5th Engrossment - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to workers' compensation; modifying 1.3 provisions relating to insurance, procedures and 1.4 benefits; providing penalties; appropriating money; 1.5 amending Minnesota Statutes 1994, sections 13.69, 1.6 subdivision 1; 13.82, subdivision 1; 79.074, 1.7 subdivision 2; 79.085; 79.211, subdivision 1; 79.251, 1.8 subdivision 2, and by adding a subdivision; 79.253, by 1.9 adding a subdivision; 79.34, subdivision 2; 79.35; 1.10 79.50; 79.51, subdivisions 1 and 3; 79.52, by adding 1.11 subdivisions; 79.53, subdivision 1; 79.55, 1.12 subdivisions 2, 5, and by adding subdivisions; 79.56, 1.13 subdivisions 1 and 3; 79.60, subdivision 1; 79A.01, 1.14 subdivisions 1, 4, and by adding a subdivision; 1.15 79A.02, subdivisions 1, 2, and 4; 79A.03, by adding a 1.16 subdivision; 79A.04, subdivisions 2 and 9; 79A.09, 1.17 subdivision 4; 79A.15; 168.012, subdivision 1; 175.16; 1.18 176.011, subdivisions 16 and 25; 176.021, subdivisions 1.19 3 and 3a; 176.061, subdivision 10; 176.081, 1.20 subdivisions 1, 7, 7a, 9, and by adding a subdivision; 1.21 176.101, subdivisions 1, 2, 4, 5, 6, 8, and by adding 1.22 a subdivision; 176.102, subdivisions 3a and 11; 1.23 176.103, subdivisions 2 and 3; 176.104, subdivision 1; 1.24 176.105, subdivision 4; 176.106; 176.129, subdivisions 1.25 9 and 10; 176.130, subdivision 9; 176.135, subdivision 1.26 1; 176.1351, subdivisions 1 and 5; 176.136, 1.27 subdivisions 1a, 1b, and 2; 176.138; 176.139, 1.28 subdivision 2; 176.178; 176.179; 176.181, subdivisions 1.29 7 and 8; 176.182; 176.183, subdivisions 1 and 2; 1.30 176.185, subdivision 5a; 176.191, subdivisions 1, 5, 1.31 8, and by adding a subdivision; 176.194, subdivision 1.32 4; 176.215, by adding a subdivision; 176.221, 1.33 subdivisions 1, 3, 3a, 6a, and 7; 176.225, 1.34 subdivisions 1 and 5; 176.231, subdivision 10; 1.35 176.238, subdivisions 6 and 10; 176.261; 176.2615, 1.36 subdivision 7; 176.275, subdivision 1; 176.281; 1.37 176.285; 176.291; 176.305, subdivision 1a; 176.645; 1.38 176.66, subdivision 11; 176.82; 176.83, subdivision 5; 1.39 176.84, subdivision 2; and 268.08, subdivision 3; Laws 1.40 1994, chapter 625, article 5, section 7; proposing 1.41 coding for new law in Minnesota Statutes, chapters 79; 1.42 79A; 176; and 182; repealing Minnesota Statutes 1994, 1.43 sections 79.53, subdivision 2; 79.54; 79.56, 1.44 subdivision 2; 79.57; 79.58; 176.011, subdivision 26; 1.45 176.081, subdivisions 2, 5, and 8; 176.101, 1.46 subdivisions 3a, 3b, 3c, 3d, 3e, 3f, 3g, 3h, 3i, 3j, 2.1 3k, 3l, 3m, 3n, 3o, 3p, 3q, 3r, 3s, 3t, and 3u; 2.2 176.103, subdivision 2a; 176.132; 176.133; 176.191, 2.3 subdivision 2; 176.232; and 176.86; Laws 1990, chapter 2.4 521, section 4. 2.5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.6 ARTICLE 1 2.7 Section 1. Minnesota Statutes 1994, section 79.50, is 2.8 amended to read: 2.9 79.50 [PURPOSES.] 2.10 The purposes of chapter 79 are to: 2.11 (a) Promote public welfare by regulating insurance rates so 2.12 that premiums are not excessive, inadequate, or unfairly 2.13 discriminatory; 2.14 (b) Promote quality and integrity in the databases used in 2.15 workers' compensation insurance ratemaking; 2.16 (c) Prohibit price fixing agreements and anticompetitive 2.17 behavior by insurers; 2.18 (d)Promote price competition and provide rates that are2.19responsive to competitive market conditions;2.20(e) Provide a means of establishment of proper rates if2.21competition is not effective;2.22(f)Define the function and scope of activities of data 2.23 service organizations; 2.24(g) Provide for an orderly transition from regulated rates2.25to competitive market conditions;and 2.26(h)(e) Encourage insurers to provide alternative 2.27 innovative methods whereby employers can meet the requirements 2.28 imposed by section 176.181. 2.29 Sec. 2. Minnesota Statutes 1994, section 79.51, 2.30 subdivision 1, is amended to read: 2.31 Subdivision 1. [ADOPTION; WHEN.] The commissioner shall 2.32 adopt rules to implement provisions of this chapter.The rules2.33shall be finally adopted after May 1, 1982. By January 15,2.341982, the commissioner shall provide the legislature a2.35description and explanation of the intent and anticipated effect2.36of the rules on the various factors of the rating system.2.37 Sec. 3. Minnesota Statutes 1994, section 79.51, 3.1 subdivision 3, is amended to read: 3.2 Subd. 3. [RULES; SUBJECT MATTER.] (a) The commissioner in 3.3 issuing rules shall consider: 3.4 (1) data reporting requirements, including types of data 3.5 reported, such as loss and expense data; 3.6 (2) experience rating plans; 3.7 (3) retrospective rating plans; 3.8 (4) general expenses and related expense provisions; 3.9 (5) minimum premiums; 3.10 (6) classification systems and assignment of risks to 3.11 classifications; 3.12 (7) loss development and trend factors; 3.13 (8) the workers' compensation reinsurance association; 3.14 (9) requiring substantial compliance with the rules 3.15 mandated by this section as a condition of workers' compensation 3.16 carrier licensure; 3.17 (10) imposing limitations on the functions of workers' 3.18 compensation data service organizations consistent with the 3.19 introduction of competition; 3.20 (11) the rules contained in the workers' compensation 3.21 rating manual adopted by the workers' compensation insurers 3.22 rating association or other licensed data service organizations; 3.23and3.24 (12) the supporting data and information required in 3.25 filings under section 79.56, including but not limited to, the 3.26 experience of the filing insurer and the extent to which the 3.27 filing insurer relies upon data service organization loss 3.28 information, descriptions of the actuarial and statistical 3.29 methods employed in setting rates, and the filing insurers 3.30 interpretation of any statistical data relied upon; and 3.31 (13) any other factors that the commissioner deems relevant 3.32 to achieve the purposes of this chapter. 3.33 (b) The rules shall provide for the following: 3.34 (1)competition in workers' compensation insurance rates in3.35such a way that the advantages of competition are introduced3.36with a minimum of employer hardship;4.1(2)adequate safeguards against excessive or discriminatory 4.2 rates in workers' compensation; 4.3(3)(2) encouragement of workers' compensation insurance 4.4 rates which are as low as reasonably necessary, but shall make 4.5 provision against inadequate rates, insolvencies and unpaid 4.6 benefits; 4.7(4)(3) assurances that employers are not unfairly 4.8 relegated to the assigned risk pool; 4.9(5)(4) requiring all appropriate data and other 4.10 information from insurers for the purpose of issuing rules, 4.11 making legislative recommendations pursuant to this sectionand4.12monitoring the effectiveness of competition; and 4.13(6)(5) preserving a framework for risk classification, 4.14 data collection, and other appropriate joint insurer 4.15 serviceswhere these will not impede the introduction of4.16competition in premium rates. 4.17 Sec. 4. Minnesota Statutes 1994, section 79.53, 4.18 subdivision 1, is amended to read: 4.19 Subdivision 1. [METHOD OF CALCULATION.] Each insurer shall 4.20 establish premiums to be paid by an employer according to its 4.21 filed rates and rating plan as follows: 4.22 Rates shall be applied to an exposure base to yield a base 4.23 premium which may be furthermodifiedincreased or decreased up 4.24 to 25 percent by merit rating, premium discounts, and other 4.25 appropriate factors contained in the rating plan of an insurer 4.26 to produce premium if the increase or decrease is not unfairly 4.27 discriminatory. Nothing in this chapter shall be deemed to 4.28 prohibit the use of any premium, provided the premium is not 4.29 excessive, inadequate or unfairly discriminatory. 4.30 Sec. 5. Minnesota Statutes 1994, section 79.55, 4.31 subdivision 2, is amended to read: 4.32 Subd. 2. [EXCESSIVENESS.]No premium is excessive in a4.33competitive market. In the absence of a competitive market,4.34premiumsRates and rating plans are excessive if the expected 4.35 underwriting profit, together with expected income from invested 4.36 reservesfor the market in question, that would accrue to an 5.1 insurer under the rates and rating plans would be unreasonably 5.2 high in relation to the risk undertaken by the insurer in 5.3 transacting the business. The burden is on the insurer to 5.4 establish that profit is not unreasonably high. 5.5 Sec. 6. Minnesota Statutes 1994, section 79.55, 5.6 subdivision 5, is amended to read: 5.7 Subd. 5. [DISCOUNTS PERMITTED.] An insurer may offer a 5.8discount fromscheduled credit or debit to a manual premium of 5.9 up to 25 percent if the premium otherwise complies with this 5.10 section.The commissioner shall not by rule, or otherwise,5.11prohibit a credit or discount from a manual premium solely5.12because it is greater than a certain fixed percentage of the5.13premium.5.14 Sec. 7. Minnesota Statutes 1994, section 79.55, is amended 5.15 by adding a subdivision to read: 5.16 Subd. 6. [RATING FACTORS.] In determining whether a rate 5.17 filing complies with this section, separate consideration shall 5.18 be given to: (i) past and prospective loss experience within 5.19 this state and outside this state to the extent necessary to 5.20 develop credible rates; (ii) dividends, savings, or unabsorbed 5.21 premium deposits allowed or returned by insurers to their 5.22 policyholders, members, or subscribers; and (iii) a reasonable 5.23 allowance for expense and profit. An allowance for expense 5.24 shall be presumed reasonable if it reflects expenses that are 5.25 22.5 percent greater or less than the average expense for all 5.26 insurers writing workers' compensation insurance in this state. 5.27 An allowance for after-tax profit shall consider anticipated 5.28 investment income from premium receipts net of disbursements and 5.29 from allocated surplus, based on the current five-year United 5.30 States Treasury note yield and an assumed premium to surplus 5.31 ratio of 2.25 to one. The allowance for after-tax profit shall 5.32 be presumed reasonable if the corresponding return on equity 5.33 target is equal to or less than the sum of: (i) the current 5.34 yield on five-year United States Treasury securities; and (ii) 5.35 an appropriate equity risk premium that reflects the risks of 5.36 writing workers' compensation insurance. The risk premium shall 6.1 not be less than the average, since 1926, of the differences in 6.2 return between: (i) the annual return, including dividend 6.3 income, for the Standards and Poors 500 common stock index or 6.4 predecessor index for each year; and (ii) the five-year United 6.5 States Treasury note yield as of the start of the corresponding 6.6 year. Profit and expense allowances not presumed reasonable 6.7 under this subdivision, are reasonable if the circumstances of 6.8 an insurer, the market, or other factors justify them. 6.9 Sec. 8. Minnesota Statutes 1994, section 79.55, is amended 6.10 by adding a subdivision to read: 6.11 Subd. 7. [EXTERNAL FACTORS.] That portion of a rate or 6.12 rating plan related to assessments from the assigned risk plan, 6.13 reinsurance association, guarantee fund, special compensation 6.14 fund, agent commission, premium tax and any other state-mandated 6.15 surcharges shall not cause the rate or rating plan to be 6.16 considered excessive, inadequate, or unfairly discriminatory. 6.17 Sec. 9. Minnesota Statutes 1994, section 79.56, 6.18 subdivision 1, is amended to read: 6.19 Subdivision 1. [AFTER EFFECTIVE DATEPREFILING OF RATES.] 6.20 Each insurer shall file with the commissioner a complete copy of 6.21 its rates and rating plan, and all changes and amendments 6.22 thereto,within 15 days after theirand such supporting data and 6.23 information that the commissioner may by rule require, at least 6.24 60 days prior to its effectivedatesdate.An insurer need not6.25file a rating plan if it uses a rating plan filed by a data6.26service organization. If an insurer uses a rating plan of a6.27data service organization but deviates from it, then all6.28deviations must be filed by the insurer.The commissioner shall 6.29 advise an insurer within 30 days of the filing if its submission 6.30 is not accompanied with such supporting data and information 6.31 that the commissioner by rule may require. The commissioner may 6.32 extend the filing review period and effective date for an 6.33 additional 30 days if an insurer, after having been advised of 6.34 what supporting data and information is necessary to complete 6.35 its filing, does not provide such information within 15 days of 6.36 having been so notified. If any rate or rating plan filing or 7.1 amendment thereto is not disapproved by the commissioner within 7.2 the filing review period, the insurer may implement it. For the 7.3 period August 1, 1995 to December 31, 1995, the filing shall be 7.4 made at least 90 days prior to the effective date and the 7.5 department shall advise an insurer within 60 days of such filing 7.6 if the filing is insufficient under this section. 7.7 Sec. 10. Minnesota Statutes 1994, section 79.56, 7.8 subdivision 3, is amended to read: 7.9 Subd. 3. [PENALTIES.] Any insurer using a rate or a rating 7.10 plan which has not been filed shall be subject to a fine of up 7.11 to $100 for each day the failure to file continues. The 7.12 commissioner may, after a hearing on the record, find that the 7.13 failure is willful. A willful failure to meet filing 7.14 requirements shall be punishable by a fine of up to $500 for 7.15 each day during which a willful failure continues. These 7.16 penalties shall be in addition to any other penalties provided 7.17 by law. Notwithstanding this subdivision, an employer that 7.18 generates $500,000 in annual written workers' compensation 7.19 premium under the rates and rating plan of an insurer before the 7.20 application of any large deductible rating plans, may be written 7.21 by that insurer using rates or rating plans that are not subject 7.22 to disapproval but which have been filed. The $500,000 7.23 threshold shall be increased on January 1, 1996, and on each 7.24 January 1 thereafter by the percentage increase in the statewide 7.25 average weekly wage, to the nearest $1,000. The commissioner 7.26 shall advise insurers licensed to write workers' compensation 7.27 insurance in this state of the annual threshold adjustment. 7.28 Sec. 11. [79.561] [DISAPPROVAL OF RATES OR RATING PLANS.] 7.29 Subdivision 1. [DISAPPROVAL; TIME PERIOD.] The 7.30 commissioner may disapprove a rate and rating plan or amendment 7.31 thereto prior to its effective date, as provided under section 7.32 79.56, subdivision 1, if the commissioner determines that it is 7.33 excessive, inadequate, or unfairly discriminatory. If the 7.34 commissioner disapproves any rate or rating plan filing or 7.35 amendment thereto, the commissioner shall advise the filing 7.36 insurer what rate and rating plan the commissioner has reason to 8.1 believe would be in compliance with section 79.55, and the 8.2 reasons for that determination. An insurer may not implement a 8.3 rate and rating plan or amendment thereto which has been 8.4 disapproved under this subdivision. If the commissioner 8.5 disapproves any rate and rating plan filing or amendment 8.6 thereto, an insurer may use its current rate and rating plan for 8.7 writing any workers' compensation insurance in this state. 8.8 Following any disapproval, the commissioner and insurer may 8.9 reach agreement on a rate or rating plan filing or amendment 8.10 thereto. Notwithstanding any law to the contrary, in such 8.11 cases, the rate or rating plan filing or amendment thereto may 8.12 be implemented by the insurer immediately. 8.13 Subd. 2. [HEARING.] If an insurer's rate or rating plan 8.14 filing or amendment thereto is disapproved under subdivision 1, 8.15 the insurer may request a contested case hearing under chapter 8.16 14. The insurer shall have the burden of proof to justify that 8.17 its rate and rating plan or amendment thereto is in compliance 8.18 with section 79.55. The hearing must be scheduled promptly and 8.19 in no case later than three months from the date of disapproval 8.20 or else the rate and rating plan or amendment thereto shall be 8.21 considered effective and may be implemented by the insurer. A 8.22 determination pursuant to chapter 14 must be made within 90 days 8.23 following the closing of the hearing record. 8.24 Subd. 3. [CONSULTANTS AND COSTS.] The commissioner may 8.25 retain consultants, including a consulting actuary or other 8.26 experts, that the commissioner determines necessary for purposes 8.27 of this chapter. The salary limit set by section 43A.17 does 8.28 not apply to a consulting actuary retained under this 8.29 subdivision. A consulting actuary shall be a fellow in the 8.30 casualty actuarial society and shall have demonstrated 8.31 experience in workers' compensation insurance ratemaking. Any 8.32 individual not so qualified shall not render an opinion or 8.33 testify on actuarial aspects of a filing, including but not 8.34 limited to, data quality, loss development, and trending. The 8.35 costs incurred in retaining any consulting actuaries and experts 8.36 shall be reimbursed by the special compensation fund. 9.1 Sec. 12. Minnesota Statutes 1994, section 175.16, is 9.2 amended to read: 9.3 175.16 [DIVISIONS.] 9.4 Subdivision 1. [ESTABLISHED.] The department of labor and 9.5 industry shall consist of the following divisions: division of 9.6 workers' compensation, division of boiler inspection, division 9.7 of occupational safety and health, division of statistics, 9.8 division of steamfitting standards, division of voluntary 9.9 apprenticeship, division of labor standards, and such other 9.10 divisions as the commissioner of the department of labor and 9.11 industry may deem necessary and establish. Each division of the 9.12 department and persons in charge thereof shall be subject to the 9.13 supervision of the commissioner of the department of labor and 9.14 industry and, in addition to such duties as are or may be 9.15 imposed on them by statute, shall perform such other duties as 9.16 may be assigned to them by said commissioner. 9.17 Subd. 2. [FRAUD INVESTIGATION UNIT.] The department of 9.18 labor and industry shall contain a fraud investigation unit for 9.19 the purposes of investigating fraudulent or other illegal 9.20 practices of health care providers, employers, insurers, 9.21 attorneys, employees, and others related to workers' 9.22 compensation and to investigate other matters under the 9.23 jurisdiction of the department. 9.24 An investigator of the fraud investigation unit of the 9.25 department of labor and industry has the inspection authority of 9.26 the commissioner provided under section 182.659 and may apply 9.27 this authority to subjects of investigations under this 9.28 subdivision. 9.29 Sec. 13. Minnesota Statutes 1994, section 176.011, 9.30 subdivision 25, is amended to read: 9.31 Subd. 25. [MAXIMUM MEDICAL IMPROVEMENT.] "Maximum medical 9.32 improvement" means the date after which no further significant 9.33 recovery from or significant lasting improvement to a personal 9.34 injury can reasonably be anticipated, based upon reasonable 9.35 medical probability., irrespective and regardless of subjective 9.36 complaints of pain. Except where an employee is medically 10.1 unable to continue working under section 176.101, subdivision 1, 10.2 paragraph (e), clause (2), once the date of maximum medical 10.3 improvement has been determined, no further determinations of 10.4 other dates of maximum medical improvement for that personal 10.5 injury is permitted. The determination that an employee has 10.6 reached maximum medical improvement shall not be rendered 10.7 ineffective by the worsening of the employee's medical condition 10.8 and recovery therefrom. 10.9 Sec. 14. Minnesota Statutes 1994, section 176.021, 10.10 subdivision 3, is amended to read: 10.11 Subd. 3. [COMPENSATION, COMMENCEMENT OF PAYMENT.] All 10.12 employers shall commence payment of compensation at the time and 10.13 in the manner prescribed by this chapter without the necessity 10.14 of any agreement or any order of the division. Except for 10.15 medical, burial, and other nonperiodic benefits, payments shall 10.16 be made as nearly as possible at the intervals when the wage was 10.17 payable, provided, however, that payments for permanent partial 10.18 disability shall be governed by section 176.101. If doubt 10.19 exists as to the eventual permanent partial disability, payment 10.20for the economic recovery compensation or impairment10.21compensation, whichever is due, pursuant to section 176.101,10.22 shall be then made when due for the minimum permanent partial 10.23 disability ascertainable, and further payment shall be made upon 10.24 any later ascertainment of greater permanent partial 10.25 disability. Prior to or at the time of commencement of the 10.26 payment ofeconomic recovery compensation or lump sum or10.27periodic payment of impairmentpermanent partial compensation, 10.28 the employee and employer shall be furnished with a copy of the 10.29 medical report upon which the payment is based and all other 10.30 medical reports which the insurer has that indicate a permanent 10.31 partial disability rating, together with a statement by the 10.32 insurer as to whether the tendered payment is for minimum 10.33 permanent partial disability or final and eventual disability. 10.34 After receipt of all reports available to the insurer that 10.35 indicate a permanent partial disability rating, the employee 10.36 shall make available or permit the insurer to obtain any medical 11.1 report that the employee has or has knowledge of that contains a 11.2 permanent partial disability rating which the insurer does not 11.3 already have.Economic recovery compensation or impairment11.4 Permanent partial compensation pursuant to section 176.101 is 11.5 payable in addition to but not concurrently with compensation 11.6 for temporary total disability but is payable pursuant to 11.7 section 176.101. Impairment compensation is payable 11.8 concurrently and in addition to compensation for permanent total 11.9 disability pursuant to section 176.101.Economic recovery11.10compensation or impairment compensationPermanent partial 11.11 compensation pursuant to section 176.101 shall be withheld 11.12 pending completion of payment for temporary total disability, 11.13 and no credit shall be taken for payment ofeconomic recovery11.14compensation or impairmentpermanent partial compensation 11.15 against liability for temporary total or future permanent total 11.16 disability. Liability on the part of an employer or the insurer 11.17 for disability of a temporary total, temporary partial, and 11.18 permanent total nature shall be considered as a continuing 11.19 product and part of the employee's inability to earn or 11.20 reduction in earning capacity due to injury or occupational 11.21 disease and compensation is payable accordingly, subject to 11.22 section 176.101.Economic recovery compensation or11.23impairmentPermanent partial compensation is payable for 11.24 functional loss of use or impairment of function, permanent in 11.25 nature, and payment therefore shall be separate, distinct, and 11.26 in addition to payment for any other compensation, subject to 11.27 section 176.101. The right to receive temporary total, 11.28 temporary partial, or permanent total disability payments vests 11.29 in the injured employee or the employee's dependents under this 11.30 chapter or, if none, in the employee's legal heirs at the time 11.31 the disability can be ascertained and the right is not abrogated 11.32 by the employee's death prior to the making of the payment. 11.33 The right to receiveeconomic recoverypermanent partial 11.34 compensationor impairment compensationvests in an injured 11.35 employee at the time the disability can be ascertained provided 11.36 that the employee lives for at least 30 days beyond the date of 12.1 the injury. Upon the death of an employee who is receiving 12.2 economic recovery compensation or impairment compensation, 12.3 further compensation is payable pursuant to section 176.101. 12.4 Impairment compensation is payable under this paragraph if 12.5 vesting has occurred, the employee dies prior to reaching 12.6 maximum medical improvement, and the requirements and conditions 12.7 under section 176.101, subdivision 3e, are not met. 12.8 Disability ratings for permanent partial disability shall 12.9 be based on objective medical evidence. 12.10 Sec. 15. Minnesota Statutes 1994, section 176.021, 12.11 subdivision 3a, is amended to read: 12.12 Subd. 3a. [PERMANENT PARTIAL BENEFITS, PAYMENT.] Payments 12.13 for permanent partial disability as provided in section 176.101, 12.14 subdivision32a, shall be made in the following manner: 12.15 (a) If the employee returns to work, payment shall be made 12.16by lump sumat the same intervals as temporary total payments 12.17 were made; 12.18 (b) If temporary total payments have ceased, but the 12.19 employee has not returned to work, payment shall be made at the 12.20 same intervals as temporary total payments were made; 12.21 (c) If temporary total disability payments cease because 12.22 the employee is receiving payments for permanent total 12.23 disability or because the employee is retiring or has retired 12.24 from the work force, then payment shall be madeby lump sumat 12.25 the same intervals as temporary total payments were made; 12.26 (d) If the employee completes a rehabilitation plan 12.27 pursuant to section 176.102, but the employer does not furnish 12.28 the employee with work the employee can do in a permanently 12.29 partially disabled condition, and the employee is unable to 12.30 procure such work with another employer, then payment shall be 12.31 madeby lump sumat the same intervals as temporary total 12.32 payments were made. 12.33 Sec. 16. Minnesota Statutes 1994, section 176.061, 12.34 subdivision 10, is amended to read: 12.35 Subd. 10. [INDEMNITY.] Notwithstanding the provisions of 12.36 chapter 65B or any other law to the contrary, an employer has a 13.1 right of indemnity for any compensation paid or payable pursuant 13.2 to this chapter, including temporary total compensation, 13.3 temporary partial compensation, permanent partialdisability,13.4economic recovery compensation, impairmentcompensation, medical 13.5 compensation, rehabilitation, death, and permanent total 13.6 compensation. 13.7 Sec. 17. Minnesota Statutes 1994, section 176.101, 13.8 subdivision 1, is amended to read: 13.9 Subdivision 1. [TEMPORARY TOTAL DISABILITY.] (a) For 13.10 injury producing temporary total disability, the compensation is 13.11 66-2/3 percent of the weekly wage at the time of injury. 13.12 (b)During the year(1) Commencing on October 1,199213.13 1995,and each year thereafter,the maximum weekly compensation 13.14 payable is105 percent of the statewide average weekly wage for13.15the period ending December 31 of the preceding year$615 per 13.16 week. 13.17 (2) The workers' compensation advisory council may consider 13.18 adjustment increases and make recommendations to the legislature. 