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SF 1054

2nd Engrossment - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 2nd Engrossment

  1.1                          A bill for an act 
  1.2             relating to insurance; regulating insurers, agents, 
  1.3             coverages and benefits, costs, claims, investments, 
  1.4             and notifications and disclosures; prescribing powers 
  1.5             and duties of the commissioner; eliminating the 
  1.6             regulation of nonprofit legal services plans; amending 
  1.7             Minnesota Statutes 2000, sections 60A.06, subdivision 
  1.8             3; 60A.08, subdivision 13; 60A.11, subdivision 10; 
  1.9             60A.129, subdivision 2; 60A.14, subdivision 1; 60A.16, 
  1.10            subdivision 1; 60A.23, subdivision 8; 61A.072, by 
  1.11            adding a subdivision; 62A.17, subdivision 1; 62A.20, 
  1.12            subdivision 1; 62A.21, subdivision 2a; 62A.302; 
  1.13            62A.31, subdivisions 1a, 1i, 3; 62A.65, subdivision 8; 
  1.14            62E.04, subdivision 4; 62E.06, subdivision 1; 62I.07, 
  1.15            subdivision 1; 62L.05, subdivisions 1, 2; 62M.03, 
  1.16            subdivision 2; 62M.05, subdivision 5; 62Q.01, 
  1.17            subdivision 6; 62Q.73, subdivision 3; 65A.29, 
  1.18            subdivision 7; 65B.04, subdivision 3; 65B.06, 
  1.19            subdivisions 1, 4; 65B.16; 65B.19, subdivision 2; 
  1.20            67A.20, by adding a subdivision; 70A.07; 79A.02, 
  1.21            subdivision 1; 79A.03, subdivision 7; 79A.04, 
  1.22            subdivision 16; 79A.15; 471.617, subdivision 1; 
  1.23            proposing coding for new law in Minnesota Statutes, 
  1.24            chapters 62A; 62L; repealing Minnesota Statutes 2000, 
  1.25            sections 13.7191, subdivision 11; 60A.111; 62G.01; 
  1.26            62G.02; 62G.03; 62G.04; 62G.05; 62G.06; 62G.07; 
  1.27            62G.08; 62G.09; 62G.10; 62G.11; 62G.12; 62G.13; 
  1.28            62G.14; 62G.15; 62G.16; 62G.17; 62G.18; 62G.19; 
  1.29            62G.20; 62G.21; 62G.22; 62G.23; 62G.24; 62G.25. 
  1.31     Section 1.  Minnesota Statutes 2000, section 60A.06, 
  1.32  subdivision 3, is amended to read: 
  1.33     Subd. 3.  [LIMITATION ON COMBINATION POLICIES.] (a) Unless 
  1.34  specifically authorized by subdivision 1, clause (4), it is 
  1.35  unlawful to combine in one policy coverage permitted by 
  1.36  subdivision 1, clauses (4) and (5)(a).  This subdivision does 
  1.37  not prohibit the simultaneous sale of these products, but the 
  2.1   sale must involve two separate and distinct policies.  
  2.2      (b) This subdivision does not apply to group policies.  
  2.3      (c) This subdivision does not apply to policies permitted 
  2.4   by subdivision 1, clause (4), that contain benefits providing 
  2.5   acceleration of life, endowment, or annuity benefits in advance 
  2.6   of the time they would otherwise be payable, or to long-term 
  2.7   care policies as defined in section 62A.46, subdivision 2, or 
  2.8   chapter 62S.  
  2.9      [EFFECTIVE DATE.] This section is effective the day 
  2.10  following final enactment. 
  2.11     Sec. 2.  Minnesota Statutes 2000, section 60A.08, 
  2.12  subdivision 13, is amended to read: 
  2.14  PROHIBITED.] (a) No insurer shall issue or renew a policy of 
  2.15  liability insurance in this state that reduces the limits of 
  2.16  liability stated in the policy by the costs of legal defense. 
  2.17     (b) This subdivision does not apply to:  
  2.18     (1) professional liability insurance with annual aggregate 
  2.19  limits of liability greater than of at least $100,000, including 
  2.20  directors' and officers' and errors and omissions liability 
  2.21  insurance; 
  2.22     (2) environmental impairment liability insurance; 
  2.23     (3) insurance policies issued to large commercial risks; or 
  2.24     (4) coverages that the commissioner determines to be 
  2.25  appropriate which will be published in the manner prescribed for 
  2.26  surplus lines insurance in section 60A.201, subdivision 4.  
  2.27     (c) For purposes of this subdivision, "large commercial 
  2.28  risks" means an insured whose gross annual revenues in the 
  2.29  fiscal year preceding issuance of the policy were at least 
  2.30  $10,000,000. 
  2.31     [EFFECTIVE DATE.] This section is effective the day 
  2.32  following final enactment. 
  2.33     Sec. 3.  Minnesota Statutes 2000, section 60A.11, 
  2.34  subdivision 10, is amended to read: 
  2.35     Subd. 10.  [DEFINITIONS.] The following terms have the 
  2.36  meaning assigned in this subdivision for purposes of this 
  3.1   section and section 60A.111: 
  3.2      (a) "Adequate evidence" means a written confirmation, 
  3.3   advice, or other verification issued by a depository, issuer, or 
  3.4   custodian bank which shows that the investment is held for the 
  3.5   company; 
  3.6      (b) "Adequate security" means a letter of credit qualifying 
  3.7   under subdivision 11, paragraph (f), cash, or the pledge of an 
  3.8   investment authorized by any subdivision of this section; 
  3.9      (c) "Admitted assets," for purposes of computing percentage 
  3.10  limitations on particular types of investments, means the assets 
  3.11  as shown by the company's annual statement, required by section 
  3.12  60A.13, as of the December 31 immediately preceding the date the 
  3.13  company acquires the investment; 
  3.14     (d) "Clearing corporation" means The Depository Trust 
  3.15  Company or any other clearing agency registered with the 
  3.16  securities and exchange commission pursuant to the Securities 
  3.17  Exchange Act of 1934, section 17A, Euro-clear Clearance System 
  3.18  Limited and CEDEL S.A., and, with the approval of the 
  3.19  commissioner, any other clearing corporation as defined in 
  3.20  section 336.8-102; 
  3.21     (e) "Control" has the meaning assigned to that term in, and 
  3.22  must be determined in accordance with, section 60D.15, 
  3.23  subdivision 4; 
  3.24     (f) "Custodian bank" means a bank or trust company or a 
  3.25  branch of a bank or trust company that is acting as custodian 
  3.26  and is supervised and examined by state or federal authority 
  3.27  having supervision over the bank or trust company or with 
  3.28  respect to a company's foreign investments only by the 
  3.29  regulatory authority having supervision over banks or trust 
  3.30  companies in the jurisdiction in which the bank, trust company, 
  3.31  or branch is located, and any banking institutions qualifying as 
  3.32  an "Eligible Foreign Custodian" under the Code of Federal 
  3.33  Regulations, section 270.17f-5, adopted under section 17(f) of 
  3.34  the Investment Company Act of 1940, and specifically including 
  3.35  Euro-clear Clearance System Limited and CEDEL S.A., acting as 
  3.36  custodians; 
  4.1      (g) "Evergreen clause" means a provision that automatically 
  4.2   renews a letter of credit for a time certain if the issuer of 
  4.3   the letter of credit fails to affirmatively signify its 
  4.4   intention to nonrenew upon expiration; 
  4.5      (h) "Government obligations" means direct obligations for 
  4.6   the payment of money, or obligations for the payment of money to 
  4.7   the extent guaranteed as to the payment of principal and 
  4.8   interest by any governmental issuer where the obligations are 
  4.9   payable from ad valorem taxes or guaranteed by the full faith, 
  4.10  credit, and taxing power of the issuer and are not secured 
  4.11  solely by special assessments for local improvements; 
  4.12     (i) "Noninvestment grade obligations" means obligations 
  4.13  which, at the time of acquisition, were rated below Baa/BBB or 
  4.14  the equivalent by a securities rating agency or which, at the 
  4.15  time of acquisition, were not in one of the two highest 
  4.16  categories established by the securities valuation office of the 
  4.17  National Association of Insurance Commissioners; 
  4.18     (j) "Issuer" means the corporation, business trust, 
  4.19  governmental unit, partnership, association, individual, or 
  4.20  other entity which issues or on behalf of which is issued any 
  4.21  form of obligation; 
  4.22     (k) "Licensed real estate appraiser" means a person who 
  4.23  develops and communicates real estate appraisals and who holds a 
  4.24  current, valid license under chapter 82B or a substantially 
  4.25  similar licensing requirement in another jurisdiction; 
  4.26     (l) "Member bank" means a national bank, state bank or 
  4.27  trust company which is a member of the Federal Reserve System; 
  4.28     (m) "National securities exchange" means an exchange 
  4.29  registered under section 6 of the Securities Exchange Act of 
  4.30  1934 or an exchange regulated under the laws of the Dominion of 
  4.31  Canada; 
  4.32     (n) "NASDAQ" means the reporting system for securities 
  4.33  meeting the definition of National Market System security as 
  4.34  provided under Part I to Schedule D of the National Association 
  4.35  of Securities Dealers Incorporated bylaws; 
  4.36     (o) "Obligations" include bonds, notes, debentures, 
  5.1   transportation equipment certificates, repurchase agreements, 
  5.2   bank certificates of deposit, time deposits, bankers' 
  5.3   acceptances, and other obligations for the payment of money not 
  5.4   in default as to payments of principal and interest on the date 
  5.5   of investment, whether constituting general obligations of the 
  5.6   issuer or payable only out of certain revenues or certain funds 
  5.7   pledged or otherwise dedicated for payment.  Leases are 
  5.8   considered obligations if the lease is assigned for the benefit 
  5.9   of the company and is nonterminable by the lessee or lessees 
  5.10  thereunder upon foreclosure of any lien upon the leased 
  5.11  property, and rental payments are sufficient to amortize the 
  5.12  investment over the primary lease term; 
  5.13     (p) "Qualified assets" means the sum of (1) all investments 
  5.14  qualified in accordance with this section other than investments 
  5.15  in affiliates and subsidiaries, (2) investments in obligations 
  5.16  of affiliates as defined in section 60D.15, subdivision 2, 
  5.17  secured by real or personal property sufficient to qualify the 
  5.18  investment under subdivision 19 or 23, (3) qualified investments 
  5.19  in subsidiaries, as defined in section 60D.15, subdivision 9, on 
  5.20  a consolidated basis with the insurance company without 
  5.21  allowance for goodwill or other intangible value, and (4) cash 
  5.22  on hand and on deposit, agent's balances or uncollected premiums 
  5.23  not due more than 90 days, assets held pursuant to section 
  5.24  60A.12, subdivision 2, investment income due and accrued, funds 
  5.25  due or on deposit or recoverable on loss payments under 
  5.26  contracts of reinsurance entered into pursuant to section 
  5.27  60A.09, premium bills and notes receivable, federal income taxes 
  5.28  recoverable, and equities and deposits in pools and 
  5.29  associations; 
  5.30     (q) "Qualified net earnings" means that the net earnings of 
  5.31  the issuer after elimination of extraordinary nonrecurring items 
  5.32  of income and expense and before income taxes and fixed charges 
  5.33  over the five immediately preceding completed fiscal years, or 
  5.34  its period of existence if less than five years, has averaged 
  5.35  not less than 1-1/4 times its average annual fixed charges 
  5.36  applicable to the period; 
  6.1      (r) "Required liabilities" means the sum of (1) total 
  6.2   liabilities as required to be reported in the company's most 
  6.3   recent annual report to the commissioner of commerce of this 
  6.4   state, (2) for companies operating under the stock plan, the 
  6.5   minimum paid-up capital and surplus required to be maintained 
  6.6   pursuant to section 60A.07, subdivision 5a, (3) for companies 
  6.7   operating under the mutual or reciprocal plan, the minimum 
  6.8   amount of surplus required to be maintained pursuant to section 
  6.9   60A.07, subdivision 5b, and (4) the amount, if any, by which the 
  6.10  company's loss and loss adjustment expense reserves exceed 350 
  6.11  percent of its surplus as it pertains to policyholders as of the 
  6.12  same date.  The commissioner may waive the requirement in clause 
  6.13  (4) unless the company's written premiums exceed 300 percent of 
  6.14  its surplus as it pertains to policyholders as of the same 
  6.15  date.  In addition to the required amounts pursuant to clauses 
  6.16  (1) to (4), the commissioner may require that the amount of any 
  6.17  apparent reserve deficiency that may be revealed by one to five 
  6.18  year loss and loss adjustment expense development analysis for 
  6.19  the five years reported in the company's most recent annual 
  6.20  statement to the commissioner be added to required liabilities; 
  6.21     (s) "Revenue obligations" means obligations for the payment 
  6.22  of money by a governmental issuer where the obligations are 
  6.23  payable from revenues, earnings, or special assessments on 
  6.24  properties benefited by local improvements of the issuer which 
  6.25  are specifically pledged therefor; 
  6.26     (t) "Security" has the meaning given in section 5 of the 
  6.27  Security Act of 1933 and specifically includes, but is not 
  6.28  limited to, stocks, stock equivalents, warrants, rights, 
  6.29  options, obligations, American Depository Receipts (ADR's), 
  6.30  repurchase agreements, and reverse repurchase agreements; and 
  6.31     (u) "Unrestricted surplus" means the amount by which 
  6.32  qualified assets exceed 110 percent of required liabilities.  
