HF 3760

1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to commerce; regulating licensee education; regulating certain insurance
forms and rates, coverages, filings and reportings, utilization reviews, and
claims; amending Minnesota Statutes 2004, sections 60C.02, subdivision 1;
61A.02, subdivision 3; 61A.092, subdivisions 1, 3; 62A.02, subdivision 3;
62A.095, subdivision 1; 62A.17, subdivisions 1, 2, 5; 62A.27; 62A.3093;
62C.14, subdivisions 9, 10; 62E.13, subdivision 3; 62E.14, subdivision 5;
62L.02, subdivision 24; 62M.01, subdivision 2; 62M.09, subdivision 9; 70A.07;
72C.10, subdivision 1; 79.01, by adding subdivisions; 79.251, subdivision 1, by
adding a subdivision; 79.252, by adding subdivisions; 79A.23, subdivision 3;
79A.32; Minnesota Statutes 2005 Supplement, sections 45.22; 45.23; 59B.01;
62Q.75, subdivision 3; 65B.49, subdivision 5a; 72A.201, subdivision 6; 79A.04,
subdivision 2; proposing coding for new law in Minnesota Statutes, chapter 62A;
repealing Minnesota Rules, parts 2781.0100; 2781.0200; 2781.0300; 2781.0400;
2781.0500; 2781.0600.

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

Section 1.

Minnesota Statutes 2005 Supplement, section 45.22, is amended to read:

45.22 LICENSE EDUCATION APPROVAL.

(a) License education courses must be approved in advance by the commissioner.
Each sponsor who offers a license education course must deleted text begin have at least one coordinator,
approved by the commissioner, deleted text end new text begin be approved by the commissioner. Each approved
sponsor must have at least one coordinator who meets the criteria specified in Minnesota
Rules, chapter 2809, and new text end who is responsible for supervising the educational program
and assuring compliance with all laws and rules. "Sponsor" means any person or entity
offering approved education.

deleted text begin (b) For coordinators with an initial approval date before August 1, 2005, approval
will expire on December 31, 2005. deleted text end For courses with an initial approval date on or before
December 31, 2000, approval will expire on April 30, 2006. For courses with an initial
approval date after January 1, 2001, but before August 1, 2005, approval will expire
on April 30, 2007.

Sec. 2.

Minnesota Statutes 2005 Supplement, section 45.23, is amended to read:

45.23 LICENSE EDUCATION FEES.

The following fees must be paid to the commissioner:

(1) initial course approval, $10 for each hour or fraction of one hour of education
course approval sought. Initial course approval expires on the last day of the 24th month
after the course is approved;

(2) renewal of course approval, $10 per course. Renewal of course approval expires
on the last day of the 24th month after the course is renewed;

(3) initial deleted text begin coordinator deleted text end new text begin sponsor new text end approval, $100. deleted text begin Initial coordinator approval expires
on the last day of the 24th month after the coordinator is approved; deleted text end new text begin Initial sponsor
approval issued under this section is valid for a period not to exceed 24 months and
expires on January 31 of the renewal year assigned by the commissioner. Active sponsors
who have at least one approved coordinator as of the effective date of this section are
deemed to be approved sponsors and are not required to submit an initial application
for sponsor approval; new text end and

(4) renewal of deleted text begin coordinator deleted text end new text begin sponsor new text end approval, $10. deleted text begin Renewal of coordinator approval
expires on the last day of the 24th month after the coordinator is renewed. deleted text end new text begin Each renewal
of sponsor approval is valid for a period of 24 months. Active sponsors who have at least
one approved coordinator as of the effective date of this section will have an expiration
date of January 31, 2008.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2005 Supplement, section 59B.01, is amended to read:

59B.01 SCOPE AND PURPOSE.

(a) The purpose of this chapter is to create a legal framework within which service
contracts may be sold in this state.

(b) The following are exempt from this chapter:

(1) warranties;

(2) maintenance agreements;

(3) warranties, service contracts, or maintenance agreements offered by public
utilities, as defined in section 216B.02, subdivision 4, or an entity or operating unit owned
by or under common control with a public utility;

(4) service contracts sold or offered for sale to persons other than consumers;

(5) service contracts on tangible property where the tangible property for which the
service contract is sold has a purchase price of $250 or less, exclusive of sales tax;

(6) motor vehicle service contracts as defined in section 65B.29, subdivision 1,
paragraph (1);

(7) service contracts for home security equipment installed by a licensed technology
systems contractor; deleted text begin and
deleted text end

(8) motor club membership contracts that typically provide roadside assistance
services to motorists stranded for reasons that include, but are not limited to, mechanical
breakdown or adverse road conditions new text begin ; and
new text end

new text begin (9) home warranties not subject to chapter 327A, 515, 515A, or 515B new text end .

(c) new text begin Except for the agreements covered by paragraph (b), clause (9), new text end the types of
agreements referred to in paragraph (b) are not subject to chapters 60A to 79A, except
as otherwise specifically provided by law.

Sec. 4.

Minnesota Statutes 2004, section 60C.02, subdivision 1, is amended to read:

Subdivision 1.

Scope.

This chapter applies to all kinds of direct insurance, except:

(1) life;

(2) annuity;

(3) title;

(4) accident and sickness;

(5) credit;

(6) vendor's single interest or collateral protection or any similar insurance
protecting the interests of a creditor arising out of a creditor debtor transaction;

(7) mortgage guaranty;

(8) financial guaranty or other forms of insurance offering protection against
investment risks;

(9) ocean marine;

(10) a transaction or combination of transactions between a person, including
affiliates of the person, and an insurer, including affiliates of the insurer, that involves the
transfer of investment or credit risk unaccompanied by transfer of insurance risk; new text begin or
new text end

(11) insurance provided by or guaranteed by government deleted text begin ; or deleted text end new text begin .
new text end

deleted text begin (12) insurance of warranties or service contracts, including insurance that provides
for the repair, replacement, or services of goods or property, or indemnification for repair,
replacement or service, for the operation or structural failure of the goods or property due
to a defect in materials, workmanship or normal wear and tear, or provides reimbursement
for the liability insured by the user of agreement or service contracts that provide these
benefits.
deleted text end

Sec. 5.

Minnesota Statutes 2004, section 61A.02, subdivision 3, is amended to read:

Subd. 3.

Disapproval.

new text begin (a) new text end The commissioner shall, within 60 days after the filing of
any form, disapprove the form:

(1) if the benefits provided are unreasonable in relation to the premium charged;

(2) if the safety and soundness of the company would be threatened by the offering
of an excess rate of interest on the policy or contract;

(3) if it contains a provision or provisions which are unlawful, unfair, inequitable,
misleading, or encourages misrepresentation of the policy; or

(4) if the form, or its provisions, is otherwise not in the public interest. It shall
be unlawful for the company to issue any policy in the form so disapproved. If the
commissioner does not within 60 days after the filing of any form, disapprove or otherwise
object, the form shall be deemed approved.

new text begin (b) When an insurer or the Minnesota Comprehensive Health Association fails to
respond to an objection or inquiry within 60 days, the filing is automatically disapproved.
A resubmission is required if action by the Department of Commerce is subsequently
requested. An additional filing fee is required for the resubmission.
new text end

new text begin (c) new text end For purposes of new text begin paragraph (a), new text end clause (2), an excess rate of interest is a rate of
interest exceeding the rate of interest determined by subtracting three percentage points
from Moody's corporate bond yield average as most recently available.