13.19 (c) The minimum weekly compensation payable is20 percent13.20of the statewide average weekly wage for the period ending13.21December 31 of the preceding year$104 per week or the injured 13.22 employee's actual weekly wage, whichever is less. 13.23 (d)Subject to subdivisions 3a to 3u thisTemporary total 13.24 compensation shall be paid during the period of disability,13.25payment to be made at the intervals when the wage was payable,13.26as nearly as may besubject to the cessation and recommencement 13.27 conditions in paragraphs (e) to (l). 13.28 (e) Temporary total disability compensation shall cease 13.29 when the employee returns to work. Except as otherwise provided 13.30 in section 176.102, subdivision 11, temporary total disability 13.31 compensation may only be recommenced following cessation under 13.32 this paragraph, paragraph (h), or paragraph (j) prior to payment 13.33 of 104 weeks of temporary total disability compensation and only 13.34 as follows: 13.35 (1) if temporary total disability compensation ceased 13.36 because the employee returned to work, it may be recommenced if 14.1 the employee is laid off or terminated for reasons other than 14.2 misconduct within one year after returning to work if the layoff 14.3 or termination occurs prior to 90 days after the employee has 14.4 reached maximum medical improvement. Recommenced temporary 14.5 total disability compensation under this clause ceases when any 14.6 of the cessation events in paragraphs (e) to (l) occurs; or 14.7 (2) if temporary total disability compensation ceased 14.8 because the employee returned to work or ceased under paragraph 14.9 (h) or (j), it may be recommenced if the employee is medically 14.10 unable to continue at a job due to the injury. Where the 14.11 employee is medically unable to continue working due to the 14.12 injury, temporary total disability compensation may continue 14.13 until any of the cessation events in paragraphs (e) to (l) 14.14 occurs following recommencement. If an employee who has not yet 14.15 received temporary total disability compensation becomes 14.16 medically unable to continue working due to the injury after 14.17 reaching maximum medical improvement, temporary total disability 14.18 compensation shall commence and shall continue until any of the 14.19 events in paragraphs (e) to (l) occurs following commencement. 14.20 For purposes of commencement or recommencement under this clause 14.21 only, a new period of maximum medical improvement under 14.22 paragraph (j) begins when the employee becomes medically unable 14.23 to continue working due to the injury. Temporary total 14.24 disability compensation may not be recommenced under this clause 14.25 and a new period of maximum medical improvement does not begin 14.26 if the employee is not actively employed when the employee 14.27 becomes medically unable to work. All periods of initial and 14.28 recommenced temporary total disability compensation are included 14.29 in the 104-week limitation specified in paragraph (k). 14.30 (f) Temporary total disability compensation shall cease if 14.31 the employee withdraws from the labor market. Temporary total 14.32 disability compensation may be recommenced following cessation 14.33 under this paragraph only if the employee reenters the labor 14.34 market prior to 90 days after the employee reached maximum 14.35 medical improvement and prior to payment of 104 weeks of 14.36 temporary total disability compensation. Once recommenced, 15.1 temporary total disability ceases when any of the cessation 15.2 events in paragraphs (e) to (l) occurs. 15.3 (g) Temporary total disability compensation shall cease if 15.4 the total disability ends and the employee fails to diligently 15.5 search for appropriate work within the employee's physical 15.6 restrictions. Temporary total disability compensation may be 15.7 recommenced following cessation under this paragraph only if the 15.8 employee begins diligently searching for appropriate work within 15.9 the employee's physical restrictions prior to 90 days after 15.10 maximum medical improvement and prior to payment of 104 weeks of 15.11 temporary total disability compensation. Once recommenced, 15.12 temporary total disability compensation ceases when any of the 15.13 cessation events in paragraphs (e) to (l) occurs. 15.14 (h) Temporary total disability compensation shall cease if 15.15 the employee has been released to work without any physical 15.16 restrictions caused by the work injury. 15.17 (i) Temporary total disability compensation shall cease if 15.18 the employee refuses an offer of work that is consistent with a 15.19 plan of rehabilitation filed with the commissioner which meets 15.20 the requirements of section 176.102, subdivision 4, or, if no 15.21 plan has been filed, the employee refuses an offer of gainful 15.22 employment that the employee can do in the employee's physical 15.23 condition. Once temporary total disability compensation has 15.24 ceased under this paragraph, it may not be recommenced. 15.25 (j) Temporary total disability compensation shall cease 90 15.26 days after the employee has reached maximum medical improvement, 15.27 except as provided in section 176.102, subdivision 11, paragraph 15.28 (b). For purposes of this subdivision, the 90-day period after 15.29 maximum medical improvement commences on the earlier of: (1) 15.30 the date that the employee receives a written medical report 15.31 indicating that the employee has reached maximum medical 15.32 improvement; or (2) the date that the employer or insurer serves 15.33 the report on the employee and the employee's attorney, if any. 15.34 Once temporary total disability compensation has ceased under 15.35 this paragraph, it may not be recommenced except if the employee 15.36 returns to work and is subsequently medically unable to continue 16.1 working as provided in paragraph (e), clause (2). 16.2 (k) Temporary total disability compensation shall cease 16.3 entirely when 104 weeks of temporary total disability 16.4 compensation have been paid, except as provided in section 16.5 176.102, subdivision 11, paragraph (b). Notwithstanding 16.6 anything in this section to the contrary, initial and 16.7 recommenced temporary total disability compensation combined 16.8 shall not be paid for more than 104 weeks, regardless of the 16.9 number of weeks that have elapsed since the injury, except that 16.10 if the employee is in a retraining plan approved under section 16.11 176.102, subdivision 11, the 104 week limitation shall not apply 16.12 during the retraining, but is subject to the limitation before 16.13 the plan begins and after the plan ends. 16.14 (l) Paragraphs (e) to (k) do not limit other grounds under 16.15 law to suspend or discontinue temporary total disability 16.16 compensation provided under chapter 176. 16.17 Sec. 18. Minnesota Statutes 1994, section 176.101, 16.18 subdivision 2, is amended to read: 16.19 Subd. 2. [TEMPORARY PARTIAL DISABILITY.] (a) In all cases 16.20 of temporary partial disability the compensation shall be 66-2/3 16.21 percent of the difference between the weekly wage of the 16.22 employee at the time of injury and the wage the employee is able 16.23 to earn in the employee's partially disabled condition. This 16.24 compensation shall be paid during the period of disability 16.25 except as provided in this section, payment to be made at the 16.26 intervals when the wage was payable, as nearly as may be, and 16.27 subject to the maximum rate for temporary total compensation. 16.28 (b)Except as provided under subdivision 3k,Temporary 16.29 partial compensation may be paid only while the employee is 16.30 employed, earning less than the employee's weekly wage at the 16.31 time of the injury, and the reduced wage the employee is able to 16.32 earn in the employee's partially disabled condition is due to 16.33 the injury. Except as provided in section 176.102, subdivision 16.34 11,paragraphparagraphs (b) and (c), temporary partial 16.35 compensation may not be paid for more than 225 weeks, or after 16.36 450 weeks after the date of injury, whichever occurs first. 17.1 (c) Temporary partial compensation must be reduced to the 17.2 extent that the wage the employee is able to earn in the 17.3 employee's partially disabled condition plus the temporary 17.4 partial disability payment otherwise payable under this 17.5 subdivision exceeds 500 percent of the statewide average weekly 17.6 wage. 17.7 Sec. 19. Minnesota Statutes 1994, section 176.101, is 17.8 amended by adding a subdivision to read: 17.9 Subd. 2a. [PERMANENT PARTIAL DISABILITY.] (a) Compensation 17.10 for permanent partial disability is as provided in this 17.11 subdivision. Permanent partial disability must be rated as a 17.12 percentage of the whole body in accordance with rules adopted by 17.13 the commissioner under section 176.105. The percentage 17.14 determined pursuant to the rules must be multiplied by the 17.15 corresponding amount in the following table: 17.16 Impairment rating Amount 17.17 (percent) 17.18 0-25 $ 75,000 17.19 26-30 80,000 17.20 31-35 85,000 17.21 36-40 90,000 17.22 41-45 95,000 17.23 46-50 100,000 17.24 51-55 120,000 17.25 56-60 140,000 17.26 61-65 160,000 17.27 66-70 180,000 17.28 71-75 200,000 17.29 76-80 240,000 17.30 81-85 280,000 17.31 86-90 320,000 17.32 91-95 360,000 17.33 96-100 400,000 17.34 An employee may not receive compensation for more than a 100 17.35 percent disability of the whole body, even if the employee 17.36 sustains disability to two or more body parts. 18.1 (b) Permanent partial disability is payable upon cessation 18.2 of temporary total disability under subdivision 1. The 18.3 compensation is payable in installments at the same intervals 18.4 and in the same amount as the employee's temporary total 18.5 disability rate on the date of injury. Permanent partial 18.6 disability is not payable while temporary total compensation is 18.7 being paid. 18.8 Sec. 20. Minnesota Statutes 1994, section 176.101, 18.9 subdivision 4, is amended to read: 18.10 Subd. 4. [PERMANENT TOTAL DISABILITY.] For permanent total 18.11 disability, as defined in subdivision 5, the compensation shall 18.12 be 66-2/3 percent of the daily wage at the time of the injury, 18.13 subject to a maximum weekly compensation equal to the maximum 18.14 weekly compensation for a temporary total disability and a 18.15 minimum weekly compensation equal tothe minimum weekly18.16compensation for a temporary total disability65 percent of the 18.17 statewide average weekly wage. This compensation shall be paid 18.18 during the permanent total disability of the injured employee 18.19 but after a total of $25,000 of weekly compensation has been 18.20 paid, the amount of the weekly compensation benefits being paid 18.21 by the employer shall be reduced by the amount of any disability 18.22 benefits being paid by any government disability benefit program 18.23 if the disability benefits are occasioned by the same injury or 18.24 injuries which give rise to payments under this subdivision. 18.25 This reduction shall also apply to any old age and survivor 18.26 insurance benefits. Payments shall be made at the intervals 18.27 when the wage was payable, as nearly as may be. In case an 18.28 employee who is permanently and totally disabled becomes an 18.29 inmate of a public institution, no compensation shall be payable 18.30 during the period of confinement in the institution, unless 18.31 there is wholly dependent on the employee for support some 18.32 person named in section 176.111, subdivision 1, 2 or 3, in which 18.33 case the compensation provided for in section 176.111, during 18.34 the period of confinement, shall be paid for the benefit of the 18.35 dependent person during dependency. The dependency of this 18.36 person shall be determined as though the employee were deceased. 19.1 Permanent total disability shall cease at age 67 because the 19.2 employee is presumed retired from the labor market. This 19.3 presumption is rebuttable by the employee. The subjective 19.4 statement the employee is not retired is not sufficient in 19.5 itself to rebut the presumptive evidence of retirement but may 19.6 be considered along with other evidence. 19.7 Sec. 21. Minnesota Statutes 1994, section 176.101, 19.8 subdivision 5, is amended to read: 19.9 Subd. 5. [DEFINITION.](a)For purposes of subdivision 4, 19.10 permanent total disability means only: 19.11 (1) the total and permanent loss of the sight of both eyes, 19.12 the loss of both arms at the shoulder, the loss of both legs so 19.13 close to the hips that no effective artificial members can be 19.14 used, complete and permanent paralysis, total and permanent loss 19.15 of mental faculties; or 19.16 (2) any other injury which totally and permanently 19.17 incapacitates the employee from working at an occupation which 19.18 brings the employee an income., provided that the employee must 19.19 also meet the criteria of one of the following clauses: 19.20 (a) the employee has at least a 17 percent permanent 19.21 partial disability rating of the whole body; 19.22 (b) the employee has a permanent partial disability rating 19.23 of the whole body of at least 15 percent and the employee is at 19.24 least 50 years old at the time of injury; or 19.25 (c) the employee has a permanent partial disability rating 19.26 of the whole body of at least 13 percent and the employee is at 19.27 least 55 years old at the time of the injury, and has not 19.28 completed grade 12 or obtained a GED certificate. 19.29 For purposes of this clause, "totally and permanently 19.30 incapacitated" means that the employee's physical disability in 19.31 combination with any one of clauses (a), (b), or (c) causes the 19.32 employee to be unable to secure anything more than sporadic 19.33 employment resulting in an insubstantial income. Other factors 19.34 not specified in clause (a), (b), or (c), including the 19.35 employee's age, education, training and experience, may only be 19.36 considered in determining whether an employee is totally and 20.1 permanently incapacitated after the employee meets the threshold 20.2 criteria of clause (a), (b), or (c). The employee's age, level 20.3 of physical disability, or education may not be considered to 20.4 the extent the factor is inconsistent with the disability, age, 20.5 and education factors specified in clause (a), (b), or (c). 20.6(b) For purposes of paragraph (a), clause (2), "totally and20.7permanently incapacitated" means that the employee's physical20.8disability, in combination with the employee's age, education,20.9training, and experience, causes the employee to be unable to20.10secure anything more than sporadic employment resulting in an20.11insubstantial income.20.12 Sec. 22. Minnesota Statutes 1994, section 176.101, 20.13 subdivision 6, is amended to read: 20.14 Subd. 6. [MINORS; APPRENTICES.] (a) If any employee 20.15 entitled to the benefits of this chapter is an apprentice of any 20.16 age and sustains a personal injury arising out of and in the 20.17 course of employment resulting in permanent total or a 20.18 compensable permanent partial disability, for the purpose of 20.19 computing the compensation to which the employee is entitled for 20.20 the injury, the compensation rate for temporary total, temporary 20.21 partial,aor permanent total disabilityor economic recovery20.22compensationshall be the maximum rate for temporary total 20.23 disability under subdivision 1. 20.24 (b) If any employee entitled to the benefits of this 20.25 chapter is a minor and sustains a personal injury arising out of 20.26 and in the course of employment resulting in permanent total 20.27 disability, for the purpose of computing the compensation to 20.28 which the employee is entitled for the injury, the compensation 20.29 rate for a permanent total disability shall be the maximum rate 20.30 for temporary total disability under subdivision 1. 20.31 Sec. 23. Minnesota Statutes 1994, section 176.101, 20.32 subdivision 8, is amended to read: 20.33 Subd. 8. [RETIREMENTCESSATION OF BENEFITS.] Temporary 20.34 total disability payments shall cease at retirement. 20.35 "Retirement" means that a preponderance of the evidence supports 20.36 a conclusion that an employee has retired. The subjective 21.1 statement of an employee that the employee is not retired is not 21.2 sufficient in itself to rebut objective evidence of retirement 21.3 but may be considered along with other evidence. 21.4 For injuries occurring after January 1, 1984, an employee 21.5 who receives social security old age and survivors insurance 21.6 retirement benefits under the Social Security Act, Public Law 21.7 Number 98-21, as amended, is presumed retired from the labor 21.8 market. This presumption is rebuttable by a preponderance of 21.9 the evidence. 21.10 Sec. 24. Minnesota Statutes 1994, section 176.105, 21.11 subdivision 4, is amended to read: 21.12 Subd. 4. [LEGISLATIVE INTENT; RULES; LOSS OF MORE THAN ONE 21.13 BODY PART.](a)For the purpose of establishing a disability 21.14 schedulepursuant to clause (b), the legislature declares its 21.15 intent that the commissioner establish a disability schedule 21.16 which, assuming the same number and distribution of severity of21.17injuries, the aggregate total of impairment compensation and21.18economic recovery compensation benefits under section 176.101,21.19subdivisions 3a to 3u be approximately equal to the total21.20aggregate amount payable for permanent partial disabilities21.21under section 176.101, subdivision 3, provided, however, that21.22awards for specific injuries under the proposed schedule need21.23not be the same as they were for the same injuries under the21.24schedule pursuant to section 176.101, subdivision 3. The21.25scheduleshall be determined by sound actuarial evaluation and 21.26 shall be based on the benefit level which exists on January 1, 21.27 1983. 21.28(b)The commissioner shall by rulemaking adopt procedures 21.29 setting forth rules for the evaluation and rating of functional 21.30 disability and the schedule for permanent partial disability and 21.31 to determine the percentage of loss of function of a part of the 21.32 body based on the body as a whole, including internal organs, 21.33 described in section 176.101, subdivision 3, and any other body 21.34 part not listed in section 176.101, subdivision 3, which the 21.35 commissioner deems appropriate. 21.36 The rules shall promote objectivity and consistency in the 22.1 evaluation of permanent functional impairment due to personal 22.2 injury and in the assignment of a numerical rating to the 22.3 functional impairment. 22.4 Prior to adoption of rules the commissioner shall conduct 22.5 an analysis of the current permanent partial disability schedule 22.6 for the purpose of determining the number and distribution of 22.7 permanent partial disabilities and the average compensation for 22.8 various permanent partial disabilities. The commissioner shall 22.9 consider setting the compensation under the proposed schedule 22.10 for the most serious conditions higher in comparison to the 22.11 current schedule and shall consider decreasing awards for minor 22.12 conditions in comparison to the current schedule. 22.13 The commissioner may consider, among other factors, and 22.14 shall not be limited to the following factors in developing 22.15 rules for the evaluation and rating of functional disability and 22.16 the schedule for permanent partial disability benefits: 22.17 (1) the workability and simplicity of the procedures with 22.18 respect to the evaluation of functional disability; 22.19 (2) the consistency of the procedures with accepted medical 22.20 standards; 22.21 (3) rules, guidelines, and schedules that exist in other 22.22 states that are related to the evaluation of permanent partial 22.23 disability or to a schedule of benefits for functional 22.24 disability provided that the commissioner is not bound by the 22.25 degree of disability in these sources but shall adjust the 22.26 relative degree of disability to conform to the expressed intent 22.27 ofclause (a)this section; 22.28 (4) rules, guidelines, and schedules that have been 22.29 developed by associations of health care providers or 22.30 organizations provided that the commissioner is not bound by the 22.31 degree of disability in these sources but shall adjust the 22.32 relative degree of disability to conform to the expressed intent 22.33 ofclause (a)this section; 22.34 (5) the effect the rules may have on reducing litigation; 22.35 (6) the treatment of preexisting disabilities with respect 22.36 to the evaluation of permanent functional disability provided 23.1 that any preexisting disabilities must be objectively determined 23.2 by medical evidence; and 23.3 (7) symptomatology and loss of function and use of the 23.4 injured member. 23.5 The factors in paragraphs (1) to (7) shall not be used in 23.6 any individual or specific workers' compensation claim under 23.7 this chapter but shall be used only in the adoption of rules 23.8 pursuant to this section. 23.9 Nothing listed in paragraphs (1) to (7) shall be used to 23.10 dispute or challenge a disability rating given to a part of the 23.11 body so long as the whole schedule conforms with the expressed 23.12 intent ofclause (a)this section. 23.13(c)If an employee suffers a permanent functional 23.14 disability of more than one body part due to a personal injury 23.15 incurred in a single occurrence, the percent of the whole body 23.16 which is permanently partially disabled shall be determined by 23.17 the following formula so as to ensure that the percentage for 23.18 all functional disability combined does not exceed the total for 23.19 the whole body: 23.20 A + B (1 - A) 23.21 where: A is the greater percentage whole body loss of the 23.22 first body part; and B is the lesser percentage whole body loss 23.23 otherwise payable for the second body part. A + B (1-A) is 23.24 equivalent to A + B - AB. 23.25 For permanent partial disabilities to three body parts due 23.26 to a single occurrence or as the result of an occupational 23.27 disease, the above formula shall be applied, providing that A 23.28 equals the result obtained from application of the formula to 23.29 the first two body parts and B equals the percentage for the 23.30 third body part. For permanent partial disability to four or 23.31 more body parts incurred as described above, A equals the result 23.32 obtained from the prior application of the formula, and B equals 23.33 the percentage for the fourth body part or more in arithmetic 23.34 progressions. 23.35 Sec. 25. Minnesota Statutes 1994, section 176.178, is 23.36 amended to read: 24.1 176.178 [FRAUD.] 24.2 Subdivision 1. [INTENT.] Any person who, with intent to 24.3 defraud, receives workers' compensation benefits to which the 24.4 person is not entitled by knowingly misrepresenting, misstating, 24.5 or failing to disclose any material fact is guilty of theft and 24.6 shall be sentenced pursuant to section 609.52, subdivision 3. 24.7 Subd. 2. [FORMS.] The text of subdivision 1 shall be 24.8 placed on all forms prescribed by the commissioner for claims or 24.9 responses to claims for workers' compensation benefits under 24.10 this chapter. The absence of the text does not constitute a 24.11 defense against prosecution under subdivision 1. 24.12 Sec. 26. Minnesota Statutes 1994, section 176.179, is 24.13 amended to read: 24.14 176.179 [RECOVERY OF OVERPAYMENTS.] 24.15 Notwithstanding section 176.521, subdivision 3, or any 24.16 other provision of this chapter to the contrary, except as 24.17 provided in this section, no lump sum or weekly payment, or 24.18 settlement, which is voluntarily paid to an injured employee or 24.19 the survivors of a deceased employee in apparent or seeming 24.20 accordance with the provisions of this chapter by an employer or 24.21 insurer, or is paid pursuant to an order of the workers' 24.22 compensation division, a compensation judge, or court of appeals 24.23 relative to a claim by an injured employee or the employee's 24.24 survivors, and received in good faith by the employee or the 24.25 employee's survivors shall be refunded to the paying employer or 24.26 insurer in the event that it is subsequently determined that the 24.27 payment was made under a mistake in fact or law by the employer 24.28 or insurer. When the payments have been made to a person who is 24.29 entitled to receive further payments of compensation for the 24.30 same injury, the mistaken compensation may be takenas a full24.31credit against future lump sum benefit entitlement andas a 24.32 partial credit against futureweeklyperiodic benefits. The 24.33 credit applied against further payments of temporary total 24.34 disability, temporary partial disability, permanent partial 24.35 disability, permanent total disability, retraining benefits, 24.36 death benefits, or weekly payments of economic recovery or 25.1 impairment compensation shall not exceed 20 percent of the 25.2 amount that would otherwise be payable. 25.3 A credit may not be applied against medical expenses due or 25.4 payable. 25.5 Where the commissioner or compensation judge determines 25.6 that the mistaken compensation was not received in good faith, 25.7 the commissioner or compensation judge may order reimbursement 25.8 of the compensation. For purposes of this section, a payment is 25.9 not received in good faith if it is obtained through fraud, or 25.10 if the employee knew that the compensation was paid under 25.11 mistake of fact or law, and the employee has not refunded the 25.12 mistaken compensation. 25.13 Sec. 27. Minnesota Statutes 1994, section 176.221, 25.14 subdivision 6a, is amended to read: 25.15 Subd. 6a. [MEDICAL, REHABILITATION,ECONOMIC RECOVERY, AND25.16IMPAIRMENTAND PERMANENT PARTIAL COMPENSATION.] The penalties 25.17 provided by this section apply in cases where payment for 25.18 treatment under section 176.135, rehabilitation expenses under 25.19 section 176.102, subdivisions 9 and 11,economic recovery25.20compensation or impairment compensationor permanent partial 25.21 compensation are not made in a timely manner as required by law 25.22 or by rule adopted by the commissioner. 25.23 Sec. 28. Minnesota Statutes 1994, section 176.645, is 25.24 amended to read: 25.25 176.645 [ADJUSTMENT OF BENEFITS.] 25.26 Subdivision 1. [AMOUNT.] For injuries occurring after 25.27 October 1, 1975 for which benefits are payable under section 25.28 176.101, subdivisions 1, 2 and 4, and section 176.111, 25.29 subdivision 5, the total benefits due the employee or any 25.30 dependents shall be adjusted in accordance with this section. 