  6.33     [EFFECTIVE DATE.] This section is effective the day 
  6.34  following final enactment. 
  6.35     Sec. 4.  Minnesota Statutes 2000, section 60A.129, 
  6.36  subdivision 2, is amended to read: 
  7.1      Subd. 2.  [LOSS RESERVE CERTIFICATION.] (a) Each domestic 
  7.2   company engaged in providing the types of coverage described in 
  7.3   section 60A.06, subdivision 1, clause (1), (2), (3), (5)(b), 
  7.4   (6), (8), (9), (10), (11), (12), (13), or (14), must have its 
  7.5   loss reserves certified by a qualified actuary.  The company 
  7.6   must file the certification with the commissioner within 30 days 
  7.7   of completion of the certification, but not later than June 1.  
  7.8   The actuary providing the certification must not may be an 
  7.9   employee of the company but the commissioner may still require 
  7.10  an independent actuarial certification as described in 
  7.11  subdivision 1.  This subdivision does not apply to township 
  7.12  mutual companies, or to other domestic insurers having less than 
  7.13  $1,000,000 of premiums written in any year and fewer than 1,000 
  7.14  policyholders.  The commissioner may allow an exception to the 
  7.15  stand alone certification where it can be demonstrated that a 
  7.16  company in a group has a pooling or 100 percent reinsurance 
  7.17  agreement used in a group which substantially affects the 
  7.18  solvency and integrity of the reserves of the company, or where 
  7.19  it is only the parent company of a group which is licensed to do 
  7.20  business in Minnesota.  If these circumstances exist, the 
  7.21  company may file a written request with the commissioner for an 
  7.22  exception.  Companies writing reinsurance alone are not exempt 
  7.23  from this requirement.  The certification must contain the 
  7.24  following statement:  "The loss reserves and loss expense 
  7.25  reserves have been examined and found to be calculated in 
  7.26  accordance with generally accepted actuarial principles and 
  7.27  practices In my opinion, the reserves described in this 
  7.28  certification are consistent with reserves computed in 
  7.29  accordance with standards and principles established by the 
  7.30  Actuarial Standards Board and are fairly stated."  
  7.31     (b) Each foreign company engaged in providing the types of 
  7.32  coverage described in section 60A.06, subdivision 1, clause (1), 
  7.33  (2), (3), (5)(b), (6), (8), (9), (10), (11), (12), (13), or 
  7.34  (14), required by this section to file an annual audited 
  7.35  financial report, whose total net earned premium for Schedule P, 
  7.36  Part 1A to Part 1H plus Part 1R, (Schedule P, Part 1A to Part 1H 
  8.1   plus Part 1R, Column 4, current year premiums earned, from the 
  8.2   company's most currently filed annual statement) is equal to 
  8.3   one-third or more of the company's total net earned premium 
  8.4   (Underwriting and Investment Exhibit, Part 2, Column 4, total 
  8.5   line, of the annual statement) must have a reserve certification 
  8.6   by a qualified actuary at least every three years.  In the year 
  8.7   that the certification is due, the company must file the 
  8.8   certification with the commissioner within 30 days of completion 
  8.9   of the certification, but not later than June 1.  The actuary 
  8.10  providing the certification must not be an employee of the 
  8.11  company.  Companies writing reinsurance alone are not exempt 
  8.12  from this requirement.  The certification must contain the 
  8.13  following statement:  "The loss reserves and loss expense 
  8.14  reserves have been examined and found to be calculated in 
  8.15  accordance with generally accepted actuarial principles and 
  8.16  practices and are fairly stated."  
  8.17     (c) Each company providing life and/or health insurance 
  8.18  coverages described in section 60A.06, subdivision 1, clause (4) 
  8.19  or (5)(a), required by this section to file an audited annual 
  8.20  financial report, whose premiums and annuity considerations (net 
  8.21  of reinsurance) from accident and health equal one-third or more 
  8.22  of the company's total premiums and annuity considerations (net 
  8.23  of reinsurance), as reported in the summary of operations, must 
  8.24  have its aggregate reserve for accident and health policies and 
  8.25  liability for policy and contract claims for accident and health 
  8.26  certified by a qualified actuary at least once every three 
  8.27  years.  The actuary providing the certification must not be an 
  8.28  employee of the company.  Companies writing reinsurance alone 
  8.29  are not exempt from this requirement.  The certification must 
  8.30  contain the following statement:  "The policy and contract 
  8.31  claims reserves for accident and health have been examined and 
  8.32  found to be calculated in accordance with generally accepted 
  8.33  actuarial principles and practices and are fairly stated." 
  8.34     [EFFECTIVE DATE.] This section is effective the day 
  8.35  following final enactment. 
  8.36     Sec. 5.  Minnesota Statutes 2000, section 60A.14, 
  9.1   subdivision 1, is amended to read: 
  9.2      Subdivision 1.  [FEES OTHER THAN EXAMINATION FEES.] In 
  9.3   addition to the fees and charges provided for examinations, the 
  9.4   following fees must be paid to the commissioner for deposit in 
  9.5   the general fund: 
  9.6      (a) by township mutual fire insurance companies: 
  9.7      (1) for filing certificate of incorporation $25 and 
  9.8   amendments thereto, $10; 
  9.9      (2) for filing annual statements, $15; 
  9.10     (3) for each annual certificate of authority, $15; 
  9.11     (4) for filing bylaws $25 and amendments thereto, $10. 
  9.12     (b) by other domestic and foreign companies including 
  9.13  fraternals and reciprocal exchanges: 
  9.14     (1) for filing certified copy of certificate of articles of 
  9.15  incorporation, $100; 
  9.16     (2) for filing annual statement, $225; 
  9.17     (3) for filing certified copy of amendment to certificate 
  9.18  or articles of incorporation, $100; 
  9.19     (4) for filing bylaws, $75 or amendments thereto, $75; 
  9.20     (5) for each company's certificate of authority, $575, 
  9.21  annually. 
  9.22     (c) the following general fees apply: 
  9.23     (1) for each certificate, including certified copy of 
  9.24  certificate of authority, renewal, valuation of life policies, 
  9.25  corporate condition or qualification, $25; 
  9.26     (2) for each copy of paper on file in the commissioner's 
  9.27  office 50 cents per page, and $2.50 for certifying the same; 
  9.28     (3) for license to procure insurance in unadmitted foreign 
  9.29  companies, $575; 
  9.30     (4) for valuing the policies of life insurance companies, 
  9.31  one cent per $1,000 of insurance so valued, provided that the 
  9.32  fee shall not exceed $13,000 per year for any company.  The 
  9.33  commissioner may, in lieu of a valuation of the policies of any 
  9.34  foreign life insurance company admitted, or applying for 
  9.35  admission, to do business in this state, accept a certificate of 
  9.36  valuation from the company's own actuary or from the 
 10.1   commissioner of insurance of the state or territory in which the 
 10.2   company is domiciled; 
 10.3      (5) for receiving and filing certificates of policies by 
 10.4   the company's actuary, or by the commissioner of insurance of 
 10.5   any other state or territory, $50; 
 10.6      (6) for each appointment of an agent filed with the 
 10.7   commissioner, a domestic insurer shall remit $5 and all other 
 10.8   insurers shall remit $3; 
 10.9      (7) for filing forms and rates, $75 per filing, to be paid 
 10.10  on a quarterly basis in response to an invoice.  Billing and 
 10.11  payment may be made electronically; 
 10.12     (8) for annual renewal of surplus lines insurer license, 
 10.13  $300. 
 10.14     The commissioner shall adopt rules to define filings that 
 10.15  are subject to a fee. 
 10.16     [EFFECTIVE DATE.] This section is effective July 1, 2001. 
 10.17     Sec. 6.  Minnesota Statutes 2000, section 60A.16, 
 10.18  subdivision 1, is amended to read: 
 10.19     Subdivision 1.  [SCOPE.] (1) [DOMESTIC INSURANCE 
 10.20  CORPORATIONS.] Any two or more domestic insurance corporations, 
 10.21  formed for any of the purposes for which stock, mutual, or stock 
 10.22  and mutual insurance corporations, or reciprocal or 
 10.23  interinsurance contract exchanges might be formed under the laws 
 10.24  of this state, may be 
 10.25     (a) merged into one of such domestic insurance 
 10.26  corporations, or 
 10.27     (b) consolidated into a new insurance corporation to be 
 10.28  formed under the laws of this state. 
 10.30  domestic insurance corporations and any foreign insurance 
 10.31  corporations formed to carry on any insurance business for the 
 10.32  conduct of which an insurance corporation might be organized 
 10.33  under the laws of this state, may be 
 10.34     (a) merged into one of such domestic insurance 
 10.35  corporations, or 
 10.36     (b) merged into one of such foreign insurance corporations, 
 11.1   or 
 11.2      (c) consolidated into a new insurance corporation to be 
 11.3   formed under the laws of this state, or 
 11.4      (d) consolidated into a new insurance corporation to be 
 11.5   formed under the laws of the government under which one of such 
 11.6   foreign insurance corporations was formed, provided that each of 
 11.7   such foreign insurance corporations is authorized by the laws of 
 11.8   the government under which it was formed to effect such merger 
 11.9   or consolidation. 
 11.10     [EFFECTIVE DATE.] This section is effective the day 
 11.11  following final enactment. 
 11.12     Sec. 7.  Minnesota Statutes 2000, section 60A.23, 
 11.13  subdivision 8, is amended to read: 
 11.16  subdivision applies to any vendor of risk management services 
 11.17  and to any entity which administers, for compensation, a 
 11.18  self-insurance or insurance plan.  This subdivision does not 
 11.19  apply (a) to an insurance company authorized to transact 
 11.20  insurance in this state, as defined by section 60A.06, 
 11.21  subdivision 1, clauses (4) and (5); (b) to a service plan 
 11.22  corporation, as defined by section 62C.02, subdivision 6; (c) to 
 11.23  a health maintenance organization, as defined by section 62D.02, 
 11.24  subdivision 4; (d) to an employer directly operating a 
 11.25  self-insurance plan for its employees' benefits; (e) to an 
 11.26  entity which administers a program of health benefits 
 11.27  established pursuant to a collective bargaining agreement 
 11.28  between an employer, or group or association of employers, and a 
 11.29  union or unions; or (f) to an entity which administers a 
 11.30  self-insurance or insurance plan if a licensed Minnesota insurer 
 11.31  is providing insurance to the plan and if the licensed insurer 
 11.32  has appointed the entity administering the plan as one of its 
 11.33  licensed agents within this state. 
