HF 3491

2nd Engrossment - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to commerce; providing technical changes; 
  1.3             regulating personal solicitation sales and insurance 
  1.4             information reporting; providing that an insurance 
  1.5             self-audit document is privileged information and not 
  1.6             discoverable or admissible except as provided by law: 
  1.7             making technical changes governing insurance agents 
  1.8             and brokerage businesses; establishing a health 
  1.9             carrier duty to exercise ordinary care when making 
  1.10            health care treatment decisions; establishing 
  1.11            standards for Minnesota uniform health care 
  1.12            reimbursement documents; requiring certain capital and 
  1.13            surplus amounts of insurers issuing motor vehicle 
  1.14            service contract reimbursement policies; transferring 
  1.15            powers and responsibilities relating to workers' 
  1.16            compensation reinsurance association from the 
  1.17            department of labor and industry to the commissioner 
  1.18            of commerce; making certain modifications of the 
  1.19            workers' compensation self-insurance law; providing 
  1.20            certain spouse insurance coverage; regulating 
  1.21            securities; amending Minnesota Statutes 1998, sections 
  1.22            60A.052, subdivision 1; 60A.129, subdivision 5; 
  1.23            60K.14, subdivision 1; 61A.092, subdivision 6; 
  1.24            62A.136; 62C.11, subdivision 1; 62C.142, subdivision 
  1.25            2a; 62E.04, subdivision 4; 62J.51, by adding 
  1.26            subdivisions; 62J.52, subdivisions 1, 2, and 5; 
  1.27            62J.60, subdivision 1; 62S.02, subdivision 1; 64B.30, 
  1.28            subdivision 1; 65B.29, subdivisions 2 and 3; 72A.20, 
  1.29            subdivision 17; 72A.499, subdivision 1; 79.34, 
  1.30            subdivisions 1, 2, 2a, and 6; 79.35; 79.36; 79.361, 
  1.31            subdivision 1; 79.37; 79.371, subdivision 2; 79.38, 
  1.32            subdivision 1; 79A.04, subdivisions 1, 2, 7, and 9; 
  1.33            79A.11, subdivision 2, and by adding a subdivision; 
  1.34            79A.22, subdivisions 3 and 11; 80A.122, by adding a 
  1.35            subdivision; and 80A.28, subdivision 1; Minnesota 
  1.36            Statutes 1999 Supplement, sections 60A.052, 
  1.37            subdivision 2; 60K.19, subdivision 8; 62J.535, 
  1.38            subdivision 2; 72A.20, subdivision 23; 79A.22, 
  1.39            subdivision 2; 79A.23, subdivisions 1, 2, and 3; and 
  1.40            79A.24, subdivision 2; Laws 1999, chapter 177, section 
  1.41            89; proposing coding for new law in Minnesota 
  1.42            Statutes, chapters 60A; 60K; 62A; and 62J; repealing 
  1.43            Minnesota Statutes 1998, sections 62A.285, subdivision 
  1.44            4; 62A.651; 62H.10, subdivision 4; 65B.13; 79.362; 
  1.45            79.371, subdivision 1; 79.38, subdivisions 2 and 3; 
  1.46            and 79.39. 
  2.1   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.2      Section 1.  [60A.033] [DEFINITIONS.] 
  2.3      Subdivision 1.  [APPLICATION.] For purposes of sections 
  2.4   60A.033 to 60A.039, the definitions in this section have the 
  2.5   meanings given them. 
  2.6      Subd. 2.  [INSURANCE COMPLIANCE SELF-AUDIT.] "Insurance 
  2.7   compliance self-audit" or "self-audit" means a voluntary 
  2.8   internal evaluation, review, assessment, process, or audit, not 
  2.9   expressly required by law of an insurer and designed to 
  2.10  identify, correct, or prevent noncompliance or to improve 
  2.11  compliance with statutes, rules, and orders of an activity 
  2.12  regulated under chapters 60A to 79A or other laws of this state 
  2.13  or other states or federal law applicable to an insurer. 
  2.14     Subd. 3.  [INSURANCE COMPLIANCE SELF-AUDIT 
  2.15  DOCUMENT.] "Insurance compliance self-audit document" or 
  2.16  "self-audit document" means a document prepared as a result of 
  2.17  or in connection with and not before an insurance compliance 
  2.18  self-audit and includes, but is not limited to, any of the 
  2.19  following: 
  2.20     (1) correspondence, instructions, field notes and records 
  2.21  of observations, findings, opinions, suggestions, conclusions, 
  2.22  drafts, checklists, memoranda, drawings, photographs, 
  2.23  computer-generated or electronically recorded information, 
  2.24  telephone records, maps, charts, graphs, and surveys, if this 
  2.25  information is collected or developed for the primary purpose 
  2.26  and in the course of an insurance compliance self-audit; 
  2.27     (2) a report prepared by an auditor, who may be an employee 
  2.28  of the insurer or an independent contractor, which may include 
  2.29  the scope of the audit, the information gained in the audit, and 
  2.30  conclusions and recommendations, with exhibits and appendices; 
  2.31     (3) memoranda and documents analyzing portions or all of 
  2.32  the report and discussing potential implementation issues; 
  2.33     (4) an implementation plan that addresses correcting past 
  2.34  noncompliance, improving current compliance, and preventing 
  2.35  future noncompliance identified as part of the self-audit; 
  2.36     (5) analytic data generated in the course of conducting the 
  3.1   insurance compliance self-audit; or 
  3.2      (6) a written response to the findings of an insurance 
  3.3   compliance self-audit. 
  3.4      An "insurance compliance self-audit document" does not 
  3.5   include (1) a document or other information contained within an 
  3.6   insurance compliance self-audit document, but not prepared in 
  3.7   connection with or result of a self-audit, or (2) a document, 
  3.8   not prepared in connection with or as a result of a self-audit, 
  3.9   requested by the commissioner in conjunction with the 
  3.10  investigation of a consumer complaint where the document relates 
  3.11  solely to the complainant's policy or any claim made against the 
  3.12  policy and the complainant has provided the commissioner with 
  3.13  written authorization requesting its release. 
  3.14     Sec. 2.  [60A.034] [SCOPE OF PRIVILEGE.] 
  3.15     Subdivision 1.  [PRIVILEGED INFORMATION.] An insurance 
  3.16  compliance self-audit document is privileged information and is 
  3.17  not discoverable or admissible as evidence in a civil or 
  3.18  criminal legal action except as otherwise provided in section 
  3.19  60A.035.  If an insurance compliance self-audit document 
  3.20  provided by an insurer to the commissioner is disclosed to a 
  3.21  third party by the commissioner, the document is not admissible 
  3.22  as evidence in a civil or criminal legal action.  This privilege 
  3.23  does not extend to self-audits initiated after the insurer has 
  3.24  received notice of an examination by state or federal 
  3.25  regulators.  Assertion of the privilege established under this 
  3.26  subdivision to prevent disclosure of an insurance compliance 
  3.27  self-audit document does not constitute a fraudulent purpose 
  3.28  under section 60A.035. 
  3.29     Subd. 2.  [EXAMINATION PROHIBITED.] If an insurer, person, 
  3.30  or entity performs or directs the performance of an insurance 
  3.31  compliance self-audit, an officer or employee involved with the 
  3.32  insurance compliance self-audit, or consultant who is hired for 
  3.33  the purpose of performing or assisting in the performance of the 
  3.34  insurance compliance self-audit, may not be examined in a civil 
  3.35  or criminal proceeding as to the insurance compliance self-audit 
  3.36  or an insurance compliance self-audit document.  This 
  4.1   subdivision does not apply if the privilege is determined under 
  4.2   section 60A.035 not to apply. 
  4.3      Subd. 3.  [SUBMISSION PURSUANT TO EXAMINATION.] An insurer 
  4.4   must submit, in connection with examinations conducted under 
  4.5   chapter 60A or 60D, an insurance compliance self-audit document 
  4.6   to the commissioner.  The submission does not waive the 
  4.7   privilege established under this section to which the insurer is 
  4.8   otherwise entitled, and the submission is subject to sections 
  4.9   60A.03, subdivision 9, and 60A.031, subdivision 4, paragraph (f).
  4.10     Sec. 3.  [60A.035] [PRIVILEGE WAIVED OR DISCLOSURE 
  4.11  ORDERED.] 
  4.12     Subdivision 1.  [WAIVER.] The insurance compliance 
  4.13  self-audit privilege does not apply to the extent the insurer 
  4.14  that prepared or caused to be prepared the insurance compliance 
  4.15  self-audit document expressly waives the privilege by so stating 
  4.16  its intent in writing. 
  4.17     Subd. 2.  [REQUIRED DISCLOSURE.] In a civil proceeding, a 
  4.18  court of record may, after an in-camera review, require 
  4.19  disclosure of material for which the insurance compliance 
  4.20  self-audit privilege is asserted, if the court determines one of 
  4.21  the following: 
  4.22     (1) the privilege is asserted for a fraudulent purpose; or 
  4.23     (2) the material is not subject to the privilege. 
  4.24     Sec. 4.  [60A.036] [BURDEN OF PROOF.] 
  4.25     Subdivision 1.  [BURDEN.] An insurer asserting the 
  4.26  insurance compliance self-audit privilege has the burden of 
  4.27  demonstrating the applicability of the privilege. 
  4.28     Subd. 2.  [STIPULATION.] The parties may at any time 
  4.29  stipulate in proceedings under section 60A.035 to entry of an 
  4.30  order directing that specific information contained in an 
  4.31  insurance compliance self-audit document is or is not subject to 
  4.32  the insurance compliance self-audit privilege. 
  4.33     Sec. 5.  [60A.037] [EXCEPTIONS TO PRIVILEGE.] 
  4.34     The insurance compliance self-audit privilege does not 
  4.35  apply to the following: 
  4.36     (1) documents, communications, data, reports, or other 
  5.1   information, other than an insurance self-audit document, 
  5.2   required to be collected, developed, maintained, reported, or 
  5.3   otherwise made available to the commissioner, or under federal 
  5.4   or state law, rule, or order; 
  5.5      (2) information obtained by observation or monitoring by 
  5.6   the commissioner of commerce or commissioner or head of any 
  5.7   other regulatory agency; or 
  5.8      (3) information obtained from a source independent of the 
  5.9   insurance compliance self-audit. 
  5.10     Sec. 6.  [60A.038] [STATUTORY OR COMMON LAW PRIVILEGE 
  5.11  PRESERVED.] 
  5.12     Nothing in sections 60A.033 to 60A.037 limits, waives, or 
  5.13  abrogates the scope or nature of any statutory or common law 
  5.14  privilege including, but not limited to, the work product 
  5.15  doctrine, the attorney-client privilege, or the subsequent 
  5.16  remedial measures exclusion. 
  5.17     Sec. 7.  [60A.039] [COMMISSIONER'S AUTHORITY NOT 
  5.18  RESTRICTED.] 
  5.19     Nothing in sections 60A.033 to 60A.037, restricts the 
  5.20  authority of the commissioner to examine and investigate 
  5.21  insurers or conduct appropriate disciplinary actions or other 
  5.22  administrative proceedings. 
  5.23     Sec. 8.  Minnesota Statutes 1998, section 60A.052, 
  5.24  subdivision 1, is amended to read: 
  5.25     Subdivision 1.  [GROUNDS.] The commissioner may by order 
  5.26  take any or all of the following actions:  (a) deny, suspend, or 
  5.27  revoke a certificate of authority; (b) censure the insurance 
  5.28  company; or (c) impose a civil penalty as provided for in 
  5.29  section 45.027, subdivision 6; or (d) under a written agreement 
  5.30  with the insurance company based upon the company's financial 
  5.31  condition, impose conditions or restrictions on the insurance 
  5.32  company's authority to transact business in Minnesota.  In order 
  5.33  to take this action the commissioner must find that the order is 
  5.34  in the public interest, and the insurance company: 
  5.35     (1) has a board of directors or principal management that 
  5.36  is incompetent, untrustworthy, or so lacking in insurance 
  6.1   company managerial experience as to make its operation hazardous 
  6.2   to policyholders, its stockholders, or to the insurance buying 
  6.3   public; 
  6.4      (2) is controlled directly or indirectly through ownership, 
  6.5   management, reinsurance transactions, or other business 
  6.6   relations by any person or persons whose business operations are 
  6.7   or have been marked by manipulation of any assets, reinsurance, 
  6.8   or accounts as to create a hazard to the company's 
  6.9   policyholders, stockholders, or the insurance buying public; 
  6.10     (3) is in an unsound or unsafe condition; 
  6.11     (4) has the actual liabilities that exceed the actual funds 
  6.12  of the company; 
  6.13     (5) has filed an application for a license which is 
  6.14  incomplete in any material respect or contains any statement 
  6.15  which, in light of the circumstances under which it was made, 
  6.16  contained any misrepresentation or was false, misleading, or 
  6.17  fraudulent; 
  6.18     (6) has pled guilty, with or without explicitly admitting 
  6.19  guilt, pled nolo contendere, or been convicted of a felony, 
  6.20  gross misdemeanor, or misdemeanor involving moral turpitude, or 
  6.21  similar conduct; 
  6.22     (7) is permanently or temporarily enjoined by any court of 
  6.23  competent jurisdiction from engaging in or continuing any 
  6.24  conduct or practice involving any aspect of the insurance 
  6.25  business; 
  6.26     (8) has violated or failed to comply with any order of the 
  6.27  insurance regulator of any other state or jurisdiction; 
  6.28     (9) has had a certificate of authority denied, suspended, 
  6.29  or revoked, has been censured or reprimanded, has been the 
  6.30  subject of any other discipline imposed by, or has paid or has 
  6.31  been required to pay a monetary penalty or fine to, another 
  6.32  state; 
  6.33     (10) agents, officers, or directors refuse to submit to 
  6.34  examination or perform any related legal obligation; or 
  6.35     (11) has violated or failed to comply with, any of the 
  6.36  provisions of the insurance laws including chapter 45 or 
  7.1   chapters 60A to 72A or any rule or order under those chapters. 
