1.1                          A bill for an act 
  1.2             relating to workers' compensation; making technical 
  1.3             changes; freezing the medical fee schedule conversion 
  1.4             factor for one year; instructing the commissioner of 
  1.5             commerce to establish a surcharge rate; amending 
  1.6             Minnesota Statutes 2002, sections 79A.12, subdivision 
  1.7             2; 176.081, subdivision 1; 176.092, subdivision 1a; 
  1.8             176.129, subdivisions 1b, 2a; 176.135, subdivision 7; 
  1.9             176.136, subdivision 1a; 176.231, subdivision 5; 
  1.10            176.391, subdivision 2; proposing coding for new law 
  1.11            in Minnesota Statutes, chapter 79. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  [79.097] [PREMIUM SURCHARGE RATE CALCULATION.] 
  1.14     On or before June 1 of each year, the commissioner shall 
  1.15  establish the special compensation fund premium surcharge rate 
  1.16  to be used by all insurers for policies with an effective date 
  1.17  on or after July 1.  The premium surcharge rate must be 
  1.18  sufficient to generate revenue necessary to satisfy the pro rata 
  1.19  share of the assessment obligations attributable to insured 
  1.20  employers that must be paid on the assessment. 
  1.21     <b>[EFFECTIVE DATE.]</b> This section is effective for assessments 
  1.22  due after July 1, 2003. 
  1.23     Sec. 2.  Minnesota Statutes 2002, section 79A.12, 
  1.24  subdivision 2, is amended to read: 
  1.25     Subd. 2.  [ASSESSMENT.] The security fund may assess each 
  1.26  of its members a pro rata share of the funding necessary to 
  1.27  carry out its obligation and the purposes of this chapter.  
  1.28  Total annual assessments in any calendar year shall not exceed 
  2.1   ten percent of the workers' compensation benefits paid under 
  2.2   sections 176.101 and 176.111 during the previous paid indemnity 
  2.3   losses, as defined in section 176.129, made by the self-insured 
  2.4   employer during the preceding calendar year.  The annual 
  2.5   assessment calculation shall not include supplementary benefits 
  2.6   paid which will be reimbursed by the special compensation fund.  
  2.7   Funds obtained by assessments pursuant to this subdivision may 
  2.8   only be used for the purposes of this chapter.  The trustees 
  2.9   shall certify to the commissioner the collection and receipt of 
  2.10  all money from assessments, noting any delinquencies.  The 
  2.11  trustees shall take any action deemed appropriate to collect any 
  2.12  delinquent assessments. 
  2.13     Sec. 3.  Minnesota Statutes 2002, section 176.081, 
  2.14  subdivision 1, is amended to read: 
  2.15     Subdivision 1.  [LIMITATION OF FEES.] (a) A fee for legal 
  2.16  services of 25 percent of the first $4,000 of compensation 
  2.17  awarded to the employee and 20 percent of the next $60,000 of 
  2.18  compensation awarded to the employee is the maximum permissible 
  2.19  fee and does not require approval by the commissioner, 
  2.20  compensation judge, or any other party.  All fees, including 
  2.21  fees for obtaining medical or rehabilitation benefits, must be 
  2.22  calculated according to the formula under this subdivision, 
  2.23  except as otherwise provided in clause (1) or (2).  
  2.24     (1) The contingent attorney fee for recovery of monetary 
  2.25  benefits according to the formula in this section is presumed to 
  2.26  be adequate to cover recovery of medical and rehabilitation 
  2.27  benefit or services concurrently in dispute.  Attorney fees for 
  2.28  recovery of medical or rehabilitation benefits or services shall 
  2.29  be assessed against the employer or insurer only if the attorney 
  2.30  establishes that the contingent fee is inadequate to reasonably 
  2.31  compensate the attorney for representing the employee in the 
  2.32  medical or rehabilitation dispute.  In cases where the 
  2.33  contingent fee is inadequate the employer or insurer is liable 
  2.34  for attorney fees based on the formula in this subdivision or in 
  2.35  clause (2). 
  2.36     For the purposes of applying the formula where the employer 
  3.1   or insurer is liable for attorney fees, the amount of 
  3.2   compensation awarded for obtaining disputed medical and 
  3.3   rehabilitation benefits under sections 176.102, 176.135, and 
  3.4   176.136 shall be the dollar value of the medical or 
  3.5   rehabilitation benefit awarded, where ascertainable.  
