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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1986 

                        CHAPTER 455-S.F.No. 2078 
           An act relating to insurance; providing for government 
          immunity; requiring certain annual reports of property 
          and casualty insurers; prohibiting certain tying 
          arrangements; providing for remitting of certain 
          premiums; providing deposit requirements for domestic 
          companies; extending certain filing, approval, and 
          disapproval dates; creating a joint underwriting 
          association; requiring participation by insurers; 
          broadening fair plan coverage; regulating rates, forms 
          and cancellations; regulating medical malpractice 
          insurance to health care providers who are unable to 
          obtain the coverage in the voluntary market; 
          regulating malpractice actions against health care 
          providers; providing certification of expert review 
          and the waiver of privilege by health care providers; 
          requiring disclosure of experts; revising the statute 
          of limitations for medical malpractice claims by 
          minors; regulating claims for punitive damages; 
          changing the collateral source rule; providing for 
          discount of future damages; regulating civil actions;  
          limiting intangible loss; amending Minnesota Statutes 
          1984, sections 60A.06, by adding a subdivision; 
          60A.13, by adding a subdivision; 60A.25; 62A.02, 
          subdivisions 2 and 3; 62B.07, subdivisions 2 and 3; 
          62C.14, subdivision 10; 62E.14, by adding a 
          subdivision; 62F.01; 62F.02, subdivision 1; 62F.03, 
          subdivision 2; 62F.04, by adding a subdivision; 
          62G.16, subdivision 9; 65A.32; 65A.33; 65A.34, 
          subdivision 1; 65A.35, subdivisions 1 and 2; 65A.37; 
          65B.13; 65B.47, subdivision 1; 70A.04, subdivision 2; 
          70A.06, subdivisions 1 and 2; 70A.08, by adding a 
          subdivision; 70A.10; 70A.11; 72A.13, subdivision 1; 
          245.814; 398A.04, subdivision 6; 465.72; 466.01, 
          subdivision 1; 466.03, subdivision 4, and by adding 
          subdivisions; 466.05; 466.07, by adding a subdivision; 
          471.982, subdivision 3; 541.051; 541.15; 549.09, 
          subdivision 1; 549.21; 595.02, by adding a 
          subdivision; 604.02, subdivision 1, and by adding a 
          subdivision; Minnesota Statutes 1985 Supplement, 
          sections 3.736, subdivisions 1 and 3; 60A.10, 
          subdivision 1; and 62B.05; proposing coding for new 
          law in Minnesota Statutes, chapters 16B; 60A; 65B; 
          145; 317; 466; 541; 548; 549; and 604; proposing 
          coding for new law as Minnesota Statutes, chapter 62I; 
          repealing Minnesota Statutes 1984, section 70A.06, 
          subdivision 4. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1985 Supplement, section 
3.736, subdivision 1, is amended to read: 
    Subdivision 1.  [GENERAL RULE.] The state will pay 
compensation for injury to or loss of property or personal 
injury or death caused by an act or omission of any employee of 
the state while acting within the scope of his office or 
employment or peace officer who is not acting on behalf of a 
private employer and who is acting in good faith pursuant to 
section 629.40, subdivision 3, under circumstances where the 
state, if a private person, would be liable to the claimant, 
whether arising out of a governmental or proprietary function. 
Nothing in this section waives the defense of judicial or 
legislative immunity except to the extent provided in 
subdivision 8.  
    Sec. 2.  Minnesota Statutes 1985 Supplement, section 3.736, 
subdivision 3, is amended to read: 
    Subd. 3.  [EXCLUSIONS.] Without intent to preclude the 
courts from finding additional cases where the state and its 
employees should not, in equity and good conscience, pay 
compensation for personal injuries or property losses, the 
legislature declares that the state and its employees are not 
liable for the following losses: 
    (a) Any loss caused by an act or omission of a state 
employee exercising due care in the execution of a valid or 
invalid statute or regulation; 
    (b) Any loss caused by the performance or failure to 
perform a discretionary duty, whether or not the discretion is 
abused; 
    (c) Any loss in connection with the assessment and 
collection of taxes; 
    (d) Any loss caused by snow or ice conditions on any 
highway or other public place or public sidewalk that does not 
abut a publicly-owned building or a publicly-owned parking lot, 
except when the condition is affirmatively caused by the 
negligent acts of a state employee; 
    (e) Any loss caused by wild animals in their natural state; 
    (f) Any loss other than injury to or loss of property or 
personal injury or death; 
    (g) Any loss caused by the condition of unimproved real 
property owned by the state, which means land that the state has 
not improved, and appurtenances, fixtures and attachments to 
land that the state has neither affixed nor improved; 
    (h) Any loss incurred by a user within the boundaries of 
the outdoor recreation system and arising from the construction, 
operation, or maintenance of the system, as defined in section 
86A.04, or from the clearing of land, removal of refuse, and 
creation of trails or paths without artificial surfaces, or from 
the construction, operation, or maintenance of a water access 
site created by the iron range resources and rehabilitation 
board, except that the state is liable for conduct that would 
entitle a trespasser to damages against a private person. 
    (i) Any loss of benefits or compensation due under a 
program of public assistance or public welfare, except where 
state compensation for loss is expressly required by federal law 
in order for the state to receive federal grants-in-aid; 
    (j) Any loss based on the failure of any person to meet the 
standards needed for a license, permit, or other authorization 
issued by the state or its agents; 
    (k) Any loss based on the usual care and treatment, or lack 
of care and treatment, of any person at a state hospital or 
state corrections facility where reasonable use of available 
appropriations has been made to provide care; 
    (l) Any loss, damage, or destruction of property of a 
patient or inmate of a state institution;  
    (m) Any loss for which recovery is prohibited by section 
169.121, subdivision 9. 
    The state will not pay punitive damages. 
    Sec. 3.  [16B.85] [RISK MANAGEMENT.] 
    Subdivision 1.  [ALTERNATIVES TO CONVENTIONAL 
INSURANCE.] In the event that the state is unable to obtain 
certain types of insurance, or the commissioner determines 
insurance to be unreasonably costly, the commissioner may 
implement alternatives to the purchase of conventional 
insurance.  A mechanism for implementing possible alternatives 
to conventional insurance is the risk management fund created in 
subdivision 2. 
    Subd. 2.  [RISK MANAGEMENT FUND.] A state risk management 
fund is created.  All state agencies which have had or may have 
casualty claims against them with respect to the risks for which 
the commissioner has implemented conventional insurance 
alternatives shall contribute to the fund a portion of the money 
appropriated to them.  The commissioner shall determine the 
proportionate share of each agency on the basis of the agency's 
casualty claim experience as compared to other affected 
agencies.  The money in the fund to pay casualty claims arising 
from state activities and for administrative costs, including 
costs for the adjustment and defense of the claims, is 
appropriated to the commissioner.  Interest earned from the 
investment of money in the fund shall be credited to the fund 
and be available to the commissioner for the expenditures 
authorized in this subdivision.  The fund is exempt from the 
provisions of section 16A.15, subdivision 1.  In the event that 
proceeds in the fund are insufficient to pay outstanding claims 
and associated administrative costs, the commissioner, in 
consultation with the commissioner of finance, may assess state 
agencies participating in the fund amounts sufficient to pay the 
costs.  The commissioner shall determine the proportionate share 
of the assessment of each agency on the basis of the agency's 
casualty claim experience as compared to other affected agencies.
    Sec. 4.  Minnesota Statutes 1984, section 60A.06, is 
amended by adding a subdivision to read:  
    Subd. 3.  Unless specifically authorized by section 60A.06, 
subdivision 1, clause (4), it is unlawful to combine in one 
policy coverage permitted by section 60A.06, subdivision 1, 
clauses (4) and (5)(a).  This subdivision does not prohibit the 
simultaneous sale of these products, but the sale must involve 
two separate and distinct policies.  This subdivision does not 
apply to group policies.  
    Sec. 5.  Minnesota Statutes 1985 Supplement, section 
60A.10, subdivision 1, is amended to read:  
    Subdivision 1.  [DOMESTIC COMPANIES.] (1) [DEPOSIT AS 
SECURITY FOR ALL POLICYHOLDERS REQUIRED.] No company in this 
state, other than farmers' mutual, or real estate title 
insurance companies, shall do business in this state unless it 
has on deposit with the commissioner, for the protection of both 
its resident and nonresident policyholders, securities to an 
amount, the actual market value of which, exclusive of interest, 
shall never be less than $200,000 until July 1, 1986, $300,000 
until July 1, 1987, $400,000 until July 1, 1988, and $500,000 on 
and after July 1, 1988 or one-half the applicable financial 
requirement set forth in section 60A.07, whichever is less.  The 
securities shall be retained under the control of the 
commissioner as long as any policies of the depositing company 
remain in force. 
    (2) [SECURITIES DEFINED.] For the purpose of this 
subdivision, the word "securities" means bonds or other 
obligations of, or bonds or other obligations insured or 
guaranteed by, the United States, any state of the United 
States, any municipality of this state, or any agency or 
instrumentality of the foregoing. 
    (3) [PROTECTION OF DEPOSIT FROM LEVY.] No judgment creditor 
or other claimant may levy upon any securities held on deposit 
with, or for the account of, the commissioner.  Upon the entry 
of an order by a court of competent jurisdiction for the 
rehabilitation, liquidation or conservation of any depositing 
company as provided in chapter 60B, that company's deposit 
together with any accrued income thereon shall be transferred to 
the commissioner as rehabilitator, liquidator, or conservator. 
    Sec. 6.  Minnesota Statutes 1984, section 60A.13, is 
amended by adding a subdivision to read: 
    Subd. 8.  [ANNUAL REPORTS.] Each insurer licensed to write 
property and casualty insurance in this state, as a supplement 
to the annual statement required by this section, shall submit a 
report on a form furnished by the commissioner separately 
showing its direct writings in Minnesota and in the United 
States on:  liquor liability, product liability, medical 
malpractice, and any other line so designated by the 
commissioner on January 1 of each year.  