Sec. 6.

Minnesota Statutes 2004, section 61A.092, subdivision 1, is amended to read:

Subdivision 1.

Continuation of coverage.

Every group insurance policy issued
or renewed within this state after August 1, 1987, providing coverage for life insurance
benefits shall contain a provision that permits covered employees who are voluntarily or
involuntarily terminated or laid off from their employment, if the policy remains in force
for any active employee of the employer, to elect to continue the coverage for themselves
and their dependents. new text begin If the policy includes other benefits, the election provided by this
section extends to those other benefits.
new text end

An employee is considered to be laid off from employment if there is a reduction in
hours to the point where the employee is no longer eligible for coverage under the group
life insurance policy. Termination does not include discharge for gross misconduct.

Sec. 7.

Minnesota Statutes 2004, section 61A.092, subdivision 3, is amended to read:

Subd. 3.

Notice of options.

Upon termination of or layoff from employment of a
covered employee, the employer shall inform the employee of:

(1) the employee's right to elect to continue the coverage;

(2) the amount the employee must pay monthly to the employer to retain the
coverage;

(3) the manner in which and the office of the employer to which the payment to
the employer must be made; and

(4) the time by which the payments to the employer must be made to retain coverage.

The employee has 60 days within which to elect coverage. The 60-day period shall
begin to run on the date coverage would otherwise terminate or on the date upon which
notice of the right to coverage is received, whichever is later.

If the covered employee or covered dependent dies during the 60-day election period
and before the covered employee makes an election to continue or reject continuation, then
the covered employee will be considered to have elected continuation of coverage. The
deleted text begin estate of deleted text end new text begin beneficiary previously selected by new text end the former employee or covered dependent
would then be entitled to a death benefit equal to the amount of insurance that could have
been continued less any unpaid premium owing as of the date of death.

Notice must be in writing and sent by first class mail to the employee's last known
address which the employee has provided to the employer.

A notice in substantially the following form is sufficient: "As a terminated or laid
off employee, the law authorizes you to maintain your group insurance benefits, in an
amount equal to the amount of insurance in effect on the date you terminated or were laid
off from employment, for a period of up to 18 months. To do so, you must notify your
former employer within 60 days of your receipt of this notice that you intend to retain this
coverage and must make a monthly payment of $............ at ............. by the ............. of
each month."

Sec. 8.

Minnesota Statutes 2004, section 62A.02, subdivision 3, is amended to read:

Subd. 3.

Standards for disapproval.

new text begin (a) new text end The commissioner shall, within 60 days
after the filing of any form or rate, disapprove the form or rate:

(1) if the benefits provided are not reasonable in relation to the premium charged;

(2) if it contains a provision or provisions which are unjust, unfair, inequitable,
misleading, deceptive or encourage misrepresentation of the health plan form, or otherwise
does not comply with this chapter, chapter 62L, or chapter 72A;

(3) if the proposed premium rate is excessive or not adequate; or

(4) the actuarial reasons and data submitted do not justify the rate.

The party proposing a rate has the burden of proving by a preponderance of the
evidence that it does not violate this subdivision.

In determining the reasonableness of a rate, the commissioner shall also review
all administrative contracts, service contracts, and other agreements to determine the
reasonableness of the cost of the contracts or agreement and effect of the contracts on the
rate. If the commissioner determines that a contract or agreement is not reasonable, the
commissioner shall disapprove any rate that reflects any unreasonable cost arising out
of the contract or agreement. The commissioner may require any information that the
commissioner deems necessary to determine the reasonableness of the cost.

For the purposes of this subdivision, the commissioner shall establish by rule a
schedule of minimum anticipated loss ratios which shall be based on (i) the type or types
of coverage provided, (ii) whether the policy is for group or individual coverage, and
(iii) the size of the group for group policies. Except for individual policies of disability
or income protection insurance, the minimum anticipated loss ratio shall not be less
than 50 percent after the first year that a policy is in force. All applicants for a policy
shall be informed in writing at the time of application of the anticipated loss ratio of the
policy. "Anticipated loss ratio" means the ratio at the time of filing, at the time of notice
of withdrawal under subdivision 4a, or at the time of subsequent rate revision of the
present value of all expected future benefits, excluding dividends, to the present value
of all expected future premiums.

If the commissioner notifies a health carrier that has filed any form or rate that it
does not comply with this chapter, chapter 62L, or chapter 72A, it shall be unlawful for
the health carrier to issue or use the form or rate. In the notice the commissioner shall
specify the reasons for disapproval and state that a hearing will be granted within 20 days
after request in writing by the health carrier.

The 60-day period within which the commissioner is to approve or disapprove the
form or rate does not begin to run until a complete filing of all data and materials required
by statute or requested by the commissioner has been submitted.

However, if the supporting data is not filed within 30 days after a request by the
commissioner, the rate is not effective and is presumed to be an excessive rate.

new text begin (b) When an insurer or the Minnesota Comprehensive Health Association fails to
respond to an objection or inquiry within 60 days, the filing is automatically disapproved.
A resubmission is required if action by the Department of Commerce is subsequently
requested. An additional filing fee is required for the resubmission.
new text end

Sec. 9.

Minnesota Statutes 2004, section 62A.095, subdivision 1, is amended to read:

Subdivision 1.

Applicability.

(a) No health plan shall be offered, sold, or issued to a
resident of this state, or to cover a resident of this state, unless the health plan complies
with subdivision 2.

(b) Health plans providing benefits under health care programs administered by the
commissioner of human services are not subject to the limits described in subdivision
2 but are subject to the right of subrogation provisions under section 256B.37 and the
lien provisions under section 256.015; 256B.042; 256D.03, subdivision 8; or 256L.03,
subdivision 6.

new text begin For purposes of this section, "health plan" includes coverage that is excluded under
section 62A.011, subdivision 3, clauses (4), (7), and (10).
new text end

Sec. 10.

Minnesota Statutes 2004, section 62A.17, subdivision 1, is amended to read:

Subdivision 1.

Continuation of coverage.

Every group insurance policy, group
subscriber contract, and health care plan included within the provisions of section 62A.16,
except policies, contracts, or health care plans covering employees of an agency of the
federal government, shall contain a provision which permits every covered employee who
is voluntarily or involuntarily terminated or laid off from employment new text begin and every covered
dependent of the covered employee new text end , if the policy, contract, or health care plan remains
in force for active employees of the employer, to elect to continue the coverage deleted text begin for the
employee and dependents deleted text end .

An employee shall be considered to be laid off from employment if there is a
reduction in hours to the point where the employee is no longer eligible under the policy,
contract, or health care plan. Termination shall not include discharge for gross misconduct.

Upon request by the terminated or laid off employee new text begin or any covered dependent new text end , a
health carrier must provide the instructions necessary to enable the employee new text begin or dependent
new text end to elect new text begin and receive new text end continuation of coverage new text begin through the insurer in place of the former
employer new text end .

