization representing Minnesota physicians and surgeons;
new text end

new text begin (2) one member who is a doctor of osteopathic medicine and who is on a list of nominees
submitted to the commissioner by an organization representing Minnesota doctors of
osteopathic medicine;
new text end

new text begin (3) one member who is a licensed nurse in Minnesota and who is on a list submitted to
the commissioner by an organization representing Minnesota nurses;
new text end

new text begin (4) one member who is a representative of Minnesota hospitals and who is on a list of
nominees submitted to the commissioner by an organization representing Minnesota hospitals;
new text end

new text begin (5) two members who are insurance representatives and who are on a list of nominees
submitted to the commissioner by the insurance industry;
new text end

new text begin (6) two members who are attorneys with expertise in medical malpractice and who are
on a list of nominees submitted to the commissioner by an organization representing
Minnesota attorneys; and
new text end

new text begin (7) one member of the general public who is unaffiliated with the insurance or health
care industries or the medical or legal professions.
new text end

new text begin Subd. 2. new text end

new text begin Board meetings. new text end

new text begin The board is created to manage and operate the fund. The
appointed members serve for a term of six years and until a successor is duly appointed and
qualified. The board must meet at the call of the commissioner or a majority of the members,
and must meet at least once a year. A majority of the board members constitutes a quorum
for the board to conduct business. The affirmative vote by a majority of the members present
at a duly called meeting, for which reasonable notice was provided and that has achieved
a quorum, is required to exercise a board function.
new text end

new text begin Subd. 3. new text end

new text begin Board vacancies. new text end

new text begin (a) Except as provided under paragraph (b), upon a vacancy
in the membership of the board, the commissioner must:
new text end

new text begin (1) notify the applicable organization or industry under subdivision 1 that a vacancy
exists and request a list of three nominations from which to make a replacement appointment;
and
new text end

new text begin (2) appoint a qualified successor from the provided list.
new text end

new text begin (b) Upon a vacancy of a member appointed pursuant to subdivision 1, clause (7), the
commissioner must appoint a qualified successor.
new text end

new text begin Subd. 4. new text end

new text begin Operation plan required. new text end

new text begin (a) The board must develop an operation plan to
efficiently administer the fund in a manner consistent with this chapter. The fund must
operate pursuant to the operation plan, which must provide for: (1) the economic, fair, and
nondiscriminatory administration of excess medical malpractice insurance; and (2) the
prompt and efficient provision of excess medical malpractice insurance.
new text end

new text begin (b) The plan of operations may contain other provisions, including but not limited to:
(1) assessment of all members for expenses, deficits, losses, commissions, arrangements,
reasonable underwriting standards, acceptance and cession of reinsurance, and appointment
of servicing carriers; and (2) procedures to determine the amounts of insurance provided
by the fund. The operation plan and an amendment to the plan are subject to the
commissioner's approval. If the board fails to develop an operation plan within a reasonable
time frame established by the commissioner, the commissioner or the commissioner's
designee must develop the plan of operation for the fund.
new text end

new text begin Subd. 5. new text end

new text begin Necessary expenses authorized. new text end

new text begin The board may appoint employees and provide
all office space, services, equipment, materials, and supplies, and provide all budgeting,
personnel, purchasing, and related management functions necessary for the board to exercise
the powers, duties, and functions imposed or authorized by this chapter.
new text end

new text begin Subd. 6. new text end

new text begin Technical assistance. new text end

new text begin The commissioner must:
new text end

new text begin (1) provide technical and administrative assistance to the board with respect to
administering the fund, upon the board's request; and
new text end

new text begin (2) provide expertise the board may reasonably request with respect to evaluating claims
or potential claims.
new text end

Sec. 4.

new text begin [62X.04] PROVIDER DUTIES.
new text end

new text begin Subdivision 1. new text end

new text begin Membership required. new text end

new text begin A health care provider must actively pursue
membership in the fund.
new text end

new text begin Subd. 2. new text end

new text begin Payment required. new text end

new text begin Membership in the fund is contingent upon the participating
member making timely payment of all membership fees and premium surcharges under
section 62X.05.
new text end