    The supplemental reports must include the following data 
for the previous year ending on the 31st day of December: 
    (1) direct premiums written;  
    (2) direct premiums earned;  
    (3) net investment income, including net realized capital 
gains and losses, using appropriate estimates where necessary; 
    (4) incurred claims, developed as the sum, and with figures 
provided for, of the following:  
    (a) dollar amount of claims closed with payment, plus 
    (b) reserves for reported claims at the end of the current 
year, minus 
    (c) reserves for reported claims at the end of the previous 
year, plus 
    (d) reserves for incurred but not reported claims at the 
end of the current year, minus 
    (e) reserves for incurred but not reported claims at the 
end of the previous year, plus 
    (f) reserves for loss adjustment expense at the end of the 
current year, minus 
    (g) reserves for loss adjustment expense at the end of the 
previous year;  
    (5) actual incurred expenses allocated separately to loss 
adjustment, commissions, other acquisition costs, general office 
expenses, taxes, licenses and fees, and all other expenses;  
    (6) net underwriting gain or loss; and 
    (7) net operation gain or loss, including net investment 
income.  
    This report is due by the first of May of each year and the 
report due May 1, 1987 must cover the last six months of 1986.  
The commissioner shall annually compile and review all reports 
submitted by insurers pursuant to this section.  These filings 
must be published and made available to any interested insured 
or citizen. 
    Sec. 7.  Minnesota Statutes 1984, section 60A.25, is 
amended to read: 
    60A.25 [INSOLVENT COMPANIES, NOTIFICATION OF 
POLICYHOLDERS.] 
    Subdivision 1.  [NOTIFICATION OF POLICYHOLDERS.] Whenever 
any foreign or domestic insurance company authorized to transact 
the business of insurance in Minnesota is adjudicated insolvent, 
or whenever its policies are declared null and void by court 
order, the commissioner of commerce shall ascertain the names 
and last known addresses of all Minnesota policyholders of said 
company, and shall notify all Minnesota policyholders within 30 
days of such adjudication or court order.  In the case of 
foreign insurers authorized to do business in this state, the 
commissioner of commerce may elect to notify all of the 
company's licensed agents in Minnesota with a directive that the 
agents notify all insureds of the company's insolvency or that 
its policies have been declared null and void. 
    Subd. 2.  [REMITTANCE OF PREMIUMS.] Every agency contract 
written by an insurance company writing property and casualty 
insurance in Minnesota shall contain or be construed to contain 
the following provision:  "Notwithstanding any other provision 
of this contract, the obligation of the agent to remit written 
premiums to the company shall be changed upon the commencement 
of any administrative or legal proceeding by any state against 
the carrier regarding its financial condition.  After the 
commencement of the proceedings, the obligation of the agent to 
remit premiums shall be confined to the premiums earned before 
the commencement of the proceedings.  The agent shall not owe or 
remit to the company or to the liquidator or receiver any 
premiums that are unearned as of the date of the commencement of 
the delinquency proceedings, and any unearned premiums in the 
possession of the agent on the date shall be returned promptly 
by the agent to the insured or, with the approval of the 
insured, be used to purchase new coverage for the insured with a 
different insurer. 
    Sec. 8.  [60A.29] [NONPROFIT RISK INDEMNIFICATION TRUST 
ACT.] 
    Subdivision 1.  [TITLE.] This section may be cited as the 
"nonprofit risk indemnification trust act."  
    Subd. 2.  [PURPOSE.] The purpose of this section is to 
authorize the establishment of trust funds for the purpose of 
indemnifying nonprofit beneficiary organizations and their 
officers, directors, and agents for financial loss due to the 
imposition of legal liability, and to regulate the operation of 
trust funds established under this section.  
    Subd. 3.  [APPROVAL OF COMMISSIONER.] No trust fund with 
the purpose of indemnifying multiple nonprofit beneficiary 
organizations shall be established without the prior approval of 
the commissioner of the department of commerce.  The 
commissioner shall withhold approval of any trust fund that 
fails to comply with the provisions and requirements of this 
section. 
    Subd. 4.  [ELIGIBLE BENEFICIARIES.] No organization, 
corporation, agency, or program shall be a beneficiary of any 
trust fund established under this section unless it is exempt 
from taxation under section 501(c)(3) of the Internal Revenue 
Code of 1954, as amended through December 30, 1985.  No trust 
fund established under this section shall agree to indemnify the 
state of Minnesota, any political subdivision of the state, or 
any hospital licensed pursuant to section 144.55.  No trust fund 
established under this section shall indemnify any beneficiary 
for loss or damage to property permanently located outside the 
boundaries of this state or for legal liabilities arising from 
operations or activities occurring outside this state, except 
where those operations or activities are of a nonroutine nature; 
provided, however, that this restriction shall not apply to a 
beneficiary which is incorporated under the laws of this state 
and has its principal office located in this state.  
    Subd. 5.  [INELIGIBLE RISKS.] No trust fund established 
under this section shall indemnify any beneficiary for property 
loss, liabilities incurred under the workers' compensation act, 
or for benefits provided to employees pursuant to any medical, 
dental, life, or disability income protection plan. 
     Subd. 6.  [BENEFIT SCHEDULES.] Every trust fund established 
under this section shall establish in its bylaws or plan of 
operation a schedule of benefits, to be approved by the 
commissioner, governing the indemnification of beneficiaries of 
the trust.  The schedule of benefits shall include all 
conditions, limitations, and exclusions relevant to 
indemnification.  
     Subd. 7.  [INDEMNIFICATION AGREEMENTS.] Every trust fund 
established under this section shall provide each of its 
beneficiaries with a written indemnification agreement 
specifying the rights and obligations of the trust fund and the 
beneficiary under the agreement.  Each form of indemnification 
agreement shall be filed with and approved by the commissioner.  
    Subd. 8.  [CONTRIBUTIONS.] The trust fund shall establish 
contributions required of beneficiaries necessary to fund the 
operations of the fund.  All contribution schedules shall be 
filed with and approved by the commissioner prior to use.  
Contributions must be based on sound actuarial principles and be 
adequate to fund the operation of the trust fund.  Contributions 
may not be excessive, in relation to the benefits provided, or 
unfairly discriminatory.  
    Subd. 9.  [MULTIPLE TRUST AGREEMENTS PROHIBITED.] No trust 
fund established under this section shall enter into an 
agreement with any other trust fund whereby the risks assumed by 
each are pooled or shared.  
     Subd. 10.  [BOARD OF TRUSTEES.] Every trust fund 
established under this section shall be governed by a board of 
no fewer than five trustees.  The initial trustees need not be 
appointed or elected by the beneficiaries of the trust fund.  
During the second year following the creation of an authorized 
trust fund, at least one-fourth of all its trustees in office 
shall have been elected or appointed by the beneficiaries.  
After the end of the second year following the creation of an 
authorized trust fund, a majority of all trustees in office 
shall have been elected or appointed by the beneficiaries.  All 
trustees serving during the first two years following the 
creation of an authorized trust fund shall be elected or 
appointed for one-year terms.  All trustees serving thereafter 
shall be elected or appointed for two-year terms, provided that 
the trustees may be elected or appointed for one-year terms to 
the extent necessary in order to create staggered terms.  Any 
trustee may be removed at any time, with or without cause, by a 
majority vote of the beneficiaries.  The board of trustees shall 
meet no fewer than four times each year.  
    Subd. 11.  [TRUSTEES; COMPENSATION.] No trustee shall be 
paid a salary or receive other compensation for service as a 
trustee, except that the bylaws or plan of operation may provide 
for reimbursement for actual expenses incurred on behalf of the 
trust fund and for the payment of a reasonable per diem amount 
for attendance at meetings of the board.  
     Subd. 12.  [BYLAWS; PLAN OF OPERATION.] The trustees of 
each trust fund authorized under this section shall cause to be 
adopted a set of bylaws or plan of operation which shall govern 
the operation of the trust fund.  All bylaws or plans of 
operation or amendments to them are subject to prior approval by 
the commissioner.  The commissioner shall adopt rules governing 
the content and approval of bylaws or plans of operation.  
    Subd. 13.  [FINANCIAL STATEMENT; REPORT ON OPERATIONS.] 
Every trust fund authorized under this section shall, by June 1 
of every year, file with the commissioner a financial statement 
for the previous year's operations.  The financial statement 
must include the opinion of a certified public accountant that 
the statement was prepared in conformity with generally accepted 
accounting principles.  Also by June 1 of every year, every 
trust fund must file with the commissioner, on forms provided by 
the department, a report summarizing the trust fund's operations 
during the previous year.  
    Subd. 14.  [FINANCIAL STANDARDS.] Every authorized trust 
fund shall have and maintain financial assets sufficient to 
satisfy all current and future financial obligations and 
responsibilities to beneficiaries.  The commissioner shall adopt 
rules establishing minimum financial standards for authorized 
trust funds.  
    Subd. 15.  [CONTRACTS; FEES.] Authorized trust funds may 
enter into contracts with risk management service providers, 
actuarial consultants, or other vendors as are necessary to 
ensure the effective and efficient operation of the trust fund.  
Fees paid to vendors for services provided must not be excessive.
    Subd. 16.  [REINSURANCE.] Authorized trust funds may insure 
or reinsure their obligations and liabilities with insurance 
companies authorized to do business in Minnesota, pursuant to 
section 60A.06, or with companies similarly authorized in any 
other state of the United States. 
    Subd. 17.  [INTERBENEFICIARY CAUSE OF ACTION.] No 
beneficiary shall have any cause of action against any other 
beneficiary arising solely out of the insolvency of inability of 
the trust fund to meet its obligations.  
    Subd. 18.  [EXAMINATION.] The commissioner may examine 
authorized trust funds to the same extent and with the same 
purpose as is provided, with respect to insurance companies, by 
section 60A.031.  