  7.2      Sec. 9.  Minnesota Statutes 1999 Supplement, section 
  7.3   60A.052, subdivision 2, is amended to read: 
  7.4      Subd. 2.  [SUSPENSION OR REVOCATION OF AUTHORITY OR 
  7.5   CENSURE.] If the commissioner determines that one of the 
  7.6   conditions listed in subdivision 1 exists, the commissioner may 
  7.7   issue an order requiring the insurance company to show cause why 
  7.8   any or all of the following should not occur:  (1) revocation or 
  7.9   suspension of any or all certificates of authority granted to 
  7.10  the foreign or domestic insurance company or its agent; (2) 
  7.11  censuring of the insurance company; (3) cancellation of all or 
  7.12  some of the company's insurance contracts then in force in this 
  7.13  state; or (4) the imposition of a civil penalty; or (5) under a 
  7.14  written agreement with the insurance company based upon the 
  7.15  company's financial condition, imposition of conditions or 
  7.16  restrictions on the insurance company's authority to transact 
  7.17  business in Minnesota.  The order shall be calculated to give 
  7.18  reasonable notice of the time and place for hearing thereon, and 
  7.19  shall state the reasons for the entry of the order.  All 
  7.20  hearings shall be conducted in accordance with chapter 14.  The 
  7.21  insurer may waive its right to the hearing.  If the insurer is 
  7.22  under the supervision or control of the insurance department of 
  7.23  the insurer's state of domicile, that insurance department, 
  7.24  acting on behalf of the insurer, may waive the insurer's right 
  7.25  to the hearing.  After the hearing, the commissioner shall enter 
  7.26  an order disposing of the matter as the facts require.  If the 
  7.27  insurance company fails to appear at a hearing after having been 
  7.28  duly notified of it, the company shall be considered in default, 
  7.29  and the proceeding may be determined against the company upon 
  7.30  consideration of the order to show cause, the allegations of 
  7.31  which may be considered to be true. 
  7.32     Sec. 10.  Minnesota Statutes 1998, section 60A.129, 
  7.33  subdivision 5, is amended to read: 
  7.34     Subd. 5.  [CONSOLIDATED FILING.] (a) The commissioner may 
  7.35  allow an insurer to file a consolidated loss reserve 
  7.36  certification required by subdivision 2, in lieu of separate 
  8.1   loss certifications and may allow an insurer to file 
  8.2   consolidated or combined audited financial statements required 
  8.3   by subdivision 3, paragraph (a), in lieu of separate annual 
  8.4   audited financial statements, where it can be demonstrated that 
  8.5   an insurer is part of a group of insurance companies that has a 
  8.6   pooling or 100 percent reinsurance agreement which substantially 
  8.7   affects the solvency and integrity of the reserves of the 
  8.8   insurer and the insurer cedes all of its direct and assumed 
  8.9   business to the pool.  An affiliated insurance company not 
  8.10  meeting these requirements may be included in the consolidated 
  8.11  or combined audited financial statements, if the company's total 
  8.12  admitted assets are less than five percent of the consolidated 
  8.13  group's total admitted assets.  If these circumstances exist, 
  8.14  then the company may file a written application to file a 
  8.15  consolidated loss reserve certification and/or consolidated or 
  8.16  combined audited financial statements.  This application shall 
  8.17  be for a specified period. 
  8.18     (b) A consolidated annual audit filing shall include a 
  8.19  columnar consolidated or combining worksheet.  Amounts shown on 
  8.20  the audited consolidated or combined financial statement shall 
  8.21  be shown on the worksheet.  Amounts for each insurer shall be 
  8.22  stated separately.  Noninsurance operations may be shown on the 
  8.23  worksheet on a combined or individual basis.  Explanations of 
  8.24  consolidating or eliminating entries shall be shown on the 
  8.25  worksheet.  A reconciliation of any differences between the 
  8.26  amounts shown in the individual insurer columns of the worksheet 
  8.27  and comparable amounts shown on the annual statement of the 
  8.28  insurers shall be included on the worksheet. 
  8.29     Sec. 11.  [60K.081] [BROKERAGE BUSINESS.] 
  8.30     Every insurance agent duly licensed to transact business in 
  8.31  this state has the right to procure the insurance of risks, or 
  8.32  parts of risks, in the class or classes of insurance for which 
  8.33  the agent is licensed, from an insurer duly authorized to 
  8.34  transact business in this state, when the agent is not a duly 
  8.35  appointed agent of the insurer, but the insurance must be 
  8.36  consummated only through a duly appointed agent of the insurer. 
  9.1      Sec. 12.  Minnesota Statutes 1998, section 60K.14, 
  9.2   subdivision 1, is amended to read: 
  9.3      Subdivision 1.  [PERSONAL SOLICITATION OF INSURANCE SALES.] 
  9.4   (a) [DEFINITIONS.] For the purposes of this section, the 
  9.5   following terms have the meanings given them:  
  9.6      (1) "agent" means a person, copartnership, or corporation 
  9.7   required to be licensed pursuant to section 60K.02; and 
  9.8      (2) "personal solicitation" means any contact by an agent, 
  9.9   or any person acting on behalf of an agent, made for the purpose 
  9.10  of selling or attempting to sell insurance, when either the 
  9.11  agent or a person acting for the agent contacts the buyer by 
  9.12  telephone or in person, except:  (i) an attempted sale in which 
  9.13  the buyer personally knows the identity of the agent, the name 
  9.14  of the general agency, if any, which the agent represents, and 
  9.15  the fact that the agent is an insurance agent; (ii) an attempted 
  9.16  sale in which the prospective purchaser of insurance initiated 
  9.17  the contact; or (iii) a personal contact which takes place at 
  9.18  the agent's place of business.  
  9.19     (b)  [DISCLOSURE REQUIREMENT.] Before a personal 
  9.20  solicitation, the agent or person acting for an agent shall, at 
  9.21  the time of initial personal contact with the potential buyer, 
  9.22  clearly and expressly disclose in writing:  
  9.23     (1) the name and state insurance agent license number of 
  9.24  the person making the contact; 
  9.25     (2) the name of the agent, general agency, or insurer that 
  9.26  person represents; and 
  9.27     (3) the fact that the agent, agency, or insurer is in the 
  9.28  business of selling insurance.  
  9.29     If the initial personal contact is made by telephone, the 
  9.30  disclosures required by this subdivision need not be made in 
  9.31  writing. 
  9.32     (c)  [FALSE REPRESENTATION OF GOVERNMENT AFFILIATION.] No 
  9.33  agent or person acting for an agent shall make any communication 
  9.34  to a potential buyer that indicates or gives the impression that 
  9.35  the agent is acting on behalf of a government agency. 
  9.36     Sec. 13.  Minnesota Statutes 1999 Supplement, section 
 10.1   60K.19, subdivision 8, is amended to read: 
 10.2      Subd. 8.  [MINIMUM EDUCATION REQUIREMENT.] Each person 
 10.3   subject to this section shall complete a minimum of 30 credit 
 10.4   hours of courses accredited by the commissioner during each 
 10.5   24-month licensing period, two hours of which must be devoted to 
 10.6   state law, regulations, and rules applicable to the line or 
 10.7   lines of insurance for which the agent is licensed.  Any person 
 10.8   whose initial licensing period extends more than six months 
 10.9   shall complete 15 hours of courses accredited by the 
 10.10  commissioner during the initial license period.  Any person 
 10.11  teaching or lecturing at an accredited course qualifies for 
 10.12  1-1/2 times the number of credit hours that would be granted to 
 10.13  a person completing the accredited course.  No more than 15 
 10.14  credit hours per licensing period may be credited to a person 
 10.15  for courses sponsored by, offered by, or affiliated with an 
 10.16  insurance company or its agents.  Courses sponsored by, offered 
 10.17  by, or affiliated with an insurance company or agent may 
 10.18  restrict its students to agents of the company or agency. 
 10.19     Sec. 14.  Minnesota Statutes 1998, section 61A.092, 
 10.20  subdivision 6, is amended to read: 
 10.21     Subd. 6.  [APPLICATION.] This section applies to a policy, 
 10.22  certificate of insurance, or similar evidence of coverage issued 
 10.23  to a Minnesota resident or issued to provide coverage to a 
 10.24  Minnesota resident.  This section does not apply to:  (1) a 
 10.25  certificate of insurance or similar evidence of coverage that 
 10.26  meets the conditions of section 61A.093, subdivision 2; or (2) a 
 10.27  group life insurance policy that contains a provision permitting 
 10.28  the certificate holder, upon termination or layoff from 
 10.29  employment, to retain the coverage provided under the group 
 10.30  policy by paying premiums directly to the insurer, provided that 
 10.31  the employer shall give the employee notice of the employee's 
 10.32  and each related certificate holder's right to continue the 
 10.33  insurance by paying premiums directly to the insurer.  A related 
 10.34  certificate holder is an insured spouse or dependent child of 
 10.35  the employee.  Upon termination of this group policy, each 
 10.36  covered employee, spouse, and dependent child is entitled to 
 11.1   have issued to them a life conversion policy as prescribed in 
 11.2   section 61A.09, subdivision 1, paragraph (h). 
 11.3      Sec. 15.  Minnesota Statutes 1998, section 62A.136, is 
 11.4   amended to read: 
 11.5      62A.136 [DENTAL AND VISION PLAN COVERAGE.] 
 11.6      The following provisions do not apply to health plans 
 11.7   providing dental or vision coverage only:  sections 62A.041; 
 11.8   62A.0411; 62A.047; 62A.149; 62A.151; 62A.152; 62A.154; 62A.155; 
 11.9   62A.17, subdivision 6; 62A.21, subdivision 2b; 62A.26; 
 11.10  62A.28; and 62A.285; 62A.30; 62A.304; 62A.3093; and 62E.16. 
 11.11     Sec. 16.  [62A.81] [DEFINITIONS.] 
 11.12     Subdivision 1.  [ENROLLEE.] "Enrollee" means an individual 
 11.13  who is covered by a health carrier, health insurance, or health 
 11.14  coverage plan, including an insured, policy holder, subscriber, 
 11.15  contract holder, member-covered person, or certificate holder. 
 11.16     Subd. 2.  [HEALTH CARE PROVIDER.] "Health care provider" or 
 11.17  "provider" means a person defined in section 144.335, 
 11.18  subdivision 1, paragraph (b). 
 11.19     Subd. 3.  [HEALTH CARE TREATMENT DECISION.] "Health care 
 11.20  treatment decision" means a determination or decision made that 
 11.21  affects the quality of the diagnosis, care, or treatment 
 11.22  provided to an enrollee.  A health care treatment decision 
 11.23  includes, but is not limited to, a determination that a service, 
 11.24  treatment, or procedure is not medically necessary. 
 11.25     Subd. 4.  [HEALTH CARRIER.] "Health carrier" means an 
 11.26  insurance company licensed under chapter 60A to offer, sell, or 
 11.27  issue an individual or group policy of accident and sickness 
 11.28  insurance as defined in section 62A.01; a nonprofit health 
 11.29  service plan corporation operating under chapter 62C; a health 
 11.30  maintenance organization operating under chapter 62D; a joint 
 11.31  self-insurance employee health plan operating under chapter 62H; 
 11.32  a community integrated systems network licensed under chapter 
 11.33  62N; a fraternal benefit society operating under chapter 64B; or 
 11.34  an association, partnership, corporation, or limited liability 
 11.35  corporation organized for the purpose of providing, arranging, 
 11.36  or administering health care services or treatment. 
 12.1      Subd. 5.  [MEDICALLY NECESSARY CARE.] "Medically necessary 
 12.2   care" means diagnostic testing, preventative services, and 
 12.3   health care services that are appropriate, in terms of types, 
 12.4   frequency, level, setting, and duration, to the enrollee's 
 12.5   diagnosis or condition.  Medically necessary care must be 
 12.6   consistent with generally accepted practice parameters, as 
 12.7   determined by licensed health care providers in the same or 
 12.8   similar general specialty as typically manages the condition, 
 12.9   procedure, or treatment at issue and must: 
 12.10     (1) help restore, establish, maintain, or improve the 
 12.11  enrollee's health condition or function; 
 12.12     (2) prevent deterioration of the enrollee's health 
 12.13  condition or function; or 
 12.14     (3) prevent the reasonably likely onset of a health problem 
 12.15  or detect an incipient problem. 
 12.16     Subd. 6.  [ORDINARY CARE.] "Ordinary care" means, in the 
 12.17  case of a health carrier, that degree of care that a health 
 12.18  carrier of ordinary prudence would use under the same or similar 
 12.19  circumstances.  In the case of a person who is an employee, 
 12.20  agent, or representative of a health carrier, ordinary care 
 12.21  means that degree of care that a person of ordinary prudence in 
 12.22  the same profession, specialty, or area of practice would use in 
 12.23  the same or similar circumstances. 
 12.24     Sec. 17.  [62A.82] [APPLICATION.] 
 12.25     Subdivision 1.  [DUTY OF ORDINARY CARE.] A health carrier 
 12.26  has the duty to exercise ordinary care when making health care 
 12.27  treatment decisions and is liable for damages to an enrollee for 
 12.28  harm proximately caused by its failure to exercise ordinary care.
 12.29     Subd. 2.  [RESPONSIBILITY FOR ACTIONS OF OTHERS.] A health 
 12.30  carrier is also liable for damages to an enrollee for harm 
 12.31  proximately caused by a health care treatment decision made by 
 12.32  its: 
 12.33     (1) employees; 
 12.34     (2) agents; or 
 12.35     (3) representatives who are acting on its behalf and over 
 12.36  whom it has the right to exercise influence or control or has 
 13.1   actually exercised influence or control that results in the 
 13.2   failure to exercise ordinary care. 
 13.3      In an action against a health carrier, a finding that a 
 13.4   health care provider is an employee, agent, or representative of 
 13.5   the health carrier shall not be based solely on proof that the 
 13.6   person's name appears in a listing of approved health care 
 13.7   providers made available to enrollees under a health plan. 