25.31 On October 1, 1981, and thereafter on the anniversary of the 25.32 date of the employee's injury the total benefits due shall be 25.33 adjusted by multiplying the total benefits due prior to each 25.34 adjustment by a fraction, the denominator of which is the 25.35 statewide average weekly wage for December 31, of the year two 25.36 years previous to the adjustment and the numerator of which is 26.1 the statewide average weekly wage for December 31, of the year 26.2 previous to the adjustment. For injuries occurring after 26.3 October 1, 1975, all adjustments provided for in this section 26.4 shall be included in computing any benefit due under this 26.5 section. Any limitations of amounts due for daily or weekly 26.6 compensation under this chapter shall not apply to adjustments 26.7 made under this section. No adjustment increase made on or 26.8 after October 1, 1977, but prior to October 1, 1992, under this 26.9 section shall exceed six percent a year; in those instances 26.10 where the adjustment under the formula of this section would 26.11 exceed this maximum, the increase shall be deemed to be six 26.12 percent. No adjustment increase made on or after October 1, 26.13 1992, under this section shall exceed four percent a year; in 26.14 those instances where the adjustment under the formula of this 26.15 section would exceed this maximum, the increase shall be deemed 26.16 to be four percent. For injuries occurring on and after October 26.17 1, 1995, no adjustment increase made on or after October 1, 26.18 1995, shall exceed two percent a year; in those instances where 26.19 the adjustment under the formula of this section would exceed 26.20 this maximum, the increase shall be deemed to be two percent. 26.21 The workers' compensation advisory council may consider 26.22 adjustment or other further increases and make recommendations 26.23 to the legislature. 26.24 Subd. 2. [TIME OF FIRST ADJUSTMENT.] For injuries 26.25 occurring on or after October 1, 1981, the initial adjustment 26.26 made pursuant to subdivision 1 is deferred until the first 26.27 anniversary of the date of the injury. For injuries occurring 26.28 on or after October 1, 1992, the initial adjustment under 26.29 subdivision 1 is deferred until the second anniversary of the 26.30 date of the injury. The adjustment made at that time shall be 26.31 that of the last year only. For injuries occurring on or after 26.32 October 1, 1995, the initial adjustment under subdivision 1 is 26.33 deferred until the fourth anniversary of the date of injury. 26.34 The adjustment at that time shall be that of the last year only. 26.35 Sec. 29. Minnesota Statutes 1994, section 176.66, 26.36 subdivision 11, is amended to read: 27.1 Subd. 11. [AMOUNT OF COMPENSATION.] The compensation for 27.2 an occupational disease is 66-2/3 percent of the employee's 27.3 weekly wage on the date of injury subject to a maximum 27.4 compensation equal to the maximum compensation in effect on the 27.5 date of last exposure.The employee shall be eligible for27.6supplementary benefits notwithstanding the provisions of section27.7176.132, after four years have elapsed since the date of last27.8significant exposure to the hazard of the occupational disease27.9if that employee's weekly compensation rate is less than the27.10current supplementary benefit rate.27.11 Sec. 30. Minnesota Statutes 1994, section 176.82, is 27.12 amended to read: 27.13 176.82 [ACTION FOR CIVIL DAMAGES FOR OBSTRUCTING EMPLOYEE 27.14 SEEKING BENEFITS.] 27.15 Subdivision 1. [RETALIATORY DISCHARGE.] Any person 27.16 discharging or threatening to discharge an employee for seeking 27.17 workers' compensation benefits or in any manner intentionally 27.18 obstructing an employee seeking workers' compensation benefits 27.19 is liable in a civil action for damages incurred by the employee 27.20 including any diminution in workers' compensation benefits 27.21 caused by a violation of this section including costs and 27.22 reasonable attorney fees, and for punitive damages not to exceed 27.23 three times the amount of any compensation benefit to which the 27.24 employee is entitled. Damages awarded under this section shall 27.25 not be offset by any workers' compensation benefits to which the 27.26 employee is entitled. 27.27 Subd. 2. [REFUSAL TO OFFER CONTINUED EMPLOYMENT.] An 27.28 employer who, without reasonable cause, refuses to offer 27.29 continued employment to its employee when employment is 27.30 available within the employee's physical limitations shall be 27.31 liable in a civil action for one year's wages. The wages are 27.32 payable from the date of the refusal to offer continued 27.33 employment, and at the same time and at the same rate as the 27.34 employee's preinjury wage, to continue during the period of the 27.35 refusal up to a maximum of $15,000. These payments shall be in 27.36 addition to any other payments provided by this chapter. In 28.1 determining the availability of employment, the continuance in 28.2 business of the employer shall be considered and written rules 28.3 promulgated by the employer with respect to seniority or the 28.4 provisions or any collective bargaining agreement shall govern. 28.5 These payments shall not be covered by a contract of insurance. 28.6 The employer shall be served directly and be a party to the 28.7 claim. This subdivision shall not apply to employers who employ 28.8 15 or fewer full-time equivalent employees. 28.9 Sec. 31. [176.861] [DISCLOSURE OF INFORMATION.] 28.10 Subdivision 1. [INSURANCE INFORMATION.] The commissioner 28.11 may, in writing, require an insurance company to release to the 28.12 commissioner any or all relevant information or evidence the 28.13 commissioner deems important which the company may have in its 28.14 possession relating to a workers' compensation claim including 28.15 material relating to the investigation of the claim; statements 28.16 of any person, and any other evidence relevant to the 28.17 investigation. The writing from the commissioner requiring 28.18 release of the information shall contain a statement that the 28.19 commissioner has reason to believe a crime or civil fraud has 28.20 been committed with respect to an insurance claim, payment, or 28.21 application. 28.22 Subd. 2. [INFORMATION RELEASED TO AUTHORIZED PERSONS.] If 28.23 an insurance company has evidence that a claim may be 28.24 fraudulent, the company shall, in writing, notify the 28.25 commissioner and provide the commissioner with all relevant 28.26 material related to the company's inquiry into the claim. 28.27 Subd. 3. [GOOD FAITH IMMUNITY.] An insurance company or 28.28 its agent acting in its behalf and in good faith who releases 28.29 oral or written information under subdivisions 1 and 2 is immune 28.30 from civil or criminal liability that might otherwise be 28.31 incurred or imposed. 28.32 Subd. 4. [SELF-INSURER; ASSIGNED RISK PLAN.] For the 28.33 purposes of this section "insurance company" includes a 28.34 self-insurer and the assigned risk plan and their agents. 28.35 Sec. 32. Minnesota Statutes 1994, section 268.08, 28.36 subdivision 3, is amended to read: 29.1 Subd. 3. [NOT ELIGIBLE.] An individual shall not be 29.2 eligible to receive benefits for any week with respect to which 29.3 the individual is receiving, has received, or has filed a claim 29.4 for remuneration in an amount equal to or in excess of the 29.5 individual's weekly benefit amount in the form of: 29.6 (1) termination, severance, or dismissal payment or wages 29.7 in lieu of notice whether legally required or not; provided that 29.8 if a termination, severance, or dismissal payment is made in a 29.9 lump sum, such lump sum payment shall be allocated over a period 29.10 equal to the lump sum divided by the employee's regular pay 29.11 while employed by such employer; provided such payment shall be 29.12 applied for a period immediately following the last day of 29.13 employment but not to exceed 28 calendar days provided that 50 29.14 percent of the total of any such payments in excess of eight 29.15 weeks shall be similarly allocated to the period immediately 29.16 following the 28 days; or 29.17 (2) vacation allowance paid directly by the employer for a 29.18 period of requested vacation, including vacation periods 29.19 assigned by the employer under the provisions of a collective 29.20 bargaining agreement, or uniform vacation shutdown; or 29.21 (3) compensation for loss of wages under the workers' 29.22 compensation law of this state or any other state or under a 29.23 similar law of the United States, or under other insurance or 29.24 fund established and paid for by the employerexcept that this29.25does not apply to an individual who is receiving temporary29.26partial compensation pursuant to section 176.101, subdivision29.273k; or 29.28 (4) 50 percent of the pension payments from any fund, 29.29 annuity or insurance maintained or contributed to by a base 29.30 period employer including the armed forces of the United States 29.31 if the employee contributed to the fund, annuity or insurance 29.32 and all of the pension payments if the employee did not 29.33 contribute to the fund, annuity or insurance; or 29.34 (5) 50 percent of a primary insurance benefit under title 29.35 II of the Social Security Act, as amended, or similar old age 29.36 benefits under any act of Congress or this state or any other 30.1 state. 30.2 Provided, that if such remuneration is less than the 30.3 benefits which would otherwise be due under sections 268.03 to 30.4 268.231, the individual shall be entitled to receive for such 30.5 week, if otherwise eligible, benefits reduced by the amount of 30.6 such remuneration; provided, further, that if the appropriate 30.7 agency of such other state or the federal government finally 30.8 determines that the individual is not entitled to such benefits, 30.9 this provision shall not apply. If the computation of reduced 30.10 benefits, required by this subdivision, is not a whole dollar 30.11 amount, it shall be rounded down to the next lower dollar amount. 30.12 Sec. 33. [APPROPRIATION.] 30.13 $900,000 is appropriated from the special compensation fund 30.14 for the biennium ending June 30, 1997, to the department of 30.15 commerce for the purposes of rate regulation. The complement of 30.16 the department of commerce is increased by 13 positions for the 30.17 purposes of rate regulation. 30.18 Sec. 34. [APPROPRIATION.] 30.19 $110,000 is appropriated from the special compensation fund 30.20 to the department of labor and industry for the biennium ending 30.21 June 30, 1997, for the purposes of this act. 30.22 Sec. 35. [REPEALER.] 30.23 Minnesota Statutes 1994, section 176.132, is repealed. 30.24 Sec. 36. [REPEALER.] 30.25 (a) Minnesota Statutes 1994, sections 79.53, subdivision 2; 30.26 79.54; 79.56, subdivision 2; 79.57; and 79.58, are repealed. 30.27 (b) Minnesota Statutes 1994, sections 176.011, subdivision 30.28 26; and 176.101, subdivisions 3a, 3b, 3c, 3d, 3e, 3f, 3g, 3h, 30.29 3i, 3j, 3k, 3l, 3m, 3n, 3o, 3p, 3q, 3r, 3s, 3t, and 3u, are 30.30 repealed. 30.31 (c) Minnesota Statutes 1994, section 176.86, is repealed. 30.32 (d) Laws 1990, chapter 521, section 4, is repealed. 30.33 Sec. 37. [EFFECTIVE DATE.] 30.34 Sections 1 to 11 and 36, paragraph (a), are effective 30.35 January 1, 1996. Rates and rating plans in use as of January 1, 30.36 1996, may continue to be used until such time as an amendment 31.1 thereto or a new rate or rating plan is filed, at which time the 31.2 filing is subject to sections 1 to 11. 31.3 Sections 23, 24, 26, 27, and 36, paragraph (b), are 31.4 effective October 1, 1995. 31.5 Sections 13 to 22, 28, 29, 30, and 32 are effective October 31.6 1, 1995, and apply to personal injuries occurring on and after 31.7 that date. 31.8 ARTICLE 2 31.9 Section 1. Minnesota Statutes 1994, section 13.69, 31.10 subdivision 1, is amended to read: 31.11 Subdivision 1. [CLASSIFICATIONS.] (a) The following 31.12 government data of the department of public safety are private 31.13 data: 31.14 (1) medical data on driving instructors, licensed drivers, 31.15 and applicants for parking certificates and special license 31.16 plates issued to physically handicapped persons; and 31.17 (2) social security numbers in driver's license and motor 31.18 vehicle registration records, except that social security 31.19 numbers must be provided to the department of revenue for 31.20 purposes of tax administration and the department of labor and 31.21 industry for purposes of workers' compensation administration 31.22 and enforcement. 31.23 (b) The following government data of the department of 31.24 public safety are confidential data: data concerning an 31.25 individual's driving ability when that data is received from a 31.26 member of the individual's family. 31.27 Sec. 2. Minnesota Statutes 1994, section 13.82, 31.28 subdivision 1, is amended to read: 31.29 Subdivision 1. [APPLICATION.] This section shall apply to 31.30 agencies which carry on a law enforcement function, including 31.31 but not limited to municipal police departments, county sheriff 31.32 departments, fire departments, the bureau of criminal 31.33 apprehension, the Minnesota state patrol, the board of peace 31.34 officer standards and training,andthe department of commerce, 31.35 and the department of labor and industry fraud investigation 31.36 unit. 32.1 Sec. 3. Minnesota Statutes 1994, section 79.074, 32.2 subdivision 2, is amended to read: 32.3 Subd. 2. [DIVIDENDS.] Dividend plans are not unfairly 32.4 discriminatory where different premiums result for different 32.5 policyholders with similar loss exposures but different expense 32.6 factors, or where different premiums result for different 32.7 policyholders with similar expense factors but different loss 32.8 exposures, so long as the respective premiums reflect the 32.9 differences with reasonable accuracy. Every insurerreferred to32.10in section 79.20who issues participating policies shall file 32.11 with the commissioner a true copy or summary as the commissioner 32.12 shall direct of its participating dividend rates as to 32.13 policyholders. The commissioner may study the participating 32.14 dividend rates and make recommendations to the legislature 32.15 concerning possible bases for unfair discrimination. 32.16 Sec. 4. Minnesota Statutes 1994, section 79.085, is 32.17 amended to read: 32.18 79.085 [SAFETY PROGRAMS.] 32.19 All insurers writing workers' compensation insurance in 32.20 this state shall provide safety and occupational health loss 32.21 control consultation services to each of their policyholders 32.22 requesting the services in writing. Insurers must annually 32.23 notify their policyholders of their right under this section to 32.24 safety and occupational health loss consultation services. The 32.25 services must include the conduct of workplace surveys to 32.26 identify health and safety problems, review of employer injury 32.27 records with appropriate personnel, and development of plans to 32.28 improve employer occupational health and safety loss records. 32.29 Insurers shall notify each policyholder of the availability of 32.30 those services and the telephone number and address where such 32.31 services can be requested. The notification may be delivered 32.32 with the policy of workers' compensation insurance. 32.33 Sec. 5. Minnesota Statutes 1994, section 79.211, 32.34 subdivision 1, is amended to read: 32.35 Subdivision 1. [CERTAIN WAGESEXCLUDEDINCLUDED FOR 32.36 RATEMAKING.] The rating association or an insurer shallnot33.1 include wages paid for a vacation, holiday, or sick leave in the 33.2 determination of a workers' compensation insurance premium. 33.3 An insurer, including the assigned risk plan, shall not 33.4 include wages paid for work performed in an adjacent state in 33.5 the determination of a workers' compensation premium if the 33.6 employer paid a workers' compensation insurance premium to the 33.7 exclusive state fund of the adjacent state on the wages earned 33.8 in the adjacent state. 33.9 Within 30 days of the effective date of this section, a 33.10 licensed data service organization on behalf of its members 33.11 shall file an amendment to its charged class premium rates to 33.12 reflect the inclusion of vacation, holiday, and sick leave wages 33.13 in the determination of premium. Within 30 days of the filing 33.14 of those pure premium rates each insurer shall amend its filed 33.15 schedule of rates to reflect the inclusion of vacation, holiday, 33.16 and sick leave wages in the determination of premium. 33.17 Sec. 6. Minnesota Statutes 1994, section 79.251, 33.18 subdivision 2, is amended to read: 33.19 Subd. 2. [APPROPRIATEMERIT RATING PLAN.]The commissioner33.20shall develop an appropriate merit rating plan which shall be33.21applicable to all insureds holding policies or contracts of33.22coverage issued pursuant to subdivision 4 and to the insurers or33.23self-insurance administrators issuing those policies or33.24contracts. The plan shall provide a maximum merit adjustment33.25equal to ten percent of earned premium. The actual adjustment33.26may vary with insured's loss experience.To assist small 33.27 businesses with good safety records, the commissioner shall 33.28 develop a merit rating plan applicable to all employers holding 33.29 policies issued pursuant to subdivision 4. The plan shall 33.30 provide that nonexperience rated employers, with no lost time 33.31 claims for the last three policy years, shall receive 33 percent 33.32 credit. The credit must be applied directly to the premium 33.33 charged for the policy. Nonexperience rated employers with two 33.34 or more lost time claims for the last three policy years may 33.35 receive a debit. Experience rated employers shall receive a 33.36 maximum credit or debit of ten percent of premium. The merit 34.1 rating plan shall be subject to adjustment by the commissioner 34.2 as necessary to fulfill the commissioner's assigned risk plan 34.3 responsibilities. 34.4 Sec. 7. Minnesota Statutes 1994, section 79.251, is 34.5 amended by adding a subdivision to read: 34.6 Subd. 8. [DISSOLUTION.] Upon the dissolution of the 34.7 assigned risk plan, the commissioner shall proceed to wind up 34.8 the affairs of the plan, settle its accounts, and dispose of its 34.9 assets. The assets and property of the assigned risk plan must 34.10 be applied and distributed in the following order of priority: 34.11 (1) to the establishment of reserves for claims under 34.12 policies and contracts of coverage issued by the assigned risk 34.13 plan before termination; 34.14 (2) to the payment of all debts and liabilities of the 34.15 assigned risk plan, including the repayment of loans and 34.16 assessments; 34.17 (3) to the establishment of reserves considered necessary 34.18 by the commissioner for contingent liabilities or obligations of 34.19 the assigned risk plan other than claims arising under policies 34.20 and contracts of coverage; and 34.21 (4) to the state of Minnesota. 34.22 If the commissioner determines that the assets of the 34.23 assigned risk plan are insufficient to meet its obligations 34.24 under clauses (1) to (3), excluding the repayment of 34.25 assessments, the commissioner shall assess all insurers licensed 34.26 pursuant to section 60A.06, subdivision 1, clause (5), paragraph 34.27 (b), an amount sufficient to fully fund these obligations. 34.28 Sec. 8. Minnesota Statutes 1994, section 79.253, is 34.29 amended by adding a subdivision to read: 34.30 Subd. 2a. [ELIGIBLE APPLICANTS.] An employer is eligible 34.31 to apply for a grant or loan under this section if the employer 34.32 meets the following requirements: 34.33 (1) the employer's workers' compensation insurance is 34.34 provided by the assigned risk plan, is provided by an insurer 34.35 subject to penalties under chapter 176, or the employer is 34.36 self-insured; 35.1 (2) the employer has had an on-site safety survey conducted 35.2 by a Minnesota occupational safety and health investigator, a 35.3 Minnesota department of labor and industry workplace safety and 35.4 health consultant, an in-house employee safety and health 35.5 committee, a workers' compensation underwriter, a private safety 35.6 consultant, or a person under contract with the assigned risk 35.7 plan; and 35.8 (3) the on-site safety survey recommends specific safety 35.9 practices or equipment designed to reduce the risk of illness or 35.10 injury to employees. 35.11 Sec. 9. Minnesota Statutes 1994, section 79.34, 35.12 subdivision 2, is amended to read: 35.13 Subd. 2. [LOSSES; RETENTION LIMITS.] The reinsurance 35.14 association shall provide and each member shall accept 35.15 indemnification for 100 percent of the amount of ultimate loss 35.16 sustained in each loss occurrence relating to one or more claims 35.17 arising out of a single compensable event, including aggregate 35.18 losses related to a single event or occurrence which constitutes 35.19 a single loss occurrence, under chapter 176 on and after October 35.20 1, 1979, in excess of$300,000 or $100,000a low, a high, or a 35.21 super retention limit, at the option of the member. In case of 35.22 occupational disease causing disablement on and after October 1, 35.23 1979, each person suffering disablement due to occupational 35.24 disease is considered to be involved in a separate loss 35.25 occurrence.The lower retention limit shall be increased to the35.26nearest $10,000, on January 1, 1982 and on each January 135.27thereafter by the percentage increase in the statewide average35.28weekly wage, as determined in accordance with section 176.011,35.29subdivision 20. On January 1, 1982 and on each January 135.30thereafter, the higher retention limit shall be increased by the35.31amount necessary to retain a $200,000 difference between the two35.32retention limits.On January 1, 1995, the lower retention limit 35.33 is $250,000, which shall also be known as the 1995 base 35.34 retention limit. On each January 1 thereafter, the cumulative 35.35 annual percentage changes in the statewide average weekly wage 35.36 after October 1, 1994, as determined in accordance with section 36.1 176.011, subdivision 20, shall first be multiplied by the 1995 36.2 base retention limit, the result of which shall then be added to 36.3 the 1995 base retention limit. The resulting figure shall be 36.4 rounded to the nearest $10,000, yielding the low retention limit 36.5 for that year, provided that the low retention limit shall not 36.6 be reduced in any year. The high retention limit shall be two 36.7 times the low retention limit and shall be adjusted when the low 36.8 retention limit is adjusted. The super retention limit shall be 36.9 four times the low retention limit and shall be adjusted when 36.10 the low retention limit is adjusted. Ultimate loss as used in 36.11 this section means the actual loss amount which a member is 36.12 obligated to pay and which is paid by the member for workers' 36.13 compensation benefits payable under chapter 176 and shall not 36.14 include claim expenses, assessments, damages or penalties. For 36.15 losses incurred on or after January 1, 1979, any amounts paid by 36.16 a member pursuant to sections 176.183, 176.221, 176.225, and 36.17 176.82 shall not be included in ultimate loss and shall not be 36.18 indemnified by the reinsurance association. A loss is incurred 36.19 by the reinsurance association on the date on which the accident 36.20 or other compensable event giving rise to the loss occurs, and a 36.21 member is liable for a loss up to its retention limit in effect 36.22 at the time that the loss was incurred, except that members 36.23 which are determined by the reinsurance association to be 36.24 controlled by or under common control with another member, and 36.25 which are liable for claims from one or more employees entitled 36.26 to compensation for a single compensable event, including 36.27 aggregate losses relating to a single loss occurrence, may 36.28 aggregate their losses and obtain indemnification from the 36.29 reinsurance association for the aggregate losses in excess of 36.30 thehigherhighest retention limit selected by any of the 36.31 members in effect at the time the loss was incurred. Each 36.32 member is liable for payment of its ultimate loss and shall be 36.33 entitled to indemnification from the reinsurance association for 36.34 the ultimate loss in excess of the member's retention limit in 36.35 effect at the time of the loss occurrence. 36.36 A member that chooses thehigherhigh or super retention 37.1 limit shall retain the liability for all losses below thehigher37.2 chosen retention limit itself and shall not transfer the 37.3 liability to any other entity or reinsure or otherwise contract 37.4 for reimbursement or indemnification for losses below its 37.5 retention limit, except in the following cases: (a) when the 37.6 reinsurance or contract is with another member which, directly 37.7 or indirectly, through one or more intermediaries, control or 37.8 are controlled by or are under common control with the member; 37.9 (b) when the reinsurance or contract provides for reimbursement 37.10 or indemnification of a member if and only if the total of all 37.11 claims which the member pays or incurs, but which are not 37.12 reimbursable or subject to indemnification by the reinsurance 37.13 association for a given period of time, exceeds a dollar value 37.14 or percentage of premium written or earned and stated in the 37.15 reinsurance agreement or contract; (c) when the reinsurance or 37.16 contract is a pooling arrangement with other insurers where 37.17 liability of the member to pay claims pursuant to chapter 176 is 37.18 incidental to participation in the pool and not as a result of 37.19 providing workers' compensation insurance to employers on a 37.20 direct basis under chapter 176; (d) when the reinsurance or 37.21 contract is limited to all the claims of a specific insured of a 37.22 member which are reimbursed or indemnified by a reinsurer which, 37.23 directly or indirectly, through one or more intermediaries, 37.24 controls or is controlled by or is under common control with the 37.25 insured of the member so long as any subsequent contract or 37.26 reinsurance of the reinsurer relating to the claims of the 37.27 insured of a member is not inconsistent with the bases of 37.28 exception provided under clauses (a), (b) and (c); or (e) when 37.29 the reinsurance or contract is limited to all claims of a 37.30 specific self-insurer member which are reimbursed or indemnified 37.31 by a reinsurer which, directly or indirectly, through one or 37.32 more intermediaries, controls or is controlled by or is under 37.33 common control with the self-insurer member so long as any 37.34 subsequent contract or reinsurance of the reinsurer relating to 37.35 the claims of the self-insurer member are not inconsistent with 37.36 the bases for exception provided under clauses (a), (b) and (c). 