    Subd. 19.  [SECURITY DEPOSIT.] As a condition of 
authorization, every trust fund shall deposit with the 
commissioner an acceptable security of a value equal to not less 
than $500,000.  In the event that a trust fund fails to honor 
the obligations assumed by it under trust agreements issued to 
its beneficiaries, use of the security deposit shall revert to 
the commissioner for the purpose of executing the trust fund's 
obligations to its beneficiaries.  The commissioner shall adopt 
rules governing the amount of security required and the 
acceptable forms of security.  
    Subd. 20.  [RULES.] The commissioner may adopt rules to 
enforce and administer the requirements of this section.  
    Subd. 21.  [TRUST FUNDS NOT SUBJECT TO INSURANCE 
REGULATIONS.] Trust funds established under this section shall 
not be considered insurance companies or to be in the business 
of insurance nor shall they be subject to regulation by the 
commissioner, except as provided for in this section. 
    Sec. 9.  Minnesota Statutes 1984, section 62A.02, 
subdivision 2, is amended to read: 
    Subd. 2.  [APPROVAL.] No such policy shall be issued, nor 
shall any application, rider, or endorsement be used in 
connection therewith, until the expiration of 30 60 days after 
it has been so filed unless the commissioner shall sooner give 
his written approval thereto. 
    Sec. 10.  Minnesota Statutes 1984, section 62A.02, 
subdivision 3, is amended to read: 
    Subd. 3.  [DISAPPROVAL.] The commissioner shall, within 
30 60 days after the filing of any form, disapprove the form: 
    (1) if the benefits provided therein are unreasonable in 
relation to the premium charged; 
    (2) if it contains a provision or provisions which are 
unjust, unfair, inequitable, misleading, deceptive or encourage 
misrepresentation of the policy; or 
    (3) If the proposed premium rate is excessive because the 
insurer has failed to exercise reasonable cost control. 
    For the purposes of clause (1), the commissioner shall 
establish by rule a schedule of minimum anticipated loss ratios 
which shall be based on (i) the type or types of coverage 
provided, (ii) whether the policy is for group or individual 
coverage, and (iii) the size of the group for group policies.  
Except for individual policies of disability or income 
protection insurance, the minimum anticipated loss ratio shall 
not be less than 50 percent after the first year that a policy 
is in force.  All applicants for a policy shall be informed in 
writing at the time of application of the anticipated loss ratio 
of the policy.  For the purposes of this subdivision, 
"anticipated loss ratio" means the ratio at the time of form 
filing or at the time of subsequent rate revision of the present 
value of all expected future benefits, excluding dividends, to 
the present value of all expected future premiums.  Nothing in 
this paragraph shall prohibit the commissioner from disapproving 
a form which meets the requirements of this paragraph but which 
the commissioner determines still provides benefits which are 
unreasonable in relation to the premium charged.  The 
commissioner may until December 31, 1978, exercise emergency 
power for the purpose of implementing the minimum anticipated 
loss ratio requirement, and for this purpose may adopt emergency 
rules as provided in sections 14.29 to 14.36.  Notwithstanding 
the expiration of the commissioner's emergency power, any 
emergency rule adopted by him prior to the expiration of his 
emergency power may remain effective for the periods authorized 
in sections 14.29 to 14.36.  
    If the commissioner notifies an insurer which has filed any 
form that the form does not comply with the provisions of this 
section or sections 62A.03 to 62A.05 and section 72A.20, it 
shall be unlawful thereafter for the insurer to issue the form 
or use it in connection with any policy.  In the notice the 
commissioner shall specify the reasons for his disapproval and 
state that a hearing will be granted within 20 days after 
request in writing by the insurer.  
    Sec. 11.  Minnesota Statutes 1984, section 62B.07, 
subdivision 2, is amended to read: 
    Subd. 2.  The commissioner shall within 30 60 days after 
the filing of policies, certificates of insurance, notices of 
proposed insurance, applications for insurance, endorsements and 
riders, disapprove any such form if the premium rates charged or 
to be charged are excessive in relation to benefits, or if it 
contains provisions which are unjust, unfair, inequitable, 
misleading, deceptive or encourage misrepresentation of the 
coverage, or are contrary to any provision of the insurance laws 
or of any rule or regulation promulgated thereunder.  In order 
to determine whether the premium to be charged under a 
particular policy form submitted by an insurer is excessive in 
relation to benefits, and to facilitate the submission and 
approval of policy forms and premium rates to be used in 
connection therewith, the commissioner shall give full 
consideration to and make reasonable allowances for underwriting 
expenses including, but not limited to, claim adjustment 
expenses, general administrative expenses including costs for 
handling return premiums, compensation to agents, expense 
allowances to creditors, if any, branch and field expenses and 
other acquisition costs, the types of policies actually issued 
and authorized as defined in section 62B.03, (1), (2), (3) and 
(4), and any and all other factors and trends demonstrated to be 
relevant.  An insurer may support these factors by statistical 
information, experience, actuarial computations, and/or 
estimates certified by an executive officer of the insurer, and 
the commissioner shall give due consideration to such supporting 
data.  
    Sec. 12.  Minnesota Statutes 1984, section 62B.07, 
subdivision 3, is amended to read: 
    Subd. 3.  If the commissioner notifies the insurer that the 
form is disapproved, it is unlawful thereafter for the insurer 
to issue or use it.  In his notice, the commissioner shall 
specify the reason for his disapproval and state that a hearing 
will be granted within 20 days after a request in writing by the 
insurer.  No policy, certificate of insurance, notice of 
proposed insurance, nor any application, endorsement or rider, 
shall be issued or used until the expiration of 30 60 days after 
it has been filed, unless the commissioner gives his prior 
written approval thereto.  
    Sec. 13.  Minnesota Statutes 1984, section 62C.14, 
subdivision 10, is amended to read: 
    Subd. 10.  Except as otherwise provided in subdivision 9, 
all forms received by the commissioner shall be deemed filed 30 
60 days after received unless disapproved by order transmitted 
to the corporation stating that the form used in a specified 
respect is contrary to law, contains a provision or provisions 
which are unfair, inequitable, misleading, inconsistent or 
ambiguous, or is in part illegible.  It shall be unlawful to 
issue or use a document disapproved by the commissioner.  
     Sec. 14.  Minnesota Statutes 1984, section 62E.14, is 
amended by adding a subdivision to read: 
     Subd. 4.  Notwithstanding the above, any Minnesota resident 
holder of a policy or certificate of medicare supplement 
coverages pursuant to sections 62A.32 to 62A.35, or medicare 
supplement plans previously approved by the commissioner, may 
enroll in the comprehensive health insurance plan as described 
in section 62E.07, with a waiver of the preexisting condition as 
described in subdivision 3, without interruption in coverage, 
provided, the policy or certificate has been terminated by the 
insuror for reasons other than nonpayment of premium and, 
provided further, that the option to enroll in the plan is 
exercised within 30 days of termination of the existing contract.
     Coverage in the state plan for purposes of this section 
shall be effective on the date of termination upon completion of 
the proper application and payment of the required premium.  The 
application must include evidence of termination of the existing 
policy or certificate. 
    Sec. 15.  Minnesota Statutes 1984, section 62F.01, is 
amended to read: 
    62F.01 [CITATION; EXPIRATION DATE.] 
    Subdivision 1.  Sections 62F.01 to 62F.14 may be cited as 
the "Temporary Joint Underwriting Association Act". 
    Subd. 2.  Sections 62F.01 to 62F.14 expire September 1, 
1988. 
    Sec. 16.  Minnesota Statutes 1984, section 62F.02, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CREATION.] There is created a temporary 
joint underwriting association to provide medical malpractice 
insurance coverage to any licensed health care provider unable 
to obtain this insurance through ordinary methods.  Every 
insurer authorized to write and writing personal injury 
liability insurance in this state shall be a member of the 
association as a condition to obtaining and retaining a license 
to write insurance in this state. 
    Sec. 17.  Minnesota Statutes 1984, section 62F.03, 
subdivision 2, is amended to read: 
    Subd. 2.  "Association" means the temporary joint 
underwriting association. 
    Sec. 18.  Minnesota Statutes 1984, section 62F.04, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [REAUTHORIZATION.] The authorization to issue 
insurance is valid for a period of two years from the date it 
was made.  The commissioner may reauthorize the issuance of 
insurance for additional two-year periods under the terms of 
subdivision 1.  This subdivision is not a limitation on the 
number of times the commissioner may reauthorize the issuance of 
insurance. 
    Sec. 19.  Minnesota Statutes 1984, section 62G.16, 
subdivision 9, is amended to read: 
    Subd. 9.  All forms received by the commissioner shall be 
deemed filed 30 60 days after received unless disapproved by 
order transmitted to the legal service plan corporation stating 
that the form used in a specified respect is contrary to law, 
contains a provision or provisions which are unfair, 
inequitable, misleading, inconsistent or ambiguous, or is in 
part illegible.  It shall be unlawful to issue or use a document 
disapproved by the commissioner. 
    Sec. 20.  [62I.01] [CITATION.] 
    Sections 20 to 41 may be cited as the Minnesota joint 
underwriting association act. 
    Sec. 21.  [62I.02] [MINNESOTA JOINT UNDERWRITING 
ASSOCIATION.] 
    Subdivision 1.  [CREATION.] The Minnesota joint 
underwriting association is created to provide insurance 
coverage to any person or entity unable to obtain insurance 
through ordinary methods if the insurance is required by 
statute, ordinance, or otherwise required by law, or is 
necessary to earn a livelihood or conduct a business and serves 
a public purpose.  Prudent business practice or mere desire to 
have insurance coverage is not a sufficient standard for the 
association to offer insurance coverage to a person or entity.  