Sec. 11.

Minnesota Statutes 2004, section 62A.17, subdivision 2, is amended to read:

Subd. 2.

Responsibility of employee.

Every covered employee new text begin or dependent
new text end electing to continue coverage shall pay the former employer, on a monthly basis, the
cost of the continued coverage. The policy, contract, or plan must require the group
policyholder or contract holder to, upon request, provide the employee new text begin or dependent new text end with
written verification from the insurer of the cost of this coverage promptly at the time
of eligibility for this coverage and at any time during the continuation period. If the
policy, contract, or health care plan is administered by a trust, every covered employee
new text begin or dependent new text end electing to continue coverage shall pay the trust the cost of continued
coverage according to the eligibility rules established by the trust. In no event shall the
amount of premium charged exceed 102 percent of the cost to the plan for such period
of coverage for similarly situated employees with respect to whom neither termination
nor layoff has occurred, without regard to whether such cost is paid by the employer or
employee. The employee new text begin and every covered dependent new text end shall be eligible to continue the
coverage until the employee becomes covered under another group health plan, or for a
period of 18 months after the termination of or lay off from employment, whichever is
shorter. new text begin If the employee becomes covered under another group policy, contract, or health
plan that does not include dependent coverage, every covered dependent remains eligible
to continue coverage with the former employer subject to the conditions specified in this
subdivision. new text end If the employee new text begin or any covered dependent new text end becomes covered under another
group policy, contract, or health plan and the new group policy, contract, or health plan
contains any preexisting condition limitations, the employee new text begin or dependent new text end may, subject to
the 18-month maximum continuation limit, continue coverage with the former employer
until the preexisting condition limitations have been satisfied. The new policy, contract, or
health plan is primary except as to the preexisting condition. In the case of a newborn
child who is a dependent of the employee, the new policy, contract, or health plan is
primary upon the date of birth of the child, regardless of which policy, contract, or health
plan coverage is deemed primary for the mother of the child.

Sec. 12.

Minnesota Statutes 2004, section 62A.17, subdivision 5, is amended to read:

Subd. 5.

Notice of options.

Upon the termination of or lay off from employment
of an eligible employee, the employer shall inform the employee within ten days after
termination or lay off of:

(a) the right to elect to continue the coverage;

(b) the amount the employee must pay monthly to the employer new text begin or health carrier new text end to
retain the coverage;

(c) the manner in which and the office of the employer new text begin or health carrier new text end to which the
payment to the employer new text begin or health carrier new text end must be made; and

(d) the time by which the payments to the employer new text begin or health carrier new text end must be made
to retain coverage.

If the policy, contract, or health care plan is administered by a trust, the employer
is relieved of the obligation imposed by clauses (a) to (d). The trust shall inform the
employee of the information required by clauses (a) to (d).

The employee shall have 60 days within which to elect coverage. The 60-day period
shall begin to run on the date plan coverage would otherwise terminate or on the date upon
which notice of the right to coverage is received, whichever is later.

Notice must be in writing and sent by first class mail to the employee's last known
address which the employee has provided the employer or trust.

A notice in substantially the following form shall be sufficient: "As a terminated or
laid off employee, the law authorizes you to maintain your group medical insurance for
a period of up to 18 months. To do so you must notify your former employer new text begin or health
carrier new text end within 60 days of your receipt of this notice that you intend to retain this coverage
and must make a monthly payment of $.......... to ........... at .......... by the ............... of
each month."

Sec. 13.

Minnesota Statutes 2004, section 62A.27, is amended to read:

62A.27 COVERAGE OF ADOPTED CHILDREN.

(a) A health plan that provides coverage to a Minnesota resident must cover adopted
children of the insured, subscriber, participant, or enrollee on the same basis as other
dependents. Consequently, the plan shall not contain any provision concerning preexisting
condition limitations, insurability, eligibility, or health underwriting approval concerning
children placed for adoption with the participant.

(b) The coverage required by this section is effective from the date of placement
for adoption. For purposes of this section, placement for adoption means the assumption
and retention by a person of a legal obligation for total or partial support of a child in
anticipation of adoption of the child. The child's placement with a person terminates upon
the termination of the legal obligation for total or partial support.

(c) For the purpose of this section, health plan includes:

(1) coverage offered by community integrated service networks;

(2) coverage that is designed solely to provide dental or vision care; and

(3) any plan under the federal Employee Retirement Income Security Act of 1974
(ERISA), United States Code, title 29, sections 1001 to 1461.

new text begin (d) No policy or contract covered by this section may require notification to a health
carrier as a condition for this dependent coverage. However, if the policy or contract
mandates an additional premium for each dependent, the health carrier is entitled to
all premiums that would have been collected had the health carrier been aware of the
additional dependent. The health carrier may withhold payment of any health benefits
for the new dependent until it has been compensated with the applicable premium
which would have been owed if the health carrier had been informed of the additional
dependent immediately.
new text end

Sec. 14.

Minnesota Statutes 2004, section 62A.3093, is amended to read:

62A.3093 COVERAGE FOR DIABETES.

A health plan, including a plan providing the coverage specified in section 62A.011,
subdivision 3, clause (10), must provide coverage for: (1) all physician prescribed
medically appropriate and necessary equipment and supplies used in the management
and treatment of diabetes new text begin not otherwise covered for that person under Medicare or
Medicare Part D new text end ; and (2) diabetes outpatient self-management training and education,
including medical nutrition therapy, that is provided by a certified, registered, or licensed
health care professional working in a program consistent with the national standards of
diabetes self-management education as established by the American Diabetes Association.
Coverage must include persons with gestational, type I or type II diabetes. Coverage
required under this section is subject to the same deductible or coinsurance provisions
applicable to the plan's hospital, medical expense, medical equipment, or prescription drug
benefits. A health carrier may not reduce or eliminate coverage due to this requirement.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 15.

new text begin [62A.3161] MEDICARE SUPPLEMENT PLAN WITH 50 PERCENT
COVERAGE.
new text end

new text begin The Medicare supplement plan with 50 percent coverage must have a level of
coverage that will provide:
new text end

new text begin (1) 100 percent of Medicare Part A hospitalization coinsurance plus coverage for
365 days after Medicare benefits end;
new text end

new text begin (2) coverage for 50 percent of the Medicare Part A inpatient hospital deductible
amount per benefit period until the out-of-pocket limitation is met as described in clause
(8);
new text end

new text begin (3) coverage for 50 percent of the coinsurance amount for each day used from the
21st through the 100th day in a Medicare benefit period for posthospital skilled nursing
care eligible under Medicare Part A until the out-of-pocket limitation is met as described
in clause (8);
new text end

new text begin (4) coverage for 50 percent of cost sharing for all Medicare Part A eligible expenses
and respite care until the out-of-pocket limitation is met as described in clause (8);
new text end

new text begin (5) coverage for 50 percent, under Medicare Part A or B, of the reasonable cost
of the first three pints of blood, or equivalent quantities of packed red blood cells, as
defined under federal regulations, unless replaced according to federal regulations, until
the out-of-pocket limitation is met as described in clause (8);
new text end

new text begin (6) except for coverage provided in this clause, coverage for 50 percent of the
cost sharing otherwise applicable under Medicare Part B, after the policyholder pays
the Medicare Part B deductible, until the out-of-pocket limitation is met as described
in clause (8);
new text end

new text begin (7) coverage of 100 percent of the cost sharing for Medicare Part B preventive
services and diagnostic procedures for cancer screening described in section 62A.30 after
the policyholder pays the Medicare Part B deductible; and
new text end

new text begin (8) coverage of 100 percent of all cost sharing under Medicare Parts A and B for the
balance of the calendar year after the individual has reached the out-of-pocket limitation
on annual expenditures under Medicare Parts A and B of $4,000 in 2006, indexed
each year by the appropriate inflation adjustment by the secretary of the United States
Department of Health and Human Services.
new text end