38.1 Whenever it appears to the commissioner of labor and 38.2 industry that any member that chooses thehigherhigh or super 38.3 retention limit has participated in the transfer of liability to 38.4 any other entity or reinsured or otherwise contracted for 38.5 reimbursement or indemnification of losses below its retention 38.6 limit in a manner inconsistent with the bases for exception 38.7 provided under clauses (a), (b), (c), (d), and (e), the 38.8 commissioner may, after giving notice and an opportunity to be 38.9 heard, order the member to pay to the state of Minnesota an 38.10 amount not to exceed twice the difference between the 38.11 reinsurance premium for thehigher and lowerhigh or super 38.12 retention limit, as appropriate, and the low retention limit 38.13 applicable to the member for each year in which the prohibited 38.14 reinsurance or contract was in effect. Any member subject to 38.15 this penalty provision shall continue to be bound by its 38.16 selection of thehigherhigh or super retention limit for 38.17 purposes of membership in the reinsurance association. 38.18 Sec. 10. Minnesota Statutes 1994, section 79.35, is 38.19 amended to read: 38.20 79.35 [DUTIES; RESPONSIBILITIES; POWERS.] 38.21 The reinsurance association shall do the following on 38.22 behalf of its members: 38.23 (a) Assume 100 percent of the liability as provided in 38.24 section 79.34; 38.25 (b) Establish procedures by which members shall promptly 38.26 report to the reinsurance association each claim which, on the 38.27 basis of the injury sustained, may reasonably be anticipated to 38.28 involve liability to the reinsurance association if the member 38.29 is held liable under chapter 176. Solely for the purpose of 38.30 reporting claims, the member shall in all instances consider 38.31 itself legally liable for the injury. The member shall advise 38.32 the reinsurance association of subsequent developments likely to 38.33 materially affect the interest of the reinsurance association in 38.34 the claim; 38.35 (c) Maintain relevant loss and expense data relative to all 38.36 liabilities of the reinsurance association and require each 39.1 member to furnish statistics in connection with liabilities of 39.2 the reinsurance association at the times and in the form and 39.3 detail as may be required by the plan of operation; 39.4 (d) Calculate and charge to members a total premium 39.5 sufficient to cover the expected liability which the reinsurance 39.6 association will incurin excess of the higher retention limit39.7but less than the prefunded limit, together with incurred or 39.8 estimated to be incurred operating and administrative expenses 39.9 for the period to which this premium applies and actual claim 39.10 payments to be made by members, during the period to which this 39.11 premium applies, for claims in excess of the prefunded limit in 39.12 effect at the time the loss was incurred. Each member shall be 39.13 charged a premium established by the board as sufficient to 39.14 cover the reinsurance association's incurred liabilities and 39.15 expenses between the member's selected retention limit and the 39.16 prefunded limit. The prefunded limit shall be$2,500,000 on and39.17after October 1, 1979, provided that the prefunded limit shall39.18be increased on January 1, 1983 and on each January 1 thereafter39.19by the percentage increase in the statewide average weekly wage,39.20to the nearest $100,000, as determined in accordance with39.21section 176.011, subdivision20 times the lower retention limit 39.22 established in section 79.34, subdivision 2. Each member shall 39.23 be charged a proportion of the total premium calculated for its 39.24 selected retention limit in an amount equal to its proportion of 39.25 the exposure base of all members during the period to which the 39.26 reinsurance association premium will apply. The exposure base 39.27 shall be determined by the board and is subject to the approval 39.28 of the commissioner of labor and industry. In determining the 39.29 exposure base, the board shall consider, among other things, 39.30 equity, administrative convenience, records maintained by 39.31 members, amenability to audit, and degree of risk 39.32 refinement.Each member exercising the lower retention option39.33shall also be charged a premium established by the board as39.34sufficient to cover incurred or estimated to be incurred claims39.35for the liability the reinsurance association is likely to incur39.36between the lower and higher retention limits for the period to40.1which the premium applies.Each member shall also be charged a 40.2 premium determined by the board to equitably distribute excess 40.3 or deficient premiums from previous periods including any excess 40.4 or deficient premiums resulting from a retroactive change in the 40.5 prefunded limit. The premiums charged to members shall not be 40.6 unfairly discriminatory as defined in section 79.074. All 40.7 premiums shall be approved by the commissioner of labor and 40.8 industry; 40.9 (e) Require and accept the payment of premiums from members 40.10 of the reinsurance association; 40.11 (f) Receive and distribute all sums required by the 40.12 operation of the reinsurance association; 40.13 (g) Establish procedures for reviewing claims procedures 40.14 and practices of members of the reinsurance association. If the 40.15 claims procedures or practices of a member are considered 40.16 inadequate to properly service the liabilities of the 40.17 reinsurance association, the reinsurance association may 40.18 undertake, or may contract with another person, including 40.19 another member, to adjust or assist in the adjustment of claims 40.20 which create a potential liability to the association. The 40.21 reinsurance association may charge the cost of the adjustment 40.22 under this paragraph to the member, except that any penalties or 40.23 interest incurred under sections 176.183, 176.221, 176.225, and 40.24 176.82 as a result of actions by the reinsurance association 40.25 after it has undertaken adjustment of the claim shall not be 40.26 charged to the member but shall be included in the ultimate loss 40.27 and listed as a separate item; and 40.28 (h) Provide each member of the reinsurance association with 40.29 an annual report of the operations of the reinsurance 40.30 association in a form the board of directors may specify. 40.31 Sec. 11. Minnesota Statutes 1994, section 79.52, is 40.32 amended by adding a subdivision to read: 40.33 Subd. 17. [ASSOCIATION OR RATING ASSOCIATION.] 40.34 "Association" or "rating association" means the Minnesota 40.35 Workers' Compensation Insurers Association, Inc. 40.36 Sec. 12. Minnesota Statutes 1994, section 79.52, is 41.1 amended by adding a subdivision to read: 41.2 Subd. 18. [RATE OVERSIGHT COMMISSION.] "Rate oversight 41.3 commission" means the workers' compensation advisory council 41.4 established in chapter 175. 41.5 Sec. 13. Minnesota Statutes 1994, section 79.55, is 41.6 amended by adding a subdivision to read: 41.7 Subd. 8. [ANNUAL FILINGS.] Not later than October 1 of 41.8 each year, the rating association shall file with the 41.9 commissioner and the rate oversight commission the following 41.10 information used and related to the calculation and cost of 41.11 workers' compensation insurance premiums: 41.12 (1) all statistical plans, including classification 41.13 definitions used to assign each compensation risk written by its 41.14 members to its approved classification for reporting purposes; 41.15 (2) all development factors and alternative derivations; 41.16 (3) a description and summary of each data reporting and 41.17 monitoring method used to collect and monitor the database for 41.18 workers' compensation insurance; 41.19 (4) trend factors and alternative derivations and 41.20 applications; 41.21 (5) pure premium relativities for the approved 41.22 classification system for which data are reported; 41.23 (6) an evaluation of the effects of changes in law on loss 41.24 data; 41.25 (7) an explicit discussion and explanation of all 41.26 methodology, alternatives examined, assumptions adopted, and 41.27 areas of judgment and reasoning supporting judgments entered 41.28 into, and the effect of various combinations of these elements 41.29 on indications for modification of an overall pure premium rate 41.30 level change; and 41.31 (8) all merit rating plans and the calculation of any 41.32 variable factors necessary for utilization of the plan. 41.33 Sec. 14. Minnesota Statutes 1994, section 79.55, is 41.34 amended by adding a subdivision to read: 41.35 Subd. 9. [ANALYSIS BY RATE OVERSIGHT COMMISSION.] Not 41.36 later than November 1 of each year, the rate oversight 42.1 commission may submit to the commissioner a report concerning 42.2 the completeness of the filing and compliance of the filing with 42.3 the standards for excessiveness, inadequacy, and unfair 42.4 discrimination set forth in this chapter. 42.5 Sec. 15. Minnesota Statutes 1994, section 79.55, is 42.6 amended by adding a subdivision to read: 42.7 Subd. 10. [DUTIES OF COMMISSIONER.] The commissioner shall 42.8 issue a report by January 1 of each year, comparing the average 42.9 rates charged by workers' compensation insurers in the state to 42.10 the pure premium base rates filed by the association, as 42.11 reviewed by the rate oversight commission. The rate oversight 42.12 commission shall review the commissioner's report and if the 42.13 experience indicates that rates have not reasonably reflected 42.14 changes in pure premiums, the rate oversight commission shall 42.15 recommend to the legislature appropriate legislative changes to 42.16 this chapter. 42.17 Sec. 16. Minnesota Statutes 1994, section 79.60, 42.18 subdivision 1, is amended to read: 42.19 Subdivision 1. [REQUIRED ACTIVITY.] Each insurer shall 42.20 perform the following activities: 42.21 (a) Maintain membership in and report loss experience data 42.22 to a licensed data service organization in accordance with the 42.23 statistical plan and rules of the organization as approved by 42.24 the commissioner; 42.25 (b) Establish a plan for merit rating which shall be 42.26 consistently applied to all insureds, provided that members of a 42.27 data service organization may use merit rating plans developed 42.28 by that data service organization; 42.29 (c) Provide an annual report to the commissioner containing 42.30 the information and prepared in the form required by the 42.31 commissioner;and42.32 (d) Keep a record of the premiums and losses paid under 42.33 each workers' compensation policy written in Minnesota in the 42.34 form required by the commissioner; 42.35 (e) Provide to the association, upon request, information 42.36 about its insurance premiums, losses, and operations which the 43.1 association shall request in order to prepare and file with the 43.2 commissioner and the rate oversight commission the filings 43.3 required by this chapter; and 43.4 (f) Pay to the association its equitable share of the costs 43.5 of preparing the filing with the commissioner and the rate 43.6 oversight commission required by this chapter. 43.7 Sec. 17. Minnesota Statutes 1994, section 79A.01, 43.8 subdivision 1, is amended to read: 43.9 Subdivision 1. [SCOPE.] For the purposes ofsections43.1079A.01 to 79A.17this chapter, the terms defined in this section 43.11 have the meaning given them. 43.12 Sec. 18. Minnesota Statutes 1994, section 79A.01, 43.13 subdivision 4, is amended to read: 43.14 Subd. 4. [INSOLVENT SELF-INSURER.] "Insolvent 43.15 self-insurer" meanseither: (1) a member private self-insurer 43.16 who has failed to pay compensation as a result of a declaration 43.17 of bankruptcy or insolvency by a court of competent jurisdiction 43.18 and whose security deposit has been called by the commissioner 43.19 pursuant to chapter 176, or; (2) a member self-insurer who has 43.20 failed to pay compensation and who has been issued a certificate 43.21 of default by the commissioner and whose security deposit has 43.22 been called by the commissioner pursuant to chapter 176; or (3) 43.23 a member or former member private self-insurer who has failed to 43.24 pay an assessment required by section 79A.12, subdivision 2, and 43.25 who has been issued a certificate of default by the commissioner 43.26 and whose security deposit has been called by the commissioner. 43.27 Sec. 19. Minnesota Statutes 1994, section 79A.01, is 43.28 amended by adding a subdivision to read: 43.29 Subd. 10. [COMMON CLAIMS FUND.] "Common claims fund" means 43.30 the cash, cash equivalents, or investment accounts maintained by 43.31 the mutual self-insurance group to pay its workers' compensation 43.32 liabilities. 43.33 Sec. 20. Minnesota Statutes 1994, section 79A.02, 43.34 subdivision 1, is amended to read: 43.35 Subdivision 1. [MEMBERSHIP.] For the purposes of assisting 43.36 the commissioner, there is established a workers' compensation 44.1 self-insurers' advisory committee of five members that are 44.2 employers authorized to self-insure in Minnesota. Three of the 44.3 members and three alternates shall be elected by themembers of44.4 the self-insurers' security fund board of trustees and two 44.5 alternates shall be appointed by the commissioner. 44.6 Sec. 21. Minnesota Statutes 1994, section 79A.02, 44.7 subdivision 2, is amended to read: 44.8 Subd. 2. [ADVICE TO COMMISSIONER.] At the request of the 44.9 commissioner, the committee shall meet and shall advise the 44.10 commissioner with respect to whether or not an applicant to 44.11 become a private self-insurer in the state of Minnesota has met 44.12 the statutory requirements to self-insure. The department of 44.13 commerce may furnish the committee with any financial data which 44.14 it has, but a member of the advisory committee who may have a 44.15 conflict of interest in reviewing the financial data shall not 44.16 have access to the data nor participate in the discussions 44.17 concerning the applicant. Financial data received from the 44.18 commissioner is nonpublic data. The committee shall advise the 44.19 commissioner if it has any information that any private 44.20 self-insurer may become insolvent. 44.21 Sec. 22. Minnesota Statutes 1994, section 79A.02, 44.22 subdivision 4, is amended to read: 44.23 Subd. 4. [RECOMMENDATIONS TO COMMISSIONER REGARDING 44.24 REVOCATION.] After each fifth anniversary from the date each 44.25 individual and group self-insurer becomes certified to 44.26 self-insure, the committee shall review all relevant financial 44.27 data filed with the department of commerce that is otherwise 44.28 available to the public and make a recommendation to the 44.29 commissioner about whether each self-insurer's certificate 44.30 should be revoked. For group self-insurers who have been in 44.31 existence for five years or more and have been granted renewal 44.32 authority, a level of funding in the common claims fund must be 44.33 maintained at not less than the greater of either: (1) one 44.34 year's claim losses paid in the most recent year; or (2) 44.35 one-third of the security deposit posted with the department of 44.36 commerce according to section 79A.04, subdivision 2. 45.1 Sec. 23. Minnesota Statutes 1994, section 79A.03, is 45.2 amended by adding a subdivision to read: 45.3 Subd. 4a. [EXCEPTIONS.] Notwithstanding the requirements 45.4 of subdivisions 3 and 4, the commissioner, pursuant to a review 45.5 of an existing self-insurer's financial data, may continue a 45.6 self-insurer's authority to self-insure for one year if, in the 45.7 commissioner's judgment based on all factors relevant to the 45.8 self-insurer's financial status, the self-insurer will be able 45.9 to meet its obligations under this chapter for the following 45.10 year. The relevant factors to be considered must include, but 45.11 must not be limited to, the liquidity ratios, leverage ratios, 45.12 and profitability ratios of the self-insurer. Where a 45.13 self-insurer's authority to self-insure is continued under this 45.14 subdivision, the self-insurer may be required to post security 45.15 in the amount equal to two times the amount of security required 45.16 under section 79A.04, subdivision 2. 45.17 Sec. 24. Minnesota Statutes 1994, section 79A.04, 45.18 subdivision 2, is amended to read: 45.19 Subd. 2. [MINIMUM DEPOSIT.] The minimum deposit is 110 45.20 percent of the private self-insurer's estimated future liability. 45.21 Up to ten percent of that deposit may be used to secure payment 45.22 of all administrative and legal costs, and unpaid assessments 45.23 required by section 79A.12, subdivision 2, relating to or 45.24 arising from the employer's self-insuring. As used in this 45.25 section, "private self-insurer" includes both current and former 45.26 members of the self-insurers' security fund; and "private 45.27 self-insurers' estimated future liability" means the private 45.28 self-insurers' total of estimated future liability as determined 45.29 by an Associate or Fellow of the Casualty Actuarial Society 45.30 every year for group member private self-insurers and, for a 45.31 nongroup member private self-insurer's authority to self-insure, 45.32 every year for the first five years. After the first five 45.33 years, the nongroup member's total shall be as determined by an 45.34 Associate or Fellow of the Casualty Actuarial Society at least 45.35 every two years, and each such actuarial study shall include a 45.36 projection of future losses during thetwo-yearperiod until the 46.1 next scheduled actuarial study, less payments anticipated to be 46.2 made during that time. 46.3 All data and information furnished by a private 46.4 self-insurer to an Associate or Fellow of the Casualty Actuarial 46.5 Society for purposes of determining private self-insurers' 46.6 estimated future liability must be certified by an officer of 46.7 the private self-insurer to be true and correct with respect to 46.8 payroll and paid losses, and must be certified, upon information 46.9 and belief, to be true and correct with respect to reserves. 46.10 The certification must be made by sworn affidavit. In addition 46.11 to any other remedies provided by law, the certification of 46.12 false data or information pursuant to this subdivision may 46.13 result in a fine imposed by the commissioner of commerce on the 46.14 private self-insurer up to the amount of $5,000, and termination 46.15 of the private self-insurers' authority to self-insure. The 46.16 determination of private self-insurers' estimated future 46.17 liability by an Associate or Fellow of the Casualty Actuarial 46.18 Society shall be conducted in accordance with standards and 46.19 principles for establishing loss and loss adjustment expense 46.20 reserves by the Actuarial Standards Board, an affiliate of the 46.21 American Academy of Actuaries. The commissioner may reject an 46.22 actuarial report that does not meet the standards and principles 46.23 of the Actuarial Standards Board, and may further disqualify the 46.24 actuary who prepared the report from submitting any future 46.25 actuarial reports pursuant to this chapter. Within 30 days 46.26 after the actuary has been served by the commissioner with a 46.27 notice of disqualification, an actuary who is aggrieved by the 46.28 disqualification may request a hearing to be conducted in 46.29 accordance with chapter 14. Based on a review of the actuarial 46.30 report, the commissioner of commerce may require an increase in 46.31 the minimum security deposit in an amount the commissioner 46.32 considers sufficient. 46.33 Estimated future liability is determined by first taking 46.34 the total amount of the self-insured's future liability of 46.35 workers' compensation claims and then deducting the total amount 46.36 which is estimated to be returned to the self-insurer from any 47.1 specific excess insurance coverage, aggregate excess insurance 47.2 coverage, and any supplementary benefits or second injury 47.3 benefits which are estimated to be reimbursed by the special 47.4 compensation fund. Supplementary benefits or second injury 47.5 benefits will not be reimbursed by the special compensation fund 47.6 unless the special compensation fund assessment pursuant to 47.7 section 176.129 is paid and the reports required thereunder are 47.8 filed with the special compensation fund. In the case of surety 47.9 bonds, bonds shall secure administrative and legal costs in 47.10 addition to the liability for payment of compensation reflected 47.11 on the face of the bond. In no event shall the security be less 47.12 than the last retention limit selected by the self-insurer with 47.13 the workers' compensation reinsurance association. The posting 47.14 or depositing of security pursuant to this section shall release 47.15 all previously posted or deposited security from any obligations 47.16 under the posting or depositing and any surety bond so released 47.17 shall be returned to the surety. Any other security shall be 47.18 returned to the depositor or the person posting the bond. 47.19 As a condition for the granting or renewing of a 47.20 certificate to self-insure, the commissioner may require a 47.21 private self-insurer to furnish any additional security the 47.22 commissioner considers sufficient to insure payment of all 47.23 claims under chapter 176. 47.24 Sec. 25. Minnesota Statutes 1994, section 79A.04, 47.25 subdivision 9, is amended to read: 47.26 Subd. 9. [INSOLVENCY, BANKRUPTCY, OR DEFAULT; UTILIZATION 47.27 OF SECURITY DEPOSIT.] The commissioner of labor and industry 47.28 shall notify the commissioner and the security fund if the 47.29 commissioner of labor and industry has knowledge that any 47.30 private self-insurer has failed to pay workers' compensation 47.31 benefits as required by chapter 176. If the commissioner 47.32 determines that a court of competent jurisdiction has declared 47.33 the private self-insurer to be bankrupt or insolvent, and the 47.34 private self-insurer has failed to pay workers' compensation as 47.35 required by chapter 176 or, if the commissioner issues a 47.36 certificate of default against a private self-insurer for 48.1 failure to pay workers' compensation as required by chapter 176, 48.2 or failure to pay an assessment to the self-insurers' security 48.3 fund when due, then the security deposit shall be utilized to 48.4 administer and pay the private self-insurers' workers' 48.5 compensation or assessment obligations. 48.6 Sec. 26. Minnesota Statutes 1994, section 79A.09, 48.7 subdivision 4, is amended to read: 48.8 Subd. 4. [CONFIDENTIAL INFORMATION.] The security fund may 48.9 receive private data concerning the financial condition of 48.10 private self-insurers whose liabilities to pay compensation have 48.11 become its responsibilityand shall adopt bylaws to prevent48.12dissemination of that information. The data shall become public 48.13 data upon its receipt by the security fund. 48.14 Sec. 27. Minnesota Statutes 1994, section 79A.15, is 48.15 amended to read: 48.16 79A.15 [SURETY BOND FORM.] 48.17 The form for the surety bond under this chapter shall be: 48.18 STATE OF MINNESOTA 48.19 DEPARTMENT OF COMMERCE 48.20 SURETY BOND OF SELF-INSURER OF WORKERS' COMPENSATION 48.21 48.22 IN THE MATTER OF THE CERTIFICATE OF ) 48.23 ) 48.24 ) SURETY BOND 48.25 ) NO. ............. 48.26 ) PREMIUM: ........ 48.27 ) 48.28 Employer, Certificate No: .............. ) 48.29 KNOW ALL PERSONS BY THESE PRESENTS: 48.30 That ..................................................... 48.31 (Employer) 48.32 whose address is .............................................. 48.33 as Principal, and ............................................. 48.34 (Surety) 48.35 a corporation organized under the laws of ..................... 48.36 and authorized to transact a general surety business in the 48.37 State of Minnesota, as Surety, are held and firmly bound to the 48.38 State of Minnesota in the penal sum of 48.39 ...........................dollars ($..........) for which 48.40 payment we bind ourselves, our heirs, executors, administrators, 49.1 successors, and assigns, jointly and severally, firmly by these 49.2 presents. 49.3 WHEREAS in accordance with Minnesota Statutes, chapter 176, 49.4 the principal elected to self-insure, and made application for, 49.5 or received from the commissioner of commerce of the state of 49.6 Minnesota, a certificate to self-insure, upon furnishing of 49.7 proof satisfactory to the commissioner of commerce of ability to 49.8 self-insure and to compensate any or all employees of said 49.9 principal for injury or disability, and their dependents for 49.10 death incurred or sustained by said employees pursuant to the 49.11 terms, provisions, and limitations of said statute; 49.12 NOW THEREFORE, the conditions of this bond or obligation 49.13 are such that if principal shall pay and furnish compensation, 49.14 pursuant to the terms, provisions, and limitations of said 49.15 statute to its employees for injury or disability, and to the 49.16 dependents of its employees, then this bond or obligation shall 49.17 be null and void; otherwise to remain in full force and effect. 49.18 FURTHERMORE, it is understood and agreed that: 49.19 1. This bond may be amended, by agreement between the 49.20 parties hereto and the commissioner of commerce as to the 49.21 identity of the principal herein named; and, by agreement of the 49.22 parties hereto, as to the premium or rate of premium. Such 49.23 amendment must be by endorsement upon, or rider to, this bond, 49.24 executed by the surety and delivered to or filed with the 49.25 commissioner. 49.26 2. The surety does, by these presents, undertake and agree 49.27 that the obligation of this bond shall cover and extend to all 49.28 past, present, existing, and potential liability of said 49.29 principal, as a self-insurer, to the extent of the penal sum 49.30 herein named without regard to specific injuries, date or dates 49.31 of injuries, happenings or events. 49.32 3. The penal sum of this bond may be increased or 49.33 decreased, by agreement between the parties hereto and the 49.34 commissioner of commerce, without impairing the obligation 49.35 incurred under this bond for the overall coverage of the said 49.36 principal, for all past, present, existing, and potential 50.1 liability, as a self-insurer, without regard to specific 50.2 injuries, date or dates of injuries, happenings or events, to 50.3 the extent, in the aggregate, of the penal sum as increased or 50.4 decreased. Such amendment must be by endorsement. 50.5 4. The aggregate liability of the surety hereunder on all 50.6 claims whatsoever shall not exceed the penal sum of this bond in 50.7 any event. 50.8 5. This bond shall be continuous in form and shall remain 50.9 in full force and effect unless terminated as follows: 50.10 (a) The obligation of this bond shall terminate upon 50.11 written notice of cancellation from the surety, given by 50.12 registered or certified mail to the commissioner of commerce, 50.13 state of Minnesota, save and except as to all past, present, 50.14 existing, and potential liability of the principal incurred, 50.15 including obligations resulting from claims which are incurred 50.16 but not yet reported, as a self-insurer prior to effective date 50.17 of termination. This termination is effective 60 days after 50.18 receipt of notice of cancellation by the commissioner of 50.19 commerce, state of Minnesota. 