 11.34     (2)  [DEFINITIONS.] For purposes of this subdivision the 
 11.35  following terms have the meanings given them. 
 11.36     (a) "Administering a self-insurance or insurance plan" 
 12.1   means (i) processing, reviewing or paying claims, (ii) 
 12.2   establishing or operating funds and accounts, or (iii) otherwise 
 12.3   providing necessary administrative services in connection with 
 12.4   the operation of a self-insurance or insurance plan. 
 12.5      (b) "Employer" means an employer, as defined by section 
 12.6   62E.02, subdivision 2. 
 12.7      (c) "Entity" means any association, corporation, 
 12.8   partnership, sole proprietorship, trust, or other business 
 12.9   entity engaged in or transacting business in this state. 
 12.10     (d) "Self-insurance or insurance plan" means a plan 
 12.11  providing life, medical or hospital care, accident, sickness or 
 12.12  disability insurance for the benefit of employees or members of 
 12.13  an association, or a plan providing liability coverage for any 
 12.14  other risk or hazard, which is or is not directly insured or 
 12.15  provided by a licensed insurer, service plan corporation, or 
 12.16  health maintenance organization. 
 12.17     (e) "Vendor of risk management services" means an entity 
 12.18  providing for compensation actuarial, financial management, 
 12.19  accounting, legal or other services for the purpose of designing 
 12.20  and establishing a self-insurance or insurance plan for an 
 12.21  employer. 
 12.22     (3)  [LICENSE.] No vendor of risk management services or 
 12.23  entity administering a self-insurance or insurance plan may 
 12.24  transact this business in this state unless it is licensed to do 
 12.25  so by the commissioner.  An applicant for a license shall state 
 12.26  in writing the type of activities it seeks authorization to 
 12.27  engage in and the type of services it seeks authorization to 
 12.28  provide.  The license may be granted only when the commissioner 
 12.29  is satisfied that the entity possesses the necessary 
 12.30  organization, background, expertise, and financial integrity to 
 12.31  supply the services sought to be offered.  The commissioner may 
 12.32  issue a license subject to restrictions or limitations upon the 
 12.33  authorization, including the type of services which may be 
 12.34  supplied or the activities which may be engaged in.  The license 
 12.35  fee is $1,000 for the initial application and $1,000 for each 
 12.36  two-year renewal.  All licenses are for a period of two years. 
 13.2   To assure that self-insurance or insurance plans are financially 
 13.3   solvent, are administered in a fair and equitable fashion, and 
 13.4   are processing claims and paying benefits in a prompt, fair, and 
 13.5   honest manner, vendors of risk management services and entities 
 13.6   administering insurance or self-insurance plans are subject to 
 13.7   the supervision and examination by the commissioner.  Vendors of 
 13.8   risk management services, entities administering insurance or 
 13.9   self-insurance plans, and insurance or self-insurance plans 
 13.10  established or operated by them are subject to the trade 
 13.11  practice requirements of sections 72A.19 to 72A.30.  In lieu of 
 13.12  an unlimited guarantee from a parent corporation for a vendor of 
 13.13  risk management services or an entity administering insurance or 
 13.14  self-insurance plans, the commissioner may accept a surety bond 
 13.15  in a form satisfactory to the commissioner in an amount equal to 
 13.16  120 percent of the total amount of claims handled by the 
 13.17  applicant in the prior year.  If at any time the total amount of 
 13.18  claims handled during a year exceeds the amount upon which the 
 13.19  bond was calculated, the administrator shall immediately notify 
 13.20  the commissioner.  The commissioner may require that the bond be 
 13.21  increased accordingly.  
 13.22     No contract entered into after July 1, 2001, between a 
 13.23  licensed vendor of risk management services and a group 
 13.24  authorized to self-insure for workers' compensation liabilities 
 13.25  under section 79A.03, subdivision 6, may take effect until it 
 13.26  has been filed with the commissioner, and either (1) the 
 13.27  commissioner has approved it or (2) 60 days have elapsed and the 
 13.28  commissioner has not disapproved it as misleading or violative 
 13.29  of public policy. 
 13.30     (5)  [RULEMAKING AUTHORITY.] To carry out the purposes of 
 13.31  this subdivision, the commissioner may adopt rules pursuant to 
 13.32  sections 14.001 to 14.69.  These rules may: 
 13.33     (a) establish reporting requirements for administrators of 
 13.34  insurance or self-insurance plans; 
 13.35     (b) establish standards and guidelines to assure the 
 13.36  adequacy of financing, reinsuring, and administration of 
 14.1   insurance or self-insurance plans; 
 14.2      (c) establish bonding requirements or other provisions 
 14.3   assuring the financial integrity of entities administering 
 14.4   insurance or self-insurance plans; or 
 14.5      (d) establish other reasonable requirements to further the 
 14.6   purposes of this subdivision. 
 14.7      [EFFECTIVE DATE.] This section is effective July 1, 2001. 
 14.8      Sec. 8.  Minnesota Statutes 2000, section 61A.072, is 
 14.9   amended by adding a subdivision to read: 
 14.10     Subd. 6.  [ACCELERATED BENEFITS.] (a) "Accelerated benefits"
 14.11  covered under this section are benefits payable under the life 
 14.12  insurance contract: 
 14.13     (1) to a policyholder or certificate holder, during the 
 14.14  lifetime of the insured, in anticipation of death upon the 
 14.15  occurrence of a specified life-threatening or catastrophic 
 14.16  condition as defined by the policy or rider; 
 14.17     (2) that reduce the death benefit otherwise payable under 
 14.18  the life insurance contract; and 
 14.19     (3) that are payable upon the occurrence of a single 
 14.20  qualifying event that results in the payment of a benefit amount 
 14.21  fixed at the time of acceleration. 
 14.22     (b) "Qualifying event" means one or more of the following: 
 14.23     (1) a medical condition that would result in a drastically 
 14.24  limited life span as specified in the contract; 
 14.25     (2) a medical condition that has required or requires 
 14.26  extraordinary medical intervention, such as, but not limited to, 
 14.27  major organ transplant or continuous artificial life support 
 14.28  without which the insured would die; or 
 14.29     (3) a condition that requires continuous confinement in an 
 14.30  eligible institution as defined in the contract if the insured 
 14.31  is expected to remain there for the rest of the insured's life. 
 14.32     [EFFECTIVE DATE.] This section is effective July 1, 2001. 
 14.33     Sec. 9.  Minnesota Statutes 2000, section 62A.17, 
 14.34  subdivision 1, is amended to read: 
 14.35     Subdivision 1.  [CONTINUATION OF COVERAGE.] Every group 
 14.36  insurance policy, group subscriber contract, and health care 
 15.1   plan included within the provisions of section 62A.16, except 
 15.2   policies, contracts, or health care plans covering employees of 
 15.3   an agency of the federal government, shall contain a provision 
 15.4   which permits every covered employee who is voluntarily or 
 15.5   involuntarily terminated or laid off from employment, if the 
 15.6   policy, contract, or health care plan remains in force for 
 15.7   active employees of the employer, to elect to continue the 
 15.8   coverage for the employee and dependents. 
 15.9      An employee shall be considered to be laid off from 
 15.10  employment if there is a reduction in hours to the point where 
 15.11  the employee is no longer eligible under the policy, contract, 
 15.12  or health care plan.  Termination shall not include discharge 
 15.13  for gross misconduct.  
 15.14     Upon request by the terminated or laid off employee, a 
 15.15  health carrier must provide the instructions necessary to enable 
 15.16  the employee to elect continuation of coverage. 
 15.17     [EFFECTIVE DATE.] This section is effective the day 
 15.18  following final enactment. 
 15.19     Sec. 10.  Minnesota Statutes 2000, section 62A.20, 
 15.20  subdivision 1, is amended to read: 
 15.21     Subdivision 1.  [REQUIREMENT.] Every policy of accident and 
 15.22  health insurance providing coverage of hospital or medical 
 15.23  expense on either an expense-incurred basis or other than an 
 15.24  expense-incurred basis, which in addition to covering the 
 15.25  insured also provides coverage to the spouse and dependent 
 15.26  children of the insured shall contain: 
 15.27     (1) a provision which permits allows the spouse and 
 15.28  dependent children to elect to continue coverage when the 
 15.29  insured becomes enrolled for benefits under Title XVIII of the 
 15.30  Social Security Act (Medicare); and 
 15.31     (2) a provision which permits allows the dependent children 
 15.32  to continue coverage when they cease to be dependent children 
 15.33  under the generally applicable requirement of the plan. 
 15.34     Upon request by the insured or the insured's spouse or 
 15.35  dependent child, a health carrier must provide the instructions 
 15.36  necessary to enable the spouse or child to elect continuation of 
 16.1   coverage. 
 16.2      [EFFECTIVE DATE.] This section is effective the day 
 16.3   following final enactment. 
 16.4      Sec. 11.  Minnesota Statutes 2000, section 62A.21, 
 16.5   subdivision 2a, is amended to read: 
 16.6      Subd. 2a.  [CONTINUATION PRIVILEGE.] Every policy described 
 16.7   in subdivision 1 shall contain a provision which permits 
 16.8   continuation of coverage under the policy for the insured's 
 16.9   former spouse and dependent children upon entry of a valid 
 16.10  decree of dissolution of marriage.  The coverage shall be 
 16.11  continued until the earlier of the following dates: 
 16.12     (a) the date the insured's former spouse becomes covered 
 16.13  under any other group health plan; or 
 16.14     (b) the date coverage would otherwise terminate under the 
 16.15  policy. 
 16.16     If the coverage is provided under a group policy, any 
 16.17  required premium contributions for the coverage shall be paid by 
 16.18  the insured on a monthly basis to the group policyholder for 
 16.19  remittance to the insurer.  The policy must require the group 
 16.20  policyholder to, upon request, provide the insured with written 
 16.21  verification from the insurer of the cost of this coverage 
 16.22  promptly at the time of eligibility for this coverage and at any 
 16.23  time during the continuation period.  In no event shall the 
 16.24  amount of premium charged exceed 102 percent of the cost to the 
 16.25  plan for such period of coverage for other similarly situated 
 16.26  spouses and dependent children with respect to whom the marital 
 16.27  relationship has not dissolved, without regard to whether such 
 16.28  cost is paid by the employer or employee. 
 16.29     Upon request by the insured's former spouse or dependent 
 16.30  child, a health carrier must provide the instructions necessary 
 16.31  to enable the child or former spouse to elect continuation of 
 16.32  coverage. 
 16.33     [EFFECTIVE DATE.] This section is effective the day 
 16.34  following final enactment. 
 16.35     Sec. 12.  Minnesota Statutes 2000, section 62A.302, is 
 16.36  amended to read: 
 17.1      62A.302 [COVERAGE OF DEPENDENTS.] 
 17.2      Subdivision 1.  [SCOPE OF COVERAGE.] This section applies 
 17.3   to all health plans as defined in section 62A.011: 
 17.4      (1) a health plan as defined in section 62A.011; 
 17.5      (2) coverage described in section 62A.011, subdivision 3, 
 17.6   clauses (4), (6), (7), (8), (9), and (10); and 
 17.7      (3) a policy, contract, or certificate issued by a 
 17.8   community integrated service network licensed under chapter 62N. 