Sec. 16.

new text begin [62A.3162] MEDICARE SUPPLEMENT PLAN WITH 75 PERCENT
COVERAGE.
new text end

new text begin The basic Medicare supplement plan with 75 percent coverage must have a level of
coverage that will provide:
new text end

new text begin (1) 100 percent of Medicare Part A hospitalization coinsurance plus coverage for
365 days after Medicare benefits end;
new text end

new text begin (2) coverage for 75 percent of the Medicare Part A inpatient hospital deductible
amount per benefit period until the out-of-pocket limitation is met as described in clause
(8);
new text end

new text begin (3) coverage for 75 percent of the coinsurance amount for each day used from the
21st through the 100th day in a Medicare benefit period for posthospital skilled nursing
care eligible under Medicare Part A until the out-of-pocket limitation is met as described
in clause (8);
new text end

new text begin (4) coverage for 75 percent of cost sharing for all Medicare Part A eligible expenses
and respite care until the out-of-pocket limitation is met as described in clause (8);
new text end

new text begin (5) coverage for 75 percent, under Medicare Part A or B, of the reasonable cost
of the first three pints of blood, or equivalent quantities of packed red blood cells, as
defined under federal regulations, unless replaced according to federal regulations until
the out-of-pocket limitation is met as described in clause (8);
new text end

new text begin (6) except for coverage provided in this clause, coverage for 75 percent of the
cost sharing otherwise applicable under Medicare Part B after the policyholder pays
the Medicare Part B deductible until the out-of-pocket limitation is met as described
in clause (8);
new text end

new text begin (7) coverage of 100 percent of the cost sharing for Medicare Part B preventive
services and diagnostic procedures for cancer screening described in section 62A.30 after
the policyholder pays the Medicare Part B deductible; and
new text end

new text begin (8) coverage of 100 percent of all cost sharing under Medicare Parts A and B for the
balance of the calendar year after the individual has reached the out-of-pocket limitation
on annual expenditures under Medicare Parts A and B of $2,000 in 2006, indexed
each year by the appropriate inflation adjustment by the Secretary of the United States
Department of Health and Human Services.
new text end

Sec. 17.

Minnesota Statutes 2004, section 62C.14, subdivision 9, is amended to read:

Subd. 9.

Required filing.

No service plan corporation shall deliver or issue
for delivery in this state any subscriber contract, endorsement, rider, amendment or
application until a copy of the form thereof has been filed with the commissioner, subject
to disapproval by the commissioner. Any such form issued or in use on August 1, 1971, if
filed with the commissioner within 60 days after August 1, 1971, shall be deemed filed
upon receipt by the commissioner. new text begin When an insurer, service plan corporation, or the
Minnesota Comprehensive Health Association fails to respond to an objection or inquiry
within 60 days, the filing is automatically disapproved. A resubmission is required if
action by the Department of Commerce is subsequently requested. An additional filing
fee is required for the resubmission. new text end The commissioner also may by regulation exempt
from filing those subscriber contracts issued to a group of not less than 300 subscribers,
or to other groups upon such reasonable conditions and restrictions as the commissioner
may require.

Sec. 18.

Minnesota Statutes 2004, section 62C.14, subdivision 10, is amended to read:

Subd. 10.

Filing or disapproval.

Except as otherwise provided in subdivision 9,
all forms received by the commissioner shall be deemed filed 60 days after received
unless disapproved by order transmitted to the corporation stating that the form used in a
specified respect is contrary to law, contains a provision or provisions which are unfair,
inequitable, misleading, inconsistent or ambiguous, or is in part illegible. It shall be
unlawful to issue or use a document disapproved by the commissioner. new text begin When an insurer,
service plan corporation, or the Minnesota Comprehensive Health Association fails to
respond to an objection or inquiry within 60 days, the filing is automatically disapproved.
A resubmission is required if action by the Department of Commerce is subsequently
requested. An additional filing fee is required for the resubmission.
new text end

Sec. 19.

Minnesota Statutes 2004, section 62E.13, subdivision 3, is amended to read:

Subd. 3.

Duties of writing carrier.

The writing carrier shall perform all
administrative and claims payment functions required by this section. The writing carrier
shall provide these services for a period of deleted text begin three deleted text end new text begin five new text end years, unless a request to terminate
is approved by the commissioner. The commissioner shall approve or deny a request to
terminate within 90 days of its receipt. A failure to make a final decision on a request to
terminate within the specified period shall be deemed to be an approval. Six months
prior to the expiration of each deleted text begin three-year deleted text end new text begin five-year new text end period, the association shall invite
submissions of policy forms from members of the association, including the writing
carrier. The association shall follow the provisions of subdivision 2 in selecting a writing
carrier for the subsequent deleted text begin three-year deleted text end new text begin five-year new text end period.

Sec. 20.

Minnesota Statutes 2004, section 62E.14, subdivision 5, is amended to read:

Subd. 5.

Terminated employees.

An employee who is voluntarily or involuntarily
terminated or laid off from employment and unable to exercise the option to continue
coverage under section 62A.17 new text begin , and who is a Minnesota resident and who is otherwise
eligible, new text end may enroll new text begin in the comprehensive health insurance plan new text end , by submitting an
application that is received by the writing carrier no later than 90 days after termination
or layoff, with a waiver of the preexisting condition limitation set forth in subdivision 3
deleted text begin and a waiver of the evidence of rejection set forth in subdivision 1, paragraph (c) deleted text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 21.

Minnesota Statutes 2004, section 62L.02, subdivision 24, is amended to read:

Subd. 24.

Qualifying coverage.