  3.6      (2) The maximum attorney fee for obtaining a change of 
  3.7   doctor or qualified rehabilitation consultant, or any other 
  3.8   disputed medical or rehabilitation benefit for which a dollar 
  3.9   value is not reasonably ascertainable, is the amount charged in 
  3.10  hourly fees for the representation or $500, whichever is less, 
  3.11  to be paid by the employer or insurer. 
  3.12     (3) The fees for obtaining disputed medical or 
  3.13  rehabilitation benefits are included in the $13,000 limit in 
  3.14  paragraph (b).  An attorney must concurrently file all 
  3.15  outstanding disputed issues.  An attorney is not entitled to 
  3.16  attorney fees for representation in any issue which could 
  3.17  reasonably have been addressed during the pendency of other 
  3.18  issues for the same injury. 
  3.19     (b) All fees for legal services related to the same injury 
  3.20  are cumulative and may not exceed $13,000.  If multiple injuries 
  3.21  are the subject of a dispute, the commissioner, compensation 
  3.22  judge, or court of appeals shall specify the attorney fee 
  3.23  attributable to each injury.  
  3.24     (c) If the employer or the insurer or the defendant is 
  3.25  given written notice of claims for legal services or 
  3.26  disbursements, the claim shall be a lien against the amount paid 
  3.27  or payable as compensation.  Subject to the foregoing maximum 
  3.28  amount for attorney fees, up to 25 percent of the first $4,000 
  3.29  of periodic compensation awarded to the employee and 20 percent 
  3.30  of the next $60,000 of periodic compensation awarded to the 
  3.31  employee may be withheld from the periodic payments for attorney 
  3.32  fees or disbursements if the payor of the funds clearly 
  3.33  indicates on the check or draft issued to the employee for 
  3.34  payment the purpose of the withholding, the name of the 
  3.35  attorney, the amount withheld, and the gross amount of the 
  3.36  compensation payment before withholding.  In no case shall fees 
  4.1   be calculated on the basis of any undisputed portion of 
  4.2   compensation awards.  Allowable fees under this chapter shall be 
  4.3   based solely upon genuinely disputed claims or portions of 
  4.4   claims, including disputes related to the payment of 
  4.5   rehabilitation benefits or to other aspects of a rehabilitation 
  4.6   plan.  The existence of a dispute is dependent upon a 
  4.7   disagreement after the employer or insurer has had adequate time 
  4.8   and information to take a position on liability.  Neither the 
  4.9   holding of a hearing nor the filing of an application for a 
  4.10  hearing alone may determine the existence of a dispute.  Except 
  4.11  where the employee is represented by an attorney in other 
  4.12  litigation pending at the department or at the office of 
  4.13  administrative hearings, a fee may not be charged after June 1, 
  4.14  1996, for services with respect to a medical or rehabilitation 
  4.15  issue arising under section 176.102, 176.135, or 176.136 
  4.16  performed before the employee has consulted with the department 
  4.17  and the department certifies that there is a dispute and that it 
  4.18  has tried to resolve the dispute.  
  4.19     (d) An attorney who is claiming legal fees for representing 
  4.20  an employee in a workers' compensation matter shall file a 
  4.21  statement of attorney fees with the commissioner, compensation 
  4.22  judge before whom the matter was heard, or workers' compensation 
  4.23  court of appeals on cases before the court.  A copy of the 
  4.24  signed retainer agreement shall also be filed.  The employee and 
  4.25  insurer shall receive a copy of the statement.  The statement 
  4.26  shall be on a form prescribed by the commissioner and shall 
  4.27  report the number of hours spent on the case.  
  4.28     (e) Employers and insurers may not pay attorney fees or 
  4.29  wages for legal services of more than $13,000 per case.  
  4.30     (f) Each insurer and self-insured employer shall file 
  4.31  annual statements with the commissioner detailing the total 
  4.32  amount of legal fees and other legal costs incurred by the 
  4.33  insurer or employer during the year.  The statement shall 
  4.34  include the amount paid for outside and in-house counsel, 
  4.35  deposition and other witness fees, and all other costs relating 
  4.36  to litigation. 
  5.1      (g) An attorney must file a statement of attorney fees 
  5.2   within 12 months of the date the attorney has submitted the 
  5.3   written notice specified in paragraph (c).  If the attorney has 
  5.4   not filed a statement of attorney fees within the 12 months, the 
  5.5   attorney must send a renewed notice of lien to the insurer.  If 
  5.6   12 months have elapsed since the last notice of lien has been 
  5.7   received by the insurer and no statement of attorney fees has 
  5.8   been filed, the insurer must release the withheld money to the 
  5.9   employee, except that before releasing the money to the 
  5.10  employee, the insurer must give the attorney 30 days' written 
  5.11  notice of the pending release.  The insurer must not release the 
  5.12  money if the attorney files a statement of attorney fees within 
  5.13  the 30 days. 