 17.9      Subd. 2.  [REQUIRED COVERAGE.] Every health plan included 
 17.10  in subdivision 1 that provides dependent coverage must define 
 17.11  "dependent" no more restrictively than the definition provided 
 17.12  in section 62L.02. 
 17.13     Sec. 13.  Minnesota Statutes 2000, section 62A.31, 
 17.14  subdivision 1a, is amended to read: 
 17.15     Subd. 1a.  [MINIMUM COVERAGE.] The policy must provide a 
 17.16  minimum of the coverage set out in subdivision 2 and for an 
 17.17  extended basic plan, the additional requirements of section 
 17.18  62E.07. 
 17.19     [EFFECTIVE DATE.] This section is effective the day 
 17.20  following final enactment. 
 17.21     Sec. 14.  Minnesota Statutes 2000, section 62A.31, 
 17.22  subdivision 1i, is amended to read: 
 17.23     Subd. 1i.  [REPLACEMENT COVERAGE.] If a Medicare supplement 
 17.24  policy or certificate replaces another Medicare supplement 
 17.25  policy or certificate, the issuer of the replacing policy or 
 17.26  certificate shall waive any time periods applicable to 
 17.27  preexisting conditions, waiting periods, elimination periods, 
 17.28  and probationary periods in the new Medicare supplement policy 
 17.29  or certificate for benefits to the extent the time was spent 
 17.30  under the original policy or certificate.  For purposes of this 
 17.31  subdivision, "Medicare supplement policy or certificate" means 
 17.32  all coverage described in section 62A.011, subdivision 4 3, 
 17.33  clause (10). 
 17.34     [EFFECTIVE DATE.] This section is effective the day 
 17.35  following final enactment. 
 17.36     Sec. 15.  Minnesota Statutes 2000, section 62A.31, 
 18.1   subdivision 3, is amended to read: 
 18.2      Subd. 3.  [DEFINITIONS.] (a) The definitions provided in 
 18.3   this subdivision apply to sections 62A.31 to 62A.44. 
 18.4      (b) "Accident," "accidental injury," or "accidental means" 
 18.5   means to employ "result" language and does not include words 
 18.6   that establish an accidental means test or use words such as 
 18.7   "external," "violent," "visible wounds," or similar words of 
 18.8   description or characterization. 
 18.9      (1) The definition shall not be more restrictive than the 
 18.10  following:  "Injury or injuries for which benefits are provided 
 18.11  means accidental bodily injury sustained by the insured person 
 18.12  which is the direct result of an accident, independent of 
 18.13  disease or bodily infirmity or any other cause, and occurs while 
 18.14  insurance coverage is in force." 
 18.15     (2) The definition may provide that injuries shall not 
 18.16  include injuries for which benefits are provided or available 
 18.17  under a workers' compensation, employer's liability or similar 
 18.18  law, or motor vehicle no-fault plan, unless prohibited by law. 
 18.19     (c) "Applicant" means: 
 18.20     (1) in the case of an individual Medicare supplement policy 
 18.21  or certificate, the person who seeks to contract for insurance 
 18.22  benefits; and 
 18.23     (2) in the case of a group Medicare supplement policy or 
 18.24  certificate, the proposed certificate holder. 
 18.25     (d) "Bankruptcy" means a situation in which a 
 18.26  Medicare+Choice organization that is not an issuer has filed, or 
 18.27  has had filed against it, a petition for declaration of 
 18.28  bankruptcy and has ceased doing business in the state. 
 18.29     (e) "Benefit period" or "Medicare benefit period" shall not 
 18.30  be defined more restrictively than as defined in the Medicare 
 18.31  program. 
 18.32     (f) "Certificate" means a certificate delivered or issued 
 18.33  for delivery in this state or offered to a resident of this 
 18.34  state under a group Medicare supplement policy or certificate. 
 18.35     (g) "Certificate form" means the form on which the 
 18.36  certificate is delivered or issued for delivery by the issuer. 
 19.1      (h) "Convalescent nursing home," "extended care facility," 
 19.2   or "skilled nursing facility" shall not be defined more 
 19.3   restrictively than as defined in the Medicare program. 
 19.4      (i) "Employee welfare benefit plan" means a plan, fund, or 
 19.5   program of employee benefits as defined in United States Code, 
 19.6   title 29, section 1002 (Employee Retirement Income Security Act).
 19.7      (j) "Health care expenses" means expenses of health 
 19.8   maintenance organizations associated with the delivery of health 
 19.9   care services which are analogous to incurred losses of 
 19.10  insurers.  The expenses shall not include: 
 19.11     (1) home office and overhead costs; 
 19.12     (2) advertising costs; 
 19.13     (3) commissions and other acquisition costs; 
 19.14     (4) taxes; 
 19.15     (5) capital costs; 
 19.16     (6) administrative costs; and 
 19.17     (7) claims processing costs. 
 19.18     (k) "Hospital" may be defined in relation to its status, 
 19.19  facilities, and available services or to reflect its 
 19.20  accreditation by the joint commission on accreditation of 
 19.21  hospitals, but not more restrictively than as defined in the 
 19.22  Medicare program. 
 19.23     (l) "Insolvency" means a situation in which an issuer, 
 19.24  licensed to transact the business of insurance in this state, 
 19.25  including the right to transact business as any type of issuer, 
 19.26  has had a final order of liquidation entered against it with a 
 19.27  finding of insolvency by a court of competent jurisdiction in 
 19.28  the issuer's state of domicile. 
 19.29     (m) "Issuer" includes insurance companies, fraternal 
 19.30  benefit societies, health service plan corporations, health 
 19.31  maintenance organizations, and any other entity delivering or 
 19.32  issuing for delivery Medicare supplement policies or 
 19.33  certificates in this state or offering these policies or 
 19.34  certificates to residents of this state. 
 19.35     (n) "Medicare" shall be defined in the policy and 
 19.36  certificate.  Medicare may be defined as the Health Insurance 
 20.1   for the Aged Act, title XVIII of the Social Security Amendments 
 20.2   of 1965, as amended, or title I, part I, of Public Law Number 
 20.3   89-97, as enacted by the 89th Congress of the United States of 
 20.4   America and popularly known as the Health Insurance for the Aged 
 20.5   Act, as amended. 
 20.6      (o) "Medicare eligible expenses" means health care expenses 
 20.7   covered by Medicare, to the extent recognized as reasonable and 
 20.8   medically necessary by Medicare. 
 20.9      (p) "Medicare+Choice plan" means a plan of coverage for 
 20.10  health benefits under Medicare part C as defined in section 1859 
 20.11  of the federal Social Security Act, United States Code, title 
 20.12  42, section 1395w-28, and includes: 
 20.13     (1) coordinated care plans which provide health care 
 20.14  services, including, but not limited to, health maintenance 
 20.15  organization plans, with or without a point-of-service option, 
 20.16  plans offered by provider-sponsored organizations, and preferred 
 20.17  provider organization plans; 
 20.18     (2) medical savings account plans coupled with a 
 20.19  contribution into a Medicare+Choice medical savings account; and 
 20.20     (3) Medicare+Choice private fee-for-service plans. 
 20.21     (q) "Medicare-related coverage" means a policy, contract, 
 20.22  or certificate issued as a supplement to Medicare, regulated 
 20.23  under sections 62A.31 to 62A.44, including Medicare select 
 20.24  coverage; policies, contracts, or certificates that supplement 
 20.25  Medicare issued by health maintenance organizations; or 
 20.26  policies, contracts, or certificates governed by section 1833 
 20.27  (known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA" 
 20.28  or "risk" contracts) of the federal Social Security Act, United 
 20.29  States Code, title 42, section 1395, et seq., as amended.; or 
 20.30  Section 4001 of the Balanced Budget Act of 1997 (BBA)(Public Law 
 20.31  105-33), Sections 1851 to 1859 of the Social Security Act 
 20.32  establishing Part C of the Medicare program, known as the 
 20.33  "Medicare+Choice program." 
 20.34     (r) "Medicare supplement policy or certificate" means a 
 20.35  group or individual policy of accident and sickness insurance or 
 20.36  a subscriber contract of hospital and medical service 
 21.1   associations or health maintenance organizations, or those 
 21.2   policies or certificates covered by section 1833 of the federal 
 21.3   Social Security Act, United States Code, title 42, section 1395, 
 21.4   et seq., or an issued policy under a demonstration project 
 21.5   specified under amendments to the federal Social Security Act, 
 21.6   which is advertised, marketed, or designed primarily as a 
 21.7   supplement to reimbursements under Medicare for the hospital, 
 21.8   medical, or surgical expenses of persons eligible for Medicare. 
 21.9      (s) "Physician" shall not be defined more restrictively 
 21.10  than as defined in the Medicare program or section 62A.04, 
 21.11  subdivision 1, or 62A.15, subdivision 3a. 
 21.12     (t) "Policy form" means the form on which the policy is 
 21.13  delivered or issued for delivery by the issuer. 
 21.14     (u) "Secretary" means the Secretary of the United States 
 21.15  Department of Health and Human Services. 
 21.16     (v) "Sickness" shall not be defined more restrictively than 
 21.17  the following: 
 21.18     "Sickness means illness or disease of an insured person 
 21.19     which first manifests itself after the effective date of 
 21.20     insurance and while the insurance is in force." 
 21.21     The definition may be further modified to exclude 
 21.22  sicknesses or diseases for which benefits are provided under a 
 21.23  workers' compensation, occupational disease, employer's 
 21.24  liability, or similar law. 
 21.25     [EFFECTIVE DATE.] This section is effective the day 
 21.26  following final enactment. 
 21.27     Sec. 16.  [62A.421] [DEMONSTRATION PROJECTS.] 
 21.28     Subdivision 1.  [ESTABLISHMENT.] The commissioner may 
 21.29  establish demonstration projects to allow an issuer of Medicare 
 21.30  supplement policies to extend coverage to individuals enrolled 
 21.31  in part A or part B, or both, of the Medicare program, Title 
 21.32  XVIII of the Social Security Act, United States Code, title 42, 
 21.33  section 1395, et seq.  For purposes of this section, the 
 21.34  commissioner may waive compliance with the benefits described in 
 21.35  sections 62A.315 and 62A.316 and other applicable statutes and 
 21.36  rules if there is reasonable evidence that the statutes or rules 
 22.1   prohibit the operation of the demonstration project, but may not 
 22.2   waive the six-month guaranteed issue provision.  The 
 22.3   commissioner shall provide for public comment before any statute 
 22.4   or rule is waived. 
 22.5      Subd. 2.  [BENEFITS.] A demonstration project must provide 
 22.6   health benefits equal to or exceeding the level of benefits 
 22.7   provided in Title XVIII of the Social Security Act and an 
 22.8   out-of-hospital prescription drug benefit.  The out-of-hospital 
 22.9   prescription drug benefit may be waived by the commissioner if 
 22.10  the issuer presents evidence satisfactory to the commissioner 
 22.11  that the inclusion of the benefit would restrict the operation 
 22.12  of the demonstration project. 
 22.13     Subd. 3.  [APPLICATION.] An issuer electing to participate 
 22.14  in a demonstration project shall apply to the commissioner for 
 22.15  approval on a form developed by the commissioner.  The 
 22.16  application shall include at least the following: 
 22.17     (1) a statement identifying the population that the project 
 22.18  is designed to serve; 
 22.19     (2) a description of the proposed project including a 
 22.20  statement projecting a schedule of costs and benefits for the 
 22.21  policyholder; 
 22.22     (3) reference to the sections of Minnesota Statutes and 
 22.23  department of commerce rules for which waiver is requested; 
 22.24     (4) evidence that application of the requirements of 
 22.25  applicable Minnesota Statutes and department of commerce rules 
 22.26  would, unless waived, prohibit the operation of the 
 22.27  demonstration project; 
 22.28     (5) an estimate of the number of years needed to adequately 
 22.29  demonstrate the project's effects; and 
 22.30     (6) other information the commissioner may reasonably 
 22.31  require. 