"Qualifying coverage" means health benefits or
health coverage provided under:

(1) a health benefit plan, as defined in this section, but without regard to whether it is
issued to a small employer and including blanket accident and sickness insurance, other
than accident-only coverage, as defined in section 62A.11;

(2) part A or part B of Medicare;

(3) medical assistance under chapter 256B;

(4) general assistance medical care under chapter 256D;

(5) MCHA;

(6) a self-insured health plan;

(7) the MinnesotaCare program established under section 256L.02;

(8) a plan provided under section 43A.316, 43A.317, or 471.617;

(9) the Civilian Health and Medical Program of the Uniformed Services
(CHAMPUS) or other coverage provided under United States Code, title 10, chapter 55;

(10) coverage provided by a health care network cooperative under chapter 62R;

(11) a medical care program of the Indian Health Service or of a tribal organization;

(12) the federal Employees Health Benefits Plan, or other coverage provided under
United States Code, title 5, chapter 89;

(13) a health benefit plan under section 5(e) of the Peace Corps Act, codified as
United States Code, title 22, section 2504(e);

(14) a health plan; deleted text begin or
deleted text end

(15) a plan similar to any of the above plans provided in this state or in another
state as determined by the commissioner deleted text begin . deleted text end new text begin ;
new text end

new text begin (16) any plan established or maintained by a state, the United States government, or
a foreign country, or any political subdivision of a state, the United States government, or a
foreign country that provides health coverage to individuals who are enrolled in the plan; or
new text end

new text begin (17) the State Children's Health Insurance Program (SCHIP).
new text end

Sec. 22.

Minnesota Statutes 2004, section 62M.01, subdivision 2, is amended to read:

Subd. 2.

Jurisdiction.

Sections 62M.01 to 62M.16 apply to any insurance company
licensed under chapter 60A to offer, sell, or issue a policy of accident and sickness
insurance as defined in section 62A.01; a health service plan licensed under chapter
62C; a health maintenance organization licensed under chapter 62D; new text begin the Minnesota
Comprehensive Health Association created under chapter 62E; new text end a community integrated
service network licensed under chapter 62N; an accountable provider network operating
under chapter 62T; a fraternal benefit society operating under chapter 64B; a joint
self-insurance employee health plan operating under chapter 62H; a multiple employer
welfare arrangement, as defined in section 3 of the Employee Retirement Income Security
Act of 1974 (ERISA), United States Code, title 29, section 1103, as amended; a third
party administrator licensed under section 60A.23, subdivision 8, that provides utilization
review services for the administration of benefits under a health benefit plan as defined in
section 62M.02; or any entity performing utilization review on behalf of a business entity
in this state pursuant to a health benefit plan covering a Minnesota resident.

Sec. 23.

Minnesota Statutes 2004, section 62M.09, subdivision 9, is amended to read:

Subd. 9.

Annual report.

A utilization review organization shall file an annual
report with the annual financial statement it submits to the commissioner of commerce
that includes:

(1) per 1,000 deleted text begin claims deleted text end new text begin utilization reviews new text end , the number and rate of deleted text begin claims denied deleted text end
new text begin determinations not to certify new text end based on medical necessity for each procedure or service; and

(2) the number and rate of denials overturned on appeal.

new text begin A utilization review organization that is not a licensed health carrier must submit the
annual report required by this subdivision on April 1 of each year.
new text end

Sec. 24.

Minnesota Statutes 2005 Supplement, section 62Q.75, subdivision 3, is
amended to read:

Subd. 3.

Claims filing.

Unless otherwise provided deleted text begin by contract, deleted text end by section 16A.124,
subdivision 4a, deleted text begin or deleted text end by federal law, new text begin or unless the contract provides for a shorter time period,
new text end the health care providers and facilities specified in subdivision 2 must submit their charges
to a health plan company or third-party administrator within six months from the date of
service or the date the health care provider knew or was informed of the correct name and
address of the responsible health plan company or third-party administrator, whichever
is later. A health care provider or facility that does not make an initial submission of
charges within the six-month period shall not be reimbursed for the charge and may not
collect the charge from the recipient of the service or any other payer. The six-month
submission requirement may be extended to 12 months in cases where a health care
provider or facility specified in subdivision 2 has determined and can substantiate that
it has experienced a significant disruption to normal operations that materially affects
the ability to conduct business in a normal manner and to submit claims on a timely
basis. This subdivision also applies to all health care providers and facilities that submit
charges to workers' compensation payers for treatment of a workers' compensation injury
compensable under chapter 176, or to reparation obligors for treatment of an injury
compensable under chapter 65B.

Sec. 25.

Minnesota Statutes 2005 Supplement, section 65B.49, subdivision 5a, is
amended to read:

Subd. 5a.

Rental vehicles.

(a) Every plan of reparation security insuring a natural
person as named insured, covering private passenger vehicles as defined under section
65B.001, subdivision 3, and pickup trucks and vans as defined under section 168.011 must
provide that all of the obligation for damage and loss of use to a rented private passenger
vehicle, including pickup trucks and vans as defined under section 168.011, and rented
trucks with a registered gross vehicle weight of 26,000 pounds or less would be covered
by the property damage liability portion of the plan. This subdivision does not apply to
plans of reparation security covering only motor vehicles registered under section 168.10,
subdivision 1a, 1b, 1c, or 1d, or recreational equipment as defined under section 168.011.
The obligation of the plan must not be contingent on fault or negligence. In all cases
where the plan's property damage liability coverage is less than $35,000, the coverage
available under the subdivision must be $35,000. Other than as described in this paragraph
or in paragraph (j), nothing in this section amends or alters the provisions of the plan of
reparation security as to primacy of the coverages in this section.

(b) A vehicle is rented for purposes of this subdivision:

(1) if the rate for the use of the vehicle is determined on a monthly, weekly, or
daily basis; or

(2) during the time that a vehicle is loaned as a replacement for a vehicle being
serviced or repaired regardless of whether the customer is charged a fee for the use
of the vehicle.

A vehicle is not rented for the purposes of this subdivision if the rate for the vehicle's
use is determined on a period longer than one month or if the term of the rental agreement
is longer than one month. A vehicle is not rented for purposes of this subdivision if the
rental agreement has a purchase or buyout option or otherwise functions as a substitute for
purchase of the vehicle.

(c) The policy or certificate issued by the plan must inform the insured of the
application of the plan to private passenger rental vehicles, including pickup trucks and
vans as defined under section 168.011, and that the insured may not need to purchase
additional coverage from the rental company.

(d) Where an insured has two or more vehicles covered by a plan or plans of
reparation security containing the rented motor vehicle coverage required under paragraph
(a), the insured may select the plan the insured wishes to collect from and that plan is
entitled to a pro rata contribution from the other plan or plans based upon the property
damage limits of liability. If the person renting the motor vehicle is also covered by the
person's employer's insurance policy or the employer's automobile self-insurance plan,
the reparation obligor under the employer's policy or self-insurance plan has primary
responsibility to pay claims arising from use of the rented vehicle.

(e) A notice advising the insured of rental vehicle coverage must be given by the
reparation obligor to each current insured with the first renewal notice after January 1,
1989. The notice must be approved by the commissioner of commerce. The commissioner
may specify the form of the notice.

(f) When a motor vehicle is rented in this state, there must be attached to the rental
contract a separate form containing a written notice in at least 10-point bold type, if
printed, or in capital letters, if typewritten, which states:

Under Minnesota law, a personal automobile insurance policy issued in Minnesota
must cover the rental of this motor vehicle against damage to the vehicle and against
loss of use of the vehicle. Therefore, purchase of any collision damage waiver
or similar insurance affected in this rental contract is not necessary if your policy
was issued in Minnesota.

No collision damage waiver or other insurance offered as part of or in conjunction with
a rental of a motor vehicle may be sold unless the person renting the vehicle provides a
written acknowledgment that the above consumer protection notice has been read and
understood.