50.20 (b) This bond shall also terminate upon the revocation of 50.21 the certificate to self-insure, save and except as to all past, 50.22 present, existing, and potential liability of the principal 50.23 incurred, including obligations resulting from claims which are 50.24 incurred but not yet reported, as a self-insurer prior to 50.25 effective date of termination. The principal and the surety, 50.26 herein named, shall be immediately notified in writing by said 50.27 commissioner, in the event of such revocation. 50.28 6. Where the principal posts with the commissioner of 50.29 commerce, state of Minnesota, or the state treasurer, state of 50.30 Minnesota, a replacement security deposit, in the form of a 50.31 surety bond, irrevocable letter of credit, cash, securities, or 50.32 any combination thereof, in the full amount as may be required 50.33 by the commissioner of commerce, state of Minnesota, to secure 50.34 all incurred liabilities for the payment of compensation of said 50.35 principal under Minnesota Statutes, chapter 176, the surety is 50.36 released from obligations under the surety bond upon the date of 51.1 acceptance by the commissioner of commerce, state of Minnesota, 51.2 of said replacement security deposit. 51.3 7. If the said principal shall suspend payment of workers' 51.4 compensation benefits or shall become insolvent or a receiver 51.5 shall be appointed for its business, or the commissioner of 51.6 commerce, state of Minnesota, issues a certificate of default, 51.7 the undersigned surety will become liable for the workers' 51.8 compensation obligations of the principal on the date benefits 51.9 are suspended. The surety shall begin payments within 14 days 51.10 under paragraph 8, or 30 days under paragraph 10, after receipt 51.11 of written notification by certified mail from the commissioner 51.12 of commerce, state of Minnesota, to begin payments under the 51.13 terms of this bond. 51.14 8. If the surety exercises its option to administer 51.15 claims, it shall pay benefits due to the principal's injured 51.16 workers within 14 days of the receipt of the notification by the 51.17 commissioner of commerce, state of Minnesota, pursuant to 51.18 paragraph 7, without a formal award of a compensation judge, the 51.19 commissioner of labor and industry, any intermediate appellate 51.20 court, or the Minnesota supreme court and such payment will be a 51.21 charge against the penal sum of the bond. Administrative and 51.22 legal costs and payment of assessments incurred by the surety in 51.23 discharging its obligations and payment of the principal's 51.24 obligations for administration and legal expenses and payment of 51.25 assessments under Minnesota Statutes,chapterchapters 79A and 51.26 176,and sections 79A.01 to 79A.17 and Laws 1988, chapter 674,51.27section 23,shall also be a charge against the penal sum of the 51.28 bond; however, the total amount of this surety bond set aside 51.29 for the payment of said administrative and legal expenses and 51.30 payment of assessments shall be limited to a maximum ten percent 51.31 of the total penal sum of the bond unless otherwise authorized 51.32 by the security fund. 51.33 9. If any part or provision of this bond shall be declared 51.34 unenforceable or held to be invalid by a court of proper 51.35 jurisdiction, such determination shall not affect the validity 51.36 or enforceability of the other provisions or parts of this bond. 52.1 10. If the surety does not give notice to the 52.2 (self-insurer's security fund) (commercial self-insurance group 52.3 security fund) and the commissioner of commerce, state of 52.4 Minnesota, within two business days of receipt of written 52.5 notification from the commissioner of commerce, state of 52.6 Minnesota, pursuant to paragraph 7, to exercise its option to 52.7 administer claims pursuant to paragraph 8, then 52.8 the (self-insurer's security fund) (commercial self-insurance 52.9 security fund) will assume the payments of the workers' 52.10 compensation obligations of the principal pursuant to Minnesota 52.11 Statutes, chapter 176. The surety shall pay, within 30 days of 52.12 the receipt of the notification by the commissioner of commerce, 52.13 state of Minnesota, pursuant to paragraph 7, to the 52.14 self-insurer's security fund) (commercial self-insurance group 52.15 (security fund) as an initial deposit an amount equal to ten 52.16 percent of the penal sum of the bond, and shall thereafter, upon 52.17 notification from the (self-insurer's security fund) (commercial 52.18 self-insurance group security fund) that the balance of the 52.19 initial deposit had fallen to one percent of the penal sum of 52.20 the bond, remit to the (self-insurer's security fund) 52.21 (commercial self-insurance group security fund) an amount equal 52.22 to the payments made by the (self-insurer's security fund) 52.23 (commercial self-insurance group security fund) in the three 52.24 calendar months immediately preceding said notification. All 52.25 such payments will be a charge against the penal sum of the bond. 52.26 11. Disputes concerning the posting, renewal, termination, 52.27 exoneration, or return of all or any portion of the principal's 52.28 security deposit or any liability arising out of the posting or 52.29 failure to post security, or the adequacy of the security or the 52.30 reasonableness of administrative costs, including legal costs, 52.31 arising between or among a surety, the issuer of an agreement of 52.32 assumption and guarantee of workers' compensation liabilities, 52.33 the issuer of a letter of credit, any custodian of the security 52.34 deposit, the principal, or theself-insurers'(self-insurer's 52.35 security fund) (commercial self-insurance group security fund) 52.36 shall be resolved by the commissioner of commerce pursuant to 53.1 Minnesota Statutes,chapterchapters 79A and 176and sections53.279A.01 to 79A.17 and Laws 1988, chapter 674, section 23. 53.3 12. Written notification to the surety required by this 53.4 bond shall be sent to: 53.5 ......................... 53.6 Name of Surety 53.7 ......................... 53.8 To the attention of Person or 53.9 Position 53.10 ......................... 53.11 Address 53.12 ......................... 53.13 City, State, Zip 53.14 Written notification to the principal required by this bond 53.15 shall be sent to: 53.16 ........................ 53.17 Name of Principal 53.18 ........................ 53.19 To the attention of Person or 53.20 Position 53.21 ........................ 53.22 Address 53.23 ........................ 53.24 City, State, Zip 53.25 13. This bond is executed by the surety to comply with 53.26 Minnesota Statutes, chapter 176, and said bond shall be subject 53.27 to all terms and provisions thereof. 53.28 ........................ 53.29 Name of Surety 53.30 ........................ 53.31 Address 53.32 ........................ 53.33 City, State, Zip 53.34 THIS bond is executed under an unrevoked appointment or 53.35 power of attorney. 53.36 I certify (or declare) under penalty of perjury under the 53.37 laws of the state of Minnesota that the foregoing is true and 53.38 correct. 53.39 53.40 .............. ............................. 53.41 Date Signature of Attorney-In-Fact 53.43 ............................. 53.44 Printed or Typed Name of 54.1 Attorney-In-Fact 54.2 A copy of the transcript or record of the unrevoked 54.3 appointment, power of attorney, bylaws, or other instrument, 54.4 duly certified by the proper authority and attested by the seal 54.5 of the insurer entitling or authorizing the person who executed 54.6 the bond to do so for and in behalf of the insurer, must be 54.7 filed in the office of the commissioner of commerce or must be 54.8 included with this bond for such filing. 54.9 Sec. 28. [79A.19] [COMMERCIAL SELF-INSURANCE GROUPS; 54.10 DEFINITIONS.] 54.11 Subdivision 1. [SCOPE.] For the purposes of sections 54.12 79A.19 to 79A.32, the terms defined in this section have the 54.13 meanings given them. If there is any inconsistency between this 54.14 section and section 79A.01, the provisions of this section shall 54.15 govern. 54.16 Subd. 2. [ACCOUNTANT.] "Accountant" means a certified 54.17 public accountant who is not an employee of any member of the 54.18 commercial self-insurance group and is not affiliated with any 54.19 individual or organization providing services other than 54.20 accounting services to the group. 54.21 Subd. 3. [ACTUARY.] "Actuary" means an individual who has 54.22 attained the status of associate or fellow of the casualty 54.23 actuarial society who is not an employee of any member of the 54.24 commercial self-insurance group and is not affiliated with any 54.25 individual or organization providing services other than 54.26 actuarial services to the group. 54.27 Subd. 4. [COMMON CLAIMS FUND.] "Common claims fund" means 54.28 the cash, cash equivalents, or investment accounts maintained by 54.29 the commercial self-insurance group to pay its workers' 54.30 compensation liabilities. 54.31 Subd. 5. [MEMBER.] "Member" means an employer that 54.32 participates in a commercial self-insurance group. 54.33 Subd. 6. [COMMERCIAL SELF-INSURANCE GROUP.] "Commercial 54.34 self-insurance group" means a group of employers that are 54.35 self-insured for workers' compensation under chapter 176 and 54.36 elects to operate under sections 79A.19 to 79A.32 rather than 55.1 sections 79A.01 to 79A.18. 55.2 Subd. 7. [COMMERCIAL SELF-INSURANCE GROUP SECURITY 55.3 FUND.] "Commercial self-insurance group security fund" means the 55.4 commercial self-insurance group security fund established 55.5 pursuant to this chapter. 55.6 Subd. 8. [TRUSTEES.] "Trustees" means the board of 55.7 trustees of the commercial self-insurance group security fund. 55.8 Sec. 29. [79A.20] [ELIGIBILITY REQUIREMENTS FOR COMMERCIAL 55.9 SELF-INSURANCE GROUPS.] 55.10 Subdivision 1. [GROUP ELIGIBILITY.] A commercial 55.11 self-insurance group consists of two or more employers in 55.12 similar industries. The commercial self-insurance group shall 55.13 not incorporate or form a business trust pursuant to chapter 318. 55.14 Subd. 2. [MEMBERSHIP ELIGIBILITY.] A commercial 55.15 self-insurance group may only admit employers who meet the 55.16 eligibility requirements established by the group including 55.17 financial criteria, underwriting guidelines, risk profile, and 55.18 any other requirements stated in the commercial self-insurance 55.19 group's bylaws or plan of operation. 55.20 Sec. 30. [79A.21] [COMMERCIAL SELF-INSURANCE GROUP 55.21 APPLICATION.] 55.22 Subdivision 1. [PROCEDURE.] (a) Groups proposing to become 55.23 licensed as commercial self-insurance groups must complete and 55.24 submit an application on a form or forms prescribed by the 55.25 commissioner. 55.26 (b) The commissioner shall grant or deny the group's 55.27 application to self-insure within 60 days after a complete 55.28 application has been filed, provided that the time may be 55.29 extended for an additional 30 days upon 15 days' prior notice to 55.30 the applicant. 55.31 Subd. 2. [REQUIRED DOCUMENTS.] All applications must be 55.32 accompanied by the following: 55.33 (a) A detailed business plan including the risk profile of 55.34 the proposed membership, underwriting guidelines, marketing 55.35 plan, minimum financial criteria for each member, and financial 55.36 projections for the first year of operation. 56.1 (b) A plan describing the method in which premiums are to 56.2 be charged to the employer members. The plan shall be 56.3 accompanied by copies of the member's workers' compensation 56.4 insurance policies in force at the time of application. In 56.5 developing the premium for the group, the commercial 56.6 self-insurance group shall base its premium on the Minnesota 56.7 workers' compensation insurers association's manual of rules, 56.8 loss costs, and classifications approved for use in Minnesota by 56.9 the commissioner. Each member applicant shall, on a form 56.10 approved by the commissioner, complete estimated payrolls for 56.11 the first 12-month period that the applicant will be 56.12 self-insured. Premium volume discounts per the plan will be 56.13 permitted if they can be shown to be consistent with actuarial 56.14 standards. 56.15 (c) A schedule indicating actual or anticipated operational 56.16 expenses of the commercial self-insurance group. No authority 56.17 to self-insure will be granted unless, over the term of the 56.18 policy year, at least 65 percent of total revenues from all 56.19 sources for the year are available for the payment of its claim 56.20 and assessment obligations. For purposes of this calculation, 56.21 claim and assessment obligations include the cost of allocated 56.22 loss expenses as well as special compensation fund and 56.23 commercial self-insurance group security fund assessments but 56.24 exclude the cost of unallocated loss expenses. 56.25 (d) An indemnity agreement from each member who will 56.26 participate in the commercial self-insurance group, signed by an 56.27 officer of each member, providing for joint and several 56.28 liability for all claims and expenses of all of the members of 56.29 the commercial self-insurance group arising in any fund year in 56.30 which the member was a participant on a form approved by the 56.31 commissioner. The indemnity agreement shall provide for 56.32 assessments according to the group's bylaws on an individual and 56.33 proportionate basis. 56.34 (e) A copy of the commercial self-insurance group bylaws. 56.35 (f) Evidence of the security deposit required under section 56.36 79A.24, accompanied by the actuarial certification study for the 57.1 minimum security deposit as required under section 79A.24. 57.2 (g) Each initial member of the commercial self-insurance 57.3 group shall submit to the commercial self-insurance group 57.4 accountant its most recent annual financial statement. 57.5 Financial statements for a period ending more than six months 57.6 prior to the date of the application must be accompanied by an 57.7 affidavit, signed by a company officer under oath, stating that 57.8 there has been no material lessening of the net worth nor other 57.9 adverse changes in its financial condition since the end of the 57.10 period. Individual group members constituting at least 75 57.11 percent of the group's annual premium shall submit reviewed or 57.12 audited financial statements. The remaining members may submit 57.13 compilation level statements. Statements for a period ending 57.14 more than 12 months prior to the date of application cannot be 57.15 accepted. 57.16 (h) A compiled combined financial statement of all group 57.17 members prepared by the commercial self-insurance group's 57.18 accountant and a list of members included in such statements. 57.19 (i) A copy of each member's accountant's report letter from 57.20 the reports used in compiling the combined financial statements. 57.21 (j) A list of all members and the percentage of premium 57.22 each represents to the total group's annual premium for the 57.23 policy year. 57.24 Subd. 3. [APPROVAL.] The commissioner shall approve an 57.25 application for self-insurance upon a determination that all of 57.26 the following conditions are met: 57.27 (1) a completed application and all required documents have 57.28 been submitted to the commissioner; 57.29 (2) the financial ability of the commercial self-insurance 57.30 group is sufficient to fulfill all obligations that may arise 57.31 under this chapter or chapter 176; 57.32 (3) the annual premium of the commercial self-insurance 57.33 group to be charged to initial members is at least $500,000; 57.34 (4) the commercial self-insurance group has contracted with 57.35 a service company to administer its program; and 57.36 (5) the required securities or surety bond shall be on 58.1 deposit prior to the effective date of coverage for the 58.2 commercial self-insurance group. 58.3 Sec. 31. [79A.22] [COMMERCIAL SELF-INSURANCE GROUP 58.4 OPERATING REQUIREMENTS.] 58.5 Subdivision 1. [BOARD OF DIRECTORS.] (a) A commercial 58.6 self-insurance group shall elect a board of directors who shall 58.7 have complete authority over and control of the assets of the 58.8 commercial self-insurance group. The board of directors will 58.9 also be responsible for all of the operations of the commercial 58.10 self-insurance group. 58.11 (b) The majority of the board of directors shall be owners, 58.12 officers, directors, partners, or employees of members of the 58.13 commercial self-insurance group. No third-party administrator 58.14 or vendor of risk management services shall serve as a director 58.15 of the commercial self-insurance group. 58.16 (c) The directors shall approve applications for membership 58.17 in the commercial self-insurance group. 58.18 Subd. 2. [FINANCIAL STANDARDS.] Commercial self-insurance 58.19 groups shall have and maintain: 58.20 (1) combined net worth of all of the members in an amount 58.21 at least equal to 15 times the group's selected retention level 58.22 of the workers' compensation reinsurance association; 58.23 (2) sufficient assets and liquidity in the group's common 58.24 claims fund to promptly and completely meet all obligations of 58.25 its members under this chapter and chapter 176. 58.26 Subd. 3. [NEW MEMBERSHIP.] The commercial self-insurance 58.27 group shall file with the commissioner the name of any new 58.28 employer that has been accepted in the group prior to the 58.29 initiation date of membership along with the member's signed 58.30 indemnity agreement and evidence the member has deposited 58.31 sufficient premiums with the group as required by the commercial 58.32 self-insurance group's bylaws or plan of operation. The 58.33 security deposit of the group will be increased to an amount 58.34 equal to 50 percent of the new member's premium. The department 58.35 of commerce may, at its option, review the financial statement 58.36 of any applicant whose premium equals 25 percent or more of the 59.1 group's total premium. 59.2 Subd. 4. [COMMERCIAL SELF-INSURANCE GROUP COMMON CLAIMS 59.3 FUND.] (a) Each commercial self-insurance group shall establish 59.4 a common claims fund. 59.5 (b) Each commercial self-insurance group shall, not less 59.6 than ten days prior to the proposed effective date of the group, 59.7 collect cash premiums from each member equal to not less than 20 59.8 percent of the member's annual workers' compensation premium to 59.9 be paid into a common claims fund, maintained by the group in a 59.10 designated depository. The remaining balance of the member's 59.11 premium shall be paid to the group in a reasonable manner over 59.12 the remainder of the year. Payments in subsequent years shall 59.13 be made according to the business plan. 59.14 (c) Each commercial self-insurance group shall initiate 59.15 proceedings against a member when that member becomes more than 59.16 15 days delinquent in any payment of premium to the fund. 59.17 (d) There shall be no commingling of any assets of the 59.18 common claims fund with the assets of any individual member or 59.19 with any other account of the service company or fiscal agent 59.20 unrelated to the payment of workers' compensation liabilities 59.21 incurred by the group. 59.22 Subd. 5. [JOINT AND SEVERAL LIABILITY.] Each member of a 59.23 commercial self-insurance group shall be jointly and severally 59.24 liable for the obligations incurred by any member of the same 59.25 group under chapter 176 for any fund year in which the member 59.26 was a participant of the commercial self-insurance group. 59.27 Subd. 6. [ANNUAL AUDIT.] The accounts and records of the 59.28 common claims fund shall be audited in the manner required under 59.29 section 79A.03, subdivision 10. 59.30 Subd. 7. [INVESTMENTS.] (a) Any securities purchased by 59.31 the common claims fund shall be in such denominations and with 59.32 dates of maturity to ensure securities may be redeemable at 59.33 sufficient time and in sufficient amounts to meet the fund's 59.34 current and long-term liabilities. 59.35 (b) Cash assets of the common claims fund may be invested 59.36 in the following securities: 60.1 (1) direct obligations of the United States government, 60.2 except mortgage-backed securities of the Government National 60.3 Mortgage Association; 60.4 (2) bonds, notes, debentures, and other instruments which 60.5 are obligations of agencies and instrumentalities of the United 60.6 States including, but not limited to, the federal National 60.7 Mortgage Association, the federal Home Loan Mortgage 60.8 Corporation, the federal Home Loan Bank, the Student Loan 60.9 Marketing Association, and the Farm Credit System, and their 60.10 successors, but not including collateralized mortgage 60.11 obligations or mortgage pass-through instruments; 60.12 (3) bonds or securities that are issued by the state of 60.13 Minnesota and that are secured by the full faith and credit of 60.14 the state; 60.15 (4) certificates of deposit which are insured by the 60.16 federal Deposit Insurance Corporation and are issued by a 60.17 Minnesota depository institution; 60.18 (5) obligations of, or instruments unconditionally 60.19 guaranteed by, Minnesota depository institutions whose long-term 60.20 debt rating is at least AA-, or Aa3, or their equivalent by at 60.21 least two nationally recognized rating agencies. 60.22 Subd. 8. [ADMINISTRATION.] (a) The commercial 60.23 self-insurance group shall be required to secure administrative 60.24 services through a service company which maintains an office in 60.25 the state of Minnesota. Services provided by the service 60.26 company or its subcontractor should at a minimum include claim 60.27 handling, safety and loss control, and submission of all 60.28 required regulatory reports. 60.29 (b) The service company must demonstrate it has the 60.30 capability to provide, through its employees or by contract, 60.31 services which are necessary to administer the self-insurance 60.32 group and it must employ or have under contract a claims 60.33 adjuster with at least three years of Minnesota specific 60.34 workers' compensation claim handling experience. 60.35 (c) The service company retained by a commercial 60.36 self-insurance group to administer workers' compensation claims 61.1 shall estimate the total accrued liability of the group for the 61.2 payment of compensation for the commercial self-insurance 61.3 group's annual report to the commissioner and shall make the 61.4 estimate both in good faith and with the exercise of a 61.5 reasonable degree of care. 61.6 Subd. 9. [MARKETING AND COMMUNICATIONS.] A commercial 61.7 self-insurance group's applications, coverage documents, 61.8 quotations, and all marketing materials must prominently display 61.9 information indicating that the commercial self-insurance group 61.10 is a self-insured program, that members are jointly and 61.11 severally liable for the obligations of the commercial 61.12 self-insurance group, and that members will be assessed on an 61.13 individual and proportionate basis for any deficits created by 61.14 the commercial self-insurance group. 61.15 Subd. 10. [REINSURANCE.] (a) A commercial self-insurance 61.16 group shall be required to purchase specific excess coverage 61.17 with the workers' compensation reinsurance association at the 61.18 lower retention level for its first three years of operation. 61.19 After that time it may select the higher or super retention 61.20 level with prior notice given to and approval of the 61.21 commissioner. 61.22 (b) The commissioner may require a commercial 61.23 self-insurance group to purchase aggregate excess coverage. Any 61.24 reinsurance or excess coverage purchased other than that of the 61.25 workers' compensation reinsurance association must be secured 61.26 with an insurance company or reinsurer licensed to underwrite 61.27 such coverage in Minnesota and maintains at least an "A" rating 61.28 with the A.M. Best rating organization. 61.29 Subd. 11. [DISBURSEMENT OF FUND SURPLUS.] (a) One hundred 61.30 percent of any surplus money for a fund year in excess of 125 61.31 percent of the amount necessary to fulfill all obligations under 61.32 the workers' compensation act, chapter 176, for that fund year 61.33 may be declared refundable to a member at any time. The date 61.34 shall be no earlier than 18 months following the end of such 61.35 fund year. The first disbursement of fund surplus may not be 61.36 made prior to the completion of an operational audit by the 62.1 commissioner. There can be no more than one refund made in any 62.2 12-month period. When all the claims of any one fund year have 62.3 been fully paid, as certified by an actuary, all surplus money 62.4 from that fund year may be declared refundable. 62.5 (b) The commercial self-insurance group shall give notice 62.6 to the commissioner of any refund. Said notice shall be 62.7 accompanied by a statement from the commercial self-insurer 62.8 group's certified public accountant certifying that the proposed 62.9 refund is in compliance with paragraph (a). 62.10 Subd. 12. [SATISFACTION OF FUND DEFICIT.] In the event of 62.11 a deficit in any fund year, such deficit shall be paid up 62.12 immediately, either from surplus from a fund year other than the 62.13 current fund year, or by assessment of the membership. The 62.14 commissioner shall be notified within ten days of any transfer 62.15 of surplus funds. The commissioner, upon finding that a deficit 62.16 in a fund year has not been satisfied by a transfer of surplus 62.17 from another fund year, shall order an assessment to be levied 62.18 on a proportionate basis against the members of the commercial 62.19 self-insurance group during that fund year sufficient to make up 62.20 any deficit. 62.21 Sec. 32. [79A.23] [COMMERCIAL SELF-INSURANCE GROUP 62.22 REPORTING REQUIREMENTS.] 62.23 Subdivision 1. [REQUIRED REPORTS TO COMMISSIONER.] Each 62.24 commercial self-insurance group shall submit the following 62.25 documents to the commissioner. 62.26 (a) An annual report shall be submitted by April 1 showing 62.27 the incurred losses, paid and unpaid, specifying indemnity and 62.28 medical losses by classification, payroll by classification, and 62.29 current estimated outstanding liability for workers' 62.30 compensation on a calendar year basis, in a manner and on forms 62.31 available from the commissioner. In addition each group will 62.32 submit a quarterly interim loss report showing incurred losses 62.33 for all its membership. 62.34 (b) Each commercial self-insurance group shall submit 62.35 within 45 days of the end of each quarter: 62.36 (1) a schedule showing all the members who participate in 63.1 the group, their date of inception, and date of withdrawal, if 63.2 applicable; 63.3 (2) a separate section identifying which members were added 63.4 or withdrawn during that quarter; and 63.5 (3) an internal financial statement and copies of the 63.6 fiscal agent's statements supporting the balances in the common 63.7 claims fund. 63.8 (c) The commercial self-insurance group shall submit an 63.9 annual certified financial audit report of the commercial 63.10 self-insurance group fund by April 1 of the following year. The 63.11 report must be accompanied by an expense schedule showing the 63.12 commercial self-insurance group's operational costs for the same 63.13 year including service company charges, accounting and actuarial 63.14 fees, fund administration charges, reinsurance premiums, 63.15 commissions, and any other costs associated with the 63.16 administration of the group program. 