The association shall be specifically authorized to provide 
insurance coverage to day care providers, foster parents, foster 
homes, developmental achievement centers, group homes, and 
sheltered workshops for mentally, emotionally, or physically 
handicapped persons, and citizen participation groups 
established pursuant to the housing and community redevelopment 
act of 1974, Public Law Number 93-383.  Because the activities 
of certain persons or entities present a risk that is so great, 
the association shall not offer insurance coverage to any person 
or entity the board of directors of the association determines 
is outside the intended scope and purpose of the association 
because of the gravity of the risk of offering insurance 
coverage.  The association shall not offer environmental 
impairment liability or product liability insurance, or coverage 
for activities that are conducted substantially outside the 
state of Minnesota unless the insurance is required by statute, 
ordinance, or otherwise required by law.  Every insurer 
authorized to write property and casualty insurance in this 
state shall be a member of the association as a condition to 
obtaining and retaining a license to write insurance in this 
state.  
    Subd. 2.  [DIRECTOR.] The association shall have a board of 
directors composed of 11 persons chosen annually as follows:  
five persons elected by members of the association at a meeting 
called by the commissioner; three public members, as defined in 
section 214.02, appointed by the commissioner; and three 
members, appointed by the commissioner representing groups to 
whom coverage has been extended by the association.  If at any 
time no coverage is currently extended by the association, then 
either additional public members may be appointed to fill these 
three positions or, at the option of the commissioner, 
representatives from groups who had previously been covered by 
the association may serve as directors. 
    Subd. 3.  [REAUTHORIZATION.] The authorization to issue 
insurance to day care providers, foster parents, foster homes, 
developmental activity centers, group homes, and sheltered 
workshops for mentally, emotionally, or physically handicapped 
persons, and citizen participation groups established pursuant 
to the housing and community redevelopment act of 1974, Public 
Law Number 93-383, is valid for a period of two years from the 
date it was made.  The commissioner may reauthorize the issuance 
of insurance for additional two-year periods pursuant to 
sections 40 and 41.  This subdivision is not a limitation on the 
number of times the commissioner may reauthorize the issuance of 
insurance.  Insurance may not be offered pursuant to this 
section to persons or entities other than those listed in this 
subdivision after December 31, 1989. 
    Sec. 22.  [62I.03] [DEFINITION.] 
    Subdivision 1.  [SCOPE.] As used in sections 20 to 41 the 
following terms have the meanings given them in this section. 
    Subd. 2.  [ASSOCIATION.] "Association" means the Minnesota 
joint underwriting association. 
    Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
commissioner of commerce. 
    Subd. 4.  [DIRECT WRITTEN PREMIUMS.] "Direct written 
premiums" means that amount at column (2), lines 5, 8, 9, 17, 
21.2, 22, 23, 24, 25, 26, and 27, page 14, of the annual 
statement filed annually with the department of commerce 
pursuant to section 60A.13. 
    Subd. 5.  [DEFICIT.] "Deficit" means, for a particular 
policy year and line or type of insurance, that amount by which 
total paid and outstanding losses and loss adjustment expenses 
exceed premium revenue, including retrospective premium revenue. 
    Sec. 23.  [62I.04] [POLICY ISSUANCE.] 
    Any person or entity that is a resident of the state of 
Minnesota who has a current written notice of refusal to insure 
from an insurer licensed to offer insurance in the state of 
Minnesota may make written application to the association for 
coverage.  The applicable premium or required portion of it must 
be paid prior to coverage by the association. 
    The application shall be filed simultaneously with the 
association and the market assistance plan for the association. 
    The association is authorized to (1) issue or cause to be 
issued insurance policies to applicants subject to limits 
specified in the plan of operation; (2) underwrite the insurance 
and adjust and pay losses with respect to it, or appoint service 
companies to perform those functions; (3) assume reinsurance 
from its members; and (4) cede reinsurance. 
    Sec. 24.  [62I.05] [PLAN OF OPERATION.] 
    Within 45 days after the appointment of the directors of 
the association, the directors shall submit to the commissioner 
for review, a proposed plan of operation, consistent with the 
provisions of this chapter. 
    The plan of operation shall provide economic, fair, and 
nondiscriminatory administration and for the prompt, efficient 
provision of insurance coverage of the types provided by section 
20.  It shall provide for an expedited review and determination 
by the board of any application for a type of coverage that has 
not been previously excluded or authorized.  The action of the 
board on the application shall be an amendment to the plan of 
operation and the type of coverage shall thereafter be specified 
in the plan as either excluded or authorized.  It may contain 
other provisions necessary for the operation of the association, 
including but not limited to preliminary assessment of all 
members for initial expenses necessary to commence operations, 
establishment of necessary facilities, management of the 
association, assessment of members to defray losses and 
expenses, commission arrangements, reasonable and objective 
underwriting standards, acceptance and cessation of reinsurance, 
appointment of servicing carriers or other servicing 
arrangements and procedures for determining amounts of insurance 
to be provided by the association. 
    The plan of operation is subject to approval by the 
commissioner.  If the commissioner disapproves all or any part 
of the proposed plan of operation, the directors shall within 15 
days submit for review an appropriate revised plan of 
operation.  If a revised plan is not submitted within 15 days 
the commissioner shall promulgate a plan of operation.  The plan 
of operation approved or promulgated by the commissioner is 
effective and operational upon the order of the commissioner. 
    Amendments to the plan of operation may be made by the 
directors of the association subject to approval by the 
commissioner. 
    Sec. 25.  [62I.06] [POLICY FORMS; PREMIUM RATE.] 
    Subdivision 1.  [REQUIREMENT.] The policies and contracts 
of coverage issued pursuant to this chapter shall contain the 
usual and customary provisions of similar insurance policies 
issued by private insurance companies.  If a standard form is 
used in the private marketplace for any type of coverage that is 
to be extended by the association, then the association shall 
use that form.  If there are varying types of forms used in the 
marketplace the association may choose to use a standard policy 
form issued by a service organization or other entity who 
commonly prepares standardized types of forms.  If the board 
determines that neither of these alternatives is appropriate, 
then it shall adopt a policy form based upon the terms and 
conditions of the policies used for this type of coverage that 
are the most commonly used in the private market.  As far as 
practical the board shall attempt to adopt forms that are 
consistent with the practice in the private market.  No policy 
forms shall be used by the association unless it has been filed 
with the commissioner, and the commissioner may disapprove the 
form within 30 days if the commissioner determines that it is 
misleading, it violates public policy, or for any reason that 
the commissioner would be empowered to reject a similar form 
filed by a private company. 
    Subd. 2. [CANCELLATION.] If the insured fails to pay a 
stabilization reserve fund charge the association may cancel the 
policy by mailing or delivering to the insured at the insured's 
address shown on the policy at least ten days written notice 
stating the date that the cancellation is effective. 
    Subd. 3.  [RATES.] The rates, rating plan, rating rules, 
rating classification and territories applicable to insurance 
written by the association and related statistics are subject to 
chapter 70A.  Rates shall be on an actuarially sound basis, 
giving consideration to the group retrospective rating plan.  
The commissioner shall take all appropriate steps to make 
available, upon request of the association, loss and expense 
experience of insurers previously writing or currently writing 
insurance of any type the association offers or intends to offer.
    Subd. 4.  [APPROVAL.] All policies issued by the 
association are subject to the group retrospective rating plan 
approved by the commissioner under which the final premium for 
the insureds of the association, as a group, will be equal to 
the administrative expenses, loss and loss adjustment expenses 
and taxes, plus a reasonable allowance for contingency and 
servicing.  If the board of directors feels it is appropriate 
and in the interest of fairness and equity, the insureds of the 
association may be broken down into more than one group.  The 
rating plan may provide for varying rates within the rating plan 
for such groups as their relative burden to the group as a whole 
would merit.  Policyholders shall be given full credit for all 
investment income, net of expenses and reasonable management fee 
on policyholder supplied funds.  The standard premium, before 
retrospective adjustment, for each policy issued by the 
association shall be established for portions of the policy 
period coinciding with the association's fiscal year on the 
basis of the association rates, rating plans, rating rules, 
rating classifications and territories then in effect.  The 
maximum premium for all policyholders of the association as a 
group shall be limited as provided in sections 20 to 41. 
    Subd. 5.  [EXAMINATIONS.] The commissioner shall examine 
the business of the association as often as is appropriate to 
insure that the group retrospective rating plan is operating in 
a manner consistent with this chapter or other Minnesota laws.  
If it is found that the operation is deficient or inconsistent 
with this chapter or other Minnesota laws the commissioner may 
order the association to take corrective action. 
    Subd. 6.  [DEFICITS.] The association shall certify to the 
commissioner the estimated amount of any deficit remaining after 
the stabilization reserve fund has been exhausted and payment of 
the maximum final premium for all policyholders of the 
association.  Within 60 days after the certification, the 
commissioner shall authorize the association to recover the 
members' respective shares of the deficit by assessing all 
members an amount sufficient to fully fund the obligations of 
the association.  The assessment of each member shall be 
determined in the manner provided in section 26.  An assessment 
made pursuant to this section shall be deductible by the member 
from past or future premium taxes due the state. 
    Subd. 7.  [AMENDMENTS TO RATING PLAN.] In addition to the 
usual manner of amending the rating plan set forth in this 
section and section 24, the following procedure may also be used:
     (1) Any person may, by written petition served upon the 
commissioner of commerce request that a hearing be held to amend 
the rating plan, or any part of the rating plan. 
     (2) The commissioner shall forward a copy of the petition 
to the chief administrative law judge within three business days 
of its receipt.  The chief administrative law judge shall, 
within three business days of receipt of the copy of the 
petition or a request for hearing by the commissioner, set a 
hearing date, assign an administrative law judge to hear the 
matter, and notify the commissioner of the hearing date and the 
administrative law judge assigned to hear the matter.  The 
hearing date must be set not less than 60 days nor more than 90 
days from the date of receipt of the petition by the 
commissioner or the date of the commissioner's request for 
hearing if the commissioner is the person requesting a hearing.  
     (3) The commissioner shall publish a notice of the hearing 
in the State Register at least 30 days before the hearing date.  
