HF 1809

4th Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to insurance; regulating agency terminations,
coverages, fees, forms, disclosures, reports,
information security, and premiums; amending Minnesota
Statutes 2004, sections 60A.14, subdivision 1;
60A.171, subdivision 11; 60A.23, subdivision 8;
60A.966; 60A.969; 62A.136; 62A.31, subdivision 1h;
62A.315; 62A.316; 62E.12; 62E.13, subdivision 2;
62Q.471; 62Q.65; 65A.29, subdivision 11; 65B.48,
subdivision 3; 72A.20, subdivisions 13, 36; 79.211, by
adding a subdivision; 79.40; 79.56, subdivisions 1, 3;
79.62, subdivision 3; 79A.03, subdivision 9; 79A.04,
subdivisions 2, 10; 79A.06, subdivision 5; 79A.12,
subdivision 2; 79A.22, subdivision 11, by adding a
subdivision; 176.191, subdivision 3; Laws 1985,
chapter 85, section 1; proposing coding for new law in
Minnesota Statutes, chapters 60A; 62L; 65A; 65B;
repealing Minnesota Statutes 2004, sections 61A.072,
subdivision 2; 62E.03.

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

Section 1.

Minnesota Statutes 2004, section 60A.14,
subdivision 1, is amended to read:

Subdivision 1.

Fees other than examination fees.

In
addition to the fees and charges provided for examinations, the
following fees must be paid to the commissioner for deposit in
the general fund:

(a) by township mutual fire insurance companies;

(1) for filing certificate of incorporation $25 and
amendments thereto, $10;

(2) for filing annual statements, $15;

(3) for each annual certificate of authority, $15;

(4) for filing bylaws $25 and amendments thereto, $10;

(b) by other domestic and foreign companies including
fraternals and reciprocal exchanges;

(1) for filing certified copy of certificate of articles of
incorporation, $100;

(2) for filing annual statement, $225;

(3) for filing certified copy of amendment to certificate
or articles of incorporation, $100;

(4) for filing bylaws, $75 or amendments thereto, $75;

(5) for each company's certificate of authority, $575,
annually;

(c) the following general fees apply:

(1) for each certificate, including certified copy of
certificate of authority, renewal, valuation of life policies,
corporate condition or qualification, $25;

(2) for each copy of paper on file in the commissioner's
office 50 cents per page, and $2.50 for certifying the same;

(3) for license to procure insurance in unadmitted foreign
companies, $575;

(4) for valuing the policies of life insurance companies,
one cent per $1,000 of insurance so valued, provided that the
fee shall not exceed $13,000 per year for any company. The
commissioner may, in lieu of a valuation of the policies of any
foreign life insurance company admitted, or applying for
admission, to do business in this state, accept a certificate of
valuation from the company's own actuary or from the
commissioner of insurance of the state or territory in which the
company is domiciled;

(5) for receiving and filing certificates of policies by
the company's actuary, or by the commissioner of insurance of
any other state or territory, $50;

(6) for each appointment of an agent filed with the
commissioner, $10;

(7) for filing forms and rates, deleted text begin $75 deleted text end new text begin $90 new text end per filing,
deleted text begin which deleted text end new text begin or $75 per filing when submitted via electronic filing
system. Filing fees new text end may be paid on a quarterly basis in
response to an invoice. Billing and payment may be made
electronically;

(8) for annual renewal of surplus lines insurer license,
$300 deleted text begin ;
deleted text end

deleted text begin (9) $250 filing fee for a large risk alternative rating
option plan that meets the $250,000 threshold requirement deleted text end .

The commissioner shall adopt rules to define filings that
are subject to a fee.

Sec. 2.

Minnesota Statutes 2004, section 60A.171,
subdivision 11, is amended to read:

Subd. 8.

Self-insurance or insurance plan administrators
who are vendors of risk management services.

(1) [SCOPE.] This
subdivision applies to any vendor of risk management services
and to any entity which administers, for compensation, a
self-insurance or insurance plan. This subdivision does not
apply (a) to an insurance company authorized to transact
insurance in this state, as defined by section 60A.06,
subdivision 1, clauses (4) and (5); (b) to a service plan
corporation, as defined by section 62C.02, subdivision 6; (c) to
a health maintenance organization, as defined by section 62D.02,
subdivision 4; (d) to an employer directly operating a
self-insurance plan for its employees' benefits; (e) to an
entity which administers a program of health benefits
established pursuant to a collective bargaining agreement
between an employer, or group or association of employers, and a
union or unions; or (f) to an entity which administers a
self-insurance or insurance plan if a licensed Minnesota insurer
is providing insurance to the plan and if the licensed insurer
has appointed the entity administering the plan as one of its
licensed agents within this state.

(2) [DEFINITIONS.] For purposes of this subdivision the
following terms have the meanings given them.

(a) "Administering a self-insurance or insurance plan"
means (i) processing, reviewing or paying claims, (ii)
establishing or operating funds and accounts, or (iii) otherwise
providing necessary administrative services in connection with
the operation of a self-insurance or insurance plan.

(b) "Employer" means an employer, as defined by section
62E.02, subdivision 2.

(c) "Entity" means any association, corporation,
partnership, sole proprietorship, trust, or other business
entity engaged in or transacting business in this state.

(d) "Self-insurance or insurance plan" means a plan
providing life, medical or hospital care, accident, sickness or
disability insurance for the benefit of employees or members of
an association, or a plan providing liability coverage for any
other risk or hazard, which is or is not directly insured or
provided by a licensed insurer, service plan corporation, or
health maintenance organization.

(e) "Vendor of risk management services" means an entity
providing for compensation actuarial, financial management,
accounting, legal or other services for the purpose of designing
and establishing a self-insurance or insurance plan for an
employer.

(3) [LICENSE.] No vendor of risk management services or
entity administering a self-insurance or insurance plan may
transact this business in this state unless it is licensed to do
so by the commissioner. An applicant for a license shall state
in writing the type of activities it seeks authorization to
engage in and the type of services it seeks authorization to
provide. The license may be granted only when the commissioner
is satisfied that the entity possesses the necessary
organization, background, expertise, and financial integrity to
supply the services sought to be offered. The commissioner may
issue a license subject to restrictions or limitations upon the
authorization, including the type of services which may be
supplied or the activities which may be engaged in. The license
fee is deleted text begin $1,000 deleted text end new text begin $1,500 new text end for the initial application and
deleted text begin $1,000 deleted text end new text begin $1,500 new text end for each deleted text begin two-year deleted text end new text begin three-year new text end renewal. All
licenses are for a period of deleted text begin two deleted text end new text begin three new text end years.

(4) [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.]
To assure that self-insurance or insurance plans are financially
solvent, are administered in a fair and equitable fashion, and
are processing claims and paying benefits in a prompt, fair, and
honest manner, vendors of risk management services and entities
administering insurance or self-insurance plans are subject to
the supervision and examination by the commissioner. Vendors of
risk management services, entities administering insurance or
self-insurance plans, and insurance or self-insurance plans
established or operated by them are subject to the trade
practice requirements of sections 72A.19 to 72A.30. In lieu of
an unlimited guarantee from a parent corporation for a vendor of
risk management services or an entity administering insurance or
self-insurance plans, the commissioner may accept a surety bond
in a form satisfactory to the commissioner in an amount equal to
120 percent of the total amount of claims handled by the
applicant in the prior year. If at any time the total amount of
claims handled during a year exceeds the amount upon which the
bond was calculated, the administrator shall immediately notify
the commissioner. The commissioner may require that the bond be
increased accordingly.

No contract entered into after July 1, 2001, between a
licensed vendor of risk management services and a group
authorized to self-insure for workers' compensation liabilities
under section 79A.03, subdivision 6, may take effect until it
has been filed with the commissioner, and either (1) the
commissioner has approved it or (2) 60 days have elapsed and the
commissioner has not disapproved it as misleading or violative
of public policy.

(5) [RULEMAKING AUTHORITY.] To carry out the purposes of
this subdivision, the commissioner may adopt rules pursuant to
sections 14.001 to 14.69. These rules may:

(a) establish reporting requirements for administrators of
insurance or self-insurance plans;

(b) establish standards and guidelines to assure the
adequacy of financing, reinsuring, and administration of
insurance or self-insurance plans;

(c) establish bonding requirements or other provisions
assuring the financial integrity of entities administering
insurance or self-insurance plans; or

(d) establish other reasonable requirements to further the
purposes of this subdivision.

Sec. 4.

Minnesota Statutes 2004, section 60A.966, is
amended to read:

60A.966 APPROVAL OF VIATICAL SETTLEMENTS CONTRACT FORMS.

A viatical settlement provider new text begin or broker new text end may not use a
viatical settlement contract form in this state unless it has
been filed with and approved by the commissioner. A viatical
settlement contract form filed with the commissioner is
considered to have been approved if it has not been disapproved
within 60 days of the filing. The commissioner shall disapprove
a viatical settlement contract form if, in the commissioner's
opinion, the contract or contract provisions are unreasonable,
contrary to the interests of the public, or otherwise misleading
or unfair to the policy owner.