 13.8      Subd. 3.  [DEFENSES.] It shall be a defense to an action 
 13.9   asserted against a health carrier that: 
 13.10     (1) neither the health carrier, nor any employee, agent, or 
 13.11  representative for whose conduct the health carrier is liable 
 13.12  under subdivision 2, controlled, influenced, or participated in 
 13.13  the health care treatment decision; and 
 13.14     (2) the health carrier did not deny or delay payment for 
 13.15  any service, treatment, or procedure prescribed or recommended 
 13.16  by a provider to the enrollee. 
 13.17     Subd. 4.  [LIMITATIONS.] (a) The standards in subdivisions 
 13.18  1 and 2 create no obligation on the part of the health carrier 
 13.19  to provide to an enrollee a service, treatment, or procedure 
 13.20  that is not covered by the health plan. 
 13.21     (b) This section does not create liability on the part of 
 13.22  an employer or an employer group purchasing organization that 
 13.23  purchases coverage or assumes risk on behalf of its employees. 
 13.24     Subd. 5.  [LIMITATION ON DEFENSES.] Nothing in any law of 
 13.25  this state prohibiting a health carrier from practicing medicine 
 13.26  or being licensed to practice medicine may be asserted as a 
 13.27  defense by the health carrier in an action brought against it 
 13.28  pursuant to this section or any other law. 
 13.29     Subd. 6.  [NONAPPLICATION.] This section does not apply to 
 13.30  workers' compensation insurance coverage under chapter 79, 
 13.31  workers' compensation self-insurance under chapter 79A, or 
 13.32  health coverage for state employees.  This section does not 
 13.33  apply to governmental programs.  For the purposes of this 
 13.34  subdivision, "governmental programs" means the prepaid medical 
 13.35  assistance program, the MinnesotaCare program, the prepaid 
 13.36  general assistance medical care program, and the federal 
 14.1   Medicare program. 
 14.2      Subd. 7.  [RECOVERY OF ATTORNEY FEES AND OTHER 
 14.3   EXPENSES.] If an enrollee is the prevailing party in a 
 14.4   proceeding under this section, the court may award attorney fees 
 14.5   and other reasonable expenses to the enrollee.  This subdivision 
 14.6   does not preclude an enrollee from recovering costs, 
 14.7   disbursements, fees, and expenses under other applicable law. 
 14.8      Subd. 8.  [TRANSFER OF LIABILITY.] Any agreement or 
 14.9   directive that attempts to transfer to a health care provider, 
 14.10  by indemnification or otherwise, any tort liability relating to 
 14.11  the activities, actions, or omissions of a health carrier is 
 14.12  contrary to state public policy and is null and void. 
 14.13     Subd. 9.  [WAIVER OF LIABILITY.] Any agreement or waiver by 
 14.14  an enrollee of the provisions of this section is contrary to 
 14.15  state public policy and is null and void. 
 14.16     Subd. 10.  [EXHAUSTION OF APPEALS.] An enrollee must 
 14.17  exhaust the external review process to the extent authorized by 
 14.18  law before a claim can be brought against a health carrier under 
 14.19  this chapter. 
 14.20     Sec. 18.  Minnesota Statutes 1998, section 62C.11, 
 14.21  subdivision 1, is amended to read: 
 14.22     Subdivision 1.  A service plan corporation shall annually 
 14.23  on or before the last day of March, file with the commissioner a 
 14.24  financial statement, in such form as the commissioner shall 
 14.25  prescribe, verified by not less than two of its principal 
 14.26  officers, showing the financial condition of the corporation as 
 14.27  of December 31 of the preceding year.  The statement shall 
 14.28  include an audit report certified by an independent certified 
 14.29  public accountant and reconciled and adjusted to conform to the 
 14.30  financial statement.  
 14.31     Sec. 19.  Minnesota Statutes 1998, section 62C.142, 
 14.32  subdivision 2a, is amended to read: 
 14.33     Subd. 2a.  [CONTINUATION PRIVILEGE.] Every subscriber 
 14.34  contract, other than a contract whose continuance is contingent 
 14.35  upon continued employment or membership, shall contain a 
 14.36  provision which permits continuation of coverage under the 
 15.1   contract for the subscriber's former spouse and children upon 
 15.2   entry of a valid decree of dissolution of marriage, if the 
 15.3   decree requires the subscriber to provide continued coverage for 
 15.4   those persons.  The coverage may be continued until the earlier 
 15.5   of the following dates:  
 15.6      (a) the date of remarriage of either the subscriber or the 
 15.7   subscriber's former spouse becomes covered under any other group 
 15.8   health plan; or 
 15.9      (b) the date coverage would otherwise terminate under the 
 15.10  subscriber contract.  
 15.11     The contract must require the group contract holder to, 
 15.12  upon request, provide the insured with written verification from 
 15.13  the insurer of the cost of this coverage promptly at the time of 
 15.14  eligibility for this coverage and at any time during the 
 15.15  continuation period.  In no event shall the amount of premium 
 15.16  charged exceed 102 percent of the cost to the plan for such 
 15.17  period of coverage for other similarly situated spouses and 
 15.18  dependent children with respect to whom the marital relationship 
 15.19  has not dissolved, without regard to whether such cost is paid 
 15.20  by the employer or employee. 
 15.21     Sec. 20.  Minnesota Statutes 1998, section 62E.04, 
 15.22  subdivision 4, is amended to read: 
 15.23     Subd. 4.  [MAJOR MEDICAL COVERAGE.] Each insurer and 
 15.24  fraternal shall affirmatively offer coverage of major medical 
 15.25  expenses to every applicant who applies to the insurer or 
 15.26  fraternal for a new unqualified policy, which has a lifetime 
 15.27  benefit limit of less than $1,000,000, at the time of 
 15.28  application and annually to every holder of such an unqualified 
 15.29  policy of accident and health insurance renewed by the insurer 
 15.30  or fraternal.  The coverage shall provide that when a covered 
 15.31  individual incurs out-of-pocket expenses of $5,000 or more 
 15.32  within a calendar year for services covered in section 62E.06, 
 15.33  subdivision 1, benefits shall be payable, subject to any 
 15.34  copayment authorized by the commissioner, up to a maximum 
 15.35  lifetime limit of $500,000.  The offer of coverage of major 
 15.36  medical expenses may consist of the offer of a rider on an 
 16.1   existing unqualified policy or a new policy which is a qualified 
 16.2   plan.  
 16.3      Sec. 21.  Minnesota Statutes 1998, section 62J.51, is 
 16.4   amended by adding a subdivision to read: 
 16.5      Subd. 19a.  [UNIFORM EXPLANATION OF BENEFITS 
 16.6   DOCUMENT.] "Uniform explanation of benefits document" means the 
 16.7   document associated with and explaining the details of a group 
 16.8   purchaser's claim adjudication for services rendered, which is 
 16.9   sent to a patient. 
 16.10     Sec. 22.  Minnesota Statutes 1998, section 62J.51, is 
 16.11  amended by adding a subdivision to read: 
 16.12     Subd. 19b.  [UNIFORM REMITTANCE ADVICE REPORT.] "Uniform 
 16.13  remittance advice report" means the document associated with and 
 16.14  explaining the details of a group purchaser's claim adjudication 
 16.15  for services rendered, which is sent to a provider. 
 16.16     Sec. 23.  Minnesota Statutes 1998, section 62J.52, 
 16.17  subdivision 1, is amended to read: 
 16.18     Subdivision 1.  [UNIFORM BILLING FORM HCFA 1450.] (a) On 
 16.19  and after January 1, 1996, all institutional inpatient hospital 
 16.20  services, ancillary services, and institutionally owned or 
 16.21  operated outpatient services rendered by providers in Minnesota, 
 16.22  and institutional or noninstitutional home health services that 
 16.23  are not being billed using an equivalent electronic billing 
 16.24  format, must be billed using the uniform billing form HCFA 1450, 
 16.25  except as provided in subdivision 5. 
 16.26     (b) The instructions and definitions for the use of the 
 16.27  uniform billing form HCFA 1450 shall be in accordance with the 
 16.28  uniform billing form manual specified by the commissioner.  In 
 16.29  promulgating these instructions, the commissioner may utilize 
 16.30  the manual developed by the National Uniform Billing Committee, 
 16.31  as adopted and finalized by the Minnesota uniform billing 
 16.32  committee.  
 16.33     (c) Services to be billed using the uniform billing form 
 16.34  HCFA 1450 include:  institutional inpatient hospital services 
 16.35  and distinct units in the hospital such as psychiatric unit 
 16.36  services, physical therapy unit services, swing bed (SNF)  
 17.1   services, inpatient state psychiatric hospital services, 
 17.2   inpatient skilled nursing facility services, home health 
 17.3   services (Medicare part A), and hospice services; ancillary 
 17.4   services, where benefits are exhausted or patient has no 
 17.5   Medicare part A, from hospitals, state psychiatric hospitals, 
 17.6   skilled nursing facilities, and home health (Medicare part B); 
 17.7   and institutional owned or operated outpatient services such as 
 17.8   waivered services, hospital outpatient services, including 
 17.9   ambulatory surgical center services, hospital referred 
 17.10  laboratory services, hospital-based ambulance services, and 
 17.11  other hospital outpatient services, skilled nursing facilities, 
 17.12  home health, including infusion therapy, freestanding renal 
 17.13  dialysis centers, comprehensive outpatient rehabilitation 
 17.14  facilities (CORF), outpatient rehabilitation facilities (ORF), 
 17.15  rural health clinics, and community mental health centers,; home 
 17.16  health services such as home health intravenous therapy 
 17.17  providers, waivered services, personal care attendants, and 
 17.18  hospice; and any other health care provider certified by the 
 17.19  Medicare program to use this form. 
 17.20     (d) On and after January 1, 1996, a mother and newborn 
 17.21  child must be billed separately, and must not be combined on one 
 17.22  claim form. 
 17.23     Sec. 24.  Minnesota Statutes 1998, section 62J.52, 
 17.24  subdivision 2, is amended to read: 
 17.25     Subd. 2.  [UNIFORM BILLING FORM HCFA 1500.] (a) On and 
 17.26  after January 1, 1996, all noninstitutional health care services 
 17.27  rendered by providers in Minnesota except dental or pharmacy 
 17.28  providers, that are not currently being billed using an 
 17.29  equivalent electronic billing format, must be billed using the 
 17.30  health insurance claim form HCFA 1500, except as provided in 
 17.31  subdivision 5. 
 17.32     (b) The instructions and definitions for the use of the 
 17.33  uniform billing form HCFA 1500 shall be in accordance with the 
 17.34  manual developed by the administrative uniformity committee 
 17.35  entitled standards for the use of the HCFA 1500 form, dated 
 17.36  February 1994, as further defined by the commissioner. 
 18.1      (c) Services to be billed using the uniform billing form 
 18.2   HCFA 1500 include physician services and supplies, durable 
 18.3   medical equipment, noninstitutional ambulance services, 
 18.4   independent ancillary services including occupational therapy, 
 18.5   physical therapy, speech therapy and audiology, podiatry 
 18.6   services, optometry services, mental health licensed 
 18.7   professional services, substance abuse licensed professional 
 18.8   services, nursing practitioner professional services, certified 
 18.9   registered nurse anesthetists, chiropractors, physician 
 18.10  assistants, laboratories, medical suppliers, and other health 
 18.11  care providers such as home health intravenous therapy 
 18.12  providers, personal care attendants, day activity centers, 
 18.13  waivered services, hospice, and other home health services, and 
 18.14  freestanding ambulatory surgical centers. 
 18.15     Sec. 25.  Minnesota Statutes 1998, section 62J.52, 
 18.16  subdivision 5, is amended to read: 
 18.17     Subd. 5.  [STATE AND FEDERAL HEALTH CARE PROGRAMS.] (a) 
 18.18  Skilled nursing facilities and ICF/MR services billed to state 
 18.19  and federal health care programs administered by the department 
 18.20  of human services shall use the form designated by the 
 18.21  department of human services. 
 18.22     (b) On and after July 1, 1996, state and federal health 
 18.23  care programs administered by the department of human services 
 18.24  shall accept the HCFA 1450 for community mental health center 
 18.25  services and shall accept the HCFA 1500 for freestanding 
 18.26  ambulatory surgical center services. 
 18.27     (c) State and federal health care programs administered by 
 18.28  the department of human services shall be authorized to use the 
 18.29  forms designated by the department of human services for 
 18.30  pharmacy services and for child and teen checkup services. 
 18.31     (d) State and federal health care programs administered by 
 18.32  the department of human services shall accept the form 
 18.33  designated by the department of human services, and the HCFA 
 18.34  1500 for supplies, medical supplies, or durable medical 
 18.35  equipment.  Health care providers may choose which form to 
 18.36  submit. 
 19.1      (e) Personal care attendant and waivered services billed on 
 19.2   a fee-for-service basis directly to state and federal health 
 19.3   care programs administered by the department of human services 
 19.4   shall use either the HCFA 1450 or the HCFA 1500 form, as 
 19.5   designated by the department of human services. 
 19.6      Sec. 26.  [62J.581] [STANDARDS FOR MINNESOTA UNIFORM HEALTH 
 19.7   CARE REIMBURSEMENT DOCUMENTS.] 
 19.8      Subdivision 1.  [MINNESOTA UNIFORM REMITTANCE ADVICE 
 19.9   REPORT.] All group purchasers and payers shall provide a uniform 
 19.10  remittance advice report to health care providers when a claim 
 19.11  is adjudicated.  The uniform remittance advice report shall 
 19.12  comply with the standards prescribed in this section. 
 19.13     Subd. 2.  [MINNESOTA UNIFORM EXPLANATION OF BENEFITS 
 19.14  DOCUMENT.] All group purchasers and payers shall provide a 
 19.15  uniform explanation of benefits document to health care patients 
 19.16  when a claim is adjudicated.  The uniform explanation of 
 19.17  benefits document shall comply with the standards prescribed in 
 19.18  this section. 
 19.19     Subd. 3.  [SCOPE.] For purposes of sections 62J.50 to 
 19.20  62J.61, the uniform remittance advice report and the uniform 
 19.21  explanation of benefits document format specified in subdivision 
 19.22  4 shall apply to all health care services delivered by a health 
 19.23  care provider or health care provider organization in Minnesota, 
 19.24  regardless of the location of the payer, excluding commercial 
 19.25  health insurance.  Health care services not paid on an 
 19.26  individual claims basis, such as capitated payments, are not 
 19.27  included in this section.  A health plan company is excluded 
 19.28  from the requirements in subdivisions 1 and 2 if they comply 
 19.29  with section 62A.01, subdivisions 2 and 3. 