  5.14     Sec. 4.  Minnesota Statutes 2002, section 176.092, 
  5.15  subdivision 1a, is amended to read: 
  5.16     Subd. 1a.  [PARENT AS GUARDIAN.] A parent is presumed to be 
  5.17  the guardian of the minor employee for purposes of this 
  5.18  section.  Where the parents of the minor employee are divorced, 
  5.19  either parent with legal custody may be considered the guardian 
  5.20  for purposes of this section.  Notwithstanding subdivision 1, 
  5.21  where the employee receives or is eligible for a lump sum 
  5.22  payment of permanent total disability benefits, supplementary 
  5.23  benefits, or permanent partial disability benefits totaling more 
  5.24  than $3,000 or if the employee receives or is offered a 
  5.25  settlement that exceeds five times the statewide average weekly 
  5.26  wage, the compensation judge shall review such cases to 
  5.27  determine whether benefits should be paid in a lump sum or 
  5.28  through an annuity. 
  5.29     Sec. 5.  Minnesota Statutes 2002, section 176.129, 
  5.30  subdivision 1b, is amended to read: 
  5.31     Subd. 1b.  [DEFINITIONS.] (a) For purposes of this section, 
  5.32  the terms defined in this subdivision have the meanings given 
  5.33  them. 
  5.34     (b) "Paid indemnity losses" means gross benefits paid for 
  5.35  temporary total disability, economic recovery compensation, 
  5.36  permanent partial disability, temporary partial disability, 
  6.1   impairment compensation, permanent total disability, vocational 
  6.2   rehabilitation benefits retraining compensation paid to the 
  6.3   employee as provided by section 176.102, subdivision 11, or 
  6.4   dependency benefits, exclusive of medical and supplementary 
  6.5   benefits.  In the case of policy deductibles, paid indemnity 
  6.6   losses includes all benefits paid, including the amount below 
  6.7   deductible limits. 
  6.8      (c) "Standard workers' compensation premium" means the data 
  6.9   service organization's designated statistical reporting pure 
  6.10  premium after the application of experience rating plan 
  6.11  adjustments but prior to the application of premium discounts, 
  6.12  policyholder dividends, other premium adjustments, expense 
  6.13  constants, and other deviations from the designated statistical 
  6.14  reporting pure premium. 
  6.15     Sec. 6.  Minnesota Statutes 2002, section 176.129, 
  6.16  subdivision 2a, is amended to read: 
  6.17     Subd. 2a.  [PAYMENTS TO FUND.] (a) On or before April 1 of 
  6.18  each year, all self-insured employers shall report paid 
  6.19  indemnity losses and insurers shall report paid indemnity losses 
  6.20  and standard workers' compensation premium in the form and 
  6.21  manner prescribed by the commissioner.  On June 1 of each year, 
  6.22  the commissioner shall determine the total amount needed to pay 
  6.23  all estimated liabilities, including administrative expenses, of 
  6.24  the special compensation fund for the following fiscal year.  
  6.25  The commissioner shall assess this amount against self-insured 
  6.26  employers and insurers.  The total amount of the assessment must 
  6.27  be allocated between self-insured employers and insured 
  6.28  employers based on paid indemnity losses for the preceding 
  6.29  calendar year, as provided by paragraph (b).  The method of 
  6.30  assessing self-insured employers must be based on paid indemnity 
  6.31  losses, as provided by paragraph (c).  The method of assessing 
  6.32  insured employers is based on standard workers' compensation 
  6.33  premium, collectible as provided by paragraph (c).  Each insurer 
  6.34  shall collect the assessment through a policyholder surcharge as 
  6.35  provided by paragraph (d).  
  6.36     On or before June 30 of each year, the commissioner shall 
  7.1   provide notification to each self-insured employer and insurer 
  7.2   of amounts due.  Each self-insured employer and each insurer 
  7.3   shall pay at least one-half of the payment shall be made amount 
  7.4   due to the commissioner for deposit into the special 
  7.5   compensation fund on or before August 1 of the same calendar 
  7.6   year.  The remaining balance is due on February 1 of the 
  7.7   following calendar year.  Each insurer must pay the full amount 
  7.8   due as stated in the commissioner's notification, regardless of 
  7.9   the amount the insurer actually collects from the premium 
  7.10  surcharge. 