Sec. 5.

Minnesota Statutes 2004, section 60A.969, is
amended to read:

60A.969 DISCLOSURE.

A viatical settlement provider new text begin or a broker new text end shall disclose
the following information to the viator no later than the
date deleted text begin the viatical settlement contract is signed by all
parties deleted text end new text begin an application is given to the viator new text end :

(1) possible alternatives to viatical settlement contracts
for persons with catastrophic or life threatening illnesses,
including accelerated benefits offered by the issuer of the life
insurance policy;

(2) the fact that some or all of the proceeds of the
viatical settlement may be taxable and that assistance should be
sought from a personal tax advisor;

(3) the fact that the viatical settlement may be subject to
the claims of creditors;

(4) the fact that receipt of a viatical settlement may
adversely affect the recipients' eligibility for Medicaid or
other government benefits or entitlements and that advice should
be obtained from the appropriate agencies;

(5) the policy owner's right to rescind a viatical
settlement contract within 30 days of the date it is executed by
all parties or 15 days of the receipt of the viatical settlement
proceeds by the viator, whichever is less, as provided in
section 60A.970, subdivision 3; and

(6) the date by which the funds will be available to the
viator and the source of the funds.

Sec. 6.

new text begin [60A.98] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For purposes of sections 60A.98
and 60A.981, the terms defined in this section have the meanings
given them.
new text end

new text begin Subd. 2. new text end

new text begin Customer. new text end

new text begin "Customer" means a consumer who has a
continuing relationship with a licensee under which the licensee
provides one or more insurance products or services to the
consumer that are to be used primarily for personal, family, or
household purposes.
new text end

new text begin Subd. 3. new text end

new text begin Customer information. new text end

new text begin "Customer information"
means nonpublic personal information about a customer, whether
in paper, electronic, or other form, that is maintained by or on
behalf of the licensee.
new text end

new text begin Subd. 4. new text end

new text begin Customer information systems. new text end

new text begin "Customer
information systems" means the electronic or physical methods
used to access, collect, store, use, transmit, protect, or
dispose of customer information.
new text end

new text begin Subd. 5. new text end

new text begin Licensee. new text end

new text begin "Licensee" means all licensed
insurers, producers, and other persons licensed or required to
be licensed, authorized or required to be authorized, or
registered or required to be registered pursuant to the
insurance laws of this state, except that "licensee" does not
include a purchasing group or an ineligible insurer in regard to
the surplus line insurance conducted pursuant to sections
60A.195 to 60A.209. "Licensee" does not include producers until
January 1, 2007.
new text end

new text begin Subd. 6. new text end

new text begin Nonpublic financial information. new text end

new text begin "Nonpublic
financial information" means:
new text end

new text begin (1) personally identifiable financial information; and
new text end

new text begin (2) any list, description, or other grouping of consumers,
and publicly available information pertaining to them, that is
derived using any personally identifiable financial information
that is not publicly available.
new text end

new text begin Subd. 7. new text end

new text begin Nonpublic personal health
information. new text end

new text begin "Nonpublic personal health information" means
health information:
new text end

new text begin (1) that identifies an individual who is the subject of the
information; or
new text end

new text begin (2) with respect to which there is a reasonable basis to
believe that the information could be used to identify an
individual.
new text end

new text begin Subd. 8. new text end

new text begin Nonpublic personal information. new text end

new text begin "Nonpublic
personal information" means nonpublic financial information and
nonpublic personal health information.
new text end

new text begin Subd. 9. new text end

new text begin Personally identifiable financial
information. new text end

new text begin "Personally identifiable financial information"
means any information:
new text end

new text begin (1) a consumer provides to a licensee to obtain an
insurance product or service from the licensee;
new text end

new text begin (2) about a consumer resulting from a transaction involving
an insurance product or service between a licensee and a
consumer; or
new text end

new text begin (3) the licensee otherwise obtains about a consumer in
connection with providing an insurance product or service to
that consumer.
new text end

new text begin Subd. 10. new text end

new text begin Service provider. new text end

new text begin "Service provider" means a
person that maintains, processes, or otherwise is permitted
access to customer information through its provision of services
directly to the licensee.
new text end

Sec. 7.

new text begin [60A.981] INFORMATION SECURITY PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin General requirements. new text end

new text begin Each licensee shall
implement a comprehensive written information security program
that includes administrative, technical, and physical safeguards
for the protection of customer information. The administrative,
technical, and physical safeguards included in the information
security program must be appropriate to the size and complexity
of the licensee and the nature and scope of its activities.
new text end

new text begin Subd. 2. new text end

new text begin Objectives. new text end

new text begin A licensee's information security
program must be designed to:
new text end

new text begin (1) ensure the security and confidentiality of customer
information;
new text end

new text begin (2) protect against any anticipated threats or hazards to
the security or integrity of the information; and
new text end

new text begin (3) protect against unauthorized access to or use of the
information that could result in substantial harm or
inconvenience to any customer.
new text end

new text begin Subd. 3. new text end

new text begin Examples of methods of development and
implementation. new text end

new text begin The following actions and procedures are
examples of methods of implementation of the requirements of
subdivisions 1 and 2. These examples are nonexclusive
illustrations of actions and procedures that licensees may
follow to implement subdivisions 1 and 2:
new text end

new text begin (1) the licensee:
new text end

new text begin (i) identifies reasonably foreseeable internal or external
threats that could result in unauthorized disclosure, misuse,
alteration, or destruction of customer information or customer
information systems;
new text end

new text begin (ii) assesses the likelihood and potential damage of these
threats, taking into consideration the sensitivity of customer
information; and
new text end

new text begin (iii) assesses the sufficiency of policies, procedures,
customer information systems, and other safeguards in place to
control risks;
new text end

new text begin (2) the licensee:
new text end

new text begin (i) designs its information security program to control the
identified risks, commensurate with the sensitivity of the
information, as well as the complexity and scope of the
licensee's activities;
new text end

new text begin (ii) trains staff, as appropriate, to implement the
licensee's information security program; and
new text end

new text begin (iii) regularly tests or otherwise regularly monitors the
key controls, systems, and procedures of the information
security program. The frequency and nature of these tests or
other monitoring practices are determined by the licensee's risk
assessment;
new text end

new text begin (3) the licensee:
new text end

new text begin (i) exercises appropriate due diligence in selecting its
service providers; and
new text end

new text begin (ii) requires its service providers to implement
appropriate measures designed to meet the objectives of this
regulation, and, where indicated by the licensee's risk
assessment, takes appropriate steps to confirm that its service
providers have satisfied these obligations; and
new text end

new text begin (4) the licensee monitors, evaluates, and adjusts, as
appropriate, the information security program in light of any
relevant changes in technology, the sensitivity of its customer
information, internal or external threats to information, and
the licensee's own changing business arrangements, such as
mergers and acquisitions, alliances and joint ventures,
outsourcing arrangements, and changes to customer information
systems.
new text end

Sec. 8.

new text begin [60A.982] UNFAIR TRADE PRACTICES.
new text end

new text begin A violation of sections 60A.98 and 60A.981 is considered to
be a violation of sections 72A.17 to 72A.32.
new text end

Sec. 9.

Minnesota Statutes 2004, section 62A.136, is
amended to read:

62A.136 DENTAL AND VISION PLAN COVERAGE.

The following provisions do not apply to health plans new text begin as
defined in section 62A.011, subdivision 3, clause (6), new text end providing
dental or vision coverage only: sections 62A.041; 62A.0411;
62A.047; 62A.149; 62A.151; 62A.152; 62A.154; 62A.155; 62A.17,
subdivision 6; 62A.21, subdivision 2b; 62A.26; 62A.28; 62A.285;
62A.30; 62A.304; 62A.3093; and 62E.16.

Sec. 10.

Minnesota Statutes 2004, section 62A.31,
subdivision 1h, is amended to read:

Subd. 1h.

Limitations on denials, conditions, and pricing
of coverage.

No health carrier issuing Medicare-related
coverage in this state may impose preexisting condition
limitations or otherwise deny or condition the issuance or
effectiveness of any such coverage available for sale in this
state, nor may it discriminate in the pricing of such coverage,
because of the health status, claims experience, receipt of
health care, medical condition, or age of an applicant where an
application for such coverage is submitted prior to or during
the six-month period beginning with the first day of the month
in which an individual first enrolled for benefits under
Medicare Part B. This subdivision applies to each
Medicare-related coverage offered by a health carrier regardless
of whether the individual has attained the age of 65 years. If
an individual who is enrolled in Medicare Part B due to
disability status is involuntarily disenrolled due to loss of
disability status, the individual is eligible for another
six-month enrollment period provided under this subdivision
beginning the first day of the month in which the individual
later becomes eligible for and enrolls again in Medicare Part
B. An individual who is or was previously enrolled in Medicare
Part B due to disability status is eligible for another
six-month enrollment period under this subdivision beginning the
first day of the month in which the individual has attained the
age of 65 years and either maintains enrollment in, or enrolls
again in, Medicare Part B. If an individual enrolled in
Medicare Part B voluntarily disenrolls from Medicare Part B
because the individual becomes deleted text begin reemployed and is deleted text end enrolled under
an employee welfare benefit plan, the individual is eligible for
another six-month enrollment period, as provided in this
subdivision, beginning the first day of the month in which the
individual later becomes eligible for and enrolls again in
Medicare Part B.