The notice should be similar to that used for rulemaking under 
the administrative procedure act.  Approval of the notice by the 
administrative law judge is not required.  
    (4) The hearing and all matters which occur after the 
hearing are a contested case under chapter 14.  Within 45 days 
from the commencement of the hearing and within 15 days of the 
completion of the hearing the administrative law judge shall 
submit a report to the commissioner of commerce.  The parties, 
or the administrative law judge, if the parties cannot agree, 
shall adjust all time requirements under the contested case 
procedure to conform with the 45-day requirement. 
    (5) The commissioner shall render a decision within ten 
business days of the receipt of the administrative law judge's 
report.  
    (6) If all parties to the proceeding agree, any of the 
previous requirements may be waived or modified.  
     (7) A petition for a hearing to amend the rating plan or 
any part of the rating plan received by the commissioner within 
180 days of the date of the commissioner's decision in a prior 
proceeding to amend the rating plan is invalid and requires no 
action provided the petition involves the same rates as the 
previous hearing.  If the petition involves matters in addition 
to those dealt with in the previous hearing, then the additional 
matters shall be treated as a separate petition for hearing and 
a hearing may be held on those matters. 
    Sec. 26.  [62I.07] [MEMBERSHIP ASSESSMENTS.] 
    Each member of the association shall participate in its 
losses and expenses in the proportion that the direct written 
premiums of the member bears to the total aggregate direct 
written premiums written in this state by all members.  The 
members' participation in the association shall be determined 
annually on the direct written premiums written during the 
preceding calendar year as reported on the annual statements and 
other reports filed by the member with the commissioner. 
    Sec. 27.  [62I.08] [APPLICATION PROCEDURE.] 
    A person or entity that has been denied coverage or is 
unable to find an insurer willing to write coverage is eligible 
to make an application to the association.  The application 
shall be on a form approved by the board of directors.  To show 
eligibility to participate in the association the applicant 
shall certify that the applicant has been unable to find anyone 
to offer the coverage sought by the applicant.  No further proof 
shall be required of the applicant.  The application shall be 
filed simultaneously with the association and the market 
assistance plan of the association. 
    Sec. 28.  [62I.09] [MARKET ASSISTANCE PLAN.] 
    Subdivision 1.  [CREATION.] A market assistance program 
committee consisting of 12 members is created.  The 12 members 
shall be appointed by the commissioner of commerce.  The 
commissioner's designated representative shall serve as an ex 
officio member.  The commissioner shall appoint six members of 
the committee as representatives of insurers; two members who 
are insurance agents; two public members; and two members 
representative of groups to whom the association has issued 
coverage.  If, at any time after appointment, a member of the 
committee, through change of employment or similar 
circumstances, is no longer representative of the group the 
member was appointed to represent, that member shall be deemed 
unable to continue to serve as a member of the committee and the 
commissioner shall appoint a replacement for the balance of that 
member's term. 
    Subd. 2.  [TERMS AND VACANCIES.] In the event of a member's 
inability to continue to serve, the commissioner shall appoint a 
replacement.  The committee shall elect a chair and vice chair 
from among the members.  The term of each member is one year 
commencing on June 1, except that the first members to be 
appointed to the committee shall serve from the date of their 
appointment until June 1 immediately following their appointment.
    Subd. 3.  [MEETINGS.] The committee shall convene upon the 
call of the commissioner, the chair or vice chair or at the 
request of one of the committee members.  No quorum requirements 
are necessary. 
    Sec. 29.  [62I.10] [DISPOSITION OF APPLICATION.] 
    Subdivision 1.  [ACTION UPON APPLICATION.] Upon receipt of 
an application, the committee or persons the committee appoints 
or designates will immediately review the application to 
determine what assistance the committee can give.  The 
assistance may include:  (1) discussion with the applicant's 
most recent underwriter, if any, to determine if the applicant's 
coverage can be maintained with the most recent carrier; (2) 
discussion with other known available insurance markets to 
determine if any other carrier will accept the applicant; (3) 
negotiating extensions of coverage with the most recent carrier 
or a temporary carrier, if possible, to permit additional 
exploration of insurance markets or accumulation of essential 
underwriting data; and (4) referring the application to the 
first five participating insurers (participants) on the relevant 
list provided in subdivision 2.  Subsequent applications will be 
sent to the next five participants on a rotating basis.  If at 
any time there are less than ten participants on the master list 
then the master list will no longer be utilized. 
    Subd. 2.  [LIST OF PARTICIPATING INSURERS.] A list of 
participants shall be prepared and updated at least every two 
years in the following manner:  (1) the committee will secure a 
mailing list from the department of commerce of every licensed 
insurer admitted to do business as well as every eligible 
licensed surplus lines licensee; (2) the committee will mail to 
each admitted insurer and eligible surplus lines licensee an 
outline of the conditions of participation; (3) a master list of 
participants willing to take part in the market assistance 
program will be created from the responses to the initial 
mailing.  The master list will be updated at least every two 
years pursuant to clauses (1) and (2).  Order on the master list 
will be determined by random selection. 
    Subd. 3.  [REFERRAL TO PARTICIPANTS.] Upon receipt of an 
application, the committee or the persons the committee appoints 
or designates may mail or telex copies of the application to the 
first five participants on the master list. 
    Subd. 4.  [QUOTES.] Participants must quote on at least one 
out of every three applications submitted.  Each participant 
will have the right to individually evaluate the risk the 
applicant poses and develop a price commensurate with that risk. 
    Subd. 5.  [REFERRAL.] If no quote is received from the 
first five participants on the list, the next five participants 
on the list shall receive the application and the same procedure 
shall be followed until a quote is obtained or the list is 
exhausted.  All participants may, if the committee feels it 
appropriate, be given the application at once. 
    Subd. 6.  [RESPONSE FROM PARTICIPANT.] Participants may 
provide a quote on the same coverage basis they normally provide 
for similar coverage for that type of insurance in Minnesota.  
Participants will return their quotations or refusals to quote 
to the committee within ten days.  The applicant or the 
applicant's agent, if any, will be notified of the quotations.  
The agent will then complete the placement of the insurance, if 
the applicant accepts coverage from the participant at the price 
quoted, without need for an agency appointment from that 
participant.  The insurer is not required to pay the agent any 
commission, but the agent may negotiate a fee with the applicant 
prior to initial submission of the application. 
    Subd. 7.  [LIMITATION ON REAPPLICATION.] An applicant 
provided a quotation in accordance with the above procedure will 
not be eligible to seek additional quotations from the market 
assistance plan or to obtain coverage from the association if 
the quotation received would not be deemed to be a notice of 
refusal for purposes of determining eligibility for 
participation in the association. 
    Subd. 8.  [REVIEW BY THE COMMITTEE.] If the procedures in 
subdivisions 1 to 7 do not produce a quote, the application may 
be submitted to the committee.  The committee after reviewing 
the application shall proceed as follows:  (1) attempt to place 
the applicant with a single carrier; or (2) attempt to arrange 
coverage on a quota share basis with a number of carriers. 
    Subd. 9.  [DISQUALIFICATION AFTER COVERAGE GRANTED.] If an 
application is filed with the market assistance program less 
than 30 business days before the expiration date of the 
applicant's current insurance coverage the market assistance 
program may continue to seek coverage for the applicant after 
coverage is extended by the association.  The market assistance 
program will have 30 business days from the date of filing of 
the application with the market assistance program to obtain an 
offer of coverage for the applicant.  If the market assistance 
program is able to secure an offer of coverage for the applicant 
within 30 business days of filing of the application and if the 
offer of coverage would not otherwise be considered a refusal 
for purposes of the association, the applicant will be deemed to 
not be qualified to participate in the association and coverage, 
if any, shall be terminated.  If the applicant accepts the 
coverage obtained by the market assistance plan, coverage from 
the association will terminate when the new coverage begins. 
    Subd. 10.  [NOTIFICATION OF FAILURE TO PLACE.] If the 
market assistance program does not produce a quote, it shall 
notify the submitting agent or the applicant at least 24 hours 
before the time the applicant's current insurance coverage 
terminates.  A copy of the notification must be submitted to the 
commissioner and the association at the same time notice is made 
to the agent or applicant.  Notwithstanding the foregoing, the 
market assistance program may continue to act pursuant to 
subdivision 9.  Notice that the market assistance program is 
continuing to act pursuant to subdivision 9 shall be included in 
the notice required by this subdivision. 
    Sec. 30.  [62I.11] [PROGRAM PARTICIPATION.] 
    Subdivision 1.  [TERMINATION.] A participant may terminate 
its participation in the program at any time by providing 
written notice of the termination 90 days in advance of the 
effective date of the termination to the commissioner and to the 
committee. 
    Subd. 2.  [NEW PARTICIPANTS.] New participants may join the 
program at any time by submitting a written request to the 
commissioner and to the committee. 
    Sec. 31.  [62I.12] [ASSOCIATION ADMINISTRATION.] 
    Subdivision 1.  [ADMINISTRATOR.] The association shall be 
administered by a qualified insurer or vendor of risk management 
services selected by the commissioner.  If the commissioner 
deems it necessary, the commissioner may select more than one 
person to administer the association. 
    Subd. 2.  [DUTIES.] The administrator shall perform all 
services necessary to accomplish the purposes of the 
association, including the servicing of policies or contracts of 
coverage, data management, and collection of assessments. 
    Subd. 3.  [APPEALS.] Anyone adversely affected by the 
decision of the administrator may object to the decision by 
appealing to the commissioner within 15 days after the 
decision.  The appeal must be made by letter mailed to the 
commissioner with a copy to the administrator within the 15-day 
period.  The letter must include a summary of the 
administrator's decision from which the appeal is taken, the 
basis for the objection to the administrator's decision, and any 
argument or evidence in support of the appeal.  Within 15 days 
after receipt of the letter, the administrator shall file a 
response, including the basis of the administrator's decision 
and all argument and evidence in support of the decision, with 
the commissioner.  Within ten days after receipt of the 
administrator's response, the commissioner shall either affirm, 
reverse, or modify the administrator's decision as the 
commissioner deems appropriate. 