  7.11     (b) The portion of the total amount assessment that is 
  7.12  collected from allocated to self-insured employers is equal to 
  7.13  that the proportion of the that paid indemnity losses for the 
  7.14  preceding calendar year, which the paid indemnity losses of made 
  7.15  by all self-insured employers bore to the total paid indemnity 
  7.16  losses made by all self-insured employers and insured employers 
  7.17  during the preceding calendar year.  The portion of the 
  7.18  total amount assessment that is collected from allocated to 
  7.19  insured employers is equal to that the proportion of the total 
  7.20  that paid indemnity losses made on behalf of all insured 
  7.21  employers bore to the total paid indemnity losses on behalf of 
  7.22  made by all self-insured employers and insured employers during 
  7.23  the preceding calendar year.  
  7.24     (c) The portion of the total assessment allocated to 
  7.25  self-insured employers that shall be paid by each self-insured 
  7.26  employer must be based upon paid indemnity losses made by that 
  7.27  self-insured employer during the preceding calendar year.  The 
  7.28  portion of the total assessment allocated to insured employers 
  7.29  that is collected from paid by each insured employer insurer 
  7.30  must be based on standard workers' compensation premium written 
  7.31  in the state by that insurer during the preceding calendar 
  7.32  year.  An employer who has ceased to be self-insured shall 
  7.33  continue to be liable for assessments based on paid indemnity 
  7.34  losses made by the employer in the preceding calendar 
  7.35  year arising out of injuries occurring during periods when the 
  7.36  employer was self-insured, unless the self-insured employer has 
  8.1   purchased a replacement policy covering those losses.  An 
  8.2   insurer who assumes a self-insured employer's obligation under a 
  8.3   replacement policy shall separately report and pay assessments 
  8.4   based on paid indemnity losses paid by the insurer under the 
  8.5   replacement policy.  The replacement policy may provide for 
  8.6   reimbursement of the assessment to the insurer by the 
  8.7   self-insured employer. 
  8.8      (c) (d) Insurers shall collect the assessments from their 
  8.9   insured employers through a surcharge based on standard workers' 
  8.10  compensation premium, as provided in paragraph (a) for each 
  8.11  employer.  Assessments when collected do not constitute an 
  8.12  element of loss for the purpose of establishing rates for 
  8.13  workers' compensation insurance but for the purpose of 
  8.14  collection are treated as separate costs imposed on insured 
  8.15  employers.  The premium surcharge is included in the definition 
  8.16  of gross premium as defined in section 297I.01.  An insurer may 
  8.17  cancel a policy for nonpayment of the premium surcharge.  The 
  8.18  premium surcharge is excluded from the definition of premium 
  8.19  except as otherwise provided in this paragraph. 
  8.20     (e) For purposes of this section, the workers' compensation 
  8.21  assigned-risk plan established under section 79.252 shall report 
  8.22  and pay assessments on standard workers' compensation premium in 
  8.23  the same manner as an insurer.  An employer who is not 
  8.24  self-insured, but who for any reason permitted by law pays 
  8.25  benefits to an employee, either directly or through a 
  8.26  third-party administrator, shall report and pay assessments on 
  8.27  paid indemnity losses in the same manner as a self-insured 
  8.28  employer. 
  8.29     <b>[EFFECTIVE DATE.]</b> This section is effective for assessments 
  8.30  due after July 1, 2003. 
  8.31     Sec. 7.  Minnesota Statutes 2002, section 176.135, 
  8.32  subdivision 7, is amended to read: 
  8.33     Subd. 7.  [MEDICAL BILLS AND RECORDS.] Health care 
  8.34  providers shall submit to the insurer an itemized statement of 
  8.35  charges on a billing form prescribed by the commissioner.  A 
  8.36  paper billing form need not be used if the health care provider 
  9.1   and insurer agree to electronic submission under section 62J.535.
  9.2   Health care providers shall also submit copies of medical 
  9.3   records or reports that substantiate the nature of the charge 
  9.4   and its relationship to the work injury.  Health care providers 
  9.5   may charge for copies of any records or reports that are in 
  9.6   existence and directly relate to the items for which payment is 
  9.7   sought under this chapter.  The commissioner shall adopt a 
  9.8   schedule of reasonable charges by rule. 
  9.9      A health care provider shall not collect, attempt to 
  9.10  collect, refer a bill for collection, or commence an action for 
  9.11  collection against the employee, employer, or any other party 
  9.12  until the information required by this section has been 
  9.13  furnished.  