Sec. 11.

Minnesota Statutes 2004, section 62A.315, is
amended to read:

62A.315 EXTENDED BASIC MEDICARE SUPPLEMENT PLAN;
COVERAGE.

The extended basic Medicare supplement plan must have a
level of coverage so that it will be certified as a qualified
plan pursuant to section 62E.07, and will provide:

(1) coverage for all of the Medicare Part A inpatient
hospital deductible and coinsurance amounts, and 100 percent of
all Medicare Part A eligible expenses for hospitalization not
covered by Medicare;

(2) coverage for the daily co-payment amount of Medicare
Part A eligible expenses for the calendar year incurred for
skilled nursing facility care;

(3) coverage for the coinsurance amount or in the case of
hospital outpatient department services paid under a prospective
payment system, the co-payment amount, of Medicare eligible
expenses under Medicare Part B regardless of hospital
confinement, and the Medicare Part B deductible amount;

(4) 80 percent of the usual and customary hospital and
medical expenses and supplies described in section 62E.06,
subdivision 1, not to exceed any charge limitation established
by the Medicare program or state law, the usual and customary
hospital and medical expenses and supplies, described in section
62E.06, subdivision 1, while in a foreign country, and
prescription drug expenses, not covered by Medicare;

(5) coverage for the reasonable cost of the first three
pints of blood, or equivalent quantities of packed red blood
cells as defined under federal regulations under Medicare parts
A and B, unless replaced in accordance with federal regulations;

(6) 100 percent of the cost of immunizations new text begin not otherwise
covered under Part D of the Medicare program new text end and routine
screening procedures for cancer, including mammograms and pap
smears;

(7) preventive medical care benefit: coverage for the
following preventive health services new text begin not covered by Medicare new text end :

(i) an annual clinical preventive medical history and
physical examination that may include tests and services from
clause (ii) and patient education to address preventive health
care measures;

(ii) deleted text begin any one or a combination of the following deleted text end preventive
screening tests or preventive services, the new text begin selection and
new text end frequency of which is deleted text begin considered deleted text end new text begin determined to be new text end medically
appropriate deleted text begin : deleted text end new text begin by the attending physician.
new text end

deleted text begin (A) fecal occult blood test and/or digital rectal
examination;
deleted text end

deleted text begin (B) dipstick urinalysis for hematuria, bacteriuria, and
proteinuria;
deleted text end

deleted text begin (C) pure tone (air only) hearing screening test
administered or ordered by a physician;
deleted text end

deleted text begin (D) serum cholesterol screening every five years;
deleted text end

deleted text begin (E) thyroid function test;
deleted text end

deleted text begin (F) diabetes screening;
deleted text end

deleted text begin (iii) any other tests or preventive measures determined
appropriate by the attending physician.
deleted text end

Reimbursement shall be for the actual charges up to 100
percent of the Medicare-approved amount for each service as if
Medicare were to cover the service as identified in American
Medical Association current procedural terminology (AMA CPT)
codes to a maximum of $120 annually under this benefit. This
benefit shall not include payment for any procedure covered by
Medicare;

(8) at-home recovery benefit: coverage for services to
provide short-term at-home assistance with activities of daily
living for those recovering from an illness, injury, or surgery:

(i) for purposes of this benefit, the following definitions
shall apply:

(A) "activities of daily living" include, but are not
limited to, bathing, dressing, personal hygiene, transferring,
eating, ambulating, assistance with drugs that are normally
self-administered, and changing bandages or other dressings;

(B) "care provider" means a duly qualified or licensed home
health aide/homemaker, personal care aide, or nurse provided
through a licensed home health care agency or referred by a
licensed referral agency or licensed nurses registry;

(C) "home" means a place used by the insured as a place of
residence, provided that the place would qualify as a residence
for home health care services covered by Medicare. A hospital
or skilled nursing facility shall not be considered the
insured's place of residence;

(D) "at-home recovery visit" means the period of a visit
required to provide at-home recovery care, without limit on the
duration of the visit, except each consecutive four hours in a
24-hour period of services provided by a care provider is one
visit;

(ii) coverage requirements and limitations:

(A) at-home recovery services provided must be primarily
services that assist in activities of daily living;

(B) the insured's attending physician must certify that the
specific type and frequency of at-home recovery services are
necessary because of a condition for which a home care plan of
treatment was approved by Medicare;

(C) coverage is limited to:

(I) no more than the number and type of at-home recovery
visits certified as medically necessary by the insured's
attending physician. The total number of at-home recovery
visits shall not exceed the number of Medicare-approved home
health care visits under a Medicare-approved home care plan of
treatment;

(II) the actual charges for each visit up to a maximum
reimbursement of $100 per visit;

(III) $4,000 per calendar year;

(IV) seven visits in any one week;

(V) care furnished on a visiting basis in the insured's
home;

(VI) services provided by a care provider as defined in
this section;

(VII) at-home recovery visits while the insured is covered
under the policy or certificate and not otherwise excluded;

(VIII) at-home recovery visits received during the period
the insured is receiving Medicare-approved home care services or
no more than eight weeks after the service date of the last
Medicare-approved home health care visit;

(iii) coverage is excluded for:

(A) home care visits paid for by Medicare or other
government programs; and

(B) care provided by unpaid volunteers or providers who are
not care providers.

Sec. 12.

Minnesota Statutes 2004, section 62A.316, is
amended to read:

62A.316 BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.

(a) The basic Medicare supplement plan must have a level of
coverage that will provide:

(1) coverage for all of the Medicare part A inpatient
hospital coinsurance amounts, and 100 percent of all Medicare
part A eligible expenses for hospitalization not covered by
Medicare, after satisfying the Medicare part A deductible;

(2) coverage for the daily co-payment amount of Medicare
part A eligible expenses for the calendar year incurred for
skilled nursing facility care;

(3) coverage for the coinsurance amount, or in the case of
outpatient department services paid under a prospective payment
system, the co-payment amount, of Medicare eligible expenses
under Medicare part B regardless of hospital confinement,
subject to the Medicare part B deductible amount;

(4) 80 percent of the hospital and medical expenses and
supplies incurred during travel outside the United States as a
result of a medical emergency;

(5) coverage for the reasonable cost of the first three
pints of blood, or equivalent quantities of packed red blood
cells as defined under federal regulations under Medicare parts
A and B, unless replaced in accordance with federal regulations;

(6) 100 percent of the cost of immunizations new text begin not otherwise
covered under part D of the Medicare program new text end and routine
screening procedures for cancer screening including mammograms
and pap smears; and

(7) 80 percent of coverage for all physician prescribed
medically appropriate and necessary equipment and supplies used
in the management and treatment of diabetes new text begin not otherwise
covered under Part D of the Medicare program new text end . Coverage must
include persons with gestational, type I, or type II diabetes.

(b) Only the following optional benefit riders may be added
to this plan:

(1) coverage for all of the Medicare part A inpatient
hospital deductible amount;

(2) a minimum of 80 percent of eligible medical expenses
and supplies not covered by Medicare part B, not to exceed any
charge limitation established by the Medicare program or state
law;

(3) coverage for all of the Medicare part B annual
deductible;

(4) coverage for at least 50 percent, or the equivalent of
50 percent, of usual and customary prescription drug expenses;

(5) deleted text begin coverage for the following deleted text end preventive deleted text begin health services
deleted text end new text begin medical care benefit coverage for the following preventative
health services not covered by Medicare new text end :

(i) an annual clinical preventive medical history and
physical examination that may include tests and services from
clause (ii) and patient education to address preventive health
care measures;

(ii) deleted text begin any one or a combination of the following deleted text end preventive
screening tests or preventive services, the new text begin selection and
new text end frequency of which is deleted text begin considered deleted text end new text begin determined to be new text end medically
appropriate deleted text begin : deleted text end new text begin by the attending physician.
new text end

deleted text begin (A) fecal occult blood test and/or digital rectal
examination;
deleted text end

deleted text begin (B) dipstick urinalysis for hematuria, bacteriuria, and
proteinuria;
deleted text end

deleted text begin (C) pure tone (air only) hearing screening test,
administered or ordered by a physician;
deleted text end

deleted text begin (D) serum cholesterol screening every five years;
deleted text end

deleted text begin (E) thyroid function test;
deleted text end

deleted text begin (F) diabetes screening;
deleted text end

deleted text begin (iii) any other tests or preventive measures determined
appropriate by the attending physician.
deleted text end

Reimbursement shall be for the actual charges up to 100
percent of the Medicare-approved amount for each service, as if
Medicare were to cover the service as identified in American
Medical Association current procedural terminology (AMA CPT)
codes, to a maximum of $120 annually under this benefit. This
benefit shall not include payment for a procedure covered by
Medicare;