 19.30     Subd. 4.  [SPECIFICATIONS.] The uniform remittance advice 
 19.31  report and the uniform explanation of benefits document shall be 
 19.32  provided by use of a paper document conforming to the 
 19.33  specifications in this section or by use of the ANSI X12N 835 
 19.34  standard electronic format as established under United States 
 19.35  Code, title 42, sections 1320d to 1320d-8, and as amended from 
 19.36  time to time for the remittance advice.  The commissioner, after 
 20.1   consulting with the administrative uniformity committee, shall 
 20.2   specify the data elements and definitions for the uniform 
 20.3   remittance advice report and the uniform explanation of benefits 
 20.4   document.  The commissioner and the administrative uniformity 
 20.5   committee must consult with the Minnesota Dental Association and 
 20.6   Delta Dental Plan of Minnesota before requiring the use of any 
 20.7   paper documents for dental care services under this section.  
 20.8      Subd. 5.  [EFFECTIVE DATE.] The requirements in 
 20.9   subdivisions 1 and 2 are effective 12 months after the date of 
 20.10  required compliance with the standards for the electronic 
 20.11  remittance advice transaction under United States Code, title 
 20.12  42, sections 1320d to 1320d-8, and as amended from time to 
 20.13  time.  The requirements in subdivisions 1 and 2 apply regardless 
 20.14  of when the health care service was provided to the patient. 
 20.15     Sec. 27.  Minnesota Statutes 1999 Supplement, section 
 20.16  62J.535, subdivision 2, is amended to read: 
 20.17     Subd. 2.  [COMPLIANCE.] (a) Concurrent with the effective 
 20.18  dates date of required compliance established under United 
 20.19  States Code, title 42, sections 1320d to 1320d-8, as amended 
 20.20  from time to time, for uniform electronic billing standards, all 
 20.21  health care providers must conform to the uniform billing 
 20.22  standards developed under subdivision 1. 
 20.23     (b) Notwithstanding paragraph (a), the requirements for the 
 20.24  uniform remittance advice report shall be effective 12 months 
 20.25  after the date of the required compliance of the standards for 
 20.26  the electronic remittance advice transaction are effective under 
 20.27  United States Code, title 42, sections 1320d to 1320d-8, as 
 20.28  amended from time to time. 
 20.29     Sec. 28.  Minnesota Statutes 1998, section 62J.60, 
 20.30  subdivision 1, is amended to read: 
 20.31     Subdivision 1.  [MINNESOTA HEALTH CARE IDENTIFICATION 
 20.32  CARD.] All individuals with health care coverage shall be issued 
 20.33  health care identification cards by group purchasers as of 
 20.34  January 1, 1998, unless the requirements of section 62A.01, 
 20.35  subdivisions 2 and 3, are met.  The health care identification 
 20.36  cards shall comply with the standards prescribed in this section.
 21.1      Sec. 29.  Minnesota Statutes 1998, section 62S.02, 
 21.2   subdivision 1, is amended to read: 
 21.3      Subdivision 1.  [REQUIREMENTS.] A qualified long-term care 
 21.4   insurance policy may not be offered, issued, delivered, or 
 21.5   renewed in this state unless the policy satisfies the 
 21.6   requirements of this chapter and the filing provisions of 
 21.7   section 62A.02.  A qualified long-term care insurance policy 
 21.8   must cover qualified long-term care services. 
 21.9      Sec. 30.  Minnesota Statutes 1998, section 64B.30, 
 21.10  subdivision 1, is amended to read: 
 21.11     Subdivision 1.  [VISITATION AND EXAMINATION.] The 
 21.12  commissioner, or any person the commissioner may appoint, shall 
 21.13  have the power of visitation and examination into the affairs of 
 21.14  any domestic society.  The commissioner shall conduct an 
 21.15  examination at least once in every three years as often as is 
 21.16  required in section 60A.031, subdivision 1.  The commissioner 
 21.17  may: 
 21.18     (1) employ assistance for the purposes of examination and 
 21.19  the commissioner, or any person the commissioner may appoint, 
 21.20  shall have free access to any books, papers, and documents that 
 21.21  relate to the business of the association; and 
 21.22     (2) summon and qualify as witnesses, under oath, and 
 21.23  examine its officers, agents, and employees, or other persons, 
 21.24  in relation to the affairs, transactions, and condition of the 
 21.25  association. 
 21.26     Sec. 31.  Minnesota Statutes 1998, section 65B.29, 
 21.27  subdivision 2, is amended to read: 
 21.28     Subd. 2.  [INSURANCE REQUIRED.] No motor vehicle service 
 21.29  contract may be issued, sold, or offered for sale in this state 
 21.30  unless the provider of the service contract is insured under a 
 21.31  motor vehicle service contract reimbursement insurance policy 
 21.32  issued by an insurer authorized to do business in this 
 21.33  state.  Insurers issuing such a policy are required to have 
 21.34  capital and surplus equal to at least $5,000,000 at the end of 
 21.35  the preceding year.  Capital and surplus must be calculated 
 21.36  using the accounting standards required by section 60A.13. 
 22.1      Sec. 32.  Minnesota Statutes 1998, section 65B.29, 
 22.2   subdivision 3, is amended to read: 
 22.3      Subd. 3.  [FILING REQUIREMENTS.] No motor vehicle service 
 22.4   contract may be issued, sold, or offered for sale in this state 
 22.5   unless a true and correct copy of the service contract and the 
 22.6   provider's reimbursement insurance policy have been filed with 
 22.7   the commissioner and either (1) the commissioner has approved it 
 22.8   or (2) 60 days have elapsed and the commissioner has not 
 22.9   disapproved it as misleading or violative of public policy.  The 
 22.10  commissioner may, by written notice to the provider, extend the 
 22.11  review for an additional period not to exceed 60 days. 
 22.12     Sec. 33.  Minnesota Statutes 1998, section 72A.20, 
 22.13  subdivision 17, is amended to read: 
 22.14     Subd. 17.  [RETURN OF PREMIUMS.] (a) Refusing, upon 
 22.15  surrender of an individual policy of life insurance in the case 
 22.16  of the insured's death, or in the case of a surrender prior to 
 22.17  death, of an individual insurance policy not covered by the 
 22.18  standard nonforfeiture laws under section 61A.24, to refund to 
 22.19  the owner all unearned premiums paid on the policy covering the 
 22.20  insured as of the time of the insured's death or surrender if 
 22.21  the unearned premium is for a period of more than one 
 22.22  month.  The return of unearned premium must be delivered to the 
 22.23  insured within 30 days following surrender of the policy and 
 22.24  receipt by the insurer of the insured's request for cancellation.
 22.25     (b) Refusing, upon termination or cancellation of a policy 
 22.26  of automobile insurance under section 65B.14, subdivision 2, or 
 22.27  a policy of homeowner's insurance under section 65A.27, 
 22.28  subdivision 4, or a policy of accident and sickness insurance 
 22.29  under section 62A.01, or a policy of comprehensive health 
 22.30  insurance under chapter 62E, to refund to the insured all 
 22.31  unearned premiums paid on the policy covering the insured as of 
 22.32  the time of the termination or cancellation if the unearned 
 22.33  premium is for a period of more than one month.  The return of 
 22.34  unearned premium must be delivered to the insured within 30 days 
 22.35  following receipt by the insurer of the insured's request for 
 22.36  cancellation. 
 23.1      (c) This subdivision does not apply to policies of 
 23.2   insurance providing coverage only for motorcycles or other 
 23.3   seasonally rated or limited use vehicles where the rate is 
 23.4   reduced to reflect seasonal or limited use. 
 23.5      (d) For purposes of this section, a premium is unearned 
 23.6   during the period of time the insurer has not been exposed to 
 23.7   any risk of loss.  Except for premiums for motorcycle coverage 
 23.8   or other seasonally rated or limited use vehicles where the rate 
 23.9   is reduced to reflect seasonal or limited use, the unearned 
 23.10  premium is determined by multiplying the premium by the fraction 
 23.11  that results from dividing the period of time from the date of 
 23.12  termination to the date the next scheduled premium is due by the 
 23.13  period of time for which the premium was paid. 
 23.14     (e) The owner may cancel a policy referred to in this 
 23.15  section at any time during the policy period.  This provision 
 23.16  supersedes any inconsistent provision of law or any inconsistent 
 23.17  policy provision. 
 23.18     Sec. 34.  Minnesota Statutes 1999 Supplement, section 
 23.19  72A.20, subdivision 23, is amended to read: 
 23.20     Subd. 23.  [DISCRIMINATION IN AUTOMOBILE INSURANCE 
 23.21  POLICIES.] (a) No insurer that offers an automobile insurance 
 23.22  policy in this state shall: 
 23.23     (1) use the employment status of the applicant as an 
 23.24  underwriting standard or guideline; or 
 23.25     (2) deny coverage to a policyholder for the same reason. 
 23.26     (b) No insurer that offers an automobile insurance policy 
 23.27  in this state shall: 
 23.28     (1) use the applicant's status as a residential tenant, as 
 23.29  the term is defined in section 504B.001, subdivision 12, as an 
 23.30  underwriting standard or guideline; or 
 23.31     (2) deny coverage to a policyholder for the same reason; or 
 23.32     (3) make any discrimination in offering or establishing 
 23.33  rates, premiums, dividends, or benefits of any kind, or by way 
 23.34  of rebate, for the same reason.  
 23.35     (c) No insurer that offers an automobile insurance policy 
 23.36  in this state shall: 
 24.1      (1) use the failure of the applicant to have an automobile 
 24.2   policy in force during any period of time before the application 
 24.3   is made as an underwriting standard or guideline; or 
 24.4      (2) deny coverage to a policyholder for the same reason. 
 24.5      This provision Paragraph (c) does not apply if the 
 24.6   applicant was required by law to maintain automobile insurance 
 24.7   coverage and failed to do so. 
 24.8      An insurer may require reasonable proof that the applicant 
 24.9   did not fail to maintain this coverage.  The insurer is not 
 24.10  required to accept the mere lack of a conviction or citation for 
 24.11  failure to maintain this coverage as proof of failure to 
 24.12  maintain coverage.  The insurer must provide the applicant with 
 24.13  information identifying the documentation that is required to 
 24.14  establish reasonable proof that the applicant did not fail to 
 24.15  maintain the coverage. 
 24.16     (d) No insurer that offers an automobile insurance policy 
 24.17  in this state shall use an applicant's prior claims for benefits 
 24.18  paid under section 65B.44 as an underwriting standard or 
 24.19  guideline if the applicant was 50 percent or less negligent in 
 24.20  the accident or accidents causing the claims. 
 24.21     (e) No insurer shall refuse to issue any standard or 
 24.22  preferred policy of motor vehicle insurance or make any 
 24.23  discrimination in the acceptance of risks, in rates, premiums, 
 24.24  dividends, or benefits of any kind, or by way of rebate:  
 24.25     (1) between persons of the same class, or 
 24.26     (2) on account of race, or 
 24.27     (3) on account of physical handicap if the handicap is 
 24.28  compensated for by special training, equipment, prosthetic 
 24.29  device, corrective lenses, or medication and if the physically 
 24.30  handicapped person: 
 24.31     (i) is licensed by the department of public safety to 
 24.32  operate a motor vehicle in this state, and 
 24.33     (ii) operates only vehicles that are equipped with 
 24.34  auxiliary devices and equipment necessary for safe and effective 
 24.35  operation by the handicapped person, or 
 24.36     (4) on account of marital dissolution.  
 25.1      Sec. 35.  Minnesota Statutes 1998, section 72A.499, 
 25.2   subdivision 1, is amended to read: 
 25.3      Subdivision 1.  [NOTICE AND INFORMATION.] (a) In the event 
 25.4   of an adverse underwriting decision, the insurer or insurance 
 25.5   agent responsible for the decision shall provide in writing to 
 25.6   the applicant, policyholder, or individual proposed for coverage:
 25.7      (1) the specific reason or reasons for the adverse 
 25.8   underwriting decision, a summary of the person's rights under 
 25.9   sections 72A.497 and 72A.498, and that upon request the person 
 25.10  may receive the specific items of personal information that 
 25.11  support those reasons and the specific sources of the 
 25.12  information; or 
 25.13     (2) the specific reason or reasons for the adverse 
 25.14  underwriting decision, the specific items of personal and 
 25.15  privileged information that support those reasons, the names and 
 25.16  addresses of the sources that supplied the specific items of 
 25.17  information specified, and a summary of the rights established 
 25.18  under sections 72A.497 and 72A.498.  
 25.19     (b) if the adverse underwriting decision is either solely 
 25.20  or partially based upon a report of credit worthiness, credit 
 25.21  standing, or credit capacity that an insurer receives from a 
 25.22  consumer reporting agency, the primary reason or reasons for the 
 25.23  credit score or codes or other credit based information used by 
 25.24  the insurer in the insurer's underwriting. 