63.17 (d) An officer of the commercial self-insurance group 63.18 shall, under oath, attest to the accuracy of each report 63.19 submitted under paragraphs (a), (b), and (c). Upon sufficient 63.20 cause, the commissioner shall require the commercial 63.21 self-insurance group to submit a certified audit of payroll and 63.22 claim records conducted by an independent auditor approved by 63.23 the commissioner, based on generally accepted accounting 63.24 principles and generally accepted auditing standards, and 63.25 supported by an actuarial review and opinion of the future 63.26 contingent liabilities. The basis for sufficient cause shall 63.27 include the following factors: 63.28 (1) where the losses reported appear significantly 63.29 different from similar types of groups; 63.30 (2) where major changes in the reports exist from year to 63.31 year, which are not solely attributable to economic factors; or 63.32 (3) where the commissioner has reason to believe that the 63.33 losses and payroll in the report do not accurately reflect the 63.34 losses and payroll of the commercial self-insurance group. 63.35 If any discrepancy is found, the commissioner shall require 63.36 changes in the commercial self-insurance group's business plan 64.1 or service company recordkeeping practices. 64.2 (e) Each commercial self-insurance group shall submit by 64.3 August 15 a copy of the group's annual federal and state income 64.4 tax returns or provide proof that it has received an exemption 64.5 from these filings. 64.6 (f) With the annual loss report each commercial 64.7 self-insurance group shall report to the commissioner any 64.8 worker's compensation claim where the full, undiscounted value 64.9 is estimated to exceed $50,000, in a manner and on forms 64.10 prescribed by the commissioner. 64.11 (g) Each commercial self-insurance group shall submit by 64.12 May 1 a list of all members and the percentage of premium each 64.13 represents to the total group's premium for the previous 64.14 calendar year. 64.15 (h) Each commercial self-insurance group shall submit by 64.16 May 1 the following documents prepared by the group's certified 64.17 public accountant: 64.18 (1) a compiled combined financial statement of group 64.19 members and a list of members included in this statement; and 64.20 (2) a report that the statements which were combined have 64.21 met the requirements of subdivision 2. 64.22 (i) If any group member comprises over 25 percent of total 64.23 group premium, that member's statement must be reviewed or 64.24 audited and must be submitted to the commissioner by May 1 of 64.25 the following year. 64.26 (j) Each commercial self-insurance group shall submit a 64.27 copy of each member's accountant's report letter from the 64.28 reports used in compiling the combined financial statements. 64.29 Subd. 2. [REQUIRED REPORTS FROM MEMBERS TO GROUP.] Each 64.30 member of the commercial self-insurance group shall, by April 1, 64.31 submit to the group its most recent annual financial statement, 64.32 together with other financial information the group may 64.33 require. These financial statements submitted must not have a 64.34 fiscal year end date older than January 15 of the group's 64.35 calendar year end. Individual group members constituting at 64.36 least 75 percent of the group's annual premium shall submit to 65.1 the group reviewed or audited financial statements. The 65.2 remaining members may submit compilation level statements. 65.3 Subd. 3. [OPERATIONAL AUDIT.] (a) The commissioner, prior 65.4 to authorizing surplus distribution of a commercial 65.5 self-insurance group's first fund year or no later than after 65.6 the third anniversary of the group's authority to self-insure, 65.7 shall conduct an operational audit of the commercial 65.8 self-insurance group's claim handling and reserve practices as 65.9 well as its underwriting procedures to determine if they adhere 65.10 to the group's business plan. The commissioner may select 65.11 outside consultants to assist in conducting the audit. After 65.12 completion of the audit, the commissioner shall either renew or 65.13 revoke the commercial self-insurance group's authority to 65.14 self-insure. The commissioner may also order any changes deemed 65.15 necessary in the claims handling, reserving practices, or 65.16 underwriting procedures of the group. 65.17 (b) The cost of the operational audit shall be borne by the 65.18 commercial self-insurance group. 65.19 Subd. 4. [UNIT STATISTICAL REPORT.] Each commercial 65.20 self-insurance group will annually file a unit statistical 65.21 report to the Minnesota workers' compensation insurers 65.22 association. 65.23 Sec. 33. [79A.24] [COMMERCIAL SELF-INSURANCE GROUP 65.24 SECURITY DEPOSIT.] 65.25 Subdivision 1. [ANNUAL SECURING OF LIABILITY.] Each year 65.26 every commercial self-insurance group shall secure future 65.27 incurred liabilities for the payment of compensation and the 65.28 performance of the obligations of its membership imposed under 65.29 chapter 176. A new deposit must be posted within 30 days of the 65.30 filing of the commercial self-insurance group's annual actuarial 65.31 report with the commissioner. 65.32 Subd. 2. [MINIMUM DEPOSIT.] The minimum deposit is 150 65.33 percent of the commercial self-insurance group's future incurred 65.34 liabilities for the payment of compensation as determined by an 65.35 actuary. If all the members of the commercial self-insurance 65.36 group have submitted reviewed or audited financial statements to 66.1 the group's accountant, this minimum deposit shall be 110 66.2 percent of the commercial self-insurance group's future incurred 66.3 liabilities for the payment of workers' compensation as 66.4 determined by an actuary. The group must file a letter with the 66.5 commissioner from the group's accountant which confirms that the 66.6 compiled combined financial statements were prepared from 66.7 members reviewed or audited financial statements only before the 66.8 lower security deposit is allowed. Each actuarial study shall 66.9 include a projection of future losses during a one-year period 66.10 until the next scheduled actuarial study, less payments 66.11 anticipated to be made during that time. Deduction should be 66.12 made for the total amount which is estimated to be returned to 66.13 the commercial self-insurance group from any specific excess 66.14 insurance coverage, aggregate excess insurance coverage, and any 66.15 supplementary benefits which are estimated to be reimbursed by 66.16 the special compensation fund. Supplementary benefits will not 66.17 be reimbursed by the special compensation fund unless the 66.18 special compensation fund assessment pursuant to section 176.129 66.19 is paid and the required reports are filed with the special 66.20 compensation fund. In the case of surety bonds, bonds shall 66.21 secure administrative and legal costs in addition to the 66.22 liability for payment of compensation reflected on the face of 66.23 the bond. In no event shall the security be less than the 66.24 group's selected retention limit of the workers' compensation 66.25 reinsurance association. The posting or depositing of security 66.26 under this section shall release all previously posted or 66.27 deposited security from any obligations under the posting or 66.28 depositing and any surety bond so released shall be returned to 66.29 the surety. Any other security shall be returned to the 66.30 depositor or the person posting the bond. 66.31 Subd. 3. [TYPE OF ACCEPTABLE SECURITY.] The commissioner 66.32 may only accept as security, and the commercial self-insurance 66.33 group shall deposit as security, cash, approved government 66.34 securities as set forth in section 176.181, subdivision 2b, 66.35 surety bonds or irrevocable letters of credit in any combination 66.36 in accordance with the requirements under section 79A.04, 67.1 subdivision 3. 67.2 Subd. 4. [CUSTODIAL ACCOUNTS.] (a) All surety bonds, 67.3 irrevocable letters of credit, and documents showing issuance of 67.4 any irrevocable letter of credit shall be deposited in 67.5 accordance with the provisions of section 79A.071. 67.6 (b) Upon the commissioner sending a request to renew, 67.7 request to post, or request to increase a security deposit, a 67.8 perfected security interest is created in the commercial 67.9 self-insurance group's and member's assets in favor of the 67.10 commissioner to the extent of any then unsecured portion of the 67.11 commercial self-insurance group's incurred liabilities. The 67.12 perfected security interest is transferred to any cash or 67.13 securities thereafter posted by the commercial self-insurance 67.14 group with the state treasurer and is released only upon either 67.15 of the following: 67.16 (1) the acceptance by the commissioner of a surety bond or 67.17 irrevocable letter of credit for the full amount of the incurred 67.18 liabilities for the payment of compensation; or 67.19 (2) the return of cash or securities by the commissioner. 67.20 The commercial self-insurance group loses all right, title, and 67.21 interest in and any right to control all assets or obligations 67.22 posted or left on deposit as security. In the event of a 67.23 declaration of bankruptcy or insolvency by a court of competent 67.24 jurisdiction, or in the event of the issuance of a certificate 67.25 of default by the commissioner, the commissioner shall liquidate 67.26 the deposit as provided in this chapter, and transfer it to the 67.27 commercial self-insurance group security fund for application to 67.28 the commercial self-insurance group's incurred liability. 67.29 (c) No securities in physical form on deposit with the 67.30 state treasurer or the commissioner or custodial accounts 67.31 assigned to the state shall be released or exchanged without an 67.32 order from the commissioner. No security can be exchanged more 67.33 than once every 90 days. 67.34 (d) Any securities deposited with the state treasurer or 67.35 with a custodial account assigned to the state treasurer or 67.36 letters of credit or surety bonds held by the commissioner may 68.1 be exchanged or replaced by the depositor with any other 68.2 acceptable securities or letters of credit or surety bond of 68.3 like amount so long as the market value of the securities or 68.4 amount of the surety bonds or letter of credit equals or exceeds 68.5 the amount of the deposit required. If securities are replaced 68.6 by surety bond, the commercial self-insurance group must 68.7 maintain securities on deposit in an amount sufficient to meet 68.8 all outstanding workers' compensation liability arising during 68.9 the period covered by the deposit of the replaced securities. 68.10 (e) The commissioner shall return on an annual basis to the 68.11 commercial self-insurance group all amounts of security 68.12 determined by the commissioner to be in excess of the statutory 68.13 requirements for the group to self-insure, including that 68.14 necessary for administrative costs, legal fees, and the payment 68.15 of any future workers' compensation claims. 68.16 Sec. 34. [79A.25] [DEFAULT OF A COMMERCIAL SELF-INSURANCE 68.17 GROUP.] 68.18 Subdivision 1. [NOTICE OF INSOLVENCY, BANKRUPTCY, OR 68.19 DEFAULT.] The commissioner of labor and industry shall notify 68.20 the commissioner and the commercial self-insurance group 68.21 security fund if the commissioner of labor and industry has 68.22 knowledge that any commercial self-insurance group has failed to 68.23 pay workers' compensation benefits as required by chapter 176. 68.24 If the commissioner determines that a court of competent 68.25 jurisdiction has declared the commercial self-insurance group to 68.26 be bankrupt or insolvent and the commercial self-insurance group 68.27 has failed to pay workers' compensation as required by chapter 68.28 176 or if the commissioner issues a certificate of default 68.29 against a commercial self-insurance group for failure to pay 68.30 workers' compensation as required by chapter 176, then the 68.31 security deposit posted by the commercial self-insurance group 68.32 shall be utilized to administer and pay the commercial 68.33 self-insurance group's workers' compensation obligation. 68.34 Subd. 2. [REVOCATION OF CERTIFICATE TO SELF-INSURE.] (a) 68.35 The commissioner shall revoke the commercial self-insurance 68.36 group's certificate to self-insure once notified of the 69.1 commercial self-insurance group's bankruptcy, insolvency, or 69.2 upon issuance of a certificate of default. The revocation shall 69.3 be completed as soon as practicable, but no later than 30 days 69.4 after the commercial self-insurance group's security has been 69.5 called. 69.6 (b) The commissioner shall also revoke a commercial 69.7 self-insurance group's authority to self-insure on the following 69.8 grounds: 69.9 (1) failure to comply with any lawful order of the 69.10 commissioner; 69.11 (2) failure to comply with any provision of chapter 176; 69.12 (3) a deterioration of the commercial self-insurance 69.13 group's financial condition affecting its ability to pay 69.14 obligations in chapter 176; 69.15 (4) committing an unfair or deceptive act or practice as 69.16 defined in section 72A.20; or 69.17 (5) failure to abide by the plan of operation of the 69.18 workers' compensation reinsurance association. 69.19 Subd. 3. [NOTICE BY THE COMMISSIONER.] In the event of 69.20 bankruptcy, insolvency, or certificate of default, the 69.21 commissioner shall immediately notify by certified mail the 69.22 state treasurer, the surety, the issuer of an irrevocable letter 69.23 of credit, and any custodian of the security. At the time of 69.24 notification, the commissioner shall also call the security and 69.25 transfer and assign it to the commercial self-insurance group 69.26 security fund. The commissioner shall also notify by certified 69.27 mail the commercial self-insurance group's security fund and 69.28 order the commercial security fund to assume the insolvent 69.29 commercial self-insurance group's obligations for which it is 69.30 liable under chapter 176. 69.31 Sec. 35. [79A.26] [COMMERCIAL SELF-INSURANCE GROUP 69.32 SECURITY FUND.] 69.33 Subdivision 1. [CREATION.] The commercial self-insurance 69.34 group security fund is established as a nonprofit corporation 69.35 pursuant to the Minnesota nonprofit corporation act, sections 69.36 317A.001 to 317A.909. If any provision of the Minnesota 70.1 nonprofit corporation act conflicts with any provision of this 70.2 chapter, the provisions of this chapter apply. Each commercial 70.3 self-insurance group that elects to be subject to the terms of 70.4 sections 79A.19 to 79A.32 rather than sections 79A.01 to 79A.18 70.5 shall participate in the commercial self-insurance group 70.6 security fund. This participation shall be a condition of 70.7 maintaining its certificate to self-insure. 70.8 Subd. 2. [BOARD OF TRUSTEES.] The commercial security fund 70.9 shall be governed by a board consisting of a minimum of three 70.10 and maximum of five trustees. The trustees shall be 70.11 representatives of commercial self-insurance groups who shall be 70.12 elected by the participants of the commercial security fund, 70.13 each group having one vote. The trustees initially elected by 70.14 the participants shall serve staggered terms of either two or 70.15 three years. Thereafter, trustees shall be elected to 70.16 three-year terms and shall serve until their successors are 70.17 elected and assume office pursuant to the bylaws of the 70.18 commercial security fund. Two additional trustees shall be 70.19 appointed by the commissioner. These trustees shall serve 70.20 four-year terms. One of these trustees shall serve a two-year 70.21 term. Thereafter, the trustees shall be appointed to four-year 70.22 terms, and shall serve until their successors are appointed and 70.23 assume office according to the bylaws of the commercial security 70.24 fund. In addition to the trustees elected by the participants 70.25 or appointed by the commissioner, the commissioner of labor and 70.26 industry or the commissioner's designee shall be an ex officio, 70.27 nonvoting member of the board of trustees. A member of the 70.28 board of trustees may designate another person to act in the 70.29 member's place as though the member were acting and the 70.30 designee's actions shall be deemed those of the member. 70.31 Subd. 3. [BYLAWS.] The commercial security fund shall 70.32 establish bylaws and a plan of operation, subject to the prior 70.33 approval of the commissioner, necessary to the purposes of this 70.34 chapter and to carry out the responsibilities of the commercial 70.35 security fund. The commercial security fund may carry out its 70.36 responsibilities directly or by contract, and may purchase 71.1 services and insurance and borrow funds it deems necessary for 71.2 the protection of the commercial self-insurance group 71.3 participants and their employees. 71.4 Subd. 4. [CONFIDENTIAL INFORMATION.] The commercial 71.5 security fund may receive private data concerning the financial 71.6 condition of commercial self-insurance groups whose liabilities 71.7 to pay compensation have become its responsibility and shall 71.8 adopt bylaws to prevent dissemination of that information. 71.9 Subd. 5. [EMPLOYEES.] Commercial security fund employees 71.10 are not state employees and are not subject to any state civil 71.11 service regulations. 71.12 Subd. 6. [ASSUMPTION OF OBLIGATIONS.] Upon order of the 71.13 commissioner under section 79A.25, subdivision 3, the commercial 71.14 security fund shall assume the workers' compensation obligations 71.15 of an insolvent commercial self-insurance group. The 71.16 commissioner shall further order the commercial self-insurance 71.17 group security fund to commence payment of these obligations 71.18 within 14 days of the receipt of this notification and order. 71.19 Subd. 7. [ACT OR OMISSIONS; PENALTIES.] Notwithstanding 71.20 subdivision 6, the commercial security fund shall not be liable 71.21 for the payment of any penalties assessed for any act or 71.22 omission on the part of any person other than the commercial 71.23 security fund or its appointed administrator, including, but not 71.24 limited to, the penalties provided in chapter 176 unless the 71.25 commercial security fund or its appointed administrator would be 71.26 subject to penalties under chapter 176 as the result of the 71.27 actions of the commercial security fund or its administrator. 71.28 Subd. 8. [PARTY IN INTEREST.] The commercial security fund 71.29 shall be a party in interest in all proceedings involving 71.30 compensation claims against an insolvent commercial 71.31 self-insurance group whose compensation obligations have been 71.32 paid or assumed by the commercial security fund. The commercial 71.33 security fund shall have the same rights and defenses as the 71.34 insolvent commercial self-insurance group, including, but not 71.35 limited to, all of the following: 71.36 (1) to appear, defend, and appeal claims; 72.1 (2) to receive notice of, investigate, adjust, compromise, 72.2 settle, and pay claims; and 72.3 (3) to investigate, handle, and deny claims. 72.4 Subd. 9. [PAYMENTS TO COMMERCIAL SECURITY FUND.] 72.5 Notwithstanding sections 79A.19 to 79A.32 or chapter 176 to the 72.6 contrary, in the event that the commercial self-insurance group 72.7 security fund assumes the obligations of any bankrupt or 72.8 insolvent commercial self-insurance group pursuant to this 72.9 section, then the proceeds of any surety bond, workers' 72.10 compensation reinsurance association, specific excess insurance 72.11 or aggregate excess insurance policy, and any special 72.12 compensation fund payment or supplementary benefit 72.13 reimbursements shall be paid to the commercial self-insurance 72.14 group security fund instead of the bankrupt or insolvent 72.15 commercial self-insurance group or its successor in interest. 72.16 No special compensation fund reimbursements shall be made to the 72.17 commercial security fund unless the special compensation fund 72.18 assessments under section 176.129 are paid and the required 72.19 reports are made to the special compensation fund. 72.20 Subd. 10. [INSOLVENT COMMERCIAL SELF-INSURANCE GROUP.] The 72.21 commercial security fund shall have the right and obligation to 72.22 obtain reimbursement from an insolvent commercial self-insurance 72.23 group up to the amount of the commercial self-insurance group's 72.24 workers' compensation obligations paid and assumed by the 72.25 commercial security fund, including reasonable administrative 72.26 and legal costs. This right includes, but is not limited to, a 72.27 right to claim for wages and other necessities of life advanced 72.28 to claimants as subrogee of the claimants in any action to 72.29 collect against the commercial self-insurance group as debtor. 72.30 Subd. 11. [SECURITY DEPOSITS.] The commercial security 72.31 fund shall have the right and obligation to obtain from the 72.32 security deposit of an insolvent commercial self-insurance group 72.33 the amount of the commercial self-insurance group's compensation 72.34 obligations, including reasonable administrative and legal 72.35 costs, paid or assumed by the commercial security fund. 72.36 Reimbursement of administrative costs, including legal costs, 73.1 shall be subject to approval by a majority of the commercial 73.2 security fund's voting trustees. The commercial security fund 73.3 shall be a party in interest in any action to obtain the 73.4 security deposit for the payment of compensation obligations of 73.5 an insolvent commercial self-insurance group. 73.6 Subd. 12. [LEGAL ACTIONS.] The commercial security fund 73.7 shall have the right to bring an action against any person or 73.8 entity to recover compensation paid and liability assumed by the 73.9 commercial security fund, including, but not limited to, any 73.10 excess insurance carrier of the insolvent commercial 73.11 self-insurance group and any person or entity whose negligence 73.12 or breach of an obligation contributed to any underestimation of 73.13 the commercial self-insurance group's accrued liability as 73.14 reported to the commissioner. 73.15 Subd. 13. [PARTY IN INTEREST.] The commercial security 73.16 fund may be a party in interest in any action brought by any 73.17 other person seeking damages resulting from the failure of an 73.18 insolvent commercial self-insurance group to pay workers' 73.19 compensation required under this subdivision. 73.20 Subd. 14. [ASSETS MAINTAINED.] The commercial security 73.21 fund shall maintain cash, readily marketable securities, or 73.22 other assets, or a line of credit, approved by the commissioner, 73.23 sufficient to immediately continue the payment of the 73.24 compensation obligations of an insolvent commercial 73.25 self-insurance group pending receipt of the security deposit, 73.26 surety bond proceeds, irrevocable letter of credit, or, if 73.27 necessary, assessment of the participants. The commissioner may 73.28 establish the minimum amount to be maintained by, or immediately 73.29 available to, the commercial security fund for this purpose. 73.30 Subd. 15. [ASSESSMENT.] The commercial security fund may 73.31 assess each of its participants a pro rata share of the funding 73.32 necessary to carry out its obligation and the purposes of 73.33 sections 79A.19 to 79A.32. Total annual assessments in any 73.34 calendar year shall be a percentage of the workers' compensation 73.35 benefits paid under sections 176.101 and 176.111 during the 73.36 previous calendar year. The annual assessment calculation shall 74.1 not include supplementary benefits paid which will be reimbursed 74.2 by the special compensation fund. Funds obtained by assessments 74.3 under this subdivision may only be used for the purposes of 74.4 sections 79A.19 to 79A.32. The trustees shall certify to the 74.5 commissioner the collection and receipt of all money from 74.6 assessments, noting any delinquencies. The trustees shall take 74.7 any action deemed appropriate to collect any delinquent 74.8 assessments. 74.9 Subd. 16. [AUDIT OF FUND.] The trustees shall annually 74.10 contract for an independent certified audit of the financial 74.11 activities of the fund. An annual report on the financial 74.12 status of the commercial self-insurance group security fund 74.13 shall be submitted to the commissioner and to each commercial 74.14 group participant. 74.15 Sec. 36. [79A.27] [INDEMNITY AGREEMENT FORM.] 74.16 INDIVIDUAL AND PROPORTIONATE INDEMNITY AGREEMENT 74.17 WHEREAS, (name of company) has agreed to be and has been 74.18 accepted as a member of (name of commercial self-insurance 74.19 group). 74.20 WHEREAS, (name of company) has agreed to be bound by all of 74.21 the provisions of the Minnesota workers' compensation act and 74.22 all rules promulgated thereunder. 74.23 WHEREAS, that (name of company) has agreed to be bound by 74.24 bylaws or plan of operation and all amendments thereto of (name 74.25 of commercial self-insurance group); 74.26 NOW THEREFORE, IT IS AGREED that: 74.27 1. (Name of company) shall be jointly and severally liable 74.28 for all claims and expenses of all the members of (name of 74.29 commercial self-insurance group) arising in any fund year in 74.30 which (name of company) is a member of the commercial 74.31 self-insurance group. 74.32 2. (Name of commercial self-insurance group) shall assess 74.33 (name of company) on an individual and proportionate basis for 74.34 its share of the total liability of the commercial 74.35 self-insurance group. 74.36 3. In the event that (name of company) is not a member for 75.1 the full year, it shall be only liable for a pro rata share of 75.2 that liability. 75.3 IN WITNESS WHEREOF, the (name of company) and (name of 75.4 commercial self-insurance group) have caused this indemnity 75.5 agreement to be executed by its authorized officers: 75.6 Commercial Self-Insurance Group Name Company Name 75.8 By: ............................ By: ................... 75.9 date: .......................... date: ................. 75.10 Sec. 37. [79A.28] [OPEN MEETING; ADMINISTRATIVE PROCEDURE 75.11 ACT.] 75.12 The commercial self-insurance group security fund and its 75.13 board of trustees shall not be subject to: 75.14 (1) the open meeting law; 75.15 (2) the open appointments law; 75.16 (3) the data privacy law; and 75.17 (4) except where specifically set forth, the administrative 75.18 procedure act. 75.19 Sec. 38. [79A.29] [RULES.] 75.20 The commissioner may adopt, amend, and repeal rules 75.21 reasonably necessary to carry out the purposes of this chapter. 