(6) coverage for services to provide short-term at-home
assistance with activities of daily living for those recovering
from an illness, injury, or surgery:

(i) For purposes of this benefit, the following definitions
apply:

(A) "activities of daily living" include, but are not
limited to, bathing, dressing, personal hygiene, transferring,
eating, ambulating, assistance with drugs that are normally
self-administered, and changing bandages or other dressings;

(B) "care provider" means a duly qualified or licensed home
health aide/homemaker, personal care aid, or nurse provided
through a licensed home health care agency or referred by a
licensed referral agency or licensed nurses registry;

(C) "home" means a place used by the insured as a place of
residence, provided that the place would qualify as a residence
for home health care services covered by Medicare. A hospital
or skilled nursing facility shall not be considered the
insured's place of residence;

(D) "at-home recovery visit" means the period of a visit
required to provide at-home recovery care, without limit on the
duration of the visit, except each consecutive four hours in a
24-hour period of services provided by a care provider is one
visit;

(ii) Coverage requirements and limitations:

(A) at-home recovery services provided must be primarily
services that assist in activities of daily living;

(B) the insured's attending physician must certify that the
specific type and frequency of at-home recovery services are
necessary because of a condition for which a home care plan of
treatment was approved by Medicare;

(C) coverage is limited to:

(I) no more than the number and type of at-home recovery
visits certified as necessary by the insured's attending
physician. The total number of at-home recovery visits shall
not exceed the number of Medicare-approved home care visits
under a Medicare-approved home care plan of treatment;

(II) the actual charges for each visit up to a maximum
reimbursement of $40 per visit;

(III) $1,600 per calendar year;

(IV) seven visits in any one week;

(V) care furnished on a visiting basis in the insured's
home;

(VI) services provided by a care provider as defined in
this section;

(VII) at-home recovery visits while the insured is covered
under the policy or certificate and not otherwise excluded;

(VIII) at-home recovery visits received during the period
the insured is receiving Medicare-approved home care services or
no more than eight weeks after the service date of the last
Medicare-approved home health care visit;

(iii) Coverage is excluded for:

(A) home care visits paid for by Medicare or other
government programs; and

(B) care provided by family members, unpaid volunteers, or
providers who are not care providers;

(7) coverage for at least 50 percent, or the equivalent of
50 percent, of usual and customary prescription drug expenses to
a maximum of $1,200 paid by the issuer annually under this
benefit. An issuer of Medicare supplement insurance policies
that elects to offer this benefit rider shall also make
available coverage that contains the rider specified in clause
(4).

Sec. 13.

Minnesota Statutes 2004, section 62E.12, is
amended to read:

62E.12 MINIMUM BENEFITS OF COMPREHENSIVE HEALTH INSURANCE
PLAN.

(a) The association through its comprehensive health
insurance plan shall offer policies which provide the benefits
of a number one qualified plan and a number two qualified plan,
except that the maximum lifetime benefit on these plans shall be
$2,800,000; and an extended basic Medicare supplement plan and a
basic Medicare supplement plan as described in sections 62A.31
to 62A.44. The association may also offer a plan that is
identical to a number one and number two qualified plan except
that it has a $2,000 annual deductible and a $2,800,000 maximum
lifetime benefit. The association, subject to the approval of
the commissioner, may also offer plans that are identical to the
number one or number two qualified plan, except that they have
annual deductibles of $5,000 and $10,000, respectively; have
limitations on total annual out-of-pocket expenses equal to
those annual deductibles and therefore cover 100 percent of the
allowable cost of covered services in excess of those annual
deductibles; and have a $2,800,000 maximum lifetime
benefit. new text begin The association, subject to approval of the
commissioner, may also offer plans that meet all other
requirements of state law except those that are inconsistent
with high deductible health plans as defined in sections 220 and
223 of the Internal Revenue Code and supporting regulations. new text end As
of January 1, 2006, the association shall no longer be required
to offer an extended basic Medicare supplement plan.

(b) The requirement that a policy issued by the association
must be a qualified plan is satisfied if the association
contracts with a preferred provider network and the level of
benefits for services provided within the network satisfies the
requirements of a qualified plan. If the association uses a
preferred provider network, payments to nonparticipating
providers must meet the minimum requirements of section 72A.20,
subdivision 15.

(c) The association shall offer health maintenance
organization contracts in those areas of the state where a
health maintenance organization has agreed to make the coverage
available and has been selected as a writing carrier.

(d) Notwithstanding the provisions of section 62E.06 and
unless those charges are billed by a provider that is part of
the association's preferred provider network, the state plan
shall exclude coverage of services of a private duty nurse other
than on an inpatient basis and any charges for treatment in a
hospital located outside of the state of Minnesota in which the
covered person is receiving treatment for a mental or nervous
disorder, unless similar treatment for the mental or nervous
disorder is medically necessary, unavailable in Minnesota and
provided upon referral by a licensed Minnesota medical
practitioner.

Sec. 14.

Minnesota Statutes 2004, section 62E.13,
subdivision 2, is amended to read:

Subd. 2.

Selection of writing carrier.

The association
may select policies and contracts, or parts thereof, submitted
by a member or members of the association, or by the association
or others, to develop specifications for bids from any entity
which wishes to be selected as a writing carrier to administer
the state plan. The selection of the writing carrier shall be
based upon criteria established by the board of directors of the
association and approved by the commissioner. The criteria
shall outline specific qualifications that an entity must
satisfy in order to be selected and, at a minimum, shall include
the entity's proven ability to handle large group accident and
health insurance cases, efficient claim paying capacity, and the
estimate of total charges for administering the plan. The
association may select separate writing carriers for the two
types of qualified plans and the $2,000, $5,000, and $10,000
deductible plans, the deleted text begin qualified deleted text end Medicare supplement deleted text begin plan deleted text end new text begin plans new text end ,
and the health maintenance organization contract.

Sec. 15.

new text begin [62L.056] SMALL EMPLOYER FLEXIBLE BENEFITS
PLANS.
new text end

new text begin (a) Notwithstanding any provision of this chapter, chapter
363A, or any other law to the contrary, a health carrier may
offer, sell, issue, and renew a health benefit plan that is a
flexible benefits plan under this section to a small employer if
the following requirements are satisfied:
new text end

new text begin (1) the health benefit plan must be offered in compliance
with this chapter, except as otherwise permitted in this
section;
new text end

new text begin (2) the health benefit plan to be offered must be designed
to enable employers and covered persons to better manage costs
and coverage options through the use of co-pays, deductibles,
and other cost-sharing arrangements;
new text end

new text begin (3) the health benefit plan must be issued and administered
in compliance with sections 62E.141; 62L.03, subdivision 6; and
62L.12, subdivisions 3 and 4, relating to prohibitions against
enrolling in the Minnesota Comprehensive Health Association
persons eligible for employer group coverage;
new text end

new text begin (4) the health benefit plan may modify or exclude any or
all coverages of benefits that would otherwise be required by
law, except for maternity benefits and other benefits required
under federal law;
new text end

new text begin (5) each health benefit plan must be approved by the
commissioner of commerce, but the commissioner may not
disapprove a plan on the grounds of a modification or exclusion
permitted under clause (4); and
new text end

new text begin (6) prior to sale of the health benefit plan, the small
employer must be given a written list of the coverages otherwise
required by law that are modified or excluded in the health
benefit plan. The list must include a description of each
coverage in the list and indicate whether the coverage is
modified or excluded. If a coverage is modified, the list must
describe the modification. The list may, but need not, also
list any or all coverages otherwise required by law that are
included in the health benefit plan and indicate that they are
included. The insurer must require that a copy of this written
list be provided, prior to the effective date of the health
benefit plan, to each employee who is eligible for health
coverage under the employer's plan.
new text end

new text begin (b) The definitions in section 62L.02 apply to this section
as modified by this section.
new text end

new text begin (c) An employer may provide a health benefit plan permitted
under this section to its employees, the employees' dependents,
and other persons eligible for coverage under the employer's
plan, notwithstanding chapter 363A or any other law to the
contrary.
new text end

Sec. 16.

Minnesota Statutes 2004, section 62Q.471, is
amended to read:

62Q.471 EXCLUSION FOR SUICIDE ATTEMPTS PROHIBITED.

(a) No health plan may exclude or reduce coverage for
health care for an enrollee who is otherwise covered under the
health plan on the basis that the need for the health care arose
out of a suicide or suicide attempt by the enrollee.

(b) For purposes of this section, "health plan" has the
meaning given in section 62Q.01, subdivision 3, but includes the
coverages described in section 62A.011, clauses new text begin (4), (6),
and new text end (7) deleted text begin and deleted text end new text begin through new text end (10).

Sec. 17.

Minnesota Statutes 2004, section 62Q.65, is
amended to read:

62Q.65 ACCESS TO PROVIDER DISCOUNTS.

Subdivision 1.

Requirement.