  9.14     A United States government facility rendering health care 
  9.15  services to veterans is not subject to the uniform billing form 
  9.16  requirements of this subdivision. 
  9.17     Sec. 8.  Minnesota Statutes 2002, section 176.136, 
  9.18  subdivision 1a, is amended to read: 
  9.19     Subd. 1a.  [RELATIVE VALUE FEE SCHEDULE.] The liability of 
  9.20  an employer for services included in the medical fee schedule is 
  9.21  limited to the maximum fee allowed by the schedule in effect on 
  9.22  the date of the medical service, or the provider's actual fee, 
  9.23  whichever is lower.  The medical fee schedule effective on 
  9.24  October 1, 1991, remains in effect until the commissioner adopts 
  9.25  a new schedule by permanent rule.  The commissioner shall adopt 
  9.26  permanent rules regulating fees allowable for medical, 
  9.27  chiropractic, podiatric, surgical, and other health care 
  9.28  provider treatment or service, including those provided to 
  9.29  hospital outpatients, by implementing a relative value fee 
  9.30  schedule to be effective on October 1, 1993.  The commissioner 
  9.31  may adopt by reference the relative value fee schedule adopted 
  9.32  for the federal Medicare program or a relative value fee 
  9.33  schedule adopted by other federal or state agencies.  The 
  9.34  relative value fee schedule must contain reasonable 
  9.35  classifications including, but not limited to, classifications 
  9.36  that differentiate among health care provider disciplines.  The 
 10.1   conversion factors for the original relative value fee schedule 
 10.2   must reasonably reflect a 15 percent overall reduction from the 
 10.3   medical fee schedule most recently in effect.  The reduction 
 10.4   need not be applied equally to all treatment or services, but 
 10.5   must represent a gross 15 percent reduction. 
 10.6      After permanent rules have been adopted to implement this 
 10.7   section, the conversion factors must be adjusted annually on 
 10.8   October 1 by no more than the percentage change computed under 
 10.9   section 176.645, but without the annual cap provided by that 
 10.10  section.  The commissioner shall annually give notice in the 
 10.11  State Register of the adjusted conversion factors and may also 
 10.12  give annual notice of any additions, deletions, or changes to 
 10.13  the relative value units or service codes adopted by the federal 
 10.14  Medicare program, except that the conversion factor of $75.18, 
 10.15  in effect for services on or after October 1, 2002, shall not be 
 10.16  further adjusted until October 1, 2004.  The relative value 
 10.17  units may be statistically adjusted in the same manner as for 
 10.18  the original workers' compensation relative value fee schedule.  
 10.19  The notices of the adjusted conversion factors and additions, 
 10.20  deletions, or changes to the relative value units and service 
 10.21  codes is in lieu of the requirements of chapter 14.  The 
 10.22  commissioner shall follow the requirements of section 14.386, 
 10.23  paragraph (a).  The annual adjustments to the conversion factors 
 10.24  and the medical fee schedules adopted under this section, 
 10.25  including all previous fee schedules, are not subject to 
 10.26  expiration under section 14.386, paragraph (b). 
 10.27     Sec. 9.  Minnesota Statutes 2002, section 176.231, 
 10.28  subdivision 5, is amended to read: 
 10.29     Subd. 5.  [FORMS FOR REPORTS.] The commissioner shall 
 10.30  prescribe forms for use in making the reports required by this 
 10.31  section.  The first report of injury form which the employer 
 10.32  submits shall include a declaration by the employer that the 
 10.33  employer will pay the compensation the law requires.  Forms for 
 10.34  reports required by this section shall be as prescribed by the 
 10.35  commissioner and shall be the only forms used by an employer, 
 10.36  insurer, self-insurer, group self-insurer, and all health care 
 11.1   providers.  
 11.2      Sec. 10.  Minnesota Statutes 2002, section 176.391, 
 11.3   subdivision 2, is amended to read: 
 11.4      Subd. 2.  [APPOINTMENT OF PHYSICIANS, SURGEONS, AND OTHER 
 11.5   EXPERTS.] The compensation judge assigned to a matter, or the 
 11.6   commissioner, may appoint one or more neutral physicians or 
 11.7   surgeons from the list established by the commissioner to 
 11.8   examine the injury of the employee and report thereon except as 
 11.9   provided otherwise pursuant to section 176.1361.  Where 
 11.10  necessary to determine the facts, the services of other experts 
 11.11  may also be employed.