(g) When damage to a rented vehicle is covered by a plan of reparation security as
provided under paragraph (a), the rental contract must state that payment by the reparation
obligor within the time limits of section 72A.201 is acceptable, and prior payment by
the renter is not required.

(h) Compensation for the loss of use of a damaged rented motor vehicle is limited to
a period no longer than 14 days.

(i)(1) For purposes of this paragraph, "rented motor vehicle" means a rented vehicle
described in paragraph (a), using the definition of "rented" provided in paragraph (b).

deleted text begin (2) Notwithstanding section deleted text begin 169.09, subdivision 5a deleted text end , an owner of a rented motor
vehicle is not vicariously liable for legal damages resulting from the operation of the
rented motor vehicle in an amount greater than $100,000 because of bodily injury to one
person in any one accident and, subject to the limit for one person, $300,000 because of
injury to two or more persons in any one accident, and $50,000 because of injury to or
destruction of property of others in any one accident, if the owner of the rented motor
vehicle has in effect, at the time of the accident, a policy of insurance or self-insurance, as
provided in section deleted text begin 65B.48, subdivision 3 deleted text end , covering losses up to at least the amounts set
forth in this paragraph. Nothing in this paragraph alters or affects the obligations of an
owner of a rented motor vehicle to comply with the requirements of compulsory insurance
through a policy of insurance as provided in section deleted text begin 65B.48, subdivision 2 deleted text end , or through
self-insurance as provided in section deleted text begin 65B.48, subdivision 3 deleted text end ; or with the obligations arising
from section for products sold in conjunction with the rental of a motor vehicle.
Nothing in this paragraph alters or affects liability, other than vicarious liability, of an
owner of a rented motor vehicle.
deleted text end

deleted text begin (3) deleted text end new text begin (2) new text end The dollar amounts stated in this paragraph shall be adjusted for inflation
based upon the Consumer Price Index for all urban consumers, known as the CPI-U,
published by the United States Bureau of Labor Statistics. The dollar amounts stated
in this paragraph are based upon the value of that index for July 1995, which is the
reference base index for purposes of this paragraph. The dollar amounts in this paragraph
shall change effective January 1 of each odd-numbered year based upon the percentage
difference between the index for July of the preceding year and the reference base index,
calculated to the nearest whole percentage point. The commissioner shall announce and
publish, on or before September 30 of the preceding year, the changes in the dollar
amounts required by this paragraph to take effect on January 1 of each odd-numbered
year. The commissioner shall use the most recent revision of the July index available as
of September 1. Changes in the dollar amounts must be in increments of $5,000, and no
change shall be made in a dollar amount until the change in the index requires at least
a $5,000 change. If the United States Bureau of Labor Statistics changes the base year
upon which the CPI-U is based, the commissioner shall make the calculations necessary
to convert from the old base year to the new base year. If the CPI-U is discontinued, the
commissioner shall use the available index that is most similar to the CPI-U.

(j) The plan of reparation security covering the owner of a rented motor vehicle is
excess of any residual liability coverage insuring an operator of a rented motor vehicle if
the vehicle is loaned as a replacement for a vehicle being serviced or repaired, regardless
of whether a fee is charged for use of the vehicle, provided that the vehicle so loaned is
owned by the service or repair business.

Sec. 26.

Minnesota Statutes 2004, section 70A.07, is amended to read:

70A.07 RATES AND FORMS OPEN TO INSPECTION.

All rates, supplementary rate information, and forms furnished to the commissioner
under this chapter shall, deleted text begin as soon as the commissioner's review has been completed deleted text end new text begin within
ten days of their effective date new text end , be open to public inspection at any reasonable time.

Sec. 27.

Minnesota Statutes 2005 Supplement, section 72A.201, subdivision 6, is
amended to read:

Subd. 6.

Standards for automobile insurance claims handling, settlement offers,
and agreements.

In addition to the acts specified in subdivisions 4, 5, 7, 8, and 9, the
following acts by an insurer, adjuster, or a self-insured or self-insurance administrator
constitute unfair settlement practices:

(1) if an automobile insurance policy provides for the adjustment and settlement
of an automobile total loss on the basis of actual cash value or replacement with like
kind and quality and the insured is not an automobile dealer, failing to offer one of the
following methods of settlement:

(a) comparable and available replacement automobile, with all applicable taxes,
license fees, at least pro rata for the unexpired term of the replaced automobile's license,
and other fees incident to the transfer or evidence of ownership of the automobile paid, at
no cost to the insured other than the deductible amount as provided in the policy;

(b) a cash settlement based upon the actual cost of purchase of a comparable
automobile, including all applicable taxes, license fees, at least pro rata for the unexpired
term of the replaced automobile's license, and other fees incident to transfer of evidence
of ownership, less the deductible amount as provided in the policy. The costs must be
determined by:

(i) the cost of a comparable automobile, adjusted for mileage, condition, and options,
in the local market area of the insured, if such an automobile is available in that area; or

(ii) one of two or more quotations obtained from two or more qualified sources
located within the local market area when a comparable automobile is not available in
the local market area. The insured shall be provided the information contained in all
quotations prior to settlement; or

(iii) any settlement or offer of settlement which deviates from the procedure above
must be documented and justified in detail. The basis for the settlement or offer of
settlement must be explained to the insured;

(2) if an automobile insurance policy provides for the adjustment and settlement
of an automobile partial loss on the basis of repair or replacement with like kind and
quality and the insured is not an automobile dealer, failing to offer one of the following
methods of settlement:

(a) to assume all costs, including reasonable towing costs, for the satisfactory repair
of the motor vehicle. Satisfactory repair includes repair of both obvious and hidden
damage as caused by the claim incident. This assumption of cost may be reduced by
applicable policy provision; or

(b) to offer a cash settlement sufficient to pay for satisfactory repair of the vehicle.
Satisfactory repair includes repair of obvious and hidden damage caused by the claim
incident, and includes reasonable towing costs;

(3) regardless of whether the loss was total or partial, in the event that a damaged
vehicle of an insured cannot be safely driven, failing to exercise the right to inspect
automobile damage prior to repair within five business days following receipt of
notification of claim. In other cases the inspection must be made in 15 days;

(4) regardless of whether the loss was total or partial, requiring unreasonable travel
of a claimant or insured to inspect a replacement automobile, to obtain a repair estimate,
to allow an insurer to inspect a repair estimate, to allow an insurer to inspect repairs made
pursuant to policy requirements, or to have the automobile repaired;

(5) regardless of whether the loss was total or partial, if loss of use coverage
exists under the insurance policy, failing to notify an insured at the time of the insurer's
acknowledgment of claim, or sooner if inquiry is made, of the fact of the coverage,
including the policy terms and conditions affecting the coverage and the manner in which
the insured can apply for this coverage;