 25.25     Sec. 36.  Minnesota Statutes 1998, section 79.34, 
 25.26  subdivision 1, is amended to read: 
 25.27     Subdivision 1.  [CONDITIONS REQUIRING MEMBERSHIP.] The 
 25.28  nonprofit association known as the workers' compensation 
 25.29  reinsurance association may be incorporated under chapter 317A 
 25.30  with all the powers of a corporation formed under that chapter, 
 25.31  except that if the provisions of that chapter are inconsistent 
 25.32  with sections 79.34 to 79.40, sections 79.34 to 79.40 govern is 
 25.33  a division of the department of commerce directed by a deputy 
 25.34  commissioner appointed by the commissioner.  Each insurer as 
 25.35  defined by section 79.01, subdivision 2, shall, as a condition 
 25.36  of its authority to transact workers' compensation insurance in 
 26.1   this state, be a member of the reinsurance association and is 
 26.2   bound by the plan of operation of the reinsurance association; 
 26.3   provided, that all affiliated insurers within a holding company 
 26.4   system as defined in chapter 60D are considered a single entity 
 26.5   for purposes of the exercise of all rights and duties of 
 26.6   membership in the reinsurance association.  Each self-insurer 
 26.7   approved under section 176.181 and each political subdivision 
 26.8   that self-insures shall, as a condition of its authority to 
 26.9   self-insure workers' compensation liability in this state, be a 
 26.10  member of the reinsurance association and is bound by its plan 
 26.11  of operation; provided that: 
 26.12     (1) all affiliated companies within a holding company 
 26.13  system, as determined by the commissioner of labor and industry 
 26.14  commerce in a manner consistent with the standards and 
 26.15  definitions in chapter 60D, are considered a single entity for 
 26.16  purposes of the exercise of all rights and duties of membership 
 26.17  in the reinsurance association; and 
 26.18     (2) all group self-insurers granted authority to 
 26.19  self-insure pursuant to section 176.181 are considered single 
 26.20  entities for purposes of the exercise of all the rights and 
 26.21  duties of membership in the reinsurance association.  As a 
 26.22  condition of its authority to self-insure workers' compensation 
 26.23  liability, and for losses incurred after December 31, 1983, the 
 26.24  state is a member of the reinsurance association and is bound by 
 26.25  its plan of operation.  The commissioner of employee relations 
 26.26  represents the state in the exercise of all the rights and 
 26.27  duties of membership in the reinsurance association.  The state 
 26.28  treasurer shall pay the premium to the reinsurance association 
 26.29  from the state compensation revolving fund upon warrants of the 
 26.30  commissioner of employee relations, except that the University 
 26.31  of Minnesota shall pay its portion of workers' compensation 
 26.32  reinsurance premiums directly to the workers' compensation 
 26.33  reinsurance association.  For the purposes of this section, 
 26.34  "state" means the administrative branch of state government, the 
 26.35  legislative branch, the judicial branch, the University of 
 26.36  Minnesota, and any other entity whose workers' compensation 
 27.1   liability is paid from the state revolving fund.  The 
 27.2   commissioner of finance may calculate, prorate, and charge a 
 27.3   department or agency the portion of premiums paid to the 
 27.4   reinsurance association for employees who are paid wholly or in 
 27.5   part by federal funds, dedicated funds, or special revenue 
 27.6   funds.  The reinsurance association is not a state agency.  
 27.7   Actions of the reinsurance association and its board of 
 27.8   directors and actions of the commissioner of labor and industry 
 27.9   with respect to the reinsurance association are not subject to 
 27.10  chapters 13 and 15.  All property owned by the association is 
 27.11  exempt from taxation.  The reinsurance association is not 
 27.12  obligated to make any payments or pay any assessments to any 
 27.13  funds or pools established pursuant to this chapter or chapter 
 27.14  176 or any other law. 
 27.15     Sec. 37.  Minnesota Statutes 1998, section 79.34, 
 27.16  subdivision 2, is amended to read: 
 27.17     Subd. 2.  [LOSSES; RETENTION LIMITS.] The reinsurance 
 27.18  association shall provide and each member shall accept 
 27.19  indemnification for 100 percent of the amount of ultimate loss 
 27.20  sustained in each loss occurrence relating to one or more claims 
 27.21  arising out of a single compensable event, including aggregate 
 27.22  losses related to a single event or occurrence which constitutes 
 27.23  a single loss occurrence, under chapter 176 on and after October 
 27.24  1, 1979, in excess of a low, a high, or a super retention limit, 
 27.25  at the option of the member.  In case of occupational disease 
 27.26  causing disablement on and after October 1, 1979, each person 
 27.27  suffering disablement due to occupational disease is considered 
 27.28  to be involved in a separate loss occurrence.  On January 1, 
 27.29  1995, the lower retention limit is $250,000, which shall also be 
 27.30  known as the 1995 base retention limit.  On each January 1 
 27.31  thereafter, the cumulative annual percentage changes in the 
 27.32  statewide average weekly wage after October 1, 1994, as 
 27.33  determined in accordance with section 176.011, subdivision 20, 
 27.34  shall first be multiplied by the 1995 base retention limit, the 
 27.35  result of which shall then be added to the 1995 base retention 
 27.36  limit.  The resulting figure shall be rounded to the nearest 
 28.1   $10,000, yielding the low retention limit for that year, 
 28.2   provided that the low retention limit shall not be reduced in 
 28.3   any year.  The high retention limit shall be two times the low 
 28.4   retention limit and shall be adjusted when the low retention 
 28.5   limit is adjusted.  The super retention limit shall be four 
 28.6   times the low retention limit and shall be adjusted when the low 
 28.7   retention limit is adjusted.  Ultimate loss as used in this 
 28.8   section means the actual loss amount which a member is obligated 
 28.9   to pay and which is paid by the member for workers' compensation 
 28.10  benefits payable under chapter 176 and shall not include claim 
 28.11  expenses, assessments, damages or penalties.  For losses 
 28.12  incurred on or after January 1, 1979, any amounts paid by a 
 28.13  member pursuant to sections 176.183, 176.221, 176.225, and 
 28.14  176.82 shall not be included in ultimate loss and shall not be 
 28.15  indemnified by the reinsurance association.  A loss is incurred 
 28.16  by the reinsurance association on the date on which the accident 
 28.17  or other compensable event giving rise to the loss occurs, and a 
 28.18  member is liable for a loss up to its retention limit in effect 
 28.19  at the time that the loss was incurred, except that members 
 28.20  which are determined by the reinsurance association to be 
 28.21  controlled by or under common control with another member, and 
 28.22  which are liable for claims from one or more employees entitled 
 28.23  to compensation for a single compensable event, including 
 28.24  aggregate losses relating to a single loss occurrence, may 
 28.25  aggregate their losses and obtain indemnification from the 
 28.26  reinsurance association for the aggregate losses in excess of 
 28.27  the highest retention limit selected by any of the members in 
 28.28  effect at the time the loss was incurred.  Each member is liable 
 28.29  for payment of its ultimate loss and shall be entitled to 
 28.30  indemnification from the reinsurance association for the 
 28.31  ultimate loss in excess of the member's retention limit in 
 28.32  effect at the time of the loss occurrence. 
 28.33     A member that chooses the high or super retention limit 
 28.34  shall retain the liability for all losses below the chosen 
 28.35  retention limit itself and shall not transfer the liability to 
 28.36  any other entity or reinsure or otherwise contract for 
 29.1   reimbursement or indemnification for losses below its retention 
 29.2   limit, except in the following cases:  (a) when the reinsurance 
 29.3   or contract is with another member which, directly or 
 29.4   indirectly, through one or more intermediaries, control or are 
 29.5   controlled by or are under common control with the member; (b) 
 29.6   when the reinsurance or contract provides for reimbursement or 
 29.7   indemnification of a member if and only if the total of all 
 29.8   claims which the member pays or incurs, but which are not 
 29.9   reimbursable or subject to indemnification by the reinsurance 
 29.10  association for a given period of time, exceeds a dollar value 
 29.11  or percentage of premium written or earned and stated in the 
 29.12  reinsurance agreement or contract; (c) when the reinsurance or 
 29.13  contract is a pooling arrangement with other insurers where 
 29.14  liability of the member to pay claims pursuant to chapter 176 is 
 29.15  incidental to participation in the pool and not as a result of 
 29.16  providing workers' compensation insurance to employers on a 
 29.17  direct basis under chapter 176; (d) when the reinsurance or 
 29.18  contract is limited to all the claims of a specific insured of a 
 29.19  member which are reimbursed or indemnified by a reinsurer which, 
 29.20  directly or indirectly, through one or more intermediaries, 
 29.21  controls or is controlled by or is under common control with the 
 29.22  insured of the member so long as any subsequent contract or 
 29.23  reinsurance of the reinsurer relating to the claims of the 
 29.24  insured of a member is not inconsistent with the bases of 
 29.25  exception provided under clauses (a), (b) and (c); or (e) when 
 29.26  the reinsurance or contract is limited to all claims of a 
 29.27  specific self-insurer member which are reimbursed or indemnified 
 29.28  by a reinsurer which, directly or indirectly, through one or 
 29.29  more intermediaries, controls or is controlled by or is under 
 29.30  common control with the self-insurer member so long as any 
 29.31  subsequent contract or reinsurance of the reinsurer relating to 
 29.32  the claims of the self-insurer member are not inconsistent with 
 29.33  the bases for exception provided under clauses (a), (b) and (c). 
 29.34     Whenever it appears to the commissioner of labor and 
 29.35  industry commerce that any member that chooses the high or super 
 29.36  retention limit has participated in the transfer of liability to 
 30.1   any other entity or reinsured or otherwise contracted for 
 30.2   reimbursement or indemnification of losses below its retention 
 30.3   limit in a manner inconsistent with the bases for exception 
 30.4   provided under clauses (a), (b), (c), (d), and (e), the 
 30.5   commissioner may, after giving notice and an opportunity to be 
 30.6   heard, order the member to pay to the state of Minnesota an 
 30.7   amount not to exceed twice the difference between the 
 30.8   reinsurance premium for the high or super retention limit, as 
 30.9   appropriate, and the low retention limit applicable to the 
 30.10  member for each year in which the prohibited reinsurance or 
 30.11  contract was in effect.  Any member subject to this penalty 
 30.12  provision shall continue to be bound by its selection of the 
 30.13  high or super retention limit for purposes of membership in the 
 30.14  reinsurance association.  
 30.15     Sec. 38.  Minnesota Statutes 1998, section 79.34, 
 30.16  subdivision 2a, is amended to read: 
 30.17     Subd. 2a.  [DEFICIENCY.] If the board commissioner of 
 30.18  commerce determines that a distribution of excess surplus 
 30.19  resulted in inadequate funds being available to pay claims that 
 30.20  arose during the period upon which that distribution was 
 30.21  calculated, the board commissioner shall determine the amount of 
 30.22  the deficiency.  The deficiency shall be made up by imposing an 
 30.23  assessment rate against self-insured members and policyholders 
 30.24  of insurer members.  The board shall notify the commissioner of 
 30.25  commerce of the amount of the deficiency and recommend an 
 30.26  assessment rate.  The commissioner shall order an assessment at 
 30.27  a rate and for the time period necessary to eliminate the 
 30.28  deficiency.  The assessment rate shall be applied to the 
 30.29  exposure base of self-insured employers and insured employers.  
 30.30  The assessment may not be retroactive and applies only 
 30.31  prospectively.  The assessment may be spread over a period of 
 30.32  time that will cause the least financial hardship to employers.  
 30.33  All assessments under this subdivision are payable to the 
 30.34  association.  The commissioner may issue orders necessary to 
 30.35  administer this section.  
 30.36     Sec. 39.  Minnesota Statutes 1998, section 79.34, 
 31.1   subdivision 6, is amended to read: 
 31.2      Subd. 6.  [IDENTIFYING LOSSES IN REPORT.] The commissioner 
 31.3   of labor and industry commerce shall require each member to 
 31.4   identify the portion of all losses which exceed its retention 
 31.5   limit selected under this section in any report filed with the 
 31.6   workers' compensation insurers rating association of Minnesota 
 31.7   or filed with the department of labor and industry for use in 
 31.8   reviewing the workers' compensation schedule of rates.  
 31.9      Sec. 40.  Minnesota Statutes 1998, section 79.35, is 
 31.10  amended to read: 
 31.11     79.35 [DUTIES; RESPONSIBILITIES; POWERS.] 
 31.12     The reinsurance association shall do the following on 
 31.13  behalf of its members: 
 31.14     (a) Assume 100 percent of the liability as provided in 
 31.15  section 79.34; 
 31.16     (b) Establish procedures by which members shall promptly 
 31.17  report to the reinsurance association each claim which, on the 
 31.18  basis of the injury sustained, may reasonably be anticipated to 
 31.19  involve liability to the reinsurance association if the member 
 31.20  is held liable under chapter 176.  Solely for the purpose of 
 31.21  reporting claims, the member shall in all instances consider 
 31.22  itself legally liable for the injury.  The member shall advise 
 31.23  the reinsurance association of subsequent developments likely to 
 31.24  materially affect the interest of the reinsurance association in 
 31.25  the claim; 
 31.26     (c) Maintain relevant loss and expense data relative to all 
 31.27  liabilities of the reinsurance association and require each 
 31.28  member to furnish statistics in connection with liabilities of 
 31.29  the reinsurance association at the times and in the form and 
 31.30  detail as may be required by the plan of operation; 
 31.31     (d) Calculate and charge to members a total premium 
 31.32  sufficient to cover the expected liability which the reinsurance 
 31.33  association will incur, together with incurred or estimated to 
 31.34  be incurred operating and administrative expenses for the period 
 31.35  to which this premium applies and actual claim payments to be 
 31.36  made by members, during the period to which this premium 
 32.1   applies, for claims in excess of the prefunded limit in effect 
 32.2   at the time the loss was incurred.  Each member shall be charged 
 32.3   a premium established by the board as sufficient to cover the 
 32.4   reinsurance association's incurred liabilities and expenses 
 32.5   between the member's selected retention limit and the prefunded 
 32.6   limit.  The prefunded limit shall be 20 times the lower 
 32.7   retention limit established in section 79.34, subdivision 2.  
 32.8   Each member shall be charged a proportion of the total premium 
 32.9   calculated for its selected retention limit in an amount equal 
 32.10  to its proportion of the exposure base of all members during the 
 32.11  period to which the reinsurance association premium will apply.  