A high deductible health
plan must, when used in connection with a medical savings
account new text begin or health savings account new text end , provide the enrollee access
to any discounted provider fees for services covered by the high
deductible health plan, regardless of whether the enrollee has
satisfied the deductible for the high deductible health plan.

Subd. 2.

Definitions.

For purposes of this section, the
following terms have the meanings given:

(1) "high deductible health plan" has the meaning given
under the Internal Revenue Code of 1986, section 220(c)(2) new text begin , with
respect to a medical savings account; and the meaning given
under Internal Revenue Code of 1986, section 223(c)(2), with
respect to a health savings account new text end ;

(2) "medical savings account" has the meaning given under
the Internal Revenue Code of 1986, section 220(d)(1); deleted text begin and
deleted text end

(3) "discounted provider fees" means fees contained in a
provider agreement entered into by the issuer of the high
deductible health plan, or an affiliate of the issuer, for use
in connection with the high deductible health plan new text begin ; and
new text end

new text begin (4) "health savings account" has the meaning given under
the Internal Revenue Code of 1986, section 223(d) new text end .

Sec. 18.

Minnesota Statutes 2004, section 65A.29,
subdivision 11, is amended to read:

Subd. 11.

Nonrenewal.

Every insurer shall establish a
plan that sets out the minimum number and amount of claims
during an experience period that may result in a
nonrenewal. new text begin For purposes of the plan, the insurer may not
consider as a claim the insured's inquiry about a hypothetical
claim, or the insured's inquiry to the insured's agent regarding
a potential claim.
new text end

No homeowner's insurance policy may be nonrenewed based on
the insured's loss experience unless the insurer has sent a
written notice that any future losses may result in nonrenewal
due to loss experience.

Any nonrenewal of a homeowner's insurance policy must, at a
minimum, comply with the requirements of subdivision 8 and the
rules adopted by the commissioner.

Sec. 19.

new text begin [65A.297] ACTIVE DUTY MEMBER OF ARMED SERVICES
RESERVE OR NATIONAL GUARD; USE IN UNDERWRITING PROHIBITED.
new text end

new text begin No insurer, including the Minnesota FAIR plan, shall refuse
to renew, decline to offer or write, reduce the limits of,
cancel, or charge differential rates for equivalent coverage for
any coverage in a homeowner's policy because the dwelling is
vacant or occupied by a caretaker if the insured's absence is
caused solely by the insured being called to active duty as a
member of the armed services reserve or the National Guard.
new text end

Sec. 20.

new text begin [65B.286] SNOWMOBILE AUXILIARY LIGHTING SYSTEM
DISCOUNT.
new text end

new text begin Subdivision 1. new text end

new text begin Definition. new text end

new text begin For the purposes of this
section, the term "auxiliary hazard warning lighting system"
means a system installed by the manufacturer of a snowmobile as
original equipment or installed in a snowmobile by the
manufacturer or an authorized dealer of that manufacturer as an
aftermarket system that does the following when activated:
new text end

new text begin (1) a yellow light emitting diode (L.E.D.) light on the
front of the snowmobile that flashes at least once per second
and is visible at least one-half mile in front of the
snowmobile; and
new text end

new text begin (2) a red light emitting diode (L.E.D.) light on the rear
of the snowmobile that flashes at least once per second and is
visible at least one-half mile from behind the snowmobile.
new text end

new text begin Subd. 2. new text end

new text begin Required reduction. new text end

new text begin An insurer must provide an
appropriate premium reduction of at least five percent on a
policy insuring the snowmobile, or on that portion of a policy
insuring a snowmobile that is issued, delivered, or renewed in
this state, to the insured whose snowmobile is equipped with an
authorized auxiliary hazard warning lighting system. The
premium reduction required by this subdivision applies to every
snowmobile of the insured that is equipped with an auxiliary
hazard warning lighting system.
new text end

Sec. 21.

Minnesota Statutes 2004, section 65B.48,
subdivision 3, is amended to read:

Subd. 13.

Refusal to renew.

Refusing to renew, declining
to offer or write, or charging differential rates for an
equivalent amount of homeowner's insurance coverage, as defined
by section 65A.27, for property located in a town or statutory
or home rule charter city, in which the insurer offers to sell
or writes homeowner's insurance, solely because:

(a) of the geographic area in which the property is
located;

(b) of the age of the primary structure sought to be
insured;

(c) the insured or prospective insured was denied coverage
of the property by another insurer, whether by cancellation,
nonrenewal or declination to offer coverage, for a reason other
than those specified in section 65A.01, subdivision 3a, clauses
(a) to (e); deleted text begin or
deleted text end

(d) the property of the insured or prospective insured has
been insured under the Minnesota FAIR Plan Act, shall constitute
an unfair method of competition and an unfair and deceptive act
or practice new text begin ; or
new text end

new text begin (e) the insured has inquired about coverage for a
hypothetical claim or has made an inquiry to the insured's agent
regarding a potential claim new text end .

This subdivision prohibits an insurer from filing or
charging different rates for different zip code areas within the
same town or statutory or home rule charter city.

This subdivision shall not prohibit the insurer from
applying underwriting or rating standards which the insurer
applies generally in all other locations in the state and which
are not specifically prohibited by clauses (a) to deleted text begin (d) deleted text end new text begin (e) new text end . Such
underwriting or rating standards shall specifically include but
not be limited to standards based upon the proximity of the
insured property to an extraordinary hazard or based upon the
quality or availability of fire protection services or based
upon the density or concentration of the insurer's risks.
Clause (b) shall not prohibit the use of rating standards based
upon the age of the insured structure's plumbing, electrical,
heating or cooling system or other part of the structure, the
age of which affects the risk of loss. Any insurer's failure to
comply with section 65A.29, subdivisions 2 to 4, either (1) by
failing to give an insured or applicant the required notice or
statement or (2) by failing to state specifically a bona fide
underwriting or other reason for the refusal to write shall
create a presumption that the insurer has violated this
subdivision.

Sec. 23.

Minnesota Statutes 2004, section 72A.20,
subdivision 36, is amended to read:

Subd. 36.

Limitations on the use of credit information.

(a) No insurer or group of affiliated insurers may reject,
cancel, or nonrenew a policy of private passenger motor vehicle
insurance as defined under section 65B.01 or a policy of
homeowner's insurance as defined under section 65A.27, for any
person in whole or in part on the basis of credit information,
including a credit reporting product known as a "credit score"
or "insurance score," without consideration and inclusion of any
other applicable underwriting factor.

(b) If credit information, credit scoring, or insurance
scoring is to be used in underwriting, the insurer must disclose
to the consumer that credit information will be obtained and
used as part of the insurance underwriting process.

(c) Insurance inquiries and non-consumer-initiated
inquiries must not be used as part of the credit scoring or
insurance scoring process.

(d) If a credit score, insurance score, or other credit
information relating to a consumer, with respect to the types of
insurance referred to in paragraph (a), is adversely impacted or
cannot be generated because of the absence of a credit history,
the insurer must exclude the use of credit as a factor in the
decision to reject, cancel, or nonrenew.

(e) new text begin Insurers must upon the request of a policyholder
reevaluate the policyholder's score. Any change in premium
resulting from the reevaluation must be effective upon the
renewal of the policy. An insurer is not required to reevaluate
a policyholder's score pursuant to this paragraph more than
twice in any given calendar year.
new text end

new text begin (f) new text end Insurers must upon request of the applicant or
policyholder provide reasonable underwriting exceptions based
upon prior credit histories for persons whose credit information
is unduly influenced by expenses related to a catastrophic
injury or illness, temporary loss of employment, or the death of
an immediate family member. The insurer may require reasonable
documentation of these events prior to granting an exception.

deleted text begin (f) deleted text end new text begin (g) new text end A credit scoring or insurance scoring methodology
must not be used by an insurer if the credit scoring or
insurance scoring methodology incorporates the gender, race,
nationality, or religion of an insured or applicant.

deleted text begin (g) deleted text end new text begin (h) new text end Insurers that employ a credit scoring or insurance
scoring system in underwriting of coverage described in
paragraph (a) must have on file with the commissioner:

(1) the insurer's credit scoring or insurance scoring
methodology; and

(2) information that supports the insurer's use of a credit
score or insurance score as an underwriting criterion.

deleted text begin (h) deleted text end new text begin (i) new text end Insurers described in paragraph (g) shall file the
required information with the commissioner within 120 days of
August 1, 2002, or prior to implementation of a credit scoring
or insurance scoring system by the insurer, if that date is
later.

deleted text begin (i) deleted text end new text begin (j) new text end Information provided by, or on behalf of, an
insurer to the commissioner under this subdivision is trade
secret information under section 13.37.

Sec. 24.