75.22 Minnesota Rules, chapter 2780, shall apply to commercial 75.23 self-insurance groups unless otherwise specified by rule. 75.24 Sec. 39. [79A.30] [GOVERNING LAW.] 75.25 If there is any inconsistency between sections 79A.19 to 75.26 79A.32 and any other statute or rule, the provisions of sections 75.27 79A.19 to 79A.32 shall govern with respect to commercial 75.28 self-insurance groups. 75.29 Sec. 40. [79A.31] [COMMERCIAL SELF-INSURANCE GROUP 75.30 SECURITY FUND MEMBERSHIP; WITHDRAWAL FROM SELF-INSURERS' 75.31 SECURITY FUND.] 75.32 Subdivision 1. [WITHDRAWAL.] Any group self-insurer that 75.33 is a member as of August 1, 1995, of the self-insurers' security 75.34 fund established under section 79A.09, may until January 1, 75.35 1996, elect to withdraw from that fund and become a member of 75.36 the commercial self-insurance group security fund established 76.1 under section 79A.26. The transferring group shall be subject 76.2 to the provisions and requirements of sections 79A.19 to 79A.34 76.3 as of the date of transfer. Additional security may be required 76.4 pursuant to section 79A.24. Group self-insurers electing to 76.5 transfer to the commercial self-insurance group fund shall not 76.6 be subject to the provisions of section 79A.06, subdivision 5, 76.7 including, but not limited to, assessments by the self-insurers' 76.8 security fund. 76.9 Subd. 2. [TRANSFER; NOTICE TO COMMISSIONER.] A group 76.10 self-insurer shall provide to the commissioner written notice of 76.11 its intent to transfer membership to the commercial 76.12 self-insurance group security fund. The notice shall be sent at 76.13 least 30 days prior to the date the group self-insurer requests 76.14 membership in the commercial self-insurance group security fund. 76.15 Subd. 3. [TRANSFER OF POTENTIAL AND CONTINGENT 76.16 LIABILITIES.] Upon transfer pursuant to subdivision 1, the 76.17 commercial self-insurance group security fund shall assume all 76.18 of the past, present, and future potential and contingent 76.19 workers' compensation liabilities of the transferring group in 76.20 the event of any bankruptcy or insolvency of that group or its 76.21 failure to meet its obligations under this chapter and chapter 76.22 176. 76.23 Subd. 4. [ELECTION.] A group self-insurer established 76.24 after August 1, 1995, may elect to become a member of either the 76.25 self-insurers' security fund or the commercial self-insurance 76.26 group security fund. However, once the election is made, a 76.27 group may not transfer to the other security fund. 76.28 Sec. 41. [79A.32] [REPORTING TO MINNESOTA WORKERS' 76.29 COMPENSATION INSURERS' ASSOCIATION.] 76.30 Subdivision 1. [REQUIRED ACTIVITY.] Each self-insurer 76.31 shall perform the following activities: 76.32 (1) maintain membership in and report loss experience data 76.33 to the Minnesota workers' compensation insurers association, or 76.34 a licensed data service organization, in accordance with the 76.35 statistical plan and rules of the organization as approved by 76.36 the commissioner; 77.1 (2) establish a plan for merit rating which shall be 77.2 consistently applied to all insureds, provided that members of a 77.3 data service organization may use merit rating plans developed 77.4 by that data service organization; 77.5 (3) provide an annual report to the commissioner containing 77.6 the information and prepared in the form required by the 77.7 commissioner; and 77.8 (4) keep a record of the losses paid by the self-insurers 77.9 and premiums for the group self-insurers. 77.10 Subd. 2. [PERMITTED ACTIVITY.] In addition to any other 77.11 activities not prohibited by this chapter, self-insurers may: 77.12 (1) through licensed data service organizations, 77.13 individually, or with self-insurers commonly owned, managed, or 77.14 controlled, conduct research and collect statistics to 77.15 investigate, identify, and classify information relating to 77.16 causes or prevention of losses; 77.17 (2) develop and use classification plans and rates based 77.18 upon any reasonable factors; and 77.19 (3) develop rules for the assignment of risks to 77.20 classifications. 77.21 Subd. 3. [DELAYED REPORTING.] Private self-insurers 77.22 established under sections 79A.01 to 79A.18 prior to August 1, 77.23 1995, need not begin filing the reports required under 77.24 subdivision 1 until January 1, 1998. 77.25 Sec. 42. Minnesota Statutes 1994, section 168.012, 77.26 subdivision 1, is amended to read: 77.27 Subdivision 1. (a) The following vehicles are exempt from 77.28 the provisions of this chapter requiring payment of tax and 77.29 registration fees, except as provided in subdivision 1c: 77.30 (1) vehicles owned and used solely in the transaction of 77.31 official business by representatives of foreign powers, by the 77.32 federal government, the state, or any political subdivision; 77.33 (2) vehicles owned and used exclusively by educational 77.34 institutions and used solely in the transportation of pupils to 77.35 and from such institutions; 77.36 (3) vehicles used solely in driver education programs at 78.1 nonpublic high schools; 78.2 (4) vehicles owned by nonprofit charities and used 78.3 exclusively to transport disabled persons for educational 78.4 purposes; 78.5 (5) vehicles owned and used by honorary consul or consul 78.6 general of foreign governments; and 78.7 (6) ambulances owned by ambulance services licensed under 78.8 section 144.802, the general appearance of which is unmistakable. 78.9 (b) Vehicles owned by the federal government, municipal 78.10 fire apparatus, police patrols and ambulances, the general 78.11 appearance of which is unmistakable, shall not be required to 78.12 register or display number plates. 78.13 (c) Unmarked vehicles used in general police work, liquor 78.14 investigations, arson investigations, and passenger automobiles, 78.15 pickup trucks, and buses owned or operated by the department of 78.16 corrections shall be registered and shall display appropriate 78.17 license number plates which shall be furnished by the registrar 78.18 at cost. Original and renewal applications for these license 78.19 plates authorized for use in general police work and for use by 78.20 the department of corrections must be accompanied by a 78.21 certification signed by the appropriate chief of police if 78.22 issued to a police vehicle, the appropriate sheriff if issued to 78.23 a sheriff's vehicle, the commissioner of corrections if issued 78.24 to a department of corrections vehicle, or the appropriate 78.25 officer in charge if issued to a vehicle of any other law 78.26 enforcement agency. The certification must be on a form 78.27 prescribed by the commissioner and state that the vehicle will 78.28 be used exclusively for a purpose authorized by this section. 78.29 (d) Unmarked vehicles used by thedepartmentdepartments of 78.30 revenue and labor and industry, fraud unit, in conducting 78.31 seizures or criminal investigations must be registered and must 78.32 display passenger vehicle classification license number plates 78.33 which shall be furnished at cost by the registrar. Original and 78.34 renewal applications for these passenger vehicle license plates 78.35 must be accompanied by a certification signed by the 78.36 commissioner of revenue or the commissioner of labor and 79.1 industry. The certification must be on a form prescribed by the 79.2 commissioner and state that the vehicles will be used 79.3 exclusively for the purposes authorized by this section. 79.4 (e) All other motor vehicles shall be registered and 79.5 display tax-exempt number plates which shall be furnished by the 79.6 registrar at cost, except as provided in subdivision 1c. All 79.7 vehicles required to display tax-exempt number plates shall have 79.8 the name of the state department or political subdivision, or 79.9 the nonpublic high school operating a driver education program, 79.10 on the vehicle plainly displayed on both sides thereof in 79.11 letters not less than 2-1/2 inches high and one-half inch wide; 79.12 except that each state hospital and institution for the mentally 79.13 ill and mentally retarded may have one vehicle without the 79.14 required identification on the sides of the vehicle, and county 79.15 social service agencies may have vehicles used for child and 79.16 vulnerable adult protective services without the required 79.17 identification on the sides of the vehicle. Such identification 79.18 shall be in a color giving contrast with that of the part of the 79.19 vehicle on which it is placed and shall endure throughout the 79.20 term of the registration. The identification must not be on a 79.21 removable plate or placard and shall be kept clean and visible 79.22 at all times; except that a removable plate or placard may be 79.23 utilized on vehicles leased or loaned to a political subdivision 79.24 or to a nonpublic high school driver education program. 79.25 Sec. 43. Minnesota Statutes 1994, section 175.16, is 79.26 amended to read: 79.27 175.16 [DIVISIONS.] 79.28 The department of labor and industry shall consist of the 79.29 following divisions: division of workers' compensation, 79.30 division of boiler inspection, division of occupational safety 79.31 and health, division of statistics, division of steamfitting 79.32 standards, division of voluntary apprenticeship, division of 79.33 labor standards, and such other divisions as the commissioner of 79.34 the department of labor and industry may deem necessary and 79.35 establish. Each division of the department and persons in 79.36 charge thereof shall be subject to the supervision of the 80.1 commissioner of the department of labor and industry and, in 80.2 addition to such duties as are or may be imposed on them by 80.3 statute, shall perform such other duties as may be assigned to 80.4 them by said commissioner. Notwithstanding any other law to the 80.5 contrary, the commissioner is the administrator and supervisor 80.6 of all of the department's dispute resolution functions and 80.7 personnel and may delegate authority to settlement judges and 80.8 others to make determinations under sections 176.106, 176.238, 80.9 and 176.239 and to approve settlement of claims under section 80.10 176.521. 80.11 Sec. 44. Minnesota Statutes 1994, section 176.011, 80.12 subdivision 16, is amended to read: 80.13 Subd. 16. [PERSONAL INJURY.] "Personal injury" means 80.14 injury arising out of and in the course of employment and 80.15 includes personal injury caused by occupational disease; but 80.16 does not cover an employee except while engaged in, on, or about 80.17 the premises where the employee's services require the 80.18 employee's presence as a part ofsuchthat service at the time 80.19 of the injury and during the hours ofsuchthat service. Where 80.20 the employer regularly furnished transportation to employees to 80.21 and from the place of employmentsuch, those employees are 80.22 subject to this chapter while being so transported, but shall. 80.23 Personal injury does not include an injury caused by the act of 80.24 a third person or fellow employee intended to injure the 80.25 employee because of personal reasons, and not directed against 80.26 the employee as an employee, or because of the employment. 80.27 Sec. 45. Minnesota Statutes 1994, section 176.081, 80.28 subdivision 1, is amended to read: 80.29 Subdivision 1. [APPROVALLIMITATION OF FEES.] (a) A fee 80.30 for legal services of 25 percent of the first $4,000 of 80.31 compensation awarded to the employee and 20 percent of the next 80.32 $60,000 of compensation awarded to the employee is the maximum 80.33 permissible fee and does not require approval by the 80.34 commissioner, compensation judge, or any other partyexcept as80.35provided in paragraph (d). All fees, including fees for 80.36 obtaining medical or rehabilitation benefits, must be calculated 81.1 according to the formula under this subdivision,or earned in81.2hourly fees for representation at discontinuance conferences81.3under section 176.239, or earned in hourly fees for81.4representation on rehabilitation or medical issues under section81.5176.102, 176.135, or 176.136. Attorney fees for recovery of81.6medical or rehabilitation benefits or services shall be assessed81.7against the employer or insurer if these fees exceed the81.8contingent fee under this section in connection with benefits81.9currently in dispute. The amount of the fee that the employer81.10or insurer is liable for is the amount determined under81.11subdivision 5, minus the contingent feeexcept as otherwise 81.12 provided in clause (1) or (2). 81.13 (1) the contingent attorney fee for recovery of monetary 81.14 benefits according to the formula in this section is presumed to 81.15 be adequate to cover recovery of medical and rehabilitation 81.16 benefit or services concurrently in dispute. Attorney fees for 81.17 recovery of medical or rehabilitation benefits or services shall 81.18 be assessed against the employer or insurer only if the attorney 81.19 establishes that the contingent fee is inadequate to reasonably 81.20 compensate the attorney for representing the employee in the 81.21 medical or rehabilitation dispute. In cases where the 81.22 contingent fee is inadequate the employer or insurer is liable 81.23 for attorney fees based on the formula in this subdivision or in 81.24 clause (2). 81.25 For the purposes of applying the formula where the employer 81.26 or insurer is liable for attorney fees, the amount of 81.27 compensation awarded for obtaining disputed medical and 81.28 rehabilitation benefits under sections 176.102, 176.135, and 81.29 176.136 shall be the dollar value of the medical or 81.30 rehabilitation benefit awarded, where ascertainable. 81.31 (2) The maximum attorney fee for obtaining a change of 81.32 doctor or qualified rehabilitation consultant, or any other 81.33 disputed medical or rehabilitation benefit for which a dollar 81.34 value is not reasonably ascertainable, is the amount charged in 81.35 hourly fees for the representation or $500, whichever is less, 81.36 to be paid by the employer or insurer. 82.1 (3) The fees for obtaining disputed medical or 82.2 rehabilitation benefits are included in the $13,000 limit in 82.3 paragraph (b). An attorney must concurrently file all 82.4 outstanding disputed issues. An attorney is not entitled to 82.5 attorney fees for representation in any issue which could 82.6 reasonably have been addressed during the pendency of other 82.7 issues for the same injury. 82.8 (b) All fees for legal services related to the same injury 82.9 are cumulative and may not exceed $13,000, except as provided by82.10subdivision 2. If multiple injuries are the subject of a 82.11 dispute, the commissioner, compensation judge, or court of 82.12 appeals shall specify the attorney fee attributable to each 82.13 injury. 82.14 (c) If the employer or the insurer or the defendant is 82.15 given written notice of claims for legal services or 82.16 disbursements, the claim shall be a lien against the amount paid 82.17 or payable as compensation. Subject to the foregoing maximum 82.18 amount for attorney fees, up to 25 percent of the first $4,000 82.19 of periodic compensation awarded to the employee and 20 percent 82.20 of the next $60,000 of periodic compensation awarded to the 82.21 employee may be withheld from the periodic payments for attorney 82.22 fees or disbursements if the payor of the funds clearly 82.23 indicates on the check or draft issued to the employee for 82.24 payment the purpose of the withholding, the name of the 82.25 attorney, the amount withheld, and the gross amount of the 82.26 compensation payment before withholding. In no case shall fees 82.27 be calculated on the basis of any undisputed portion of 82.28 compensation awards. Allowable fees under this chapter shall be 82.29 based solely upon genuinely disputed claims or portions of 82.30 claims, including disputes related to the payment of 82.31 rehabilitation benefits or to other aspects of a rehabilitation 82.32 plan.Fees for administrative conferences under section 176.23982.33shall be determined on an hourly basis, according to the82.34criteria in subdivision 5.The existence of a dispute is 82.35 dependent upon a disagreement after the employer or insurer has 82.36 had adequate time and information to take a position on 83.1 liability. Neither the holding of a hearing nor the filing of 83.2 an application for a hearing alone may determine the existence 83.3 of a dispute. Except where the employee is represented by an 83.4 attorney in other litigation pending at the department or at the 83.5 office of administrative hearings, a fee may not be charged 83.6 after June 1, 1996, for services with respect to a medical or 83.7 rehabilitation issue arising under section 176.102, 176.135, or 83.8 176.136 performed before the employee has consulted with the 83.9 department and the department certifies that there is a dispute 83.10 and that it has tried to resolve the dispute. 83.11 (d) An attorney who is claiming legal fees for representing 83.12 an employee in a workers' compensation matter shall file a 83.13 statement of attorney fees with the commissioner, compensation 83.14 judge before whom the matter was heard, or workers' compensation 83.15 court of appeals on cases before the court. A copy of the 83.16 signed retainer agreement shall also be filed. The employee and 83.17 insurer shall receive a copy of the statement. The statement 83.18 shall be on a form prescribed by the commissioner,and shall 83.19 report the number of hours spent on the case, and shall clearly83.20and conspicuously state that the employee or insurer has ten83.21calendar days to object to the attorney fees requested. If no83.22objection is timely made by the employee or insurer, the amount83.23requested shall be conclusively presumed reasonable providing83.24the amount does not exceed the limitation in subdivision 1. The83.25commissioner, compensation judge, or court of appeals shall83.26issue an order granting the fees and the amount requested shall83.27be awarded to the party requesting the fee. 83.28If a timely objection is filed, or the fee is determined on83.29an hourly basis, the commissioner, compensation judge, or court83.30of appeals shall review the matter and make a determination83.31based on the criteria in subdivision 5.83.32If no timely objection is made by an employer or insurer,83.33reimbursement under subdivision 7 shall be made if the statement83.34of fees requested this reimbursement.83.35 (e) Employers and insurers may not pay attorney fees or 83.36 wages for legal services of more than $13,000 per case unless 84.1 the additional fees or wages are approved under subdivision 2. 84.2 (f) Each insurer and self-insured employer shall file 84.3 annual statements with the commissioner detailing the total 84.4 amount of legal fees and other legal costs incurred by the 84.5 insurer or employer during the year. The statement shall 84.6 include the amount paid for outside and in-house counsel, 84.7 deposition and other witness fees, and all other costs relating 84.8 to litigation. 84.9 Sec. 46. Minnesota Statutes 1994, section 176.081, 84.10 subdivision 7, is amended to read: 84.11 Subd. 7. [AWARD; ADDITIONAL AMOUNT.] If the employer or 84.12 insurer files a denial of liability, notice of discontinuance, 84.13 or fails to make payment of compensation or medical expenses 84.14 within the statutory period after notice of injury or 84.15 occupational disease, or otherwise unsuccessfully resists the 84.16 payment of compensation or medical expenses, or unsuccessfully 84.17 disputes the payment of rehabilitation benefits or other aspects 84.18 of a rehabilitation plan, and the injured person has employed an 84.19 attorney at law, who successfully procures payment on behalf of 84.20 the employee or who enables the resolution of a dispute with 84.21 respect to a rehabilitation plan, the compensation judge, 84.22 commissioner, or the workers' compensation court of appeals upon 84.23 appeal, upon application, shall award to the employee against 84.24 the insurer or self-insured employer or uninsured employer, in 84.25 addition to the compensation benefits paid or awarded to the 84.26 employee, an amount equal to2530 percent of that portion of 84.27 the attorney's fee which has been awarded pursuant to this 84.28 section that is in excess of $250. 84.29 Sec. 47. Minnesota Statutes 1994, section 176.081, 84.30 subdivision 7a, is amended to read: 84.31 Subd. 7a. [SETTLEMENT OFFER.] At any time prior to one day 84.32 before a matter is to be heard, a party litigating a claim made 84.33 pursuant to this chapter may serve upon the adverse party a 84.34 reasonable offer of settlement of the claim, with provision for 84.35 costs and disbursements then accrued. If before the hearing the 84.36 adverse party serves written notice that the offer is accepted, 85.1 either party may then file the offer and notice of acceptance, 85.2 together with the proof of service thereof, and thereupon 85.3 judgment shall be entered. 85.4 If an offer by an employer or insurer is not accepted by 85.5 the employee, it shall be deemed withdrawn and evidence thereof 85.6 is not admissible, except in a proceeding to determine 85.7 attorney's fees.Notwithstanding the provisions of subdivision85.87, if the judgment finally obtained by the employee is less85.9favorable than the offer, the employer shall not be liable for85.10any part of the attorney's fees awarded pursuant to this section.85.11 If an offer by an employee is not accepted by the employer 85.12 or insurer, it shall be deemed withdrawn and evidence thereof is 85.13 not admissible, except in a proceeding to determine attorney's 85.14 fees.Notwithstanding the provisions of subdivision 7, if the85.15judgment finally obtained by the employee is at least as85.16favorable as the offer, the employer shall pay an additional 2585.17percent, over the amount provided in subdivision 7, of that85.18portion of the attorney's fee which has been awarded pursuant to85.19this section that is in excess of $250.85.20 The fact that an offer is made but not accepted does not 85.21 preclude a subsequent offer. 85.22 Sec. 48. Minnesota Statutes 1994, section 176.081, 85.23 subdivision 9, is amended to read: 85.24 Subd. 9. [RETAINER AGREEMENT.] An attorney who is hired by 85.25 an employee to provide legal services with respect to a claim 85.26 for compensation made pursuant to this chapter shall prepare a 85.27 retainer agreement in which the provisions of this section are 85.28 specifically set out and provide a copy of this agreement to the 85.29 employee. The retainer agreement shall provide a space for the 85.30 signature of the employee. A signed agreement shall raise a 85.31 conclusive presumption that the employee has read and 85.32 understands the statutory fee provisions. No fee shall be 85.33 awarded pursuant to this section in the absence of a signed 85.34 retainer agreement. 85.35 The retainer agreement shall contain a notice to the 85.36 employee regarding the maximum fee allowed under this section in 86.1 ten-point type, which shall read: 86.2 Notice of Maximum Fee 86.3 The maximum fee allowed by law for legal services is 25 86.4 percent of the first $4,000 of compensation awarded to the 86.5 employee and 20 percent of the next $60,000 of compensation 86.6 awarded to the employee subject to a cumulative maximum fee of 86.7 $13,000 for fees related to the same injury. 86.8 The employee shall take notice that the employee is under 86.9 no legal or moral obligation to pay any fee for legal services 86.10 in excess of the foregoing maximum fee. 86.11 Sec. 49. Minnesota Statutes 1994, section 176.081, is 86.12 amended by adding a subdivision to read: 86.13 Subd. 12. [SANCTIONS; FAILURE TO PREPARE, APPEAR, OR 86.14 PARTICIPATE.] If a party or party's attorney fails to appear at 86.15 any conference or hearing scheduled under this chapter, is 86.16 substantially unprepared to participate in the conference or 86.17 hearing, or fails to participate in good faith, the commissioner 86.18 or compensation judge, upon motion or upon its own initiative, 86.19 shall require the party or the party's attorney or both to pay 86.20 the reasonable expenses including attorney fees, incurred by the 86.21 other party due to the failure to appear, prepare, or 86.22 participate. Attorney fees or other expenses may not be awarded 86.23 if the commissioner or compensation judge finds that the 86.24 noncompliance was substantially justified or that other 86.25 circumstances would make the sanction unjust. The department of 86.26 labor and industry, and the office of administrative hearings 86.27 may by rule establish additional sanctions for failure of a 86.28 party or the party's attorney to appear, prepare for, or 86.29 participate in a conference or hearing. 86.30 Sec. 50. Minnesota Statutes 1994, section 176.102, 86.31 subdivision 3a, is amended to read: 86.32 Subd. 3a. [DISCIPLINARY ACTIONS.] The panel has authority 86.33 to discipline qualified rehabilitation consultants and vendors 86.34 and may impose a penalty of up to$1,000$3,000 per violation, 86.35 payable to the special compensation fund, and may suspend or 86.36 revoke certification. Complaints against registered qualified 87.1 rehabilitation consultants and vendors shall be made to the 87.2 commissioner who shall investigate all complaints. If the 87.3 investigation indicates a violation of this chapter or rules 87.4 adopted under this chapter, the commissioner may initiate a 87.5 contested case proceeding under the provisions of chapter 14. 87.6 In these cases, the rehabilitation review panel shall make the 87.7 final decision following receipt of the report of an 87.8 administrative law judge. The decision of the panel is 87.9 appealable to the workers' compensation court of appeals in the 87.10 manner provided by section 176.421. The panel shall 87.11 continuously study rehabilitation services and delivery, develop 87.12 and recommend rehabilitation rules to the commissioner, and 87.13 assist the commissioner in accomplishing public education. 87.14 The commissioner may appoint alternates for one-year terms 87.15 to serve as a member when a member is unavailable. The number 87.16 of alternates shall not exceed one labor member, one employer or 87.17 insurer member, and one member representing medicine, 87.18 chiropractic, or rehabilitation. 87.19 Sec. 51. Minnesota Statutes 1994, section 176.102, 87.20 subdivision 11, is amended to read: 87.21 Subd. 11. [RETRAINING; COMPENSATION.] (a) Retraining is 87.22 limited to 156 weeks. An employee who has been approved for 87.23 retraining may petition the commissioner or compensation judge 87.24 for additional compensation not to exceed 25 percent of the 87.25 compensation otherwise payable. If the commissioner or 87.26 compensation judge determines that this additional compensation 87.27 is warranted due to unusual or unique circumstances of the 87.28 employee's retraining plan, the commissioner may award 87.29 additional compensation in an amount not to exceed the 87.30 employee's request. This additional compensation shall cease at 87.31 any time the commissioner or compensation judge determines the 87.32 special circumstances are no longer present. 