 32.12  The exposure base shall be determined by the board and is 
 32.13  subject to the approval of the commissioner of labor and 
 32.14  industry commerce.  In determining the exposure base, the board 
 32.15  commissioner shall consider, among other things, equity, 
 32.16  administrative convenience, records maintained by members, 
 32.17  amenability to audit, and degree of risk refinement.  Each 
 32.18  member shall also be charged a premium determined by the board 
 32.19  commissioner to equitably distribute excess or deficient 
 32.20  premiums from previous periods including any excess or deficient 
 32.21  premiums resulting from a retroactive change in the prefunded 
 32.22  limit.  The premiums charged to members shall not be unfairly 
 32.23  discriminatory as defined in section 79.074.  All premiums shall 
 32.24  be approved by the commissioner of labor and industry; 
 32.25     (e) Require and accept the payment of premiums from members 
 32.26  of the reinsurance association; 
 32.27     (f) Receive and distribute all sums required by the 
 32.28  operation of the reinsurance association; 
 32.29     (g) Establish procedures for reviewing claims procedures 
 32.30  and practices of members of the reinsurance association.  If the 
 32.31  claims procedures or practices of a member are considered 
 32.32  inadequate to properly service the liabilities of the 
 32.33  reinsurance association, the reinsurance association may 
 32.34  undertake, or may contract with another person, including 
 32.35  another member, to adjust or assist in the adjustment of claims 
 32.36  which create a potential liability to the association.  The 
 33.1   reinsurance association may charge the cost of the adjustment 
 33.2   under this paragraph to the member, except that any penalties or 
 33.3   interest incurred under sections 176.183, 176.221, 176.225, and 
 33.4   176.82 as a result of actions by the reinsurance association 
 33.5   after it has undertaken adjustment of the claim shall not be 
 33.6   charged to the member but shall be included in the ultimate loss 
 33.7   and listed as a separate item; and 
 33.8      (h) Provide each member of the reinsurance association with 
 33.9   an annual report of the operations of the reinsurance 
 33.10  association in a form the board of directors commissioner of 
 33.11  commerce may specify. 
 33.12     Sec. 41.  Minnesota Statutes 1998, section 79.36, is 
 33.13  amended to read: 
 33.14     79.36 [ADDITIONAL POWERS.] 
 33.15     In addition to the powers granted in section 79.35, the 
 33.16  reinsurance association may do the following: 
 33.17     (a) Sue and be sued.  A judgment against the reinsurance 
 33.18  association shall not create any direct liability against the 
 33.19  individual members of the reinsurance association.  The 
 33.20  reinsurance association shall provide in the plan of operation 
 33.21  for the indemnification, to the extent provided in the plan of 
 33.22  operation, of the members, members of the board of directors of 
 33.23  the reinsurance association, and officers, employees and other 
 33.24  persons lawfully acting on behalf of the reinsurance 
 33.25  association; 
 33.26     (b) Reinsure all or any portion of its potential liability, 
 33.27  including potential liability in excess of the prefunded limit, 
 33.28  with reinsurers licensed to transact insurance in this state or 
 33.29  otherwise approved by the commissioner of labor and industry 
 33.30  commerce; 
 33.31     (c) Provide for appropriate housing, equipment, and 
 33.32  personnel as may be necessary to assure the efficient operation 
 33.33  of the reinsurance association; 
 33.34     (d) Contract for goods and services, including but not 
 33.35  limited to independent claims management, actuarial, investment, 
 33.36  and legal services from others within or without this state to 
 34.1   assure the efficient operation of the reinsurance association; 
 34.2      (e) Adopt operating rules, consistent with the plan of 
 34.3   operation, for the administration of the reinsurance 
 34.4   association, enforce those operating rules, and delegate 
 34.5   authority as necessary to assure the proper administration and 
 34.6   operation of the reinsurance association; 
 34.7      (f) Intervene in or prosecute at any time, including but 
 34.8   not limited to intervention or prosecution as subrogee to the 
 34.9   member's rights in a third party action, any proceeding under 
 34.10  this chapter or chapter 176 in which liability of the 
 34.11  reinsurance association may, in the opinion of the board of 
 34.12  directors of the reinsurance association or its designee 
 34.13  commissioner of commerce, be established, or the reinsurance 
 34.14  association affected in any other way; 
 34.15     (g) The net proceeds derived from intervention or 
 34.16  prosecution of any subrogation interest, or other recovery, 
 34.17  shall first be used to reimburse the reinsurance association for 
 34.18  amounts paid or payable pursuant to this chapter, together with 
 34.19  any expenses of recovery, including attorney's fees, and any 
 34.20  excess shall be paid to the member or other person entitled 
 34.21  thereto, as determined by the board of directors of the 
 34.22  reinsurance association commissioner of commerce, unless 
 34.23  otherwise ordered by a court. 
 34.24     (h) Hear and determine complaints of a company or other 
 34.25  interested party concerning the operation of the reinsurance 
 34.26  association; and 
 34.27     (i) Perform other acts not specifically enumerated in this 
 34.28  section which are necessary or proper to accomplish the purposes 
 34.29  of the reinsurance association and which are not inconsistent 
 34.30  with sections 79.34 to 79.40 or the plan of operation. 
 34.31     Sec. 42.  Minnesota Statutes 1998, section 79.361, 
 34.32  subdivision 1, is amended to read: 
 34.33     Subdivision 1.  [SCOPE.] This section governs the 
 34.34  distribution of excess surplus of the workers' compensation 
 34.35  reinsurance association declared after January 1, 1993.  A 
 34.36  distribution of excess surplus is declared on the date the board 
 35.1   votes commissioner of commerce determines to make a distribution.
 35.2   No distribution of excess surplus other than that provided by 
 35.3   this section may be made.  
 35.4      Sec. 43.  Minnesota Statutes 1998, section 79.37, is 
 35.5   amended to read: 
 35.6      79.37 [ADVISORY BOARD OF DIRECTORS.] 
 35.7      A board of directors of the reinsurance association is 
 35.8   created and is responsible for the operation of the reinsurance 
 35.9   association consistent with the plan of operation and sections 
 35.10  79.34 to 79.40.  The commissioner of commerce shall appoint an 
 35.11  advisory board consists consisting of 13 directors.  
 35.12  Four directors shall members must represent insurers,; two 
 35.13  directors shall members must represent employers,; two shall 
 35.14  members must represent self-insurers; two directors shall 
 35.15  members must represent employees; the commissioner of finance 
 35.16  and the executive director of the state board of investment or 
 35.17  their designees shall serve as directors members; and 
 35.18  one director shall member must represent the public.  Insurer 
 35.19  members of the reinsurance association shall elect may nominate 
 35.20  the directors members who represent insurers; self-insurer 
 35.21  members of the reinsurance association shall elect may nominate 
 35.22  the directors members who represent self-insurers; and the 
 35.23  commissioner of labor and industry commerce shall appoint the 
 35.24  remaining directors for the terms authorized in the plan of 
 35.25  operation.  Each director is entitled to one vote.  Terms of the 
 35.26  directors shall be staggered so that the terms of all the 
 35.27  directors do not expire at the same time and so that a director 
 35.28  does not serve a term of more than four years.  The board shall 
 35.29  select a chair and other officers it deems appropriate. 
 35.30     A majority of the directors currently holding office 
 35.31  constitutes a quorum.  Action may be taken by a majority vote of 
 35.32  the directors present. 
 35.33     The board shall take reasonable and prudent action 
 35.34  regarding the management of the reinsurance association 
 35.35  including but not limited to determining the entity who shall 
 35.36  manage the daily affairs of the reinsurance association.  The 
 36.1   board shall report to the governor of its actions regarding the 
 36.2   entity selected to manage the reinsurance association and the 
 36.3   reasons for the selection. 
 36.4      Sec. 44.  Minnesota Statutes 1998, section 79.371, 
 36.5   subdivision 2, is amended to read: 
 36.6      Subd. 2.  [PERSONAL LIABILITY; EXCLUDED.] The members of 
 36.7   the advisory board and officers or employees of the association 
 36.8   are not liable personally, either jointly or severally, for the 
 36.9   obligation created by this section. 
 36.10     Sec. 45.  Minnesota Statutes 1998, section 79.38, 
 36.11  subdivision 1, is amended to read: 
 36.12     Subdivision 1.  [PROVISIONS.] The commissioner of commerce 
 36.13  shall by rule adopt a plan of operation shall to provide for all 
 36.14  of the following: 
 36.15     (a) The establishment of necessary facilities; 
 36.16     (b) The management and operation of the reinsurance 
 36.17  association; 
 36.18     (c) A preliminary premium, payable by each member in 
 36.19  proportion to its total premium in the year preceding the 
 36.20  inauguration of the reinsurance association, for initial 
 36.21  expenses necessary to commence operation of the reinsurance 
 36.22  association; 
 36.23     (d) Procedures to be utilized in charging premiums, 
 36.24  including adjustments from excess or deficient premiums from 
 36.25  prior periods; 
 36.26     (e) Procedures governing the actual payment of premiums to 
 36.27  the reinsurance association; 
 36.28     (f) Reimbursement of each member of the advisory board by 
 36.29  the reinsurance association for actual and necessary expenses 
 36.30  incurred on reinsurance association business; and 
 36.31     (g) The composition, terms, compensation and other 
 36.32  necessary rules consistent with section 79.37 for boards of 
 36.33  directors of the reinsurance association; 
 36.34     (h) The investment policy of the reinsurance association; 
 36.35  and 
 36.36     (i) Any other matters required by or necessary to 
 37.1   effectively implement sections 79.34 to 79.40. 
 37.2      Sec. 46.  Minnesota Statutes 1998, section 79A.04, 
 37.3   subdivision 1, is amended to read: 
 37.4      Subdivision 1.  [ANNUAL SECURING OF LIABILITY.] Each year 
 37.5   every private self-insuring employer shall secure incurred 
 37.6   liabilities for the payment of compensation and the performance 
 37.7   of the its obligations and the obligations of all self-insuring 
 37.8   employers imposed under chapter 176 by renewing the prior year's 
 37.9   security deposit or by making a new deposit of security.  If a 
 37.10  new deposit is made, it must be posted within 60 days of the 
 37.11  filing of the self-insured employer's annual report with the 
 37.12  commissioner, but in no event later than July 1. 
 37.13     Sec. 47.  Minnesota Statutes 1998, section 79A.04, 
 37.14  subdivision 2, is amended to read: 
 37.15     Subd. 2.  [MINIMUM DEPOSIT.] The minimum deposit is 110 
 37.16  percent of the private self-insurer's estimated future liability.
 37.17  Up to ten percent of that The deposit may be used to secure 
 37.18  payment of all administrative and legal costs, and unpaid 
 37.19  assessments required by section 79A.12, subdivision 2, relating 
 37.20  to or arising from the employer's its or other employers' 
 37.21  self-insuring.  As used in this section, "private self-insurer" 
 37.22  includes both current and former members of the self-insurers' 
 37.23  security fund; and "private self-insurers' estimated future 
 37.24  liability" means the private self-insurers' total of estimated 
 37.25  future liability as determined by an Associate or Fellow of the 
 37.26  Casualty Actuarial Society every year for group member private 
 37.27  self-insurers and, for a nongroup member private self-insurer's 
 37.28  authority to self-insure, every year for the first five years.  
 37.29  After the first five years, the nongroup member's total shall be 
 37.30  as determined by an Associate or Fellow of the Casualty 
 37.31  Actuarial Society at least every two years, and each such 
 37.32  actuarial study shall include a projection of future losses 
 37.33  during the period until the next scheduled actuarial study, less 
 37.34  payments anticipated to be made during that time.  
 37.35     All data and information furnished by a private 
 37.36  self-insurer to an Associate or Fellow of the Casualty Actuarial 
 38.1   Society for purposes of determining private self-insurers' 
 38.2   estimated future liability must be certified by an officer of 
 38.3   the private self-insurer to be true and correct with respect to 
 38.4   payroll and paid losses, and must be certified, upon information 
 38.5   and belief, to be true and correct with respect to reserves.  
 38.6   The certification must be made by sworn affidavit.  In addition 
 38.7   to any other remedies provided by law, the certification of 
 38.8   false data or information pursuant to this subdivision may 
 38.9   result in a fine imposed by the commissioner of commerce on the 
 38.10  private self-insurer up to the amount of $5,000, and termination 
 38.11  of the private self-insurers' authority to self-insure.  The 
 38.12  determination of private self-insurers' estimated future 
 38.13  liability by an Associate or Fellow of the Casualty Actuarial 
 38.14  Society shall be conducted in accordance with standards and 
 38.15  principles for establishing loss and loss adjustment expense 
 38.16  reserves by the Actuarial Standards Board, an affiliate of the 
 38.17  American Academy of Actuaries.  The commissioner may reject an 
 38.18  actuarial report that does not meet the standards and principles 
 38.19  of the Actuarial Standards Board, and may further disqualify the 
 38.20  actuary who prepared the report from submitting any future 
 38.21  actuarial reports pursuant to this chapter.  Within 30 days 
 38.22  after the actuary has been served by the commissioner with a 
 38.23  notice of disqualification, an actuary who is aggrieved by the 
 38.24  disqualification may request a hearing to be conducted in 
 38.25  accordance with chapter 14.  Based on a review of the actuarial 
 38.26  report, the commissioner of commerce may require an increase in 
 38.27  the minimum security deposit in an amount the commissioner 
 38.28  considers sufficient. 
 38.29     Estimated future liability is determined by first taking 
 38.30  the total amount of the self-insured's future liability of 
 38.31  workers' compensation claims and then deducting the total amount 
 38.32  which is estimated to be returned to the self-insurer from any 
 38.33  specific excess insurance coverage, aggregate excess insurance 
 38.34  coverage, and any supplementary benefits or second injury 
 38.35  benefits which are estimated to be reimbursed by the special 
 38.36  compensation fund. Supplementary benefits or second injury 
 39.1   benefits will not be reimbursed by the special compensation fund 
 39.2   unless the special compensation fund assessment pursuant to 
 39.3   section 176.129 is paid and the reports required thereunder are 
 39.4   filed with the special compensation fund.  In the case of surety 
 39.5   bonds, bonds shall secure administrative and legal costs in 
 39.6   addition to the liability for payment of compensation reflected 
 39.7   on the face of the bond.  In no event shall the security be less 
 39.8   than the last retention limit selected by the self-insurer with 
 39.9   the workers' compensation reinsurance association, provided that 
 39.10  the commissioner may allow former members to post less than the 
 39.11  workers' compensation reinsurance association retention level if 
 39.12  that amount is adequate to secure payment of the self-insurers' 
 39.13  estimated future liability, as defined in this subdivision, 
 39.14  including payment of claims, administrative and legal costs, and 
 39.15  unpaid assessments required by section 79A.12, subdivision 2.  