Minnesota Statutes 2004, section 79.211, is
amended by adding a subdivision to read:

new text begin Subd. 4. new text end

new text begin Experience modification factor revision for
certain closed claims. new text end

new text begin An insurer or an employer insured under
a workers' compensation policy subject to an experience rating
plan may request in writing of the data service organization
computing the policy's experience modification factor that the
most recent factor be revised if each of the following criteria
is met:
new text end

new text begin (1) a workers' compensation claim under that policy is
closed between the normal valuation date for that claim and the
next time that valuation is used in computing the experience
modification factor on the policy;
new text end

new text begin (2) the data service organization receives a revised unit
statistical report containing data on the closed claim in a form
consistent with its filed unit statistical plan; and
new text end

new text begin (3) inclusion of the closed claim in the experience
modification factor calculation would impact that factor by five
percentage points or more.
new text end

Sec. 25.

Minnesota Statutes 2004, section 79.40, is
amended to read:

79.40 PREMIUM INCLUSION IN RATEMAKING.

Premiums charged members by the reinsurance association
shall be recognized in the ratemaking procedures for insurance
rates deleted text begin in the same manner as assessments for the special
compensation fund deleted text end .

Sec. 26.

Minnesota Statutes 2004, section 79.56,
subdivision 1, is amended to read:

Subdivision 1.

Prefiling of rates.

new text begin (a) new text end Each insurer
shall file with the commissioner a complete copy of its rates
and rating plan, and all changes and amendments thereto, and
such supporting data and information that the commissioner may
by rule require, at least 60 days prior to its effective date.
The commissioner shall advise an insurer within 30 days of the
filing if its submission is not accompanied with such supporting
data and information that the commissioner by rule may require.
The commissioner may extend the filing review period and
effective date for an additional 30 days if an insurer, after
having been advised of what supporting data and information is
necessary to complete its filing, does not provide such
information within 15 days of having been so notified. If any
rate or rating plan filing or amendment thereto is not
disapproved by the commissioner within the filing review period,
the insurer may implement it. For the period August 1, 1995, to
December 31, 1995, the filing shall be made at least 90 days
prior to the effective date and the department shall advise an
insurer within 60 days of such filing if the filing is
insufficient under this section.

new text begin (b) A rating plan or rates are not subject to the
requirements of paragraph (a), where the insurer files a
certification verifying that it will use the mutually agreed
upon rating plan or rates only to write a specific employer that
generates $250,000 in annual written workers' compensation
premiums before the application of any large deductible rating
plan. The certification must be refiled upon each renewal of
the employer's policy. The $250,000 threshold includes premiums
generated in any state. The designation and certification must
be submitted in substantially the following form:
new text end

new text begin Name and address of insurer:.................................
new text end

new text begin Name and address of insured employer:........................
new text end

new text begin Policy period:...............................................
new text end

new text begin I certify that the employer named above generates $250,000 or
more in annual countrywide written workers' compensation
premiums, and that the calculation of this threshold is based on
the rates and rating plans that have been approved by the
appropriate state regulatory authority. The filing of this
certification authorizes the use of this rate or rating plan
only for the named employer.
new text end

new text begin Name of responsible officer:.................................
new text end

new text begin Title:.......................................................
new text end

new text begin Signature:...................................................
new text end

Sec. 27.

Minnesota Statutes 2004, section 79.56,
subdivision 3, is amended to read:

Subd. 3.

Penalties.

deleted text begin (a) deleted text end Any insurer using a rate or a
rating plan which has not been filed new text begin or certified under
subdivision 1 new text end shall be subject to a fine of up to $100 for each
day the failure to file continues. The commissioner may, after
a hearing on the record, find that the failure is willful. A
willful failure to meet filing requirements shall be punishable
by a fine of up to $500 for each day during which a willful
failure continues. These penalties shall be in addition to any
other penalties provided by law.

deleted text begin (b) Notwithstanding this subdivision, an employer that
generates $250,000 in annual written workers' compensation
premium under the rates and rating plan of an insurer before the
application of any large deductible rating plans, may be written
by that insurer using rates or rating plans that are not subject
to disapproval but which have been filed. For the purposes of
this paragraph, written workers' compensation premiums generated
from states other than Minnesota are included in calculating the
$250,000 threshold for large risk alternative rating option
plans.
deleted text end

Sec. 28.

Minnesota Statutes 2004, section 79.62,
subdivision 3, is amended to read:

Subd. 3.

Issuance.

The commissioner, upon finding that
the applicant organization is qualified to provide the services
required and proposed, or has contracted with a licensed data
service organization to purchase these services which are
required by this chapter but are not provided directly by the
applicant, and that all requirements of law are met, shall issue
a license. Each license is subject to annual renewal effective
June 30. Each new or renewal license application must be
accompanied by a fee of deleted text begin $50 deleted text end new text begin $1,000 new text end .

Sec. 29.

Minnesota Statutes 2004, section 79A.03,
subdivision 9, is amended to read:

Subd. 9.

Filing reports.

(a) Incurred losses, paid and
unpaid, specifying indemnity and medical losses by
classification, payroll by classification, and current estimated
outstanding liability for workers' compensation shall be
reported to the commissioner by each self-insurer on a calendar
year basis, in a manner and on forms available from the
commissioner. Payroll information must be filed by April 1 of
the following year.

(b) Each self-insurer shall, under oath, attest to the
accuracy of each report submitted pursuant to paragraph (a).
Upon sufficient cause, the commissioner shall require the
self-insurer to submit a certified audit of payroll and claim
records conducted by an independent auditor approved by the
commissioner, based on generally accepted accounting principles
and generally accepted auditing standards, and supported by an
actuarial review and opinion of the future contingent
liabilities. The basis for sufficient cause shall include the
following factors: where the losses reported appear
significantly different from similar types of businesses; where
major changes in the reports exist from year to year, which are
not solely attributable to economic factors; or where the
commissioner has reason to believe that the losses and payroll
in the report do not accurately reflect the losses and payroll
of that employer. If any discrepancy is found, the commissioner
shall require changes in the self-insurer's or workers'
compensation service company record-keeping practices.

(c) An annual status report due August 1 by each
self-insurer shall be filed in a manner and on forms prescribed
by the commissioner.

(d) Each individual self-insurer shall, within four months
after the end of its fiscal year, annually file with the
commissioner its latest 10K report required by the Securities
and Exchange Commission. If an individual self-insurer does not
prepare a 10K report, it shall file an annual certified
financial statement, together with such other financial
information as the commissioner may require to substantiate data
in the financial statement.

(e) Each member of the group shall, within deleted text begin seven deleted text end new text begin six new text end months
after the end of each fiscal year for that group, deleted text begin file deleted text end new text begin submit to
a certified public accountant designated by the group, new text end the most
recent annual financial statement, reviewed by a certified
public accountant in accordance with the Statements on Standards
for Accounting and Review Services, Volume 2, the American
Institute of Certified Public Accountants Professional
Standards, or audited in accordance with generally accepted
auditing standards, together with such other financial
information the commissioner may require. In addition, the
group shall file new text begin with the commissioner new text end , within seven months
after the end of each fiscal year for that group, combining
financial statements of the group members, compiled by a
certified public accountant in accordance with the Statements on
Standards for Accounting and Review Services, Volume 2, the
American Institute of Certified Public Accountants Professional
Standards. The combining financial statements shall include,
but not be limited to, a balance sheet, income statement,
statement of changes in net worth, and statement of cash flow.
Each combining financial statement shall include a column for
each individual group member along with a total column. new text begin Each
combined statement shall have a statement from the certified
public accountant confirming that each member has submitted the
required financial statement as defined in this section. The
certified public accountant shall notify the commissioner if any
statement is qualified or otherwise conditional. The
commissioner may require additional financial information from
any group member.
new text end

Where a group has 50 or more members, the group shall file,
in lieu of the combining financial statements, a combined
financial statement showing only the total column for the entire
group's balance sheet, income statement, statement of changes in
net worth, and statement of cash flow. Additionally, the group
shall disclose, for each member, the total assets, net worth,
revenue, and income for the most recent fiscal year. The
combining and combined financial statements may omit all
footnote disclosures.

(f) In addition to the financial statements required by
paragraphs (d) and (e), interim financial statements or 10Q
reports required by the Securities and Exchange Commission may
be required by the commissioner upon an indication that there
has been deterioration in the self-insurer's financial
condition, including a worsening of current ratio, lessening of
net worth, net loss of income, the downgrading of the company's
bond rating, or any other significant change that may adversely
affect the self-insurer's ability to pay expected losses. Any
self-insurer that files an 8K report with the Securities and
Exchange Commission shall also file a copy of the report with
the commissioner within 30 days of the filing with the
Securities and Exchange Commission.

Sec. 30.

Minnesota Statutes 2004, section 79A.04,
subdivision 2, is amended to read:

Subd. 2.

Minimum deposit.

The minimum deposit is 110
percent of the private self-insurer's estimated future
liability. The deposit may be used to secure payment of all
administrative and legal costs, and unpaid assessments required
by section 79A.12, subdivision 2, relating to or arising from
its or other employers' self-insuring. As used in this section,
"private self-insurer" includes both current and former members
of the self-insurers' security fund; and "private self-insurers'
estimated future liability" means the private self-insurers'
total of estimated future liability as determined by an
Associate or Fellow of the Casualty Actuarial Society every year
for group member private self-insurers and, for a nongroup
member private self-insurer's authority to self-insure, every
year for the first five years. After the first five years, the
nongroup member's total shall be as determined by an Associate
or Fellow of the Casualty Actuarial Society at least every two
years, and each such actuarial study shall include a projection
of future losses during the period until the next scheduled
actuarial study, less payments anticipated to be made during
that time.