Sec. 5.

new text begin [62X.05] PAYMENT OBLIGATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Membership fees. new text end

new text begin A health care provider must pay annual membership
fees on or before the anniversary date of the provider's membership in the fund. The board
must set the membership fees subject to the commissioner's approval. Membership fees
may be paid annually or in semiannual or quarterly installments.
new text end

new text begin Subd. 2. new text end

new text begin Premium surcharge. new text end

new text begin (a) In addition to the membership fees under subdivision
1, the commissioner must levy an annual premium surcharge on (1) each participating health
care provider who has obtained a policy that meets the requirements of section 62X.06, and
(2) each self-insurer.
new text end

new text begin (b) The commissioner must determine the surcharge based upon sound actuarial
principles, using data obtained from Minnesota experience, if available. The amount of the
surcharge must be sufficient to pay claims and expenses from the fund. The surcharge may
differ between individual health care providers.
new text end

new text begin (c) The insurer must collect the surcharge on the same basis as the insurer collects
premiums from the health care provider. The surcharge with accrued interest must be remitted
to the fund within 30 days after the date the premiums for medical malpractice insurance
have been received by the insurer from the health care provider.
new text end

new text begin (d) If the insurer collects the annual premium surcharge but does not remit the annual
premium surcharge within the time limit specified in paragraph (c), the insurer's certificate
of authority must be suspended until the annual premium surcharge is paid.
new text end

new text begin Subd. 3. new text end

new text begin Self-insureds. new text end

new text begin (a) A self-insured is eligible for membership in the fund upon
(1) payment of membership fees and premium surcharges, and (2) compliance with other
board requirements.
new text end

new text begin (b) The commissioner must determine the (1) surcharge for self-insureds, and (2) process
for self-insureds to remit the surcharge. The amount of the surcharge imposed on self-insureds
must be in an amount comparable to what a health care provider would be required to pay
if the provider's surcharge was based upon a medical malpractice insurance policy issued
by an insurer.
new text end

Sec. 6.

new text begin [62X.06] FINANCIAL TRANSPARENCY.
new text end

new text begin Subdivision 1. new text end

new text begin Books and records. new text end

new text begin All books, records, and audits of the fund are open
to the general public for reasonable inspection. This subdivision does not apply to confidential
claim information.
new text end

new text begin Subd. 2. new text end

new text begin Annual state audit. new text end

new text begin On or before December 31 of each year, the state auditor
must audit the records of the fund and furnish an audited financial report to all fund members
and the Department of Commerce.
new text end

Sec. 7.

new text begin [62X.07] MEDICAL MALPRACTICE INSURANCE REQUIREMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Medical malpractice insurance required. new text end

new text begin A health care provider must
maintain a medical malpractice insurance policy issued by an insurer or must qualify as a
self-insurer. Qualification as a self-insurer is subject to conditions established by the
commissioner. The commissioner may establish conditions that permit a self-insurer to
self-insure for claims that are (1) against an employee who is a health care provider, and
(2) not covered by the fund.
new text end

new text begin Subd. 2. new text end

new text begin Rulemaking. new text end

new text begin The commissioner must establish by rule the minimum liability
limits for a medical malpractice insurance policy that must be maintained by a health care
provider. The limits may differ between individual health care providers. When determining
the minimum level of coverage for health care providers, the commissioner must consider
the health care provider's area of practice, past and prospective risk experience, and any
other factors the commissioner deems relevant. The commissioner must also consider the
fund's financial solvency when establishing the minimum liability limits.
new text end

new text begin Subd. 3. new text end

new text begin Insurer certificate of insurance filing required. new text end

new text begin Each insurer must, at the
time and in a form prescribed by the commissioner, file with the commissioner a certificate
of insurance on behalf of the health care provider upon original issuance and each renewal
of a medical malpractice insurance policy.
new text end

new text begin Subd. 4. new text end

new text begin Self-insured provider certificate of insurance filing required. new text end

new text begin Each
self-insured health care provider furnishing medical malpractice insurance must, at the time
and in a form prescribed by the commissioner, file with the commissioner a certificate of
self-insurance and a separate certificate of insurance for each health care provider covered
by the self-insured plan.
new text end