 39.16  The posting or depositing of security pursuant to this section 
 39.17  shall release all previously posted or deposited security from 
 39.18  any obligations under the posting or depositing and any surety 
 39.19  bond so released shall be returned to the surety.  Any other 
 39.20  security shall be returned to the depositor or the person 
 39.21  posting the bond. 
 39.22     As a condition for the granting or renewing of a 
 39.23  certificate to self-insure, the commissioner may require a 
 39.24  private self-insurer to furnish any additional security the 
 39.25  commissioner considers sufficient to insure payment of all 
 39.26  claims under chapter 176. 
 39.27     Sec. 48.  Minnesota Statutes 1998, section 79A.04, 
 39.28  subdivision 7, is amended to read: 
 39.29     Subd. 7.  [PERFECTION OF SECURITY.] Upon the commissioner 
 39.30  sending a request to renew, request to post, or request to 
 39.31  increase a security deposit, a perfected security interest is 
 39.32  created in the private self-insured's assets in favor of the 
 39.33  commissioner to the extent of any then unsecured portion of the 
 39.34  self-insured's incurred liabilities.  That perfected security 
 39.35  interest is transferred to any cash or securities thereafter 
 39.36  posted by the private self-insured with the state treasurer and 
 40.1   is released only upon either of the following: 
 40.2      (1) the acceptance by the commissioner of a surety bond or 
 40.3   irrevocable letter of credit for the full amount of the incurred 
 40.4   liabilities for the payment of compensation; or 
 40.5      (2) the return of cash or securities by the commissioner. 
 40.6      The private self-insured employer loses all right, title, 
 40.7   and interest in and any right to control all assets or 
 40.8   obligations posted or left on deposit as security.  In the event 
 40.9   of a declaration of bankruptcy or insolvency by a court of 
 40.10  competent jurisdiction that a private self-insurer is the 
 40.11  subject of a voluntary or involuntary petition under the United 
 40.12  States Bankruptcy Code, title 11, or a court of competent 
 40.13  jurisdiction has declared the private self-insurer to be 
 40.14  bankrupt or insolvent, or in the event of the issuance of a 
 40.15  certificate of default by the commissioner, the commissioner 
 40.16  shall liquidate the deposit as provided in this chapter, and 
 40.17  transfer it to the self-insurer's security fund for application 
 40.18  to the self-insured employer's incurred liability and other 
 40.19  current or future obligations of the self-insurers' security 
 40.20  fund.  In the event that a private self-insurer is the subject 
 40.21  of a voluntary or involuntary petition under the United States 
 40.22  Bankruptcy Code, title 11, or a court of competent jurisdiction 
 40.23  has declared the private self-insurer to be bankrupt or 
 40.24  insolvent, or in the event of the issuance of a certificate of 
 40.25  default by the commissioner, all right, title, and interest in 
 40.26  and any right to control all assets or obligations which have 
 40.27  been posted or deposited as security must be transferred to the 
 40.28  self-insurers' security fund. 
 40.29     Sec. 49.  Minnesota Statutes 1998, section 79A.04, 
 40.30  subdivision 9, is amended to read: 
 40.31     Subd. 9.  [INSOLVENCY, BANKRUPTCY, OR DEFAULT; UTILIZATION 
 40.32  OF SECURITY DEPOSIT.] The commissioner of labor and industry 
 40.33  shall notify the commissioner and the security fund if the 
 40.34  commissioner of labor and industry has knowledge that any 
 40.35  private self-insurer has failed to pay workers' compensation 
 40.36  benefits as required by chapter 176.  If the commissioner 
 41.1   determines that a private self-insurer is the subject of a 
 41.2   voluntary or involuntary petition under the United States 
 41.3   Bankruptcy Code, title 11, or the commissioner determines that a 
 41.4   court of competent jurisdiction has declared the private 
 41.5   self-insurer to be bankrupt or insolvent, and the private 
 41.6   self-insurer has failed to pay workers' compensation as required 
 41.7   by chapter 176 or, if the commissioner issues a certificate of 
 41.8   default against a private self-insurer for failure to pay 
 41.9   workers' compensation as required by chapter 176, or failure to 
 41.10  pay an assessment to the self-insurers' security fund when due, 
 41.11  then the security deposit shall be utilized to administer and 
 41.12  pay the private self-insurers' workers' compensation or 
 41.13  assessment obligations or any other current or future 
 41.14  obligations of the self-insurers' security fund.  
 41.15     Sec. 50.  Minnesota Statutes 1998, section 79A.11, 
 41.16  subdivision 2, is amended to read: 
 41.17     Subd. 2.  [SECURITY DEPOSITS.] The security fund shall have 
 41.18  the right and obligation to obtain from and retain the security 
 41.19  deposit of an insolvent private self-insurer the amount of to 
 41.20  apply to the private self-insurer's current or future 
 41.21  compensation obligations, including reasonable administrative 
 41.22  and legal costs, paid or assumed by the security fund and to 
 41.23  other current or future obligations of the security fund.  
 41.24  Reimbursement of administrative costs, including legal costs, 
 41.25  shall be subject to approval by a majority of the security 
 41.26  fund's voting trustees.  The security fund shall be a party in 
 41.27  interest in any action to obtain the security deposit for the 
 41.28  payment of compensation obligations of an insolvent self-insurer.
 41.29     Sec. 51.  Minnesota Statutes 1998, section 79A.11, is 
 41.30  amended by adding a subdivision to read: 
 41.31     Subd. 2a.  [REPLACEMENT INSURANCE POLICY.] The insolvent 
 41.32  self-insurer may obtain an insurance policy as described in 
 41.33  section 79A.06, subdivision 5, to discharge further workers' 
 41.34  compensation obligations assumed by the self-insurers' security 
 41.35  fund on behalf of the insolvent insurer.  At the self-insurers' 
 41.36  security fund's option and in its sole discretion, any part of 
 42.1   the insolvent self-insurers' security deposit may be used to 
 42.2   fund the acquisition of this policy.  After the security deposit 
 42.3   has been used to:  (1) fund the acquisition of this policy; (2) 
 42.4   pay all direct and indirect administrative and professional 
 42.5   expenses of the fund related to the insolvent self-insurer; and 
 42.6   (3) to the extent not covered by the insurance policy, pay the 
 42.7   insolvent self-insurers' losses, allocated loss expense and 
 42.8   unallocated loss expense, any part of the insolvent 
 42.9   self-insurers' security deposit that remains must be promptly 
 42.10  returned to the insolvent self-insurer. 
 42.11     Sec. 52.  Minnesota Statutes 1999 Supplement, section 
 42.12  79A.22, subdivision 2, is amended to read: 
 42.13     Subd. 2.  [FINANCIAL STANDARDS.] Commercial self-insurance 
 42.14  groups shall have and maintain: 
 42.15     (1) combined net worth of all of the members in an amount 
 42.16  at least equal to 12 10 times the group's selected retention 
 42.17  level of the workers' compensation reinsurance association.  For 
 42.18  purposes of this clause, the amount of any retained surplus by 
 42.19  the group is considered part of the combined net worth of all 
 42.20  the members; 
 42.21     (2) sufficient assets and liquidity in the group's common 
 42.22  claims fund to promptly and completely meet all obligations of 
 42.23  its members under this chapter and chapter 176. 
 42.24     Sec. 53.  Minnesota Statutes 1998, section 79A.22, 
 42.25  subdivision 3, is amended to read: 
 42.26     Subd. 3.  [NEW MEMBERSHIP.] The commercial self-insurance 
 42.27  group shall file with the commissioner the name of any new 
 42.28  employer that has been accepted in the group prior to the 
 42.29  initiation date of membership along with the member's signed 
 42.30  indemnity agreement and evidence the member has deposited 
 42.31  sufficient premiums with the group as required by the commercial 
 42.32  self-insurance group's bylaws or plan of operation.  The 
 42.33  security deposit of the group will shall be increased quarterly 
 42.34  to an amount equal to 50 percent of the new member's premium 
 42.35  members' premiums for that quarter.  If the total increase of 
 42.36  new members' premiums for the first quarter is less than five 
 43.1   percent of the total annual premium of the group, no quarterly 
 43.2   increase is necessary until the cumulative quarterly increases 
 43.3   for that calendar year exceed five percent of the total premium 
 43.4   of the group.  The department of commerce commissioner may, at 
 43.5   its the commissioner's option, review the financial statement of 
 43.6   any applicant whose premium equals 25 percent or more of the 
 43.7   group's total premium. 
 43.8      Sec. 54.  Minnesota Statutes 1998, section 79A.22, 
 43.9   subdivision 11, is amended to read: 
 43.10     Subd. 11.  [DISBURSEMENT OF FUND SURPLUS.] (a) One hundred 
 43.11  percent of any surplus money for a fund year in excess of 125 
 43.12  percent of the amount necessary to fulfill all obligations under 
 43.13  the Workers' Compensation Act, chapter 176, for that fund year 
 43.14  may be declared refundable to a member at any time.  The date 
 43.15  shall be no earlier than 18 months following the end of such 
 43.16  fund year.  The first disbursement of fund surplus may not be 
 43.17  made prior to the completion of an operational audit by the 
 43.18  commissioner written approval of the commissioner.  There can be 
 43.19  no more than one refund made in any 12-month period.  When all 
 43.20  the claims of any one fund year have been fully paid, as 
 43.21  certified by an actuary, all surplus money from that fund year 
 43.22  may be declared refundable. 
 43.23     (b) The commercial self-insurance group shall give notice 
 43.24  to the commissioner of any refund.  Said notice shall be 
 43.25  accompanied by a statement from the commercial self-insurer 
 43.26  group's certified public accountant certifying that the proposed 
 43.27  refund is in compliance with paragraph (a). 
 43.28     Sec. 55.  Minnesota Statutes 1999 Supplement, section 
 43.29  79A.23, subdivision 1, is amended to read: 
 43.30     Subdivision 1.  [REQUIRED REPORTS TO COMMISSIONER.] Each 
 43.31  commercial self-insurance group shall submit the following 
 43.32  documents to the commissioner.  
 43.33     (a) An annual report shall be submitted by April 1 showing 
 43.34  the incurred losses, paid and unpaid, specifying indemnity and 
 43.35  medical losses by classification, payroll by classification, and 
 43.36  current estimated outstanding liability for workers' 
 44.1   compensation on a calendar year basis, in a manner and on forms 
 44.2   available from the commissioner.  In addition each group will 
 44.3   submit a quarterly interim loss report showing incurred losses 
 44.4   for all its membership. 
 44.5      (b) Each commercial self-insurance group shall submit 
 44.6   within 45 days of the end of each quarter:  
 44.7      (1) a schedule showing all the members who participate in 
 44.8   the group, their date of inception, and date of withdrawal, if 
 44.9   applicable; 
 44.10     (2) a separate section identifying which members were added 
 44.11  or withdrawn during that quarter; and 
 44.12     (3) an internal financial statement and copies of the 
 44.13  fiscal agent's statements supporting the balances in the common 
 44.14  claims fund. 
 44.15     (c) The commercial self-insurance group shall submit an 
 44.16  annual certified financial audit report of the commercial 
 44.17  self-insurance group fund by April 1 of the following year.  The 
 44.18  report must be accompanied by an expense schedule showing the 
 44.19  commercial self-insurance group's operational costs for the same 
 44.20  year including service company charges, accounting and actuarial 
 44.21  fees, fund administration charges, reinsurance premiums, 
 44.22  commissions, and any other costs associated with the 
 44.23  administration of the group program. 
 44.24     (d) An officer of the commercial self-insurance group 
 44.25  shall, under oath, attest to the accuracy of each report 
 44.26  submitted under paragraphs (a), (b), and (c).  Upon sufficient 
 44.27  cause, the commissioner shall require the commercial 
 44.28  self-insurance group to submit a certified audit of payroll and 
 44.29  claim records conducted by an independent auditor approved by 
 44.30  the commissioner, based on generally accepted accounting 
 44.31  principles and generally accepted auditing standards, and 
 44.32  supported by an actuarial review and opinion of the future 
 44.33  contingent liabilities.  The basis for sufficient cause shall 
 44.34  include the following factors: 
 44.35     (1) where the losses reported appear significantly 
 44.36  different from similar types of groups; 
 45.1      (2) where major changes in the reports exist from year to 
 45.2   year, which are not solely attributable to economic factors; or 
 45.3      (3) where the commissioner has reason to believe that the 
 45.4   losses and payroll in the report do not accurately reflect the 
 45.5   losses and payroll of the commercial self-insurance group.  
 45.6   If any discrepancy is found, the commissioner shall require 
 45.7   changes in the commercial self-insurance group's business plan 
 45.8   or service company recordkeeping practices. 
 45.9      (e) Each commercial self-insurance group shall submit by 
 45.10  September 15 a copy of the group's annual federal and state 
 45.11  income tax returns or provide proof that it has received an 
 45.12  exemption from these filings. 
 45.13     (f) With the annual loss report each commercial 
 45.14  self-insurance group shall report to the commissioner any 
 45.15  worker's compensation claim where the full, undiscounted value 
 45.16  is estimated to exceed $50,000, in a manner and on forms 
 45.17  prescribed by the commissioner. 
 45.18     (g) Each commercial self-insurance group shall submit by 
 45.19  May 1 a list of all members and the percentage of premium each 
 45.20  represents to the total group's premium for the previous 
 45.21  calendar year.  
 45.22     (h) Each commercial self-insurance group shall submit by 
 45.23  October 15 the following documents prepared by the group's 
 45.24  certified public accountant:  
 45.25     (1) a compiled combined financial statement of group 
 45.26  members and a list of members included in this statement.  An 
 45.27  "Agreed Upon Procedures" report, as determined by the 
 45.28  commissioner, indicating combined net worth, total assets, cash 
 45.29  flow, and net income of the group members may be filed in lieu 
 45.30  of the compiled combined financial statement; and 
 45.31     (2) a report that the statements which were combined have 
 45.32  met the requirements of subdivision 2.  