All data and information furnished by a private
self-insurer to an Associate or Fellow of the Casualty Actuarial
Society for purposes of determining private self-insurers'
estimated future liability must be certified by an officer of
the private self-insurer to be true and correct with respect to
payroll and paid losses, and must be certified, upon information
and belief, to be true and correct with respect to reserves.
The certification must be made by sworn affidavit. In addition
to any other remedies provided by law, the certification of
false data or information pursuant to this subdivision may
result in a fine imposed by the commissioner of commerce on the
private self-insurer up to the amount of $5,000, and termination
of the private self-insurers' authority to self-insure. The
determination of private self-insurers' estimated future
liability by an Associate or Fellow of the Casualty Actuarial
Society shall be conducted in accordance with standards and
principles for establishing loss and loss adjustment expense
reserves by the Actuarial Standards Board, an affiliate of the
American Academy of Actuaries. The commissioner may reject an
actuarial report that does not meet the standards and principles
of the Actuarial Standards Board, and may further disqualify the
actuary who prepared the report from submitting any future
actuarial reports pursuant to this chapter. Within 30 days
after the actuary has been served by the commissioner with a
notice of disqualification, an actuary who is aggrieved by the
disqualification may request a hearing to be conducted in
accordance with chapter 14. Based on a review of the actuarial
report, the commissioner of commerce may require an increase in
the minimum security deposit in an amount the commissioner
considers sufficient.

Estimated future liability is determined by first taking
the total amount of the self-insured's future liability of
workers' compensation claims and then deducting the total amount
which is estimated to be returned to the self-insurer from any
specific excess insurance coverage, aggregate excess insurance
coverage, and any supplementary benefits or second injury
benefits which are estimated to be reimbursed by the special
compensation fund. new text begin However, in the determination of estimated
future liability, the actuary for the self-insurer shall not
take a credit for any excess insurance or reinsurance which is
provided by a captive insurance company which is wholly owned by
the self-insurer. new text end Supplementary benefits or second injury
benefits will not be reimbursed by the special compensation fund
unless the special compensation fund assessment pursuant to
section 176.129 is paid and the reports required thereunder are
filed with the special compensation fund. In the case of surety
bonds, bonds shall secure administrative and legal costs in
addition to the liability for payment of compensation reflected
on the face of the bond. In no event shall the security be less
than the last retention limit selected by the self-insurer with
the Workers' Compensation Reinsurance Association, provided that
the commissioner may allow former members to post less than the
Workers' Compensation Reinsurance Association retention level if
that amount is adequate to secure payment of the self-insurers'
estimated future liability, as defined in this subdivision,
including payment of claims, administrative and legal costs, and
unpaid assessments required by section 79A.12, subdivision 2.
The posting or depositing of security pursuant to this section
shall release all previously posted or deposited security from
any obligations under the posting or depositing and any surety
bond so released shall be returned to the surety. Any other
security shall be returned to the depositor or the person
posting the bond.

As a condition for the granting or renewing of a
certificate to self-insure, the commissioner may require a
private self-insurer to furnish any additional security the
commissioner considers sufficient to insure payment of all
claims under chapter 176.

Sec. 31.

Minnesota Statutes 2004, section 79A.04,
subdivision 10, is amended to read:

Subd. 10.

Notice; obligation of fund.

In the event of
bankruptcy, insolvency, or certificate of default, the
commissioner shall immediately notify by certified mail the
commissioner of finance, the surety, the issuer of an
irrevocable letter of credit, and any custodian of the security
required in this chapter. At the time of notification, the
commissioner shall also call the security and transfer and
assign it to the self-insurers' security fund. The commissioner
shall also immediately notify by certified mail the
self-insurers' security fund, and order the security fund to
assume the insolvent self-insurers' obligations for which it is
liable under chapter 176. The security fund shall commence
payment of these obligations within 14 days of receipt of this
notification and order. Payments shall be made to claimants
whose entitlement to benefits can be ascertained by the security
fund, with or without proceedings before the Department of Labor
and Industry, the Office of Administrative Hearings, the
Workers' Compensation Court of Appeals, or the Minnesota Supreme
Court. Upon the assumption of obligations by the security fund
pursuant to the commissioner's notification and order, the
security fund has the right to immediate possession of any
posted or deposited security and the custodian, surety, or
issuer of any irrevocable letter of credit or the commissioner,
if in possession of it, shall turn over the security, proceeds
of the surety bond, or letter of credit to the security fund
together with the interest that has accrued since the date of
the self-insured employer's insolvency. new text begin The security fund has
the right to the immediate possession of all relevant workers'
compensation claim files and data of the self-insurer, and the
possessor of the files and data must turn the files and data, or
complete copies of them, over to the security fund within five
days of the notification provided under this subdivision. If
the possessor of the files and data fails to timely turn over
the files and data to the security fund, it is liable to the
security fund for a penalty of $500 per day for each day after
the five-day period has expired. The security fund is entitled
to recover its reasonable attorney fees and costs in any action
brought to obtain possession of the workers' compensation claim
files and data of the self-insurer, and for any action to
recover the penalties provided by this subdivision. new text end The
self-insurers' security fund may administer payment of benefits
or it may retain a third-party administrator to do so.

Sec. 32.

Minnesota Statutes 2004, section 79A.06,
subdivision 5, is amended to read:

Subd. 5.

Private employers who have ceased to be
self-insured.

(a) Private employers who have ceased to be
private self-insurers shall discharge their continuing
obligations to secure the payment of compensation which is
accrued during the period of self-insurance, for purposes of
Laws 1988, chapter 674, sections 1 to 21, by compliance with all
of the following obligations of current certificate holders:

(1) Filing reports with the commissioner to carry out the
requirements of this chapter;

(2) Depositing and maintaining a security deposit for
accrued liability for the payment of any compensation which may
become due, pursuant to chapter 176. However, if a private
employer who has ceased to be a private self-insurer purchases
an insurance policy from an insurer authorized to transact
workers' compensation insurance in this state which provides
coverage of all claims for compensation arising out of injuries
occurring during the entire period the employer was
self-insured, whether or not reported during that period, the
policy will:

(i) discharge the obligation of the employer to maintain a
security deposit for the payment of the claims covered under the
policy;

(ii) discharge any obligation which the self-insurers'
security fund has or may have for payment of all claims for
compensation arising out of injuries occurring during the period
the employer was self-insured, whether or not reported during
that period; and

(iii) discharge the obligations of the employer to pay any
future assessments to the self-insurers' security fund.

A private employer who has ceased to be a private
self-insurer may instead buy an insurance policy described
above, except that it covers only a portion of the period of
time during which the private employer was self-insured;
purchase of such a policy discharges any obligation that the
self-insurers' security fund has or may have for payment of all
claims for compensation arising out of injuries occurring during
the period for which the policy provides coverage, whether or
not reported during that period.

A policy described in this clause may not be issued by an
insurer unless it has previously been approved as to form and
substance by the commissioner; and

(3) Paying within 30 days all assessments of which notice
is sent by the security fund, for a period of seven years from
the last day its certificate of self-insurance was in effect.
Thereafter, the private employer who has ceased to be a private
self-insurer may either: (i) continue to pay within 30 days all
assessments of which notice is sent by the security fund until
it has no incurred liabilities for the payment of compensation
arising out of injuries during the period of self-insurance; or
(ii) pay the security fund a cash payment equal to four percent
of the net present value of all remaining incurred liabilities
for the payment of compensation under sections 176.101 and
176.111 as certified by a member of the casualty actuarial
society. Assessments shall be based on the benefits paid by the
employer during the calendar year immediately preceding the
calendar year in which the employer's right to self-insure is
terminated or withdrawn.

(b) With respect to a self-insurer who terminates its
self-insurance authority after April 1, 1998, that member shall
obtain and file with the commissioner an actuarial opinion of
its outstanding liabilities as determined by an associate or
fellow of the Casualty Actuarial Society new text begin within 120 days of the
date of its termination. If the actuarial opinion is not timely
filed, the self-insurers' security fund may, at its discretion,
engage the services of an actuary for this purpose. The expense
of this actuarial opinion must be assessed against and be the
obligation of the self-insurer. The commissioner may issue a
certificate of default against the self-insurer for failure to
pay this assessment to the self-insurers' security fund as
provided by section 79A.04, subdivision 9 new text end . The opinion must
separate liability for indemnity benefits from liability from
medical benefits, and must discount each up to four percent per
annum to net present value. Within 30 days after notification
of approval of the actuarial opinion by the commissioner, the
member shall pay to the security fund an amount equal to 120
percent of that discounted outstanding indemnity liability,
multiplied by the greater of the average annualized assessment
rate since inception of the security fund or the annual rate at
the time of the most recent assessment before termination. new text begin If
the payment is not made within 30 days of the notification,
interest on it at the rate prescribed by section 549.09 must be
paid by the former member to the security fund until the
principal amount is paid in full.
new text end

(c) A former member who terminated its self-insurance
authority before April 1, 1998, who has paid assessments to the
self-insurers' security fund for seven years, and whose
annualized assessment is $500 or less, may buy out of its
outstanding liabilities to the self-insurers' security fund by
an amount calculated as follows: 1.35 multiplied by the
indemnity case reserves at the time of the calculation,
multiplied by the then current self-insurers' security fund
annualized assessment rate.