(6) regardless of whether the loss was total or partial, failing to include the insured's
deductible in the insurer's demands under its subrogation rights. Subrogation recovery
must be shared at least on a proportionate basis with the insured, unless the deductible
amount has been otherwise recovered by the insured, except that when an insurer is
recovering directly from an uninsured third party by means of installments, the insured
must receive the full deductible share as soon as that amount is collected and before any
part of the total recovery is applied to any other use. No deduction for expenses may be
made from the deductible recovery unless an attorney is retained to collect the recovery, in
which case deduction may be made only for a pro rata share of the cost of retaining the
attorney. An insured is not bound by any settlement of its insurer's subrogation claim with
respect to the deductible amount, unless the insured receives, as a result of the subrogation
settlement, the full amount of the deductible. Recovery by the insurer and receipt by the
insured of less than all of the insured's deductible amount does not affect the insured's
rights to recover any unreimbursed portion of the deductible from parties liable for the loss;

(7) requiring as a condition of payment of a claim that repairs to any damaged
vehicle must be made by a particular contractor or repair shop or that parts, other than
window glass, must be replaced with parts other than original equipment parts or engaging
in any act or practice of intimidation, coercion, threat, incentive, or inducement for or
against an insured to use a particular contractor or repair shop. Consumer benefits included
within preferred vendor programs must not be considered an incentive or inducement.
At the time a claim is reported, the insurer must provide the following advisory to the
insured or claimant:

" deleted text begin Minnesota law gives deleted text end You new text begin have new text end the right to choose a repair shop to fix your vehicle.
Your policy will cover the reasonable costs of repairing your vehicle to its pre-accident
condition no matter where you have repairs made. Have you selected a repair shop or
would you like a referral?"

After an insured has indicated that the insured has selected a repair shop, the insurer
must cease all efforts to influence the insured's or claimant's choice of repair shop;

(8) where liability is reasonably clear, failing to inform the claimant in an automobile
property damage liability claim that the claimant may have a claim for loss of use of
the vehicle;

(9) failing to make a good faith assignment of comparative negligence percentages
in ascertaining the issue of liability;

(10) failing to pay any interest required by statute on overdue payment for an
automobile personal injury protection claim;

(11) if an automobile insurance policy contains either or both of the time limitation
provisions as permitted by section 65B.55, subdivisions 1 and 2, failing to notify the
insured in writing of those limitations at least 60 days prior to the expiration of that time
limitation;

(12) if an insurer chooses to have an insured examined as permitted by section
65B.56, subdivision 1, failing to notify the insured of all of the insured's rights and
obligations under that statute, including the right to request, in writing, and to receive
a copy of the report of the examination;

(13) failing to provide, to an insured who has submitted a claim for benefits
described in section 65B.44, a complete copy of the insurer's claim file on the insured,
excluding internal company memoranda, all materials that relate to any insurance fraud
investigation, materials that constitute attorney work-product or that qualify for the
attorney-client privilege, and medical reviews that are subject to section 145.64, within ten
business days of receiving a written request from the insured. The insurer may charge
the insured a reasonable copying fee. This clause supersedes any inconsistent provisions
of sections 72A.49 to 72A.505;

(14) if an automobile policy provides for the adjustment or settlement of an
automobile loss due to damaged window glass, failing to provide payment to the insured's
chosen vendor based on a competitive price that is fair and reasonable within the local
industry at large.

Where facts establish that a different rate in a specific geographic area actually served
by the vendor is required by that market, that geographic area must be considered. This
clause does not prohibit an insurer from recommending a vendor to the insured or from
agreeing with a vendor to perform work at an agreed-upon price, provided, however,
that before recommending a vendor, the insurer shall offer its insured the opportunity to
choose the vendor. If the insurer recommends a vendor, the insurer must also provide
the following advisory:

"Minnesota law gives you the right to go to any glass vendor you choose, and
prohibits me from pressuring you to choose a particular vendor.";

(15) requiring that the repair or replacement of motor vehicle glass and related
products and services be made in a particular place or shop or by a particular entity, or by
otherwise limiting the ability of the insured to select the place, shop, or entity to repair or
replace the motor vehicle glass and related products and services; or

(16) engaging in any act or practice of intimidation, coercion, threat, incentive, or
inducement for or against an insured to use a particular company or location to provide
the motor vehicle glass repair or replacement services or products. For purposes of this
section, a warranty shall not be considered an inducement or incentive.

Sec. 28.

Minnesota Statutes 2004, section 72C.10, subdivision 1, is amended to read:

Subdivision 1.

Readability compliance; filing and approval.

No insurer shall
make, issue, amend, or renew any policy or contract after the dates specified in section
72C.11 for the applicable type of policy unless the contract is in compliance with the
requirements of sections 72C.06 to 72C.09 and unless the contract is filed with the
commissioner for approval. The contract shall be deemed approved deleted text begin 90 deleted text end new text begin 60 new text end days after filing
unless disapproved by the commissioner within the deleted text begin 90-day deleted text end new text begin 60-day new text end period. new text begin When an
insurer, service plan corporation, or the Minnesota Comprehensive Health Association
fails to respond to an objection or inquiry within 60 days, the filing is automatically
disapproved. A resubmission is required if action by the Department of Commerce
is subsequently requested. An additional filing fee is required for the resubmission.
new text end The commissioner shall not unreasonably withhold approval. Any disapproval shall be
delivered to the insurer in writing, stating the grounds therefor. Any policy filed with the
commissioner shall be accompanied by a Flesch scale readability analysis and test score
and by the insurer's certification that the policy or contract is in its judgment readable
based on the factors specified in sections 72C.06 to 72C.08.

Sec. 29.

Minnesota Statutes 2004, section 79.01, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Assigned risk plan. new text end

new text begin "Assigned risk plan" means:
new text end

new text begin (1) the method to provide workers' compensation coverage to employers unable to
obtain coverage through licensed workers' compensation companies; and
new text end

new text begin (2) the procedures established by the commissioner to implement that method of
providing coverage including administration of all assigned risk losses and reserves.
new text end

Sec. 30.

Minnesota Statutes 2004, section 79.01, is amended by adding a subdivision
to read:

new text begin Subd. 1b. new text end

new text begin Employer. new text end

new text begin "Employer" has the meaning given in section 176.011,
subdivision 10.
new text end

Sec. 31.

Minnesota Statutes 2004, section 79.251, subdivision 1, is amended to read:

Subdivision 1.

General duties of commissioner.

(a)(1) The commissioner shall
have all the usual powers and authorities necessary for the discharge of the commissioner's
duties under this section and may contract with individuals in discharge of those duties.
The commissioner shall audit the reserves established (a) for individual cases arising
under policies and contracts of coverage issued under subdivision 4 and (b) for the total
book of business issued under subdivision 4. If the commissioner determines on the basis
of an audit that there is an excess surplus in the assigned risk plan, the commissioner must
notify the commissioner of finance who shall transfer assets of the plan equal to the excess
surplus to the budget reserve account in the general fund.

(2) The commissioner shall monitor the operations of section 79.252 and this section
and shall periodically make recommendations to the governor and legislature when
appropriate, for improvement in the operation of those sections.

(3) All insurers and self-insurance administrators issuing policies or contracts under
subdivision 4 shall pay to the commissioner a .25 percent assessment on premiums for
policies and contracts of coverage issued under subdivision 4 for the purpose of defraying
the costs of performing the duties under clauses (1) and (2). Proceeds of the assessment
shall be deposited in the state treasury and credited to the general fund.