 22.32     Subd. 4.  [TIMELINE.] The commissioner shall approve, deny, 
 22.33  or refer back to the issuer for modification, the application 
 22.34  for a demonstration project within 60 days of the receipt of a 
 22.35  complete application. 
 22.36     Subd. 5.  [PERIOD SPECIFIED.] The commissioner may approve 
 23.1   an application for a demonstration project for a period of six 
 23.2   years, with an option to renew. 
 23.3      Subd. 6.  [ANNUAL REPORT.] Each issuer for which a 
 23.4   demonstration project is approved shall annually file a report 
 23.5   with the commissioner summarizing the project's experience at 
 23.6   the same time it files its annual report.  The report shall be 
 23.7   on a form developed by the commissioner and shall be separate 
 23.8   from the annual report. 
 23.9      Subd. 7.  [RESCISSION OF APPROVAL.] The commissioner may 
 23.10  rescind approval of a demonstration project if the commissioner 
 23.11  makes any of the findings listed in section 60A.052 or 62D.15, 
 23.12  subdivision 1, with respect to the project for which it has not 
 23.13  been granted a specific exemption, or if the commissioner finds 
 23.14  that the project's operation is contrary to the information 
 23.15  contained in the approved application. 
 23.16     [EFFECTIVE DATE.] This section is effective the day 
 23.17  following final enactment. 
 23.18     Sec. 17.  Minnesota Statutes 2000, section 62A.65, 
 23.19  subdivision 8, is amended to read: 
 23.21  Notwithstanding the provisions of subdivisions 1 to 7, a health 
 23.22  carrier may elect to cease doing business in the individual 
 23.23  health plan market in this state if it complies with the 
 23.24  requirements of this subdivision.  For purposes of this section, 
 23.25  "cease doing business" means to discontinue issuing new 
 23.26  individual health plans and to refuse to renew all of the health 
 23.27  carrier's existing individual health plans issued in this state 
 23.28  whose terms permit refusal to renew under the circumstances 
 23.29  specified in this subdivision.  This subdivision does not permit 
 23.30  cancellation of an individual health plan, unless the terms of 
 23.31  the health plan permit cancellation under the circumstances 
 23.32  specified in this subdivision.  A health carrier electing to 
 23.33  cease doing business in the individual health plan market in 
 23.34  this state shall notify the commissioner 180 days prior to the 
 23.35  effective date of the cessation.  Within 30 days after the 
 23.36  termination, the health carrier shall submit to the commissioner 
 24.1   a complete list of policyholders that have been terminated.  The 
 24.2   cessation of business does not include the failure of a health 
 24.3   carrier to offer or issue new business in the individual health 
 24.4   plan market or continue an existing product line in that market, 
 24.5   provided that a health carrier does not terminate, cancel, or 
 24.6   fail to renew its current individual health plan business.  A 
 24.7   health carrier electing to cease doing business in the 
 24.8   individual health plan market shall provide 120 days' written 
 24.9   notice to each policyholder covered by an individual health plan 
 24.10  issued by the health carrier.  This notice must also inform each 
 24.11  policyholder of the existence of the Minnesota Comprehensive 
 24.12  Health Association, the requirements for being accepted, the 
 24.13  procedures for applying for coverage, and the telephone numbers 
 24.14  at the department of health and the department of commerce for 
 24.15  information about private individual or family health coverage.  
 24.16  A health carrier that ceases to write new business in the 
 24.17  individual health plan market shall continue to be governed by 
 24.18  this section with respect to continuing individual health plan 
 24.19  business conducted by the health carrier.  A health carrier that 
 24.20  ceases to do business in the individual health plan market after 
 24.21  July 1, 1994, is prohibited from writing new business in the 
 24.22  individual health plan market in this state for a period of five 
 24.23  years from the date of notice to the commissioner.  This 
 24.24  subdivision applies to any health maintenance organization that 
 24.25  ceases to do business in the individual health plan market in 
 24.26  one service area with respect to that service area only.  
 24.27  Nothing in this subdivision prohibits an affiliated health 
 24.28  maintenance organization from continuing to do business in the 
 24.29  individual health plan market in that same service area.  The 
 24.30  right to refuse to renew an individual health plan under this 
 24.31  subdivision does not apply to individual health plans issued on 
 24.32  a guaranteed renewable basis that does not permit refusal to 
 24.33  renew under the circumstances specified in this subdivision.  
 24.34     Sec. 18.  Minnesota Statutes 2000, section 62E.04, 
 24.35  subdivision 4, is amended to read: 
 24.36     Subd. 4.  [MAJOR MEDICAL COVERAGE.] Each insurer and 
 25.1   fraternal shall affirmatively offer coverage of major medical 
 25.2   expenses to every applicant who applies to the insurer or 
 25.3   fraternal for a new unqualified policy, which has a lifetime 
 25.4   benefit limit of less than $1,000,000, at the time of 
 25.5   application and annually to every holder of such an unqualified 
 25.6   policy of accident and health insurance renewed by the insurer 
 25.7   or fraternal.  The coverage shall provide that when a covered 
 25.8   individual incurs out-of-pocket expenses of $5,000 or more 
 25.9   within a calendar year for services covered in section 62E.06, 
 25.10  subdivision 1, benefits shall be payable, subject to any 
 25.11  copayment authorized by the commissioner, up to a maximum 
 25.12  lifetime limit of $500,000 not less than $1,000,000.  The offer 
 25.13  of coverage of major medical expenses may consist of the offer 
 25.14  of a rider on an existing unqualified policy or a new policy 
 25.15  which is a qualified plan. 
 25.16     Sec. 19.  Minnesota Statutes 2000, section 62E.06, 
 25.17  subdivision 1, is amended to read: 
 25.18     Subdivision 1.  [NUMBER THREE PLAN.] A plan of health 
 25.19  coverage shall be certified as a number three qualified plan if 
 25.20  it otherwise meets the requirements established by chapters 62A 
 25.21  and, 62C, and 62Q, and the other laws of this state, whether or 
 25.22  not the policy is issued in Minnesota, and meets or exceeds the 
 25.23  following minimum standards: 
 25.24     (a) The minimum benefits for a covered individual shall, 
 25.25  subject to the other provisions of this subdivision, be equal to 
 25.26  at least 80 percent of the cost of covered services in excess of 
 25.27  an annual deductible which does not exceed $150 per person.  The 
 25.28  coverage shall include a limitation of $3,000 per person on 
 25.29  total annual out-of-pocket expenses for services covered under 
 25.30  this subdivision.  The coverage shall be subject to a maximum 
 25.31  lifetime benefit of not less than $500,000 $1,000,000. 
 25.32     The $3,000 limitation on total annual out-of-pocket 
 25.33  expenses and the $500,000 $1,000,000 maximum lifetime benefit 
 25.34  shall not be subject to change or substitution by use of an 
 25.35  actuarially equivalent benefit. 
 25.36     (b) Covered expenses shall be the usual and customary 
 26.1   charges for the following services and articles when prescribed 
 26.2   by a physician: 
 26.3      (1) hospital services; 
 26.4      (2) professional services for the diagnosis or treatment of 
 26.5   injuries, illnesses, or conditions, other than dental, which are 
 26.6   rendered by a physician or at the physician's direction; 
 26.7      (3) drugs requiring a physician's prescription; 
 26.8      (4) services of a nursing home for not more than 120 days 
 26.9   in a year if the services would qualify as reimbursable services 
 26.10  under Medicare; 
 26.11     (5) services of a home health agency if the services would 
 26.12  qualify as reimbursable services under Medicare; 
 26.13     (6) use of radium or other radioactive materials; 
 26.14     (7) oxygen; 
 26.15     (8) anesthetics; 
 26.16     (9) prostheses other than dental but including scalp hair 
 26.17  prostheses worn for hair loss suffered as a result of alopecia 
 26.18  areata; 
 26.19     (10) rental or purchase, as appropriate, of durable medical 
 26.20  equipment other than eyeglasses and hearing aids; 
 26.21     (11) diagnostic X-rays and laboratory tests; 
 26.22     (12) oral surgery for partially or completely unerupted 
 26.23  impacted teeth, a tooth root without the extraction of the 
 26.24  entire tooth, or the gums and tissues of the mouth when not 
 26.25  performed in connection with the extraction or repair of teeth; 
 26.26     (13) services of a physical therapist; 
 26.27     (14) transportation provided by licensed ambulance service 
 26.28  to the nearest facility qualified to treat the condition; or a 
 26.29  reasonable mileage rate for transportation to a kidney dialysis 
 26.30  center for treatment; and 
 26.31     (15) services of an occupational therapist. 
 26.32     (c) Covered expenses for the services and articles 
 26.33  specified in this subdivision do not include the following: 
 26.34     (1) any charge for care for injury or disease either (i) 
 26.35  arising out of an injury in the course of employment and subject 
 26.36  to a workers' compensation or similar law, (ii) for which 
 27.1   benefits are payable without regard to fault under coverage 
 27.2   statutorily required to be contained in any motor vehicle, or 
 27.3   other liability insurance policy or equivalent self-insurance, 
 27.4   or (iii) for which benefits are payable under another policy of 
 27.5   accident and health insurance, Medicare, or any other 
 27.6   governmental program except as otherwise provided by section 
 27.7   62A.04, subdivision 3, clause (4); 
 27.8      (2) any charge for treatment for cosmetic purposes other 
 27.9   than for reconstructive surgery when such service is incidental 
 27.10  to or follows surgery resulting from injury, sickness, or other 
 27.11  diseases of the involved part or when such service is performed 
 27.12  on a covered dependent child because of congenital disease or 
 27.13  anomaly which has resulted in a functional defect as determined 
 27.14  by the attending physician; 
 27.15     (3) care which is primarily for custodial or domiciliary 
 27.16  purposes which would not qualify as eligible services under 
 27.17  Medicare; 
 27.18     (4) any charge for confinement in a private room to the 
 27.19  extent it is in excess of the institution's charge for its most 
 27.20  common semiprivate room, unless a private room is prescribed as 
 27.21  medically necessary by a physician, provided, however, that if 
 27.22  the institution does not have semiprivate rooms, its most common 
 27.23  semiprivate room charge shall be considered to be 90 percent of 
 27.24  its lowest private room charge; 
 27.25     (5) that part of any charge for services or articles 
 27.26  rendered or prescribed by a physician, dentist, or other health 
 27.27  care personnel which exceeds the prevailing charge in the 
 27.28  locality where the service is provided; and 
 27.29     (6) any charge for services or articles the provision of 
 27.30  which is not within the scope of authorized practice of the 
 27.31  institution or individual rendering the services or articles. 
 27.32     (d) The minimum benefits for a qualified plan shall 
 27.33  include, in addition to those benefits specified in clauses (a) 
 27.34  and (e), benefits for well baby care, effective July 1, 1980, 
 27.35  subject to applicable deductibles, coinsurance provisions, and 
 27.36  maximum lifetime benefit limitations. 
 28.1      (e) Effective July 1, 1979, the minimum benefits of a 
 28.2   qualified plan shall include, in addition to those benefits 
 28.3   specified in clause (a), a second opinion from a physician on 
 28.4   all surgical procedures expected to cost a total of $500 or more 
 28.5   in physician, laboratory, and hospital fees, provided that the 
 28.6   coverage need not include the repetition of any diagnostic tests.