(d) A former member who terminated its self-insurance
authority before April 1, 1998, and who is paying assessments
within the first seven years after ceasing to be self-insured
under paragraph (a), clause (3), may elect to buy out its
outstanding liabilities to the self-insurers' security fund by
obtaining and filing with the commissioner an actuarial opinion
of its outstanding liabilities as determined by an associate or
fellow of the Casualty Actuarial Society. The opinion must
separate liability for indemnity benefits from liability for
medical benefits, and must discount each up to four percent per
annum to net present value. Within 30 days after notification
of approval of the actuarial opinion by the commissioner, the
member shall pay to the security fund an amount equal to 120
percent of that discounted outstanding indemnity liability,
multiplied by the greater of the average annualized assessment
rate since inception of the security fund or the annual rate at
the time of the most recent assessment.

(e) A former member who has paid the security fund
according to paragraphs (b) to (d) and subsequently receives
authority from the commissioner to again self-insure shall be
assessed under section 79A.12, subdivision 2, only on indemnity
benefits paid on injuries that occurred after the former member
received authority to self-insure again; provided that the
member furnishes verified data regarding those benefits to the
security fund.

(f) In addition to proceedings to establish liabilities and
penalties otherwise provided, a failure to comply may be the
subject of a proceeding before the commissioner. An appeal from
the commissioner's determination may be taken pursuant to the
contested case procedures of chapter 14 within 30 days of the
commissioner's written determination.

Any current or past member of the self-insurers' security
fund is subject to service of process on any claim arising out
of chapter 176 or this chapter in the manner provided by section
5.25, or as otherwise provided by law. The issuance of a
certificate to self-insure to the private self-insured employer
shall be deemed to be the agreement that any process which is
served in accordance with this section shall be of the same
legal force and effect as if served personally within this state.

Sec. 33.

Minnesota Statutes 2004, section 79A.12,
subdivision 2, is amended to read:

Subd. 2.

Assessment.

The security fund may assess each
of its members a pro rata share of the funding necessary to
carry out its obligation and the purposes of this chapter.
Total annual assessments in any calendar year shall not exceed
ten percent of deleted text begin the workers' compensation benefits paid under
sections 176.101 and 176.111 during the previous deleted text end new text begin paid indemnity
losses, as defined in section 176.129, made by the self-insured
employer during the preceding new text end calendar year. The annual
assessment calculation shall not include supplementary benefits
paid which will be reimbursed by the special compensation fund.
Funds obtained by assessments pursuant to this subdivision may
only be used for the purposes of this chapter. The trustees
shall certify to the commissioner the collection and receipt of
all money from assessments, noting any delinquencies. The
trustees shall take any action deemed appropriate to collect any
delinquent assessments.

Sec. 34.

Minnesota Statutes 2004, section 79A.22,
subdivision 11, is amended to read:

Subd. 11.

Disbursement of fund surplus.

(a) deleted text begin One
hundred deleted text end new text begin Except as otherwise provided in paragraphs (b) and (c),
100 new text end percent of any surplus money for a fund year in excess of
125 percent of the amount necessary to fulfill all obligations
under the Workers' Compensation Act, chapter 176, for that fund
year may be declared refundable to deleted text begin a member deleted text end new text begin eligible members new text end at
any time. deleted text begin The date shall be no earlier than 18 months following
the end of such fund year. The first disbursement of fund
surplus may not be made prior to the written approval of the
commissioner. There can be no more than one refund made in any
12-month period.
deleted text end

new text begin (b) Except as otherwise provided in paragraph (c), for
groups that have been in existence for five years or more, 100
percent of any surplus money for a fund year in excess of 110
percent of the amount necessary to fulfill all obligations under
the Workers' Compensation Act, chapter 176, for that fund year
may be declared refundable to eligible members at any time.
new text end

new text begin (c) Excess surplus distributions under paragraphs (a) and
(b) may not be greater than the combined surplus of the group at
the time of the distribution.
new text end

new text begin (d) new text end When all the claims of any one fund year have been
fully paid, as certified by an actuary, all surplus money from
that fund year may be declared refundable.

deleted text begin (b) deleted text end new text begin (e) new text end The commercial self-insurance group shall give new text begin ten
days' prior new text end notice to the commissioner of any refund. deleted text begin Said deleted text end new text begin The
new text end notice deleted text begin shall deleted text end new text begin must new text end be accompanied by a statement from the
commercial self-insurer group's certified public accountant
certifying that the proposed refund is in compliance
with deleted text begin paragraph (a) deleted text end new text begin this subdivision new text end .

Sec. 35.

Minnesota Statutes 2004, section 79A.22, is
amended by adding a subdivision to read:

new text begin Subd. 14. new text end

new text begin All states coverage. new text end

new text begin Policies issued by
commercial self-insurance groups pursuant to this chapter may
also provide workers' compensation coverage required under the
laws of states other than Minnesota, commonly known as "all
states coverage." The coverage must be provided to members of
the group which are temporarily performing work in another state.
new text end

Sec. 36.

Minnesota Statutes 2004, section 176.191,
subdivision 3, is amended to read:

Subd. 3.

Insurer payment.

If a dispute exists as to
whether an employee's injury is compensable under this chapter
and the employee is otherwise covered by an insurer new text begin or entity
new text end pursuant to chapters 62A, 62C deleted text begin and deleted text end new text begin , new text end 62D, new text begin 62E, 62R, and 62T, new text end that
insurer new text begin or entity new text end shall pay any medical costs incurred by the
employee for the injury up to the limits of the applicable
coverage and shall make any disability payments otherwise
payable by that insurer new text begin or entity new text end in the absence of or in
addition to workers' compensation liability. If the injury is
subsequently determined to be compensable pursuant to this
chapter, the workers' compensation insurer shall be ordered to
reimburse the insurer new text begin or entity new text end that made the payments for all
payments made under this subdivision by the insurer new text begin or entity new text end ,
including interest at a rate of 12 percent a year. If a payment
pursuant to this subdivision exceeds the reasonable value as
permitted by sections 176.135 and 176.136, the provider shall
reimburse the workers' compensation insurer for all the excess
as provided by rules promulgated by the commissioner.

Sec. 37.

Laws 1985, chapter 85, section 1, is amended to
read:

Section 1.

Certain counties; joint agreements for
insurance coverage.

new text begin (a) new text end The counties of Aitkin, Itasca, Koochiching and St.
Louis, and political subdivisions located in those counties,
except the city of Duluth, when two or more of them are acting
jointly under Minnesota Statutes, section 471.61, subdivision 1,
or section 471.59 for purposes of section 471.61, may act
jointly for the same purposes with any nonprofit organization
organized under the laws of Minnesota and which is exempt from
taxation pursuant to section 501(c)(3) of the Internal Revenue
Code 1954, as amended through December 31, 1984.

new text begin (b) Notwithstanding Minnesota Statutes, sections 62L.03;
62L.04; 62L.045; or any other provision of Minnesota Statutes,
chapter 62L, an arrangement described in paragraph (a) may
provide the same health coverage under the same plan and premium
rates to its member employers that have 50 or fewer employees
that the arrangement provides to its member employers that have
more than 50 employees. The insurer offering the plan need not
offer this same plan to small employers that are not member
employers in the arrangement described in paragraph (a).
new text end

new text begin (c) Paragraph (b) is a pilot project that expires at the
end of its third full plan year after its date of enactment.
After the second full plan year, the entity operating an
arrangement described in paragraph (a) shall provide a written
report to the commissioner of commerce summarizing the
advantages and disadvantages of the pilot project and
recommending whether to make it permanent.
new text end

Sec. 38 new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, sections 61A.072, subdivision 2;
and 62E.03 are repealed.
new text end

Sec. 39. new text begin EFFECTIVE DATES.
new text end

new text begin (a) Sections 9, 13, 14, 15, 18, 22, 23, 25, and 31 to 36
are effective the day following final enactment. Section 19 is
effective the day following final enactment and applies to any
action taken by an insurer on or after that date. Sections 1,
3, 21, and 26 to 28 are effective July 1, 2005. The remaining
sections are effective August 1, 2005.
new text end

new text begin (b) Pursuant to Minnesota Statutes, section 645.023,
subdivision 1, clause (a), local approval of section 37 is not
required. Section 37 is effective the day following final
enactment.
new text end