 45.33     (i) If any group member comprises over 25 percent of total 
 45.34  group premium, that member's financial statement must be 
 45.35  reviewed or audited, and, at the commissioner's option, must be 
 45.36  filed with the department of commerce commissioner by October 15 
 46.1   of the following year. 
 46.2      (j) Each commercial self-insurance group shall submit a 
 46.3   copy of each member's accountant's report letter from the 
 46.4   reports used in compiling the combined financial 
 46.5   statements.  This requirement does not apply to any group that 
 46.6   has been in existence for at least three years. 
 46.7      Sec. 56.  Minnesota Statutes 1999 Supplement, section 
 46.8   79A.23, subdivision 2, is amended to read: 
 46.9      Subd. 2.  [REQUIRED REPORTS FROM MEMBERS TO GROUP.] (a) 
 46.10  Each member of the commercial self-insurance group shall, by 
 46.11  September 15, submit to the group its most recent annual 
 46.12  financial statement, together with other financial information 
 46.13  the group may require.  These financial statements submitted 
 46.14  must not have a fiscal year end date older than January 15 of 
 46.15  the group's calendar year end.  Individual group members 
 46.16  constituting at least 25 percent of the group's annual premium 
 46.17  shall submit to the group reviewed or audited financial 
 46.18  statements.  The remaining members must submit compilation level 
 46.19  statements.  
 46.20     (b) For groups that have been in existence for at least 
 46.21  three years, individual group members may satisfy the 
 46.22  requirements of paragraph (a) by submitting compiled, reviewed, 
 46.23  or audited statements or the most recent federal income tax 
 46.24  return filed by the member. 
 46.25     Sec. 57.  Minnesota Statutes 1999 Supplement, section 
 46.26  79A.23, subdivision 3, is amended to read: 
 46.27     Subd. 3.  [OPERATIONAL AUDIT.] (a) The commissioner, prior 
 46.28  to authorizing surplus distribution of a commercial 
 46.29  self-insurance group's first fund year or no later than after 
 46.30  the third anniversary of the group's authority to self-insure, 
 46.31  shall may conduct an operational audit of the commercial 
 46.32  self-insurance group's claim handling and reserve practices as 
 46.33  well as its underwriting procedures to determine if they adhere 
 46.34  to the group's business plan.  The commissioner may select 
 46.35  outside consultants to assist in conducting the audit.  After 
 46.36  completion of the audit, the commissioner shall either renew or 
 47.1   revoke the commercial self-insurance group's authority to 
 47.2   self-insure.  The commissioner may also order any changes deemed 
 47.3   necessary in the claims handling, reserving practices, or 
 47.4   underwriting procedures of the group. 
 47.5      (b) The cost of the operational audit shall be borne by the 
 47.6   commercial self-insurance group. 
 47.7      Sec. 58.  Minnesota Statutes 1999 Supplement, section 
 47.8   79A.24, subdivision 2, is amended to read: 
 47.9      Subd. 2.  [MINIMUM DEPOSIT.] The minimum deposit is 125 
 47.10  percent of the commercial self-insurance group's estimated 
 47.11  future liability for the payment of compensation as determined 
 47.12  by an actuary.  If all the members of the commercial 
 47.13  self-insurance group have submitted reviewed or audited 
 47.14  financial statements to the group's accountant has been in 
 47.15  existence for three years, this minimum deposit shall be 110 
 47.16  percent of the commercial self-insurance group's estimated 
 47.17  future liability for the payment of workers' compensation as 
 47.18  determined by an actuary.  The group must file a letter with the 
 47.19  commissioner from the group's accountant which confirms that the 
 47.20  compiled combined financial statements were prepared from 
 47.21  members reviewed or audited financial statements only before the 
 47.22  lower security deposit is allowed.  Each actuarial study shall 
 47.23  include a projection of future losses during a one-year period 
 47.24  until the next scheduled actuarial study, less payments 
 47.25  anticipated to be made during that time.  Deduction should be 
 47.26  made for the total amount which is estimated to be returned to 
 47.27  the commercial self-insurance group from any specific excess 
 47.28  insurance coverage, aggregate excess insurance coverage, and any 
 47.29  supplementary benefits which are estimated to be reimbursed by 
 47.30  the special compensation fund.  Supplementary benefits will not 
 47.31  be reimbursed by the special compensation fund unless the 
 47.32  special compensation fund assessment pursuant to section 176.129 
 47.33  is paid and the required reports are filed with the special 
 47.34  compensation fund.  In the case of surety bonds, bonds shall 
 47.35  secure administrative and legal costs in addition to the 
 47.36  liability for payment of compensation reflected on the face of 
 48.1   the bond.  In no event shall the security be less than the 
 48.2   group's selected retention limit of the workers' compensation 
 48.3   reinsurance association.  The posting or depositing of security 
 48.4   under this section shall release all previously posted or 
 48.5   deposited security from any obligations under the posting or 
 48.6   depositing and any surety bond so released shall be returned to 
 48.7   the surety.  Any other security shall be returned to the 
 48.8   depositor or the person posting the bond.  
 48.9      Sec. 59.  Minnesota Statutes 1998, section 80A.122, is 
 48.10  amended by adding a subdivision to read: 
 48.11     Subd. 4a.  [EXPIRATION.] (a) A filing made in connection 
 48.12  with the securities of an open-end investment company, whether 
 48.13  owned by an insurance company, bank, securities firm, or any 
 48.14  other entity, under subdivision 1 expires the next June 30 
 48.15  unless renewed.  To renew a notice filing, an issuer shall: 
 48.16     (1) before expiration of a current notice filing, file with 
 48.17  the commissioner the documents specified by the commissioner 
 48.18  under subdivision 1, clause (2), together with any fees required 
 48.19  by section 80A.28, subdivision 1, paragraph (c); and 
 48.20     (2) no later than September 1 following expiration, file a 
 48.21  sales report for the prior fiscal year with the commissioner 
 48.22  specifying: 
 48.23     (i) the registered sales; 
 48.24     (ii) the actual sales; and 
 48.25     (iii) the balance that could be sold without an additional 
 48.26  filing under section 80A.28, subdivision 1, paragraph (c). 
 48.27     (b) No portion of the unsold balance of shares indicated on 
 48.28  the issuer's sales report may be lawfully sold in this state in 
 48.29  connection with a renewed notice filing until fees have been 
 48.30  paid to renew the shares. 
 48.31     Sec. 60.  Minnesota Statutes 1998, section 80A.28, 
 48.32  subdivision 1, is amended to read: 
 48.33     Subdivision 1.  (a) There shall be a filing fee of $100 for 
 48.34  every application for registration or notice filing.  There 
 48.35  shall be an additional fee of one-tenth of one percent of the 
 48.36  maximum aggregate offering price at which the securities are to 
 49.1   be offered in this state, and the maximum combined fees shall 
 49.2   not exceed $300.  
 49.3      (b) When an application for registration is withdrawn 
 49.4   before the effective date or a preeffective stop order is 
 49.5   entered under section 80A.13, subdivision 1, all but the $100 
 49.6   filing fee shall be returned.  If an application to register 
 49.7   securities is denied, the total of all fees received shall be 
 49.8   retained. 
 49.9      (c) Where a filing is made in connection with a federal 
 49.10  covered security under section 18(b)(2) of the Securities Act of 
 49.11  1933, there is a fee of $100 for every initial filing.  If the 
 49.12  filing is made in connection with redeemable securities issued 
 49.13  by an open end management company or unit investment trust, as 
 49.14  defined in the Investment Company Act of 1940, there is an 
 49.15  additional annual fee of 1/20 of one percent of the maximum 
 49.16  aggregate offering price at which the securities are to be 
 49.17  offered in this state during the notice filing period.  The fee 
 49.18  must be paid at the time of the initial filing and thereafter in 
 49.19  connection with each renewal no later than July 1 of each year 
 49.20  and must be sufficient to cover the shares the issuer expects to 
 49.21  sell in this state over the next 12 months.  If during a current 
 49.22  notice filing the issuer determines it is likely to sell shares 
 49.23  in excess of the shares for which fees have been paid to the 
 49.24  commissioner, the issuer shall submit an amended notice filing 
 49.25  to the commissioner under section 80A.122, subdivision 1, clause 
 49.26  (3), together with a fee of 1/20 of one percent of the maximum 
 49.27  aggregate offering price of the additional shares.  Shares for 
 49.28  which a fee has been paid, but which have not been sold at the 
 49.29  time of expiration of the notice filing, may not be sold unless 
 49.30  an additional fee to cover the shares has been paid to the 
 49.31  commissioner as provided in this section and section 80A.122, 
 49.32  subdivision 4a.  If the filing is made in connection with 
 49.33  redeemable securities issued by such a company or trust, there 
 49.34  is no maximum fee for securities filings made according to this 
 49.35  paragraph.  If the filing is made in connection with any other 
 49.36  federal covered security under Section 18(b)(2) of the 
 50.1   Securities Act of 1933, there is an additional fee of one-tenth 
 50.2   of one percent of the maximum aggregate offering price at which 
 50.3   the securities are to be offered in this state, and the combined 
 50.4   fees shall not exceed $300.  Beginning with fiscal year 2001 and 
 50.5   continuing each fiscal year thereafter, as of the last day of 
 50.6   each fiscal year, the commissioner shall determine the total 
 50.7   amount of all fees that were collected under this paragraph in 
 50.8   connection with any filings made for that fiscal year for 
 50.9   securities of an open-end investment company on behalf of a 
 50.10  security that is a federal covered security pursuant to section 
 50.11  18(b)(2) of the Securities Act of 1933.  To the extent the total 
 50.12  fees collected by the commissioner in connection with these 
 50.13  filings exceed $25,000,000, the commissioner shall refund, on a 
 50.14  pro rata basis, to all persons who paid any fees for that fiscal 
 50.15  year, the amount of fees collected by the commissioner in excess 
 50.16  of $25,000,000.  No individual refund is required of amounts of 
 50.17  $100 or less for a fiscal year.  
 50.18     Sec. 61.  Laws 1999, chapter 177, section 89, is amended to 
 50.19  read: 
 50.20     Sec. 89.  [EFFECTIVE DATES.] 
 50.21     (a) Sections 1, 3, 5 to 8, 20, 22 to 28, 31, 34, 35, 38, 
 50.22  39, 44 to 51, 54 to 56, 58 to 60, 66, 67, 69 to 87, and 88, 
 50.23  paragraph (b), are effective the day following final enactment. 
 50.24     (b) Sections 13 to 15 are effective the day following final 
 50.25  enactment and apply to plans of merger approved on or after that 
 50.26  date by the board of directors of the first of the constituent 
 50.27  corporations to grant such approval.  Merging or consolidating 
 50.28  insurance corporations may, however, elect to have the changes 
 50.29  made by sections 13 to 15 not apply to a merger or consolidation 
 50.30  arising out of a joint agreement entered into prior to January 
 50.31  1, 2000. 
 50.32     (c) Section 32 is effective July 1, 2000 2001. 
 50.33     (d) Section 33 is effective December 1, 1999, and applies 
 50.34  to all license renewals on or after that date. 
 50.35     (e) Section 30 is effective as follows: 
 50.36     (1) The amendment to Minnesota Statutes, section 60K.03, 
 51.1   subdivision 2, paragraph (d), is effective January 1, 2000. 
 51.2      (2) The amendment to Minnesota Statutes, section 60K.03, 
 51.3   subdivision 2, paragraph (e), is effective the day following 
 51.4   final enactment.  
 51.5      Sec. 62.  [SPOUSE INSURANCE COVERAGE.] 
 51.6      (a) If the spouse of a retired employee who received 
 51.7   employer-paid hospital, medical, and dental benefits under Laws 
 51.8   1993, chapter 224, article 8, section 18, was covered as a 
 51.9   dependent of the retired employee when the employee retired, the 
 51.10  spouse may continue coverage under the retired employee's group 
 51.11  until the latter of the time the spouse or the retired employee 
 51.12  attains the age of 65.  The spouse must pay for coverage after 
 51.13  the retired employee attains the age of 65.  Eligibility is 
 51.14  subject to changes in coverage and payment amounts that apply to 
 51.15  employees in positions from which the retired employee retired.  
 51.16  This section does not apply if the retired employee terminated 
 51.17  coverage because the employee became eligible for employer-paid 
 51.18  health insurance from a new employer. 
 51.19     (b) A spouse whose coverage had been discontinued before 
 51.20  the effective date of this section because the retired employee 
 51.21  attained the age of 65 may receive coverage for which the spouse 
 51.22  becomes eligible under paragraph (a) only if the spouse notifies 
 51.23  the former employer within 180 days of the effective date of 
 51.24  this act.  
 51.25     Sec. 63.  [TRANSFER.] 
 51.26     Powers and responsibilities relating to the workers' 
 51.27  compensation reinsurance association are transferred from the 
 51.28  commissioner of labor and industry to the commissioner of 
 51.29  commerce in accordance with Minnesota Statutes, section 15.039. 
 51.30     Sec. 64.  [REPEALER.] 
 51.31     Minnesota Statutes 1998, sections 62A.285, subdivision 4; 
 51.32  62A.651; 62H.10, subdivision 4; 65B.13; 79.362; 79.371, 
 51.33  subdivision 1; 79.38, subdivisions 2 and 3; and 79.39, are 
 51.34  repealed.  
 51.35     Sec. 65.  [EFFECTIVE DATES.] 
 51.36     Sections 8, 9, 11, 12, 15, 18, 19, 27, 29, 34, 35, 46 to 
 52.1   58, and 64 are effective the day following enactment. 
 52.2      Sections 16 and 17 apply to claims arising from events that 
 52.3   occur on or after January 1, 2001, for health plan contracts 
 52.4   issued or renewed on or after that date. 
 52.5      Section 31 is effective January 1, 2001. 
 52.6      Sections 36 to 45 and 63 are effective July 1, 2000. 
 52.7      Section 62 is effective the day following final enactment.  
 52.8   In addition to application to a spouse of a retired employee 
 52.9   when the retired employee attains the age of 65 after the 
 52.10  effective date, section 62 also applies to a spouse who was 
 52.11  terminated from coverage before the effective date because the 
 52.12  retired employee attained the age of 65.