Sec. 8.

new text begin [62X.08] FILED CLAIMS.
new text end

new text begin Subdivision 1. new text end

new text begin Recovery from the fund. new text end

new text begin A person filing a claim may recover from the
fund only if:
new text end

new text begin (1) the health care provider or the health care provider's employee has coverage under
the fund;
new text end

new text begin (2) the fund is named as a party in the action; and
new text end

new text begin (3) the action against the fund is commenced within the same time limitation as the
action against the health care provider or the health care provider's employee.
new text end

new text begin Subd. 2. new text end

new text begin Fund's right to defense. new text end

new text begin If, after reviewing the facts upon which the claim is
based, the fund determines that there is a reasonable probability that a damages payment
exceeds the limits provided in section 62X.07, the fund may appear and actively defend the
fund if the fund is named as a party in an action against a health care provider or a health
care provider's employee that has coverage under the fund. In an action under this
subdivision, the fund may retain counsel and pay out of the fund attorney fees and expenses,
including court costs, incurred to defend the fund. The attorney or law firm retained to
defend the fund must not be retained or employed by the board to perform legal services
for the board other than legal services directly connected with the fund. The fund may appeal
a judgment affecting the fund as provided by law.
new text end

new text begin Subd. 3. new text end

new text begin Insurer obligation to defend. new text end

new text begin The insurer or self-insurer providing insurance
or self-insurance for a health care provider who is also covered by the fund is responsible
for providing an adequate defense of the fund on a claim filed that may potentially affect
the fund with respect to the insurance or self-insurance policy. The insurer or self-insurer
must act in good faith and in a fiduciary relationship with respect to a claim affecting the
fund. The board must approve a settlement exceeding an amount that may require payment
by the fund.
new text end

new text begin Subd. 4. new text end

new text begin Right of recovery. new text end

new text begin (a) A person who has recovered a final judgment or a
settlement approved by the board against a health care provider or a health care provider's
employee that has coverage under the fund may file a claim with the board to recover the
portion of the judgment or settlement that is in excess of the limits provided under section
62X.07 or the maximum liability limit for which the health care provider is insured,
whichever limit is greater.
new text end

new text begin (b) If the fund incurs liability for future payments exceeding $500,000 to a person under
a single claim as the result of a settlement or judgment, the fund must pay the full medical
expenses for which the fund is liable each year, plus an amount not to exceed $500,000 per
year that pays the remaining liability over the person's anticipated lifetime until the liability
is paid in full. The fund may deduct from payments made under this paragraph the reasonable
costs incurred that are attributable to the remaining liability, including attorney fees reduced
to present value. If the remaining liability is not paid before the person dies, the fund must
pay the remaining liability in a lump sum.
new text end

new text begin Subd. 5. new text end

new text begin Fund payment requirements. new text end

new text begin (a) A payment under this section must be made
from money collected and paid into the fund and from interest earned on the fund's assets.
new text end

new text begin (b) A claim duly filed against the fund must be paid in the order received and within 90
days after the date the claim is filed, unless the payment is appealed by the fund or is subject
to a periodic payment under this section. If the money in the fund is insufficient to pay all
claims, a claim received after the money is exhausted must be immediately payable the
following year, in the order in which the claim was received.
new text end

new text begin Subd. 6. new text end

new text begin Board right of action. new text end

new text begin The board may bring an action against an insurer,
self-insurer, or health care provider for failure to act in good faith or a breach of fiduciary
responsibility.
new text end

Sec. 9.

new text begin [62X.09] NOTICE PERIOD FOR INSURANCE POLICY CHANGES.
new text end

new text begin An insurer must not (1) increase the premium upon any renewal or reissuance of a
medical malpractice insurance policy, or (2) impose a change in deductible, coverage, or
other policy term that materially alters the policy, unless the insurer mails or delivers to the
named insured written notice of an increase or change at least 90 days before the policy's
renewal or anniversary date.
new text end