 28.7      (f) Effective August 1, 1985, the minimum benefits of a 
 28.8   qualified plan must include, in addition to the benefits 
 28.9   specified in clauses (a), (d), and (e), coverage for special 
 28.10  dietary treatment for phenylketonuria when recommended by a 
 28.11  physician. 
 28.12     (g) Outpatient mental health coverage is subject to section 
 28.13  62A.152, subdivision 2. 
 28.14     Sec. 20.  Minnesota Statutes 2000, section 62I.07, 
 28.15  subdivision 1, is amended to read: 
 28.16     Subdivision 1.  [GENERAL ASSESSMENT.] Each member of the 
 28.17  association that is authorized to write property and casualty 
 28.18  insurance in the state shall participate in its losses and 
 28.19  expenses in the proportion that the direct written premiums of 
 28.20  the member on the kinds of insurance in that account bears to 
 28.21  the total aggregate direct written premiums written in this 
 28.22  state by all members on the kinds of insurance in that account.  
 28.23  The members' participation in the association shall be 
 28.24  determined annually on the direct written premiums written 
 28.25  during the preceding calendar year as reported on the annual 
 28.26  statements and other reports filed by the member with the 
 28.27  commissioner.  Direct written premiums mean that amount at page 
 28.28  14 15, column (2), lines 5.1 5.2, 8, 9, 17, 21.2, 22, 23, 24, 
 28.29  25, 26, and 27 of the annual statement filed annually with the 
 28.30  department of commerce under section 60A.13. 
 28.31     Sec. 21.  Minnesota Statutes 2000, section 62L.05, 
 28.32  subdivision 1, is amended to read: 
 28.33     Subdivision 1.  [TWO SMALL EMPLOYER PLANS.] Each health 
 28.34  carrier in the small employer market must make available, on a 
 28.35  guaranteed issue basis, to any small employer that satisfies the 
 28.36  contribution and participation requirements of section 62L.03, 
 29.1   subdivision 3, both of the small employer plans described in 
 29.2   subdivisions 2 and 3.  Under subdivisions 2 and 3, coinsurance 
 29.3   and deductibles do not apply to child health supervision 
 29.4   services and prenatal services, as defined by section 62A.047.  
 29.5   The maximum out-of-pocket costs for covered services must be 
 29.6   $3,000 per individual and $6,000 per family per year.  The 
 29.7   maximum lifetime benefit must be $500,000 not less than 
 29.8   $1,000,000.  
 29.9      Sec. 22.  Minnesota Statutes 2000, section 62L.05, 
 29.10  subdivision 2, is amended to read: 
 29.12  benefits of the deductible-type small employer plan offered by a 
 29.13  health carrier must be equal to 80 percent of the charges, as 
 29.14  specified in subdivision 10, for health care services, supplies, 
 29.15  or other articles covered under the small employer plan, in 
 29.16  excess of an annual deductible which must be $500 $2,250 per 
 29.17  individual and $1,000 $4,500 per family. 
 29.20     Subdivision 1.  [SUSPENSION.] The commissioner may, by 
 29.21  order, suspend the operation of sections 62L.13 to 62L.22, upon 
 29.22  receipt of a recommendation for suspension from the association 
 29.23  board of directors.  The order is effective 30 days after 
 29.24  publication in the State Register.  
 29.25     Subd. 2.  [SUSPENSION OF REINSURANCE OPERATIONS.] Upon the 
 29.26  issuance of an order issued pursuant to subdivision 1, the 
 29.27  association shall suspend its operations in an orderly manner 
 29.28  supervised by the commissioner and shall provide for the proper 
 29.29  storage of the association's records.  Notwithstanding the 
 29.30  provisions of subdivision 1, the association may continue to 
 29.31  levy assessments under section 62L.22 for the purpose of 
 29.32  satisfying the association's presuspension expenses and the 
 29.33  expenses associated with the association's suspension activities 
 29.34  pursuant to this subdivision.  The assessments must be approved 
 29.35  by the commissioner. 
 29.36     Subd. 3.  [NO CANCELLATION PERMITTED.] Effective upon the 
 30.1   effective date of an order issued pursuant to subdivision 1, 
 30.2   reinsurance must be terminated for any person reinsured by the 
 30.3   association pursuant to section 62L.18.  No health carrier may 
 30.4   cancel or fail to renew a health benefit plan for any person 
 30.5   whose reinsurance with the association has been terminated 
 30.6   subsequently to the issuance of an order pursuant to subdivision 
 30.7   1 solely because of the termination of reinsurance.  
 30.9   commissioner may, by order, reactivate the operation of sections 
 30.10  62L.13 to 62L.22, on a finding that the private market for 
 30.11  reinsurance of health benefit plans has failed and that 
 30.12  commercial reinsurance is unavailable to health carriers 
 30.13  operating in the small employer market in Minnesota.  The 
 30.14  commissioner may not make findings or issue an order pursuant to 
 30.15  this subdivision until a hearing is held pursuant to chapter 14. 
 30.16     Subd. 5.  [TRANSITION.] After issuance of any order 
 30.17  pursuant to subdivision 4, the commissioner shall immediately 
 30.18  appoint an interim board of directors of the association.  The 
 30.19  terms of members of this interim board must be for a period not 
 30.20  to exceed 18 months.  The board shall cause the reinsurance 
 30.21  operations of the association to be resumed within 180 days of 
 30.22  an order issued pursuant to subdivision 4. 
 30.23     Subd. 6.  [MODIFICATION OF FIVE-YEAR RULE.] If the 
 30.24  commissioner issues an order pursuant to subdivision 4, any 
 30.25  health carrier may elect to participate in the reinsurance 
 30.26  association, notwithstanding any departicipation by the health 
 30.27  carrier within the preceding five years that, pursuant to 
 30.28  section 62L.17, would have otherwise prohibited the health 
 30.29  carrier's participation. 
 30.30     [EFFECTIVE DATE.] This section is effective the day 
 30.31  following final enactment. 
 30.32     Sec. 24.  Minnesota Statutes 2000, section 62M.03, 
 30.33  subdivision 2, is amended to read: 
 30.35  organization that meets the definition of a utilization review 
 30.36  organization under section 62M.02, subdivision 21, that is not 
 31.1   licensed in this state that performs utilization review services 
 31.2   for Minnesota residents must register with the commissioner of 
 31.3   commerce and must certify compliance with sections 62M.01 to 
 31.4   62M.16. 
 31.5      Initial registration must occur no later than January 1, 
 31.6   1993.  The registration is effective for two years and may be 
 31.7   renewed for another two years by written request.  Each 
 31.8   utilization review organization registered under this chapter 
 31.9   shall notify the commissioner of commerce within 30 days of any 
 31.10  change in the name, address, or ownership of the 
 31.11  organization.  The organization shall pay to the commissioner of 
 31.12  commerce a fee of $1,000 for the initial registration 
 31.13  application and $1,000 for each two-year renewal. 
 31.14     Sec. 25.  Minnesota Statutes 2000, section 62M.05, 
 31.15  subdivision 5, is amended to read: 
 31.17  utilization review organization and the claims administrator are 
 31.18  separate entities, the utilization review organization must 
 31.19  forward, electronically or in writing, a notification of 
 31.20  certification or determination not to certify to the appropriate 
 31.21  claims administrator for the health benefit plan.  If it is 
 31.22  determined by the claims administrator that the certified health 
 31.23  care service is not covered by the health benefit plan, the 
 31.24  claims administrator must promptly notify the claimant and 
 31.25  provider of this information. 
 31.26     Sec. 26.  Minnesota Statutes 2000, section 62Q.01, 
 31.27  subdivision 6, is amended to read: 
 31.28     Subd. 6.  [MEDICARE-RELATED COVERAGE.] "Medicare-related 
 31.29  coverage" means a policy, contract, or certificate issued as a 
 31.30  supplement to Medicare, regulated under sections 62A.31 to 
 31.31  62A.44, including Medicare select coverage; policies, contracts, 
 31.32  or certificates that supplement Medicare issued by health 
 31.33  maintenance organizations; or policies, contracts, or 
 31.34  certificates governed by section 1833 (known as "cost" or "HCPP" 
 31.35  contracts) or 1876 (known as "TEFRA" or "risk" contracts) of the 
 31.36  federal Social Security Act, United States Code, title 42, 
 32.1   section 1395, et seq., as amended.; or Section 4001 of the 
 32.2   Balanced Budget Act of 1997 (BBA)(Public Law 105-33), Sections 
 32.3   1851 to 1859 of the Social Security Act establishing Part C of 
 32.4   the Medicare program, known as the "Medicare+Choice program." 
 32.5      [EFFECTIVE DATE.] This section is effective the day 
 32.6   following final enactment. 
 32.7      Sec. 27.  Minnesota Statutes 2000, section 62Q.73, 
 32.8   subdivision 3, is amended to read: 
 32.9      Subd. 3.  [RIGHT TO EXTERNAL REVIEW.] (a) Any enrollee or 
 32.10  anyone acting on behalf of an enrollee who has received an 
 32.11  adverse determination may submit a written request for an 
 32.12  external review of the adverse determination, if applicable 
 32.13  under section 62Q.68, subdivision 1, or 62M.06, to the 
 32.14  commissioner of health if the request involves a health plan 
 32.15  company regulated by that commissioner or to the commissioner of 
 32.16  commerce if the request involves a health plan company regulated 
 32.17  by that commissioner.  Notification of the enrollee's right to 
 32.18  external review must accompany the denial issued by the insurer. 
 32.19  The written request must be accompanied by a filing fee of $25.  
 32.20  The fee may be waived by the commissioner of health or commerce 
 32.21  in cases of financial hardship. 
 32.22     (b) Nothing in this section requires the commissioner of 
 32.23  health or commerce to independently investigate an adverse 
 32.24  determination referred for independent external review. 
 32.25     (c) If an enrollee requests an external review, the health 
 32.26  plan company must participate in the external review.  The cost 
 32.27  of the external review in excess of the filing fee described in 
 32.28  paragraph (a) shall be borne by the health plan company.  
 32.29     Sec. 28.  Minnesota Statutes 2000, section 65A.29, 
 32.30  subdivision 7, is amended to read: 
 32.31     Subd. 7.  [RENEWAL; NOTICE REQUIREMENT.] No insurer shall 
 32.32  refuse to renew, or reduce limits of coverage, or eliminate any 
 32.33  coverage in a homeowner's insurance policy unless it mails or 
 32.34  delivers to the insured, at the address shown in the policy, at 
 32.35  least 60 days' advance notice of its intention.  The notice must 
 32.36  contain the specific underwriting or other reason or reasons for 
 33.1   the indicated action and must state the name of the insurer and 
 33.2   the date the notice is issued.  
 33.3      Proof of mailing this notice to the insured at the address 
 33.4   shown in the policy is sufficient proof that the notice required 
 33.5   by this section has been given. 
 33.6      [EFFECTIVE DATE.] This section is effective the day 
 33.7   following final enactment. 
 33.8      Sec. 29.  Minnesota Statutes 2000, section 65B.04, 
 33.9   subdivision 3, is amended to read: 
 33.10     Subd. 3.  [AMENDMENTS.] The plan of operation may be 
 33.11  amended by a majority vote of the governing committee, and the 
 33.12  approval of the commissioner and ratification by a majority of 
 33.13  the members.  An order by the commissioner disapproving an 
 33.14  amendment to the plan of operation must be issued within 30 days 
 33.15  of receipt by the commissioner of the proposed amendment, 
 33.16  certified by the governing committee as having been adopted by 
 33.17  that committee by a majority vote, or the amendment shall be 
 33.18  deemed approved by the commissioner.  An order of disapproval 
 33.19  may be appealed as provided in chapter 14.  
 33.20     [EFFECTIVE DATE.] This section is effective the day 
 33.21  following final enactment. 