87.33 (b) If the employee is not employed during a retraining 87.34 plan that has been specifically approved under this section, 87.35 temporary total compensation is payable for up to 90 days after 87.36 the end of the retraining plan; except that, payment during the 88.1 90-day period is subject to cessation in accordance with section 88.2 176.101. If the employee is employed during the retraining plan 88.3 but earning less than at the time of injury, temporary partial 88.4 compensation is payable at the rate of 66-2/3 percent of the 88.5 difference between the employee's weekly wage at the time of 88.6 injury and the weekly wage the employee is able to earn in the 88.7 employee's partially disabled condition, subject to the maximum 88.8 rate for temporary total compensation. Temporary partial 88.9 compensation is not subject to the 225-week or 450-week 88.10 limitations provided by section 176.101, subdivision 2, during 88.11 the retraining plan, but is subject to those limitations before 88.12 and after the plan. 88.13 (c) Any request for retraining shall be filed with the 88.14 commissioner before 104 weeks of any combination of temporary 88.15 total or temporary partial compensation have been paid. 88.16 Retraining shall not be available after 104 weeks of any 88.17 combination of temporary total or temporary partial compensation 88.18 benefits have been paid unless the request for the retraining 88.19 has been filed with the commissioner prior to the time the 104 88.20 weeks of compensation have been paid. 88.21 (d) The employer or insurer must notify the employee in 88.22 writing of the 104 week limitation for filing a request for 88.23 retraining with the commissioner. This notice must be given 88.24 before 80 weeks of temporary total disability or temporary 88.25 partial disability compensation have been paid, regardless of 88.26 the number of weeks that have elapsed since the date of injury. 88.27 If the notice is not given before the 80 weeks, the period of 88.28 time within which to file a request for retraining is extended 88.29 by the number of days the notice is late, but in no event may a 88.30 request be filed later than 225 weeks after any combination of 88.31 temporary total disability or temporary partial disability 88.32 compensation have been paid. The commissioner may assess a 88.33 penalty of $25 per day that the notice is late, up to a maximum 88.34 penalty of $2,000, against an employer or insurer for failure to 88.35 provide the notice. The penalty is payable to the assigned risk 88.36 safety account. 89.1 Sec. 52. Minnesota Statutes 1994, section 176.103, 89.2 subdivision 2, is amended to read: 89.3 Subd. 2. [SCOPE.] The commissioner shall monitor the 89.4 medical and surgical treatment provided to injured employees, 89.5 the services of other health care providers and shall also 89.6 monitor hospital utilization as it relates to the treatment of 89.7 injured employees. This monitoring shall include determinations 89.8 concerning the appropriateness of the service, whether the 89.9 treatment is necessary and effective, the proper cost of 89.10 services, the quality of the treatment, the right of providers 89.11 to receive payment under this chapter for services rendered or 89.12 the right to receive payment under this chapter for future 89.13 services. Insurers and self-insurers must assist the 89.14 commissioner in this monitoring by reporting to the commissioner 89.15 cases of suspected excessive, inappropriate, or unnecessary 89.16 treatment.The commissioner shall report specific cases of89.17suspected inappropriate, unnecessary, and excessive treatment to89.18the medical services review board. The medical services review89.19board shall review those cases and make a determination of89.20whether there is inappropriate, unnecessary, or excessive89.21treatment based on rules adopted by the commissioner in89.22consultation with the medical services review board. The89.23determination of the board is not subject to the contested case89.24provisions of the administrative procedure act in chapter 14.89.25An affected provider shall be given notice and an opportunity to89.26be heard before the board prior to the board reporting its89.27findings and conclusions. The board shall report its findings89.28and conclusions to the commissioner. The findings and89.29conclusions of the board are binding on the commissioner. The89.30commissioner shall order a sanction if the board has concluded89.31there was inappropriate, unnecessary, or excessive treatment.89.32 The commissioner in consultation with the medical services 89.33 review board shall adopt rules defining standards of treatment 89.34 including inappropriate, unnecessary, or excessive treatment and 89.35 the sanctions to be imposed for inappropriate, unnecessary, or 89.36 excessive treatment. The sanctions imposed may include, without 90.1 limitation, a warning, a restriction on providing treatment, 90.2 requiring preauthorization by the board for a plan of treatment, 90.3 and suspension from receiving compensation for the provision of 90.4 treatment under chapter 176. The commissioner's authority under 90.5 this section also includes the authority to make determinations 90.6 regarding any other activity involving the questions of 90.7 utilization of medical services, and any other determination the 90.8 commissioner deems necessary for the proper administration of 90.9 this section, but does not include the authority to make the 90.10 initial determination of primary liability, except as provided 90.11 by section 176.305. 90.12 Sec. 53. Minnesota Statutes 1994, section 176.103, 90.13 subdivision 3, is amended to read: 90.14 Subd. 3. [MEDICAL SERVICES REVIEW BOARD; SELECTION; 90.15 POWERS.] (a) There is created a medical services review board 90.16 composed of the commissioner or the commissioner's designee as 90.17 an ex officio member, two persons representing chiropractic, one 90.18 person representing hospital administrators, one physical 90.19 therapist, and six physicians representing different specialties 90.20 which the commissioner determines are the most frequently 90.21 utilized by injured employees. The board shall also have one 90.22 person representing employees, one person representing employers 90.23 or insurers, and one person representing the general public. 90.24 The members shall be appointed by the commissioner and shall be 90.25 governed by section 15.0575. Terms of the board's members may 90.26 be renewed. The board may appoint from its members whatever 90.27 subcommittees it deems appropriate. 90.28 The commissioner may appoint alternates for one-year terms 90.29 to serve as a member when a member is unavailable. The number 90.30 of alternates shall not exceed one chiropractor, one physical 90.31 therapist, one hospital administrator, three physicians, one 90.32 employee representative, one employer or insurer representative, 90.33 and one representative of the general public. 90.34 The board shall review clinical results for adequacy and 90.35 recommend to the commissioner scales for disabilities and 90.36 apportionment. 91.1 The board shall review and recommend to the commissioner 91.2 rates for individual clinical procedures and aggregate costs. 91.3 The board shall assist the commissioner in accomplishing public 91.4 education. 91.5 In evaluating the clinical consequences of the services 91.6 provided to an employee by a clinical health care provider, the 91.7 board shall consider the following factors in the priority 91.8 listed: 91.9 (1) the clinical effectiveness of the treatment; 91.10 (2) the clinical cost of the treatment; and 91.11 (3) the length of time of treatment. 91.12 The board shall advise the commissioner on the adoption of 91.13 rules regarding all aspects of medical care and services 91.14 provided to injured employees. 91.15 (b) The medical services review board may upon petition 91.16 from the commissioner and after hearing, issue a warning, a 91.17 penalty of $200 per violation, a restriction on providing 91.18 treatment that requires preauthorization by the board, 91.19 commissioner, or compensation judge for a plan of treatment, 91.20 disqualify, or suspend a provider from receiving payment for 91.21 services rendered under this chapter if a provider has violated 91.22 any part of this chapter or rule adopted under this chapter, or 91.23 where there has been a pattern of, or an egregious case of, 91.24 inappropriate, unnecessary, or excessive treatment by a provider. 91.25 The hearings are initiated by the commissioner under the 91.26 contested case procedures of chapter 14. The board shall make 91.27 the final decision following receipt of the recommendation of 91.28 the administrative law judge. The board's decision is 91.29 appealable to the workers' compensation court of appeals in the 91.30 manner provided by section 176.421. 91.31 (c) The board may adopt rules of procedure. The rules may 91.32 be joint rules with the rehabilitation review panel. 91.33 Sec. 54. Minnesota Statutes 1994, section 176.104, 91.34 subdivision 1, is amended to read: 91.35 Subdivision 1. [DISPUTE.] If there exists a dispute 91.36 regarding medical causation or whether an injury arose out of 92.1 and in the course and scope of employment and an employeehas92.2been disabled for the requisite time under section 176.102,92.3subdivision 4,is otherwise eligible for rehabilitation services 92.4 under section 176.102 prior to determination of liability, the 92.5 employee shall be referred by the commissioner to the 92.6 department's vocational rehabilitation unit which shall provide 92.7 rehabilitation consultation if appropriate. The services 92.8 provided by the department's vocational rehabilitation unit and 92.9 the scope and term of the rehabilitation are governed by section 92.10 176.102 and rules adopted pursuant to that section. 92.11 Rehabilitation costs and services under this subdivision shall 92.12 be monitored by the commissioner. 92.13 Sec. 55. Minnesota Statutes 1994, section 176.106, is 92.14 amended to read: 92.15 176.106 [ADMINISTRATIVE CONFERENCE.] 92.16 Subdivision 1. [SCOPE.] All determinations by the 92.17 commissioner or the commissioner's designee pursuant to section 92.18 176.102, 176.103, 176.135, or 176.136 shall be in accordance 92.19 with the procedures contained in this section. 92.20 Subd. 2. [REQUEST FOR CONFERENCE.] Any party may request 92.21 an administrative conference by filing a request on a form 92.22 prescribed by the commissioner. 92.23 Subd. 3. [CONFERENCE.] The matter shall be scheduled for 92.24 an administrative conference within 60 days after receipt of the 92.25 request for a conference. Notice of the conference shall be 92.26 served on all parties no later than 14 days prior to the 92.27 conference, unless the commissioner determines that a conference 92.28 shall not be held. The commissioner may order an administrative 92.29 conference before the commissioner's designee whether or not a 92.30 request for conference is filed. 92.31 The commissioner may refuse to hold an administrative 92.32 conference and refer the matter for a settlement or pretrial 92.33 conference or may certify the matter to the office of 92.34 administrative hearings for a full hearing before a compensation 92.35 judge. 92.36 Subd. 4. [APPEARANCES.] All parties shall appear either 93.1 personally, by telephone, by representative, or by written 93.2 submission. Thecommissionercommissioner's designee shall 93.3 determine the issues in dispute based upon the information 93.4 available at the conference. 93.5 Subd. 5. [DECISION.] A written decision shall be issued by 93.6 thecommissioner or an authorized representativecommissioner's 93.7 designee determining all issues considered at the conference or 93.8 if a conference was not held, based on the written submissions. 93.9 Disputed issues of fact shall be determined by a preponderance 93.10 of the evidence. The decision must be issued within 30 days 93.11 after the close of the conference or if no conference was held, 93.12 within 60 days after receipt of the request for conference. The 93.13 decision must include a statement indicating the right to 93.14 request a de novo hearing before a compensation judge and how to 93.15 initiate the request. 93.16 Subd. 6. [PENALTY.] At a conference, if the insurer does 93.17 not provide a specific reason for nonpayment of the items in 93.18 dispute, thecommissionercommissioner's designee may assess a 93.19 penalty of $300 payable to the assigned risk safety account, 93.20 unless it is determined that the reason for the lack of 93.21 specificity was the failure of the insurer, upon timely request, 93.22 to receive information necessary to remedy the lack of 93.23 specificity. This penalty is in addition to any penalty that 93.24 may be applicable for nonpayment. 93.25 Subd. 7. [REQUEST FOR HEARING.] Any party aggrieved by the 93.26 decision of thecommissionercommissioner's designee may request 93.27 a formal hearing by filing the request with the commissioner and 93.28 serving the request on all parties no later than 30 days after 93.29 the decision; provided, however, that the commissioner shall 93.30 review a decision of the commissioner's designee regarding a 93.31 claim for a medical benefit of $1500 or less and the 93.32 commissioner's decision shall be final.The requestRequests on 93.33 other issues shall be referred to the office of administrative 93.34 hearings for a de novo hearing before a compensation 93.35 judge. Except where the only issues to be determined pursuant 93.36 to this section involve liability for past treatment or services 94.1 that will not affect entitlement to ongoing or future proposed 94.2 treatment or services under section 176.102 or 176.135, the 94.3 commissioner shall refer a timely request to the office of 94.4 administrative hearings within five working days after filing of 94.5 the request and the hearing at the office of administrative 94.6 hearings must be held on the first date that all parties are 94.7 available but not later than 60 days after the office of 94.8 administrative hearings receives the matter. Following the 94.9 hearing, the compensation judge must issue the decision within 94.10 30 days. The decision of the compensation judge is appealable 94.11 pursuant to section 176.421. 94.12 Subd. 8. [DENIAL OF PRIMARY LIABILITY.] The commissioner 94.13 does not have authority to make determinations relating to 94.14 medical or rehabilitation benefits when there is a genuine 94.15 dispute over whether the injury initially arose out of and in 94.16 the course of employment, except as provided by section 176.305. 94.17 Subd. 9. [SUBSEQUENT CAUSATION ISSUES.] If initial 94.18 liability for an injury has been admitted or established and an 94.19 issue subsequently arises regarding causation between the 94.20 employee's condition and the work injury, the commissioner may 94.21 make the subsequent causation determination subject to de novo 94.22 hearing by a compensation judge with a right to review by the 94.23 court of appeals, as provided in this chapter. 94.24 Sec. 56. [176.107] [TELECONFERENCES.] 94.25 The division, department, office, or the court of appeals 94.26 may, at its discretion, conduct mediation sessions, 94.27 administrative conferences, settlement conferences, or hearings 94.28 as provided in this chapter in person, by telephone, or by 94.29 visual or audio teleconferencing methods. 94.30 Sec. 57. [176.108] [LIGHT-DUTY WORK POOLS.] 94.31 Employers may form light-duty work pools for the purpose of 94.32 encouraging the return to work of injured employees. The 94.33 commissioner may adopt emergency and permanent rules necessary 94.34 to implement this section. 94.35 Sec. 58. Minnesota Statutes 1994, section 176.129, 94.36 subdivision 9, is amended to read: 95.1 Subd. 9. [POWERS OF FUND.] In addition to powers granted 95.2 to the special compensation fund by this chapter the fund may do 95.3 the following: 95.4 (a) sue and be sued in its own name; 95.5 (b) intervene in or commence an action under this chapter 95.6 or any other law, including, but not limited to, intervention or 95.7 action as a subrogee to the division's right in a third-party 95.8 action, any proceeding under this chapter in which liability of 95.9 the special compensation fund is an issue, or any proceeding 95.10 which may result in other liability of the fund or to protect 95.11 the legal right of the fund; 95.12 (c) enter into settlements including but not limited to 95.13 structured, annuity purchase agreements with appropriate parties 95.14 under this chapter;. Notwithstanding any other provision of 95.15 this chapter, any settlement may provide that the fund partially 95.16 or totally denies liability for payment of benefits, and no 95.17 determination of employer insurance status and liability under 95.18 section 176.183, subdivision 2, shall be required for approval 95.19 of the stipulation for a settlement; 95.20 (d) contract with another party to administer the special 95.21 compensation fund; 95.22 (e) take any other action which an insurer is permitted by 95.23 law to take in operating within this chapter; and 95.24 (f) conduct a financial audit of indemnity claim payments 95.25 and assessments reported to the fund. This may be contracted by 95.26 the fund to a private auditing firm. 95.27 Sec. 59. Minnesota Statutes 1994, section 176.129, 95.28 subdivision 10, is amended to read: 95.29 Subd. 10. [PENALTY.] Sums paid to the commissioner 95.30 pursuant to this section shall be in the manner prescribed by 95.31 the commissioner. The commissioner may impose a penalty payable 95.32 to the assigned risk safety account of up to 15 percent of the 95.33 amount due under this section but not less than$500$1,000 in 95.34 the event payment is not made in the manner prescribed. 95.35 Sec. 60. Minnesota Statutes 1994, section 176.130, 95.36 subdivision 9, is amended to read: 96.1 Subd. 9. [FALSE REPORTS.] Any person or entity that, for 96.2 the purpose of evading payment of the assessment or avoiding the 96.3 reimbursement, or any part of it, makes a false report under 96.4 this section shall pay to the assigned risk safety account, in 96.5 addition to the assessment, a penalty of5075 percent of the 96.6 amount of the assessment. A person who knowingly makes or signs 96.7 a false report, or who knowingly submits other false 96.8 information, is guilty of a misdemeanor. 96.9 Sec. 61. Minnesota Statutes 1994, section 176.135, 96.10 subdivision 1, is amended to read: 96.11 Subdivision 1. [MEDICAL, PSYCHOLOGICAL, CHIROPRACTIC, 96.12 PODIATRIC, SURGICAL, HOSPITAL.] (a) The employer shall furnish 96.13 any medical, psychological, chiropractic, podiatric, surgical 96.14 and hospital treatment, including nursing, medicines, medical, 96.15 chiropractic, podiatric, and surgical supplies, crutches and 96.16 apparatus, including artificial members, or, at the option of 96.17 the employee, if the employer has not filed notice as 96.18 hereinafter provided, Christian Science treatment in lieu of 96.19 medical treatment, chiropractic medicine and medical supplies, 96.20 as may reasonably be required at the time of the injury and any 96.21 time thereafter to cure and relieve from the effects of the 96.22 injury. This treatment shall include treatments necessary to 96.23 physical rehabilitation. 96.24 (b) The employer shall pay for the reasonable value of 96.25 nursing services provided by a member of the employee's family 96.26 in cases of permanent total disability. 96.27 (c) Exposure to rabies is an injury and an employer shall 96.28 furnish preventative treatment to employees exposed to rabies. 96.29 (d) The employer shall furnish replacement or repair for 96.30 artificial members, glasses, or spectacles, artificial eyes, 96.31 podiatric orthotics, dental bridge work, dentures or artificial 96.32 teeth, hearing aids, canes, crutches, or wheel chairs damaged by 96.33 reason of an injury arising out of and in the course of the 96.34 employment. For the purpose of this paragraph, "injury" 96.35 includes damage wholly or in part to an artificial member. In 96.36 case of the employer's inability or refusal seasonably to 97.1 provide the items required to be provided under this paragraph, 97.2 the employer is liable for the reasonable expense incurred by or 97.3 on behalf of the employee in providing the same, including costs 97.4 of copies of any medical records or medical reports that are in 97.5 existence, obtained from health care providers, and that 97.6 directly relate to the items for which payment is sought under 97.7 this chapter, limited to the charges allowed by subdivision 7, 97.8 and attorney fees incurred by the employee.Attorney's fees97.9shall be determined on an hourly basis according to the criteria97.10in section 176.081, subdivision 5.97.11 (e) Both the commissioner and the compensation judges have 97.12 authority to make determinations under this section in 97.13 accordance with sections 176.106 and 176.305. 97.14 (f) An employer may require that the treatment and supplies 97.15 required to be provided by an employer by this section be 97.16 received in whole or in part from a managed care plan certified 97.17 under section 176.1351 except as otherwise provided by that 97.18 section. 97.19 Sec. 62. Minnesota Statutes 1994, section 176.1351, 97.20 subdivision 1, is amended to read: 97.21 Subdivision 1. [APPLICATION.] Any person or entity, other 97.22 than a workers' compensation insurer or an employer for its own 97.23 employees, may make written application to the commissioner to 97.24 have a plan certified that provides management of quality 97.25 treatment to injured workers for injuries and diseases 97.26 compensable under this chapter. Specifically, and without 97.27 limitation, an entity licensed under chapter 62C or 62D or a 97.28 preferred provider organization that is subject to chapter 72A 97.29 is eligible for certification under this section. Each 97.30 application for certification shall be accompanied by a 97.31 reasonable fee prescribed by the commissioner which shall be 97.32 deposited in the special compensation fund. A plan may be 97.33 certified to provide services in a limited geographic area. A 97.34 certificate is valid for the period the commissioner prescribes 97.35 unless revoked or suspended. Application for certification 97.36 shall be made in the form and manner and shall set forth 98.1 information regarding the proposed plan for providing services 98.2 as the commissioner may prescribe. The information shall 98.3 include, but not be limited to: 98.4 (1) a list of the names of all health care providers who 98.5 will provide services under the managed care plan, together with 98.6 appropriate evidence of compliance with any licensing or 98.7 certification requirements for those providers to practice in 98.8 this state; and 98.9 (2) a description of the places and manner of providing 98.10 services under the plan. 98.11 Sec. 63. Minnesota Statutes 1994, section 176.1351, 98.12 subdivision 5, is amended to read: 98.13 Subd. 5. [REVOCATION, SUSPENSION, AND REFUSAL TO CERTIFY; 98.14 PENALTIES AND ENFORCEMENT.] (a) The commissioner shall refuse to 98.15 certify or shall revoke or suspend the certification of a 98.16 managed care plan if the commissioner finds that the plan for 98.17 providing medical or health care services fails to meet the 98.18 requirements of this section, or service under the plan is not 98.19 being provided in accordance with the terms of a certified plan. 98.20 (b) In lieu of or in addition to suspension or revocation 98.21 under paragraph (a), the commissioner may, for any noncompliance 98.22 with the managed care plan as certified or any violation of a 98.23 statute or rule applicable to a managed care plan, assess an 98.24 administrative penalty payable to the special compensation fund 98.25 in an amount up to $25,000 for each violation or incidence of 98.26 noncompliance. The commissioner may adopt emergency or 98.27 permanent rules necessary to implement this subdivision. In 98.28 determining the level of an administrative penalty, the 98.29 commissioner shall consider the following factors: 98.30 (1) the number of workers affected or potentially affected 98.31 by the violation or noncompliance; 98.32 (2) the effect or potential effect of the violation or 98.33 noncompliance on workers' health, access to health services, or 98.34 workers' compensation benefits; 98.35 (3) the effect or potential effect of the violation or 98.36 noncompliance on workers' understanding of their rights and 99.1 obligations under the workers' compensation law and rules; 99.2 (4) whether the violation or noncompliance is an isolated 99.3 incident or part of a pattern of violations; and 99.4 (5) the potential or actual economic benefits derived by 99.5 the managed care plan or a participating provider by virtue of 99.6 the violation or noncompliance. 99.7 The commissioner shall give written notice to the managed 99.8 care plan of the penalty assessment and the reasons for the 99.9 penalty. The managed care plan has 30 days from the date the 99.10 penalty notice is issued within which to file a written request 99.11 for an administrative hearing and review of the commissioner's 99.12 determination pursuant to section 176.85, subdivision 1. 99.13 (c) If the commissioner, for any reason, has cause to 99.14 believe that a managed care plan has or may violate a statute or 99.15 rule or a provision of the managed care plan as certified, the 99.16 commissioner may, before commencing action under paragraph (a) 99.17 or (b), call a conference with the managed care plan and other 99.18 persons who may be involved in the suspected violation or 99.19 noncompliance for the purpose of ascertaining the facts relating 99.20 to the suspected violation or noncompliance and arriving at an 99.21 adequate and effective means of correcting or preventing the 99.22 violation or noncompliance. The commissioner may enter into 99.23 stipulated consent agreements with the managed care plan for 99.24 corrective or preventive action or the amount of the penalty to 99.25 be paid. Proceedings under this paragraph shall not be governed 99.26 by any formal procedural requirements, and may be conducted in a 99.27 manner the commissioner deems appropriate under the 99.28 circumstances. 99.29 (d) The commissioner may issue an order directing a managed 99.30 care plan or a representative of a managed care plan to cease 99.31 and desist from engaging in any act or practice that is not in 99.32 compliance with the managed care plan as certified, or that it 99.33 is in violation of an applicable statute or rule. Within 30 99.34 days of service of the order, the managed care plan may request 99.35 review of the cease and desist order by an administrative law 99.36 judge pursuant to chapter 14. The decision of the