    Sec. 32.  [62I.13] [ACTION BY THE MINNESOTA JOINT 
UNDERWRITING ASSOCIATION UPON THE APPLICATION.] 
    Subdivision 1.  [GENERALLY.] Eligibility for coverage by 
the association is subject to the terms and conditions of 
subdivisions 2 and 3. 
    Subd. 2.  [MINIMUM OF QUALIFICATIONS.] Anyone who is unable 
to obtain insurance in the private market and who so certifies 
to the association in the application is eligible to make 
written application to the association for coverage.  Payment of 
the applicable premium or required portion of it must be paid 
prior to coverage by the association.  An offer of coverage at a 
rate in excess of the rate that would be charged by the 
association for similar coverage and risk shall be deemed to be 
a refusal of coverage for purposes of eligibility for 
participation in the association.  It shall not be deemed to be 
a written notice of refusal if the rate for coverage offered is 
less than five percent in excess of the joint underwriting 
association rates for similar coverage and risk.  However, the 
offered rate must also be the rate that the insurer has filed 
with the department of commerce if the insurer is required to 
file its rates with the department.  If the insurer is not 
required to file its rates with the department, the offered rate 
must be the rate generally charged by the insurer for similar 
coverage and risk. 
    Subd. 3.  [DISQUALIFYING FACTORS.] For good cause, coverage 
may be denied or terminated by the association.  Good cause may 
exist if the applicant or insured:  (1) has an outstanding debt 
due or owing to the association at the time of application or 
renewal arising from a prior policy; (2) refuses to permit 
completion of an audit requested by the commissioner or 
administrator; (3) submits misleading or erroneous information 
to the commissioner or administrator; (4) disregards safety 
standards, laws, rules or ordinance pertaining to the risk being 
insured; (5) fails to supply information requested by the 
commissioner or administrator; (6) fails to comply with the 
terms of the policies or contracts for coverage issued by the 
association; and (7) has not satisfied the requirements of the 
market assistance program as set forth in section 28. 
    Subd. 4.  [DISQUALIFICATION AFTER COVERAGE GRANTED.] If an 
application is filed with the market assistance program less 
than 30 business days before the expiration of the applicant's 
current insurance coverage, the market assistance program may 
continue to seek coverage for the applicant after coverage is 
extended by the association.  The market assistance program will 
have 30 business days from the date of filing the application 
with the market assistance program to obtain an offer of 
coverage for the applicant.  If the market assistance program is 
able to secure an offer of coverage for the applicant within 30 
business days of filing of the application and if the offer of 
coverage would not otherwise be considered refusal for purposes 
of the association, the applicant will be deemed to be not 
qualified to participate in the association plan and coverage, 
if any, shall be terminated. 
    Subd. 5.  [NOTICE.] An application for coverage under the 
association must be granted or denied within ten days after 
receipt by the administrator of a properly completed application 
and any supplemental information requested by the 
administrator.  Anyone covered by the association must be given 
at least 30 days notice of nonrenewal or cancellation of 
coverage. 
    Sec. 33.  [62I.14] [ASSESSMENTS.] 
    In the event the commissioner deems it necessary to make an 
assessment, an assessed insurer must pay the assessment within 
30 days of receipt of notice of the assessment.  The 
commissioner may suspend or revoke an insurer's certificate of 
authority and impose a civil penalty in an amount not to exceed 
$5,000 for an insurer's failure to pay the assessment within the 
30 day period. 
    Sec. 34.  [62I.15] [EXTENSION OF COVERAGE.] 
    If the association determines that the applicant meets the 
underwriting standards of the association as described in the 
plan of operation and there is no unpaid, uncontested premium 
due from the application for prior insurance, including failure 
to make written objections to premium charges within 30 days 
after billing, or if there is no other allowable reason as set 
forth in this chapter for denial of coverage, the association 
upon receipt of the premium or portion of it as described in the 
plan of operation shall issue a policy of insurance to the 
applicant. 
    Sec. 35.  [62I.16] [STABILIZATION RESERVE FUND.] 
    Subdivision 1.  [CREATION.] There is created a 
stabilization reserve fund.  Each policyholder shall pay to the 
association a stabilization reserve fund charge of 33 percent of 
each premium payment due for insurance through the association.  
This charge shall be separately stated in the policy.  The 
association shall cancel the policy of any policyholder who 
fails to pay the stabilization reserve fund charge. 
    Subd. 2.  [PAYMENT.] The association shall promptly pay 
into the stabilization reserve fund all fund charges it collects 
from its policyholders and any retrospective premium refunds 
payable under the group retrospective rating plan. 
    Subd. 3.  [SUPERVISION.] All money paid into the fund shall 
be held in trust by the corporate trustee selected by the board 
of directors.  The corporate trustee may invest the money held 
in trust subject to the approval of the board.  All investment 
income shall be credited to the fund.  All expenses of the 
administration of the fund shall be charged against the fund.  
The money held in trust shall be used solely for the purpose of 
discharging when due any retrospective premium charges payable 
by policyholders and any retrospective premium refunds payable 
to policyholders under the group retrospective rating plan.  
Payment of retrospective premium charges shall be made upon 
certification of the amount due.  If all money accruing to the 
fund is exhausted in payment of retrospective premium charges, 
all liability and obligations of the association's policyholders 
with respect to the payment of retrospective premium charges 
shall terminate and shall be conclusively presumed to have been 
discharged.  Any stabilization reserve fund charges from a 
particular policy year and line or type of insurance not used to 
pay retrospective premiums must be returned to policyholders 
after all claims and expense obligations from that particular 
policy year and line or type of insurance are satisfied. 
    Subd. 4.  [EXEMPTION.] The board of directors may, upon 
their own motion or upon application of any applicant or 
insured, exempt any group from the payment of the stabilization 
reserve charge.  The exemption shall be granted only to those 
groups who are unable to obtain insurance coverage in the 
private market as a result of the private market's refusal to 
write coverage for that group rather than because of loss 
experiences or risks posed by the applicant or insured as an 
individual.  It shall be presumed that a group is qualified for 
this exemption if more than 20 percent of the members of that 
group are unable to obtain the insurance coverage that they 
seek.  The board of directors shall also consider granting 
exemption if any members of the same group are unable to obtain 
coverage in the private market even though no claims have been 
made against them or payments made on their behalf by any 
insurer within the last three years. 
    Subd. 5.  [SURCHARGE.] In addition to determining the basic 
rate for coverages to be offered by the joint underwriting 
association, the association shall also develop a surcharge plan 
or similar method for adjusting the rate to be charged to those 
persons who have had claims made against them.  The surcharge 
plan shall take into effect the risk posed to the association by 
the applicant or the insured.  The surcharge plan shall be 
sufficient to provide for the sound financial operation of the 
plan based upon commonly agreed upon actuarial principles. 
    Sec. 36.  [62I.17] [IMMUNITY FROM LIABILITY.] 
    No cause of action of any nature shall arise against the 
association, the commissioner or the commissioner's authorized 
representatives, or any other person or organization, for any 
statements made in good faith by them during any proceedings or 
concerning any matters within the scope of this chapter. 
    Sec. 37.  [62I.18] [RIGHT OF APPEAL.] 
    Any applicant to the association, any person insured 
pursuant to this chapter or their representatives, any affected 
insurer, or any person who has applied for coverage pursuant to 
this chapter may appeal to the commissioner within 30 days after 
any ruling, action, or decision by or on behalf of the 
association with respect to those items that the plan of 
operation defines as appealable matters. 
    Sec. 38.  [62I.19] [ANNUAL STATEMENTS.] 
    On March 1 of each year the association shall file with the 
commissioner a report of its transactions, financial conditions, 
and operations during the preceding year.  The report shall be 
on a form approved by the commissioner.  The commissioner may at 
any time require the association to furnish additional 
information to assist in evaluating the scope, operation, and 
experience of the association. 
    Sec. 39.  [62I.20] [MERGER OF OTHER PLANS.] 
    Upon application by the governing body of the liquor 
liability assigned risk plan authorized by section 340A.409 or 
the joint underwriting association authorized by chapter 62F to 
be merged with the association, the commissioner shall, if the 
commissioner deems it appropriate, hold a public hearing in 
regard to the merger.  The commissioner upon motion or upon the 
motion of any insured under plans shall hold a hearing.  Unless 
it can be shown that the rights of the insured would be 
adversely affected by the merger or that it would be less 
efficient or more costly to merge the plans, the commissioner 
shall consent to the merger.  The commissioner shall also 
consent to the merger at any time there are less than ten 
insureds in any plan. 
    Sec. 40.  [62I.21] [ACTIVATION OF MARKET ASSISTANCE PLAN 
AND JOINT UNDERWRITING ASSOCIATION.] 
    At any time the commissioner of commerce deems it necessary 
to provide assistance with respect to the placement of general 
liability insurance coverage on Minnesota risks for a class of 
business, the commissioner shall by notice in the state register 
activate the market assistance plan and the joint underwriting 
association.  The plan and association are activated for a 
period of 180 days from publication of the notice.  At the same 
time the notice is published, the commissioner shall prepare a 
written petition requesting that a hearing be held to determine 
whether activation of the market assistance plan and the joint 
underwriting association is necessary beyond the 180-day 
period.  The hearing must be held in accordance with section 
41.  The commissioner by order shall deactivate a market 
assistance program and the joint underwriting association at any 
time the commissioner finds that the market assistance program 
and the joint underwriting association are not necessary. 
    Sec. 41.  [62I.22] [HEARING.] 
    Subdivision 1.  [ADMINISTRATIVE LAW JUDGE.] The 
commissioner shall forward a copy of the petition to activate 
the market assistance plan and the joint underwriting 
association with respect to a class of business to the chief 
administrative law judge.  The chief administrative law judge 
shall, within three business days of receipt of the copy of the 
petition, set a hearing date, assign an administrative law judge 
to hear the matter, and notify the commissioner of the hearing 
date and the administrative law judge assigned to hear the 
matter.  The hearing date must be no less than 60 days nor more 
than 90 days from the date of receipt of the petition by the 
chief administrative law judge. 