(4) The assigned risk plan shall not be deemed a state agency.

new text begin (5) The commissioner shall monitor and have jurisdiction over all reserves
maintained for assigned risk plan losses.
new text end

(b) As used in this subdivision, "excess surplus" means the amount of assigned
risk plan assets in excess of the amount needed to pay all current liabilities of the plan,
including, but not limited to:

(1) administrative expenses;

(2) benefit claims; and

(3) if the assigned risk plan is dissolved under subdivision 8, the amounts that would
be due insurers who have paid assessments to the plan.

Sec. 32.

Minnesota Statutes 2004, section 79.251, is amended by adding a subdivision
to read:

new text begin Subd. 2a. new text end

new text begin Assigned risk rating plan. new text end

new text begin (a) Employers insured through the assigned
risk plan are subject to paragraphs (b) and (c).
new text end

new text begin (b) Classifications must be assigned according to a uniform classification system
approved by the commissioner.
new text end

new text begin (c) Rates must be modified according to an experience rating plan approved by the
commissioner. Any experience rating plan is subject to Minnesota Rules, parts 2700.2800
and 2700.2900.
new text end

Sec. 33.

Minnesota Statutes 2004, section 79.252, is amended by adding a subdivision
to read:

new text begin Subd. 2a. new text end

new text begin Minimum qualifications. new text end

new text begin Any employer that (1) is required to carry
workers' compensation insurance pursuant to chapter 176 and (2) has a current written
notice of refusal to insure pursuant to subdivision 2, is entitled to coverage upon making
written application to the assigned risk plan, and paying the applicable premium.
new text end

Sec. 34.

Minnesota Statutes 2004, section 79.252, is amended by adding a subdivision
to read:

new text begin Subd. 3a. new text end

new text begin Disqualifying factors. new text end

new text begin An employer may be denied or terminated from
coverage through the assigned risk plan if the employer:
new text end

new text begin (1) applies for coverage for only a portion of the employer's statutory liability under
chapter 176, excluding wrap-up policies;
new text end

new text begin (2) has an outstanding debt due and owing to the assigned risk plan at the time of
renewal arising from a prior policy;
new text end

new text begin (3) persistently refuses to permit completion of an adequate payroll audit;
new text end

new text begin (4) repeatedly submits misleading or erroneous payroll information; or
new text end

new text begin (5) flagrantly disregards safety or loss control recommendations. Cancellation for
nonpayment of premium may be initiated by the service contractor upon 60 days' written
notice to the employer pursuant to section 176.185, subdivision 1.
new text end

Sec. 35.

Minnesota Statutes 2004, section 79.252, is amended by adding a subdivision
to read:

new text begin Subd. 3b. new text end

new text begin Occupational disease exposure. new text end

new text begin An employer having a significant
occupational disease exposure, as determined by the commissioner, to be entitled to
coverage shall have physical examinations made:
new text end

new text begin (a) of employees who have not been examined within one year of the date of
application for assignment;
new text end

new text begin (b) of new employees before hiring; and
new text end

new text begin (c) of terminated employees. Upon request, the findings and reports of doctors
making examinations, together with x-rays and other original exhibits, must be furnished
to the assigned risk plan or the Department of Labor and Industry.
new text end

Sec. 36.

Minnesota Statutes 2005 Supplement, section 79A.04, subdivision 2, is
amended to read:

Subd. 2.

Minimum deposit.

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

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

new text begin In addition, the Minnesota self-insurers' security fund may, at its sole discretion
and cost, undertake an independent actuarial review or an actuarial study of a private
self-insurers' estimated future liability as defined herein. The review or study must be
conducted by an associate or fellow of the Casualty Actuarial Society. The actuary has
the right to receive and review data and information of the self-insurer necessary for
the actuary to complete its review or study. A copy of this report must be filed with the
commissioner and a copy must be furnished to the self-insurer.
new text end

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

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

Sec. 37.

Minnesota Statutes 2004, section 79A.23, subdivision 3, is amended to read:

Subd. 3.

Operational audit.

(a) The commissioner deleted text begin , prior to authorizing surplus
distribution of a commercial self-insurance group's first fund year or no later than after
the third anniversary of the group's authority to self-insure, deleted text end may conduct an operational
audit of the commercial self-insurance group's claim handling and reserve practices as
well as its underwriting procedures to determine if they adhere to the group's business
plan new text begin and sound business practices new text end . The commissioner may select outside consultants to
assist in conducting the audit. After completion of the audit, the commissioner shall either
renew or revoke the commercial self-insurance group's authority to self-insure. The
commissioner may also order any changes deemed necessary in the claims handling,
reserving practices, or underwriting procedures of the group.

(b) The cost of the operational audit shall be borne by the commercial self-insurance
group.

Sec. 38.

Minnesota Statutes 2004, section 79A.32, is amended to read:

79A.32 REPORTING TO deleted text begin MINNESOTA WORKERS' COMPENSATION
INSURERS' ASSOCIATION deleted text end new text begin LICENSED DATA SERVICE ORGANIZATIONS new text end .

deleted text begin Subdivision 1. deleted text end

deleted text begin Required activity. deleted text end

deleted text begin Each self-insurer shall perform the following
activities:
deleted text end

deleted text begin (1) maintain membership in and report loss experience data to the Minnesota
Workers' Compensation Insurers Association, or a licensed data service organization,
in accordance with the statistical plan and rules of the organization as approved by the
commissioner;
deleted text end

deleted text begin (2) establish a plan for merit rating which shall be consistently applied to all
insureds, provided that members of a data service organization may use merit rating plans
developed by that data service organization;
deleted text end

deleted text begin (3) provide an annual report to the commissioner containing the information and
prepared in the form required by the commissioner; and
deleted text end

deleted text begin (4) keep a record of the losses paid by the self-insurers and premiums for the
group self-insurers.
deleted text end

Subd. 2.

Permitted activity.

deleted text begin In addition to any other activities not prohibited by
this chapter, self-insurers may deleted text end new text begin Through data service organizations licensed under chapter
79, self-insurers may new text end :

(1) deleted text begin through licensed data service organizations, deleted text end individually, or with self-insurers
commonly owned, managed, or controlled, conduct research and collect statistics to
investigate, identify, and classify information relating to causes or prevention of losses; new text begin and
new text end

(2) deleted text begin develop and use classification plans and rates based upon any reasonable factors;
and deleted text end new text begin at the request of a private self-insurer or self-insurer group, submit and collect data,
including payroll and loss data; and perform calculations, including calculations of
experience modifications of individual self-insured employers.
new text end

deleted text begin (3) develop rules for the assignment of risks to classifications.
deleted text end

deleted text begin Subd. 3. deleted text end

deleted text begin Delayed reporting. deleted text end

deleted text begin Private self-insurers established under sections
to prior to August 1, 1995, need not begin filing the reports required
under subdivision 1 until January 1, 1998.
deleted text end

Sec. 39. new text begin REPEALER.
new text end

new text begin Minnesota Rules, parts 2781.0100; 2781.0200; 2781.0300; 2781.0400; 2781.0500;
and 2781.0600, new text end new text begin are repealed.
new text end