 33.22     Sec. 30.  Minnesota Statutes 2000, section 65B.06, 
 33.23  subdivision 1, is amended to read: 
 33.24     Subdivision 1.  With respect to private passenger, nonfleet 
 33.25  automobiles, the facility shall provide for the equitable 
 33.26  distribution of qualified applicants to members in accordance 
 33.27  with the participation ratio or among these insurance companies 
 33.28  as selected under the provisions of the plan of operation. 
 33.29     [EFFECTIVE DATE.] This section is effective the day 
 33.30  following final enactment. 
 33.31     Sec. 31.  Minnesota Statutes 2000, section 65B.06, 
 33.32  subdivision 4, is amended to read: 
 33.33     Subd. 4.  Coverage made available under this section shall 
 33.34  be the standard automobile policy and endorsement forms, as 
 33.35  approved by the commissioner, with such changes, additions and 
 33.36  amendments as are adopted by the governing committee and 
 34.1   approved by the commissioner. 
 34.2      [EFFECTIVE DATE.] This section is effective the day 
 34.3   following final enactment. 
 34.4      Sec. 32.  Minnesota Statutes 2000, section 65B.16, is 
 34.5   amended to read: 
 34.7   REDUCTION.] 
 34.8      No notice of cancellation or reduction in the limits of 
 34.9   liability of coverage of an automobile insurance policy under 
 34.10  section 65B.15 shall be effective unless the specific 
 34.11  underwriting or other reason or reasons for such cancellation or 
 34.12  reduction in the limits of liability of coverage are stated in 
 34.13  such notice and the notice is mailed or delivered by the insurer 
 34.14  so as to provide the named insured with at least 30 days days' 
 34.15  notice prior to the effective date of cancellation; provided, 
 34.16  however, that when nonpayment of premium is the reason for 
 34.17  cancellation or when the company is exercising its right to 
 34.18  cancel insurance which has been in effect for less than 60 days 
 34.19  at least ten days' notice of cancellation, and the reasons for 
 34.20  the cancellation, shall be given.  Information regarding moving 
 34.21  traffic violations or motor vehicle accidents must be 
 34.22  specifically requested on the application in order for a company 
 34.23  to use those incidents to exercise its right to cancel within 
 34.24  the first 59 days of coverage.  When nonpayment of premiums is 
 34.25  the reason for cancellation, the reason must be given to the 
 34.26  insured with the notice of cancellation; and if the company is 
 34.27  exercising its right to cancel within the first 59 days of 
 34.28  coverage and notice is given with less than ten days remaining 
 34.29  in the 59-day period, the coverage must be extended, to expire 
 34.30  ten days after notice was mailed.  
 34.31     Sec. 33.  Minnesota Statutes 2000, section 65B.19, 
 34.32  subdivision 2, is amended to read: 
 34.33     Subd. 2.  [NOTICE OF RIGHT TO COMPLAIN.] When the insurer 
 34.34  notifies the policyholder of nonrenewal, cancellation or 
 34.35  reduction in the limits of liability of coverage under section 
 34.36  65B.16 or 65B.17, the insurer shall also notify the named 
 35.1   insured of the right to complain within 30 days of receipt by 
 35.2   the named insured of notice of nonrenewal, cancellation or 
 35.3   reduction in the limits of liability to the commissioner of such 
 35.4   action and of the nature of and possible eligibility for 
 35.5   insurance through the Minnesota automobile insurance plan.  Such 
 35.6   notice shall be included in the notice of nonrenewal, 
 35.7   cancellation or reduction in the limits of liability of 
 35.8   coverage, and shall state that such notice of the insured's 
 35.9   right of complaint to the commissioner and of the availability 
 35.10  of insurance through the Minnesota automobile insurance plan is 
 35.11  given pursuant to sections 65B.14 to 65B.21.  The notice must 
 35.12  state the name of the insurer and the date the notice is issued. 
 35.13     Sec. 34.  Minnesota Statutes 2000, section 67A.20, is 
 35.14  amended by adding a subdivision to read: 
 35.15     Subd. 3.  [WITH LICENSED INSURERS.] Township mutual fire 
 35.16  insurance companies may enter into reinsurance agreements with 
 35.17  any Minnesota licensed insurer authorized to write the same 
 35.18  lines of business. 
 35.19     [EFFECTIVE DATE.] This section is effective the day 
 35.20  following final enactment. 
 35.21     Sec. 35.  Minnesota Statutes 2000, section 70A.07, is 
 35.22  amended to read: 
 35.24     All rates and, supplementary rate information, and forms, 
 35.25  furnished to the commissioner under this chapter shall, as soon 
 35.26  as the rates are reviewed by the commissioner as the 
 35.27  commissioner's review has been completed, be open to public 
 35.28  inspection at any reasonable time.  
 35.29     [EFFECTIVE DATE.] This section is effective the day 
 35.30  following final enactment. 
 35.31     Sec. 36.  Minnesota Statutes 2000, section 79A.02, 
 35.32  subdivision 1, is amended to read: 
 35.33     Subdivision 1.  [MEMBERSHIP.] For the purposes of assisting 
 35.34  the commissioner, there is established a workers' compensation 
 35.35  self-insurers' advisory committee of five members that are 
 35.36  employers authorized to self-insure in Minnesota.  Three of the 
 36.1   members and three alternates shall be elected by the 
 36.2   self-insurers' security fund board of trustees and two members 
 36.3   and two alternates shall be appointed by the 
 36.4   commissioner.  Notwithstanding section 15.059, subdivision 5a, 
 36.5   the advisory committee does not expire June 30, 2001. 
 36.6      [EFFECTIVE DATE.] This section is effective the day 
 36.7   following final enactment. 
 36.8      Sec. 37.  Minnesota Statutes 2000, section 79A.03, 
 36.9   subdivision 7, is amended to read: 
 36.10     Subd. 7.  [FINANCIAL STANDARDS.] A self-insurer group shall 
 36.11  have and maintain: 
 36.12     (a) A combined net worth of all of the members of an amount 
 36.13  at least equal to the greater of ten times the retention 
 36.14  selected with the workers' compensation reinsurance association 
 36.15  or one-third of the current annual modified premium of the 
 36.16  members.  
 36.17     (b) Sufficient assets, net worth, and liquidity to promptly 
 36.18  and completely meet all obligations of its members under chapter 
 36.19  176 or this chapter.  In determining whether a group is in sound 
 36.20  financial condition, consideration shall be given to the 
 36.21  combined net worth of the member companies; the consolidated 
 36.22  long-term and short-term debt to equity ratios of the member 
 36.23  companies; any excess insurance other than reinsurance with the 
 36.24  workers' compensation reinsurance association, purchased by the 
 36.25  group from an insurer licensed in Minnesota or from an 
 36.26  authorized surplus line carrier; other financial data requested 
 36.27  by the commissioner or submitted by the group; and the combined 
 36.28  workers' compensation experience of the group for the last four 
 36.29  years. 
 36.30     No authority to self-insure will be granted unless, over 
 36.31  the term of the policy year, at least 65 percent of total 
 36.32  revenues from all sources for the year are available for the 
 36.33  payment of its claim and assessment obligations, and insurance 
 36.34  premiums for stop loss coverage.  For purposes of this 
 36.35  calculation, claim and assessment obligations include the cost 
 36.36  of allocated loss expenses as well as special compensation fund 
 37.1   and self-insurers' security fund assessments but exclude the 
 37.2   cost of unallocated loss expenses. 
 37.3      [EFFECTIVE DATE.] This section is effective July 1, 2001. 
 37.4      Sec. 38.  Minnesota Statutes 2000, section 79A.04, 
 37.5   subdivision 16, is amended to read: 
 37.7   following a private self-insurer's bankruptcy, insolvency, or 
 37.8   certificate of default, the commissioner calls its security and 
 37.9   proceeds in accordance with this section, the commissioner shall 
 37.10  revoke the certificate to self-insure of the private 
 37.11  self-insurer as soon as practicable but no later than 30 days 
 37.12  after its security has been called.  No insolvent self-insurer, 
 37.13  as defined in section 79A.01, subdivision 4, shall be eligible 
 37.14  to receive another grant of authority to self-insure unless 
 37.15  either:  (1) the insolvent self-insurer's posted security was 
 37.16  sufficient to pay all direct and indirect administrative and 
 37.17  professional expenses of the security fund related to the 
 37.18  insolvent self-insurer, and all losses, including estimated 
 37.19  future liability, allocated loss expense, and unallocated loss 
 37.20  expense of the insolvent self-insurer; or (2) the insolvent 
 37.21  self-insurer pays the security fund an amount equal to all such 
 37.22  losses and expenses the security fund has paid or will be 
 37.23  required to pay related to this insolvent self-insurer. 
 37.24     Sec. 39.  Minnesota Statutes 2000, section 79A.15, is 
 37.25  amended to read: 
 37.26     79A.15 [SURETY BOND FORM.] 
 37.27     The form for the surety bond under this chapter shall be: 
 37.28                         STATE OF MINNESOTA 
 37.29                       DEPARTMENT OF COMMERCE 
 37.33                                           )
 37.34                                           )    SURETY BOND 
 37.35                                           )    NO. .............
 37.36                                           )    PREMIUM: ........
 37.37                                           )
 37.38  Employer, Certificate No: .............. )
 38.1        That ..................................................... 
 38.2                             (Employer)
 38.3   whose address is ..............................................
 38.4   as Principal, and .............................................
 38.5                             (Surety) 
 38.6   a corporation organized under the laws of ..................... 
 38.7   and authorized to transact a general surety business in the 
 38.8   State of Minnesota, as Surety, are held and firmly bound to the 
 38.9   State of Minnesota in the penal sum of 
 38.10  ...........................dollars ($..........) for which 
 38.11  payment we bind ourselves, our heirs, executors, administrators, 
 38.12  successors, and assigns, jointly and severally, firmly by these 
 38.13  presents. 
 38.14     WHEREAS in accordance with Minnesota Statutes, chapter 176, 
 38.15  the principal elected to self-insure, and made application for, 
 38.16  or received from the commissioner of commerce of the state of 
 38.17  Minnesota, a certificate to self-insure, upon furnishing of 
 38.18  proof satisfactory to the commissioner of commerce of ability to 
 38.19  self-insure and to compensate any or all employees of said 
 38.20  principal for injury or disability, and their dependents for 
 38.21  death incurred or sustained by said employees pursuant to the 
 38.22  terms, provisions, and limitations of said statute; 
 38.23     NOW THEREFORE, the conditions of this bond or obligation 
 38.24  are such that if principal shall pay and furnish compensation, 
 38.25  pursuant to the terms, provisions, and limitations of said 
 38.26  statute to its employees for injury or disability, and to the 
 38.27  dependents of its employees, then this bond or obligation shall 
 38.28  be null and void; otherwise to remain in full force and effect.  
 38.29     FURTHERMORE, it is understood and agreed that: 
 38.30     1.  This bond may be amended, by agreement between the 
 38.31  parties hereto and the commissioner of commerce as to the 
 38.32  identity of the principal herein named; and, by agreement of the 
 38.33  parties hereto, as to the premium or rate of premium.  Such 
 38.34  amendment must be by endorsement upon, or rider to, this bond, 
 38.35  executed by the surety and delivered to or filed with the 
 38.36  commissioner. 
 38.37     2.  The surety does, by these presents, undertake and agree 
 39.1   that the obligation of this bond shall cover and extend to all 
 39.2   past, present, existing, and potential liability of said 
 39.3   principal, as a self-insurer, to the extent of the penal sum 
 39.4   herein named without regard to specific injuries, date or dates 
 39.5   of injuries, happenings or events.  