    Subd. 2.  [NOTICE.] The commissioner of commerce shall 
publish notice of the hearing in the State Register at least 30 
days before the hearing date.  The notice should be that used 
for rulemaking under chapter 14.  Approval by the administrative 
law judge of the notice prior to publication is not required. 
    Subd. 3.  [CONTESTED CASE; REPORT.] The hearing and all 
matters after the hearing are a contested case under chapter 14. 
Within 45 days from the commencement of the hearing and within 
15 days of the completion of the hearing the administrative law 
judge shall submit a report to the commissioner of commerce.  
The parties, or the administrative law judge, if the parties 
cannot agree, shall adjust all time requirements under the 
contested case procedure to conform with the 45-day requirement. 
    Subd. 4.  [DECISION.] The commissioner shall make a 
decision within ten days of the receipt of the administrative 
law judge's report. 
    Subd. 5.  [WAIVER OR MODIFICATION.] If all parties to the 
proceeding agree, any of the requirements of this section may be 
waived or modified. 
    Sec. 42.  Minnesota Statutes 1984, section 65A.32, is 
amended to read: 
    65A.32 [PURPOSES.] 
    The purposes of sections 65A.31 to 65A.43 are: 
    (1) To encourage stability in the property and liability 
insurance market for property located in urban areas of this 
state; 
    (2) To encourage maximum use, in obtaining basic property 
and liability insurance, as defined in sections 65A.31 to 
65A.43, of the normal insurance market provided by the private 
property and casualty insurance industry; 
    (3) To encourage the improvement of the condition of 
properties located in urban areas of this state and to further 
orderly community development generally; 
    (4) To provide for the formulation and administration by an 
industry placement facility of a plan assuring fair access to 
insurance requirements (FAIR Plan) in order that no property 
shall be denied basic property or liability insurance through 
the normal insurance market provided by the private property and 
casualty insurance industry except after a physical inspection 
of such property and a fair evaluation of its individual 
underwriting characteristics; 
    (5) To publicize the purposes and procedures of the FAIR 
Plan to the end that no one may fail to seek its assistance 
through ignorance thereof; 
    (6) To provide for the formulation and administration by 
the industry placement facility of a reinsurance arrangement 
whereby property and casualty insurers shall share equitably the 
responsibility for insuring insurable property for which basic 
property and liability insurance cannot be obtained through the 
normal insurance markets; and 
    (7) To provide a framework for participation by the state 
in a sharing of insured losses resulting from riots and other 
civil disorders occurring in this state as required by section 
1223 of the Housing and Urban Development Act of 1968 (Public 
Law 90-448, Ninetieth Congress, August 1, 1968).  
    Sec. 43.  Minnesota Statutes 1984, section 65A.33, is 
amended to read: 
    65A.33 [DEFINITIONS.] 
    Subdivision 1.  As used in sections 65A.31 to 65A.43, 
unless the context otherwise requires, the terms defined in this 
section have the following meaning given to them.  
    Subd. 2.  "Insurer" means any insurance company or other 
organization licensed to write and engaged in writing 
property or liability insurance business, including the property 
or liability insurance components of multi-peril policies, on a 
direct basis, in this state, except where such insurer is 
specifically exempted by statute from participation in this 
program.  
    Subd. 3.  "Basic Property or liability insurance" means the 
coverage against direct loss to real or tangible personal 
property at a fixed location that is provided in the standard 
fire policy, extended coverage endorsement, homeowners 
insurance, as defined in section 65A.27, subdivision 4, 
cooperative housing insurance, condominium insurance, builders 
risk, and such vandalism and malicious mischief insurance and 
such other classes of insurance as may be added to the program 
with respect to said property by amendment as hereinafter 
provided.  Basic Property or liability insurance does not 
include automobile, farm, commercial liability, or such 
manufacturing risks as may be excluded by the commissioner.  
    Subd. 4.  "Industry placement facility", hereinafter 
referred to as the facility, means the organization formed by 
insurers to assist applicants in urban areas in securing basic 
property or liability insurance and to administer the FAIR Plan 
and the joint reinsurance association.  
    Subd. 5.  "Inspection bureau" means the fire insurance 
rating organization designated by the facility with the approval 
of the commissioner to make inspections as required under this 
program and to perform such other duties as may be authorized by 
the facility.  
    Subd. 6.  "Urban area" includes any municipality or other 
political subdivision, subject to population or other 
limitations defined in rules and regulations of the secretary 
and such additional areas as may be designated by the 
commissioner.  
    Subd. 7.  "Premiums written" means gross direct premiums, 
excluding that portion of premium on risks ceded to the joint 
reinsurance association, charged during the second preceding 
calendar year with respect to property in this state on all 
policies of basic property or liability insurance and the basic 
property or liability insurance premium components of all 
multi-peril policies, as computed by the facility, less return 
premiums, dividends paid or credited to policyholders, or the 
unused or unabsorbed portions of premium deposits.  
    Subd. 8 7.  "Commissioner" means the commissioner of 
commerce of the state of Minnesota.  
    Subd. 9 8.  "Secretary" means the secretary of the United 
States department of housing and urban development.  
    Subd. 10.  "Servicing Insurer" means an insurer designated 
by the governing committee to issue policies on behalf of the 
industry placement facility.  
    Sec. 44.  Minnesota Statutes 1984, section 65A.34, 
subdivision 1, is amended to read: 
    65A.34 [FAIR PLAN; INSPECTIONS AND REPORTS.] 
    Subdivision 1.  Any person having an insurable interest in 
real or tangible personal property at a fixed location in an 
urban area shall be entitled upon oral or written application 
therefor to the facility to a prompt inspection of the property 
by the inspection bureau without cost.  
    Sec. 45.  Minnesota Statutes 1984, section 65A.35, 
subdivision 1, is amended to read: 
    65A.35 [FAIR PLAN BUSINESS; DISTRIBUTION AND PLACEMENT.] 
    Subdivision 1.  [MEMBERSHIP.] Each insurer which is 
authorized to write and is engaged in writing within this state, 
on a direct basis, basic property or liability insurance or any 
component thereof contained in a multi-peril policy, including 
homeowners and commercial multi-peril policies, shall 
participate in the industry placement facility, as hereinafter 
described, as a condition of its authority to write such kinds 
of insurance within this state.  
    Sec. 46.  Minnesota Statutes 1984, section 65A.35, 
subdivision 2, is amended to read: 
    Subd. 2.  [PURPOSES.] The purposes of the facility shall be 
twofold, as more fully set forth in this section: 
    (1) To formulate and administer, subject to the approval of 
the commissioner, a plan assuring fair access to insurance 
requirements in order that no property in urban areas shall be 
denied basic property or liability insurance through the normal 
insurance market provided by the private property and casualty 
insurance industry, except after a physical inspection of such 
property and a fair evaluation of its individual underwriting 
characteristics; and 
    (2) To formulate and administer, subject to the approval of 
the commissioner, a reinsurance arrangement whereby the members 
of the facility shall share equitably the responsibility for 
insuring property in urban areas which is insurable but for 
which basic property or liability insurance cannot be obtained 
through normal insurance markets.  
    Sec. 47.  Minnesota Statutes 1984, section 65A.37, is 
amended to read: 
    65A.37 [STANDARD POLICY COVERAGE.] 
    All policies issued, except homeowners policies, shall be 
for basic property insurance on standard policy forms at rates 
published by the inspection bureau Insurance Services Office and 
shall be issued for a term of one year.  All homeowners, 
cooperative housing insurance, and condominium insurance 
policies must be on forms published by Insurance Services Office 
and approved by the commissioner. 
    Sec. 48.  Minnesota Statutes 1984, section 65B.13, is 
amended to read: 
    65B.13 [AUTOMOBILE INSURANCE, DISCRIMINATION IN AUTOMOBILE 
POLICIES FORBIDDEN.] 
    No insurance company, or its agent, shall refuse to issue 
any standard or preferred policy of motor vehicle insurance or 
make any discrimination in the acceptance of risks, in rates, 
premiums, dividends, or benefits of any kind, or by way of 
rebate:  
    (a) between persons of the same class, or 
    (b) on account of race, or 
    (c) on account of physical handicap if the handicap is 
compensated for by special training, equipment, prosthetic 
device, corrective lenses, or medication and if the physically 
handicapped person;  
    (1) is licensed by the department of public safety to 
operate a motor vehicle in this state, and 
    (2) operates only vehicles which are equipped with 
auxiliary devices and equipment necessary for safe and effective 
operation by the handicapped person, or 
    (d) on account of marital dissolution.  
    Every company or agent violating any of the foregoing 
provisions shall be fined not more than $100 per violation, and 
every officer, agent, or solicitor violating the same shall be 
guilty of a misdemeanor.  The commissioner of commerce is 
authorized to treat violations of this section as an unfair 
insurance practice and to enforce this section using the 
procedures, remedies, and penalties provided in sections 72A.17 
to 72A.32.  
    Sec. 49.  [65B.1311] [COVERAGE FOR FORMER SPOUSE.] 
    Subdivision 1.  [NEW POLICY ISSUED.] If the former spouse 
of a named insured under a policy of private passenger vehicle 
insurance applies within 60 days of entry of a valid decree of 
dissolution of the marriage and the former spouse was an insured 
driver under the policy for at least 12 months prior to entry of 
the decree, the insurer must issue a policy, upon payment of the 
appropriate premium, to the former spouse only on the basis of 
the driving record applicable to the former spouse and any 
person who is to be an insured, as defined in section 65B.43, 
under the policy to be issued, provided the person or persons to 
be insured meets the insurer's eligibility standards. 