 39.6      3.  The penal sum of this bond may be increased or 
 39.7   decreased, by agreement between the parties hereto and the 
 39.8   commissioner of commerce, without impairing the obligation 
 39.9   incurred under this bond for the overall coverage of the said 
 39.10  principal, for all past, present, existing, and potential 
 39.11  liability, as a self-insurer, without regard to specific 
 39.12  injuries, date or dates of injuries, happenings or events, to 
 39.13  the extent, in the aggregate, of the penal sum as increased or 
 39.14  decreased.  Such amendment must be by endorsement. 
 39.15     4.  The aggregate liability of the surety hereunder on all 
 39.16  claims whatsoever shall not exceed the penal sum of this bond in 
 39.17  any event. 
 39.18     5.  This bond shall be continuous in form and shall remain 
 39.19  in full force and effect unless terminated as follows: 
 39.20     (a) The obligation of this bond shall terminate upon 
 39.21  written notice of cancellation from the surety, given by 
 39.22  registered or certified mail to the commissioner of commerce, 
 39.23  state of Minnesota, save and except as to all past, present, 
 39.24  existing, and potential liability of the principal incurred, 
 39.25  including obligations resulting from claims which are incurred 
 39.26  but not yet reported, as a self-insurer prior to effective date 
 39.27  of termination.  This termination is effective 60 days after 
 39.28  receipt of notice of cancellation by the commissioner of 
 39.29  commerce, state of Minnesota. 
 39.30     (b) This bond shall also terminate upon the revocation of 
 39.31  the certificate to self-insure, save and except as to all past, 
 39.32  present, existing, and potential liability of the principal 
 39.33  incurred, including obligations resulting from claims which are 
 39.34  incurred but not yet reported, as a self-insurer prior to 
 39.35  effective date of termination.  The principal and the surety, 
 39.36  herein named, shall be immediately notified in writing by said 
 40.1   commissioner, in the event of such revocation. 
 40.2      6.  Where the principal posts with the commissioner of 
 40.3   commerce, state of Minnesota, or the state treasurer, state of 
 40.4   Minnesota, a replacement security deposit, in the form of a 
 40.5   surety bond, irrevocable letter of credit, cash, securities, or 
 40.6   any combination thereof, in the full amount as may be required 
 40.7   by the commissioner of commerce, state of Minnesota, to secure 
 40.8   all incurred liabilities for the payment of compensation of said 
 40.9   principal under Minnesota Statutes, chapter 176, the surety is 
 40.10  released from obligations under the surety bond upon the date of 
 40.11  acceptance by the commissioner of commerce, state of Minnesota, 
 40.12  of said replacement security deposit. 
 40.13     7.  If the said principal shall suspend payment of workers' 
 40.14  compensation benefits or shall become insolvent or a receiver 
 40.15  shall be appointed for its business, or the commissioner of 
 40.16  commerce, state of Minnesota, issues a certificate of default, 
 40.17  the undersigned surety will become liable for the workers' 
 40.18  compensation obligations of the principal on the date benefits 
 40.19  are suspended.  The surety shall begin payments within 14 days 
 40.20  under paragraph 8, or 30 days under paragraph 10, after receipt 
 40.21  of written notification by certified mail from the commissioner 
 40.22  of commerce, state of Minnesota, to begin payments under the 
 40.23  terms of this bond. 
 40.24     8.  If the surety exercises its option to administer 
 40.25  claims, it shall pay benefits due to the principal's injured 
 40.26  workers within 14 days of the receipt of the notification by the 
 40.27  commissioner of commerce, state of Minnesota, pursuant to 
 40.28  paragraph 7, without a formal award of a compensation judge, the 
 40.29  commissioner of labor and industry, any intermediate appellate 
 40.30  court, or the Minnesota supreme court and such payment will be a 
 40.31  charge against the penal sum of the bond.  Administrative and 
 40.32  legal costs and payment of assessments incurred by the surety in 
 40.33  discharging its obligations and payment of the principal's 
 40.34  obligations for administration and legal expenses and payment of 
 40.35  assessments under Minnesota Statutes, chapters 79A and 176, 
 40.36  shall also be a charge against the penal sum of the bond; 
 41.1   however, the total amount of this surety bond set aside for the 
 41.2   payment of said administrative and legal expenses and payment of 
 41.3   assessments shall be limited to a maximum ten percent of the 
 41.4   total penal sum of the bond unless otherwise authorized by the 
 41.5   security fund. 
 41.6      9.  If any part or provision of this bond shall be declared 
 41.7   unenforceable or held to be invalid by a court of proper 
 41.8   jurisdiction, such determination shall not affect the validity 
 41.9   or enforceability of the other provisions or parts of this bond. 
 41.10     10.  If the surety does not give notice to the 
 41.11  (self-insurer's security fund) (commercial self-insurance group 
 41.12  security fund) and the commissioner of commerce, state of 
 41.13  Minnesota, within two five business days of receipt of written 
 41.14  notification from the commissioner of commerce, state of 
 41.15  Minnesota, pursuant to paragraph 7, to exercise its option to 
 41.16  administer claims pursuant to paragraph 8, then the 
 41.17  (self-insurer's security fund) (commercial self-insurance 
 41.18  security fund) will assume the payments of the workers' 
 41.19  compensation obligations of the principal pursuant to Minnesota 
 41.20  Statutes, chapter 176.  Administrative, legal, actuarial, and 
 41.21  other direct costs attributed to the principal shall also be a 
 41.22  charge against the penal sum of the bond.  The surety shall pay, 
 41.23  within 30 days of the receipt of the notification by the 
 41.24  commissioner of commerce, state of Minnesota, pursuant to 
 41.25  paragraph 7, to the (self-insurer's security fund) (commercial 
 41.26  self-insurance group security fund) as an initial deposit an 
 41.27  amount equal to ten 50 percent of the penal sum of the bond, and 
 41.28  shall thereafter, upon notification from the (self-insurer's 
 41.29  security fund) (commercial self-insurance group security fund) 
 41.30  that the balance of the initial deposit, including interest 
 41.31  earned as provided below with respect to the segregated account, 
 41.32  had fallen to one ten percent of the penal sum of the bond, 
 41.33  remit to the (self-insurer's security fund) (commercial 
 41.34  self-insurance group security fund) an amount equal to the 
 41.35  payments made by the (self-insurer's security fund) (commercial 
 41.36  self-insurance group security fund) in the three calendar months 
 42.1   immediately preceding said notification. an additional ten 
 42.2   percent of the penal sum of the bond.  All such payments will be 
 42.3   a charge against the penal sum of the bond.  The initial deposit 
 42.4   and all subsequent deposits shall be deposited by the 
 42.5   (self-insurer's security fund) (commercial self-insurance group 
 42.6   security fund) into a segregated, interest-bearing account.  
 42.7   These deposits, together with any interest earned thereon, shall 
 42.8   be used to satisfy all obligations of the surety hereunder.  
 42.9   Upon determination that there are no remaining reserves for any 
 42.10  known claims covered under the bond, the balance of the account, 
 42.11  including any interest earned thereon, shall be paid to the 
 42.12  surety. 
 42.13     Said repayment of the funds to the surety will not 
 42.14  discharge the bond, which shall remain in full force and effect 
 42.15  as to all past, present, existing, and potential liability of 
 42.16  the principal incurred, including obligations resulting from 
 42.17  claims which are incurred but not yet reported, as a 
 42.18  self-insurer prior to the effective date of termination of the 
 42.19  bond. 
 42.20     11.  Disputes concerning the posting, renewal, termination, 
 42.21  exoneration, or return of all or any portion of the principal's 
 42.22  security deposit or any liability arising out of the posting or 
 42.23  failure to post security, or the adequacy of the security or the 
 42.24  reasonableness of administrative costs, including legal costs, 
 42.25  arising between or among a surety, the issuer of an agreement of 
 42.26  assumption and guarantee of workers' compensation liabilities, 
 42.27  the issuer of a letter of credit, any custodian of the security 
 42.28  deposit, the principal, or the (self-insurer's security fund) 
 42.29  (commercial self-insurance group security fund) shall be 
 42.30  resolved by the commissioner of commerce pursuant to Minnesota 
 42.31  Statutes, chapters 79A and 176.  
 42.32     12.  Written notification to the surety required by this 
 42.33  bond shall be sent to: 
 42.34                                   .........................
 42.35                                   Name of Surety 
 42.36                                   .........................
 42.37                                   To the attention of Person or
 43.1                                      Position
 43.2                                    .........................
 43.3                                    Address 
 43.4                                    .........................
 43.5                                    City, State, Zip 
 43.6      Written notification to the principal required by this bond 
 43.7   shall be sent to: 
 43.8                                    .........................
 43.9                                    Name of Principal
 43.10                                   .........................
 43.11                                   To the attention of Person or
 43.12                                     Position
 43.13                                   .........................
 43.14                                   Address
 43.15                                   .........................
 43.16                                   City, State, Zip
 43.17     13.  This bond is executed by the surety to comply with 
 43.18  Minnesota Statutes, chapter 176, and said bond shall be subject 
 43.19  to all terms and provisions thereof. 
 43.20                                   .........................
 43.21                                   Name of Surety
 43.22                                   .........................
 43.23                                   Address
 43.24                                   .........................
 43.25                                   City, State, Zip
 43.26     THIS bond is executed under an unrevoked appointment or 
 43.27  power of attorney.  
 43.28     I certify (or declare) under penalty of perjury under the 
 43.29  laws of the state of Minnesota that the foregoing is true and 
 43.30  correct.  
 43.32  ..............                   .............................
 43.33  Date                             Signature of Attorney-In-Fact 
 43.35                                   .............................
 43.36                                   Printed or Typed Name of  
 43.37                                   Attorney-In-Fact 
 43.38     A copy of the transcript or record of the unrevoked 
 43.39  appointment, power of attorney, bylaws, or other instrument, 
 43.40  duly certified by the proper authority and attested by the seal 
 43.41  of the insurer entitling or authorizing the person who executed 
 43.42  the bond to do so for and in behalf of the insurer, must be 
 43.43  filed in the office of the commissioner of commerce or must be 
 44.1   included with this bond for such filing. 
 44.2      [EFFECTIVE DATE.] This section is effective for bonds 
 44.3   posted on or after January 1, 2002. 
 44.4      Sec. 40.  Minnesota Statutes 2000, section 471.617, 
 44.5   subdivision 1, is amended to read: 
 44.6      Subdivision 1.  [IF MORE THAN 100 EMPLOYEES; CONDITIONS.] A 
 44.7   statutory or home rule charter city, county, school district, or 
 44.8   instrumentality thereof which has more than 100 employees, may 
 44.9   by ordinance or resolution self-insure for any employee health 
 44.10  benefits including long-term disability, but not for employee 
 44.11  life benefits.  Any self-insurance plan shall provide all 
 44.12  benefits which are required by law to be provided by group 
 44.13  health insurance policies.  Self-insurance plans shall must be 
 44.14  certified as provided by section 62E.05 and must be filed and 
 44.15  certified by the department of commerce before they are issued 
 44.16  or delivered to any person in this state.  
 44.17     [EFFECTIVE DATE.] This section is effective the day 
 44.18  following final enactment. 
 44.19     Sec. 41.  [REPEALER.] 
 44.20     Minnesota Statutes 2000, sections 13.7191, subdivision 11; 
 44.21  60A.111; 62G.01; 62G.02; 62G.03; 62G.04; 62G.05; 62G.06; 62G.07; 
 44.22  62G.08; 62G.09; 62G.10; 62G.11; 62G.12; 62G.13; 62G.14; 62G.15; 
 44.23  62G.16; 62G.17; 62G.18; 62G.19; 62G.20; 62G.21; 62G.22; 62G.23; 
 44.24  62G.24; and 62G.25, are repealed. 
 44.25     [EFFECTIVE DATE.] This section is effective the day 
 44.26  following final enactment.