    Subd. 2.  [NAMED INSURED.] A named insured under a policy 
of private passenger vehicle insurance shall have the premium 
determined at the first and any subsequent renewals of the 
policy after entry of a valid decree of dissolution of the 
marriage of the named insured only on the basis of the driving 
record applicable to the named insured and any person who is to 
be an insured, as defined in section 65B.43, under the policy to 
be renewed. 
    Sec. 50.  Minnesota Statutes 1984, section 65B.47, 
subdivision 1, is amended to read: 
    Subdivision 1.  In case of injury to the driver or other 
occupant of a motor vehicle other than a commuter van, or other 
than a vehicle being used to transport children to school or to 
a school sponsored activity or other bus while it is in 
operation within the state of Minnesota as to any Minnesota 
resident who is an insured as defined in section 65B.43, 
subdivision 5, if the accident causing the injury occurs while 
the vehicle is being used in the business of transporting 
persons or property, the security for payment of basic economic 
loss benefits is the security covering the vehicle or, if none, 
the security under which the injured person is an insured. 
    Sec. 51.  Minnesota Statutes 1984, section 70A.04, 
subdivision 2, is amended to read:  
    Subd. 2.  [EXCESSIVENESS; MARKET TEST.] (a) Rates are 
presumed not to be excessive if a reasonable degree of price 
competition exists at the consumer level with respect to the 
class of business to which they apply.  In determining whether a 
reasonable degree of price competition exists, the commissioner 
shall consider all relevant tests, including, but not limited 
to, the following: 
    1.  The number of insurers actively engaged in the class of 
business. 
    2.  The nature of rate differentials in that class of 
business.  
    3.  Whether long-run profitability for insurers generally 
of the class of business is unreasonably high in relation to its 
riskiness.  
     In addition to any other manner of determining whether a 
reasonable degree of price competition exists with respect to 
any class of insurance, it is presumed that a reasonable degree 
of competition does not exist if less than five insurers write 
more than 75 percent of the direct written premiums. 
    (b) If such competition does not exist, rates are excessive 
if they are likely to produce a long-run profit that is 
unreasonably high in relation to the riskiness of the class of 
business, or if expenses are unreasonably high in relation to 
the services rendered.  
    In determining whether an excessive rate is being charged 
by an individual insurer for a class of insurance where a 
reasonable degree of competition does not exist, the 
commissioner shall determine whether the rate charged produces a 
rate of return that is not in excess of a reasonable rate of 
return.  To determine what is a reasonable rate of return, the 
riskiness of the class of insurance, the profitability of the 
insurer in that class of business, and other relevant factors 
shall be considered. 
    Sec. 52.  Minnesota Statutes 1984, section 70A.06, 
subdivision 1, is amended to read:  
    Subdivision 1.  Every licensed insurer and every rate 
service organization licensed under section 70A.14 shall furnish 
file with the commissioner all rates and all changes and 
amendments of rates made by it for use in this state not later 
than their effective date.  No rates contained in a filing shall 
become effective unless they have been filed with the 
commissioner.  In any filing, the commissioner may require the 
insurer or rate service organization to file supporting data and 
explanatory data which shall include: 
    (1) the experience and judgment of the filer, and, to the 
extent it wishes or the commissioner requires, of other insurers 
or rate service organizations; 
    (2) its interpretation of any statistical data relied upon; 
    (3) descriptions of the actuarial and statistical methods 
employed; and 
    (4) any other matters deemed relevant by the commissioner 
or the filer.  
    Notwithstanding the foregoing, if the supporting data is 
not filed within 30 days after so requested by the commissioner, 
the rate is no longer effective and is presumed to be an 
excessive rate. 
    Sec. 53.  Minnesota Statutes 1984, section 70A.06, 
subdivision 2, is amended to read: 
    Subd. 2.  No policy form shall be delivered or issued for 
delivery unless it has been filed with the commissioner and 
either (i) he has approved it or (ii) 30 60 days have elapsed 
and he has not disapproved it as misleading or violative of 
public policy, which period may be extended by the commissioner 
for an additional period not to exceed 30 60 days. 
    Sec. 54.  Minnesota Statutes 1984, section 70A.08, is 
amended by adding a subdivision to read:  
    Subd. 3.  Until January 1, 1988, the commissioner may 
restrict approval on claims-made policies to forms filed by a 
rate service organization which have been approved.  
    Sec. 55.  Minnesota Statutes l984, section 70A.10, is 
amended to read: 
    70A.10 [DELAYED EFFECT OF RATES.] 
    Subdivision 1.  [RULE ORDER INSTITUTING DELAYED EFFECT.] If 
the commissioner finds, after a hearing, that competition is not 
an effective regulator of the rates charged or that a 
substantial number of companies are competing irresponsibly 
through the rates charged, or that there are widespread 
violations of this chapter, in any kind or line of insurance or 
subdivision thereof or in any rating class or rating territory, 
he may issue a rule an order requiring that in the kind or line 
of insurance or subdivision thereof or rating class or rating 
territory comprehended by the finding any subsequent changes in 
the rates or supplementary rate information be filed with him at 
least 30 60 days before they become effective.  He may extend 
the waiting period for not to exceed 15 30 additional days by 
written notice to the filer before the 30 60 day period expires. 
    Subd. 2.  [SUPPORTING DATA.] In the rule order issued under 
subdivision 1 or in any supplementary rule order, the 
commissioner may require the filing of supporting data as to any 
or all kinds or lines of insurance or subdivisions thereof or 
classes of risks or combinations thereof as he deems necessary 
for the proper functioning of the rate monitoring and regulating 
process.  The supporting data shall include: 
    (a) The experience and judgment of the filer, and, to the 
extent it wishes or the commissioner requires, of other insurers 
or rate service organizations; 
    (b) Its interpretation of any statistical data relied upon; 
    (c) Descriptions of the actuarial and statistical methods 
employed; and 
    (d) Any other matters deemed relevant by the commissioner 
or the filer.  
    Subd. 3.  [EXPIRATION OF REGULATION ORDER.] A regulation An 
order issued under subdivision 1 shall expire no more than one 
year two years after issue.  The commissioner may renew it after 
a hearing and appropriate findings as provided under subdivision 
1.  
    Subd. 4.  [SUPPORTING INFORMATION.] Whenever a filing is 
not accompanied by such information as the commissioner has 
required under subdivision 2, he may so inform the insurer and 
the filing shall be deemed to be made when the information is 
furnished.  
    Sec. 56.  Minnesota Statutes 1984, section 70A.11, is 
amended to read: 
    70A.11 [DISAPPROVAL OF RATES.] 
    Subdivision 1.  [ORDER IN EVENT OF VIOLATION AFTER 
HEARING.] If the commissioner finds after a hearing contested 
case proceeding under chapter 14 that a rate is not in 
compliance with section 70A.04, he shall order that its use is 
to be discontinued on a date not less than 30 days after the 
order and shall order the excess premium plus interest at the 
rate specified in section 549.09 to be refunded to the 
policyholder.  The amount of the refund, plus interest, must be 
computed from the commencement date of the contested case 
hearing on the rate.  Interest must be computed as simple 
interest per annum. 
    Subd. 2.  [TIMING OF ORDER.] The order under subdivision 1 
shall be issued within 30 60 days after the close of the hearing 
or within such reasonable time extension as the commissioner may 
fix.  
    Subd. 3.  [APPROVAL OF SUBSTITUTED RATE.] No rate replacing 
a disapproved rate may be used until it has been filed with the 
commissioner and not disapproved within 30 60 days thereafter, 
except that the rate disapproved under subdivision 1, with the 
consent of the commissioner, or the last previous rate in effect 
for the insurer may be used for a period of not more than three 
months pending the approval of a substituted rate.  The 
commissioner's order may include provision for a premium 
adjustment in a rate charged pending approval of a substituted 
rate.  
    Sec. 57.  Minnesota Statutes 1984, section 72A.13, 
subdivision 1, is amended to read:  
    Subdivision 1.  Any company, corporation, association, 
society, or other insurer, or any officer or agent thereof, 
which or who solicits, issues or delivers to any person in this 
state any policy in violation of the provisions of sections 4 or 
62A.01 to 62A.10, may be punished by a fine of not more than 
$100 for each offense, and the commissioner may revoke the 
license of any company, corporation, association, society, or 
other insurer of another state or country, or of the agent 
thereof, which or who wilfully violates any provision of 
sections 4 or 62A.01 to 62A.10. 
    Sec. 58.  [60A.30] [RENEWAL OF INSURANCE POLICY WITH 
ALTERED RATES.] 
    If an insurance company licensed to do business in this 
state offers or purports to offer to renew any commercial 
liability and/or property insurance policy at less favorable 
terms as to the dollar amount of coverage or deductibles, higher 
rates, and/or higher rating plan, the new terms, the new rates 
and/or rating plan may take effect on the renewal date of the 
policy if the insurer has sent to the policyholder notice of the 
new terms, new rates and/or rating plan at least 30 days prior 
to the expiration date.  If the insurer has not so notified the 
policyholder, the policyholder may elect to cancel the renewal 
policy within the 30-day period after receipt of the notice.  
Earned premium for the period of coverage, if any, shall be 
calculated pro rata upon the prior rate.  This subdivision does 
not apply to ocean marine insurance, accident and health 
insurance, and reinsurance. 
    Sec. 59.  [60A.31] [MID TERM CANCELLATION.] 
    In addition to the requirements of Minnesota Statutes 1984, 
section 176.185, subdivision 1, no policy of insurance issued to 
cover the liability to pay compensation under Minnesota Statutes 
1984, chapter 176, shall be canceled by the insurer within the 
policy period unless the insurer has also complied with the 
requirements of such rules as the commissioner of commerce may 
adopt in regard to the cancellation of commercial liability and/ 
or commercial property insurance policies. 
    Sec. 60.  [145.682] [CERTIFICATION OF EXPERT REVIEW; 
AFFIDAVIT.] 
    Subdivision 1.  [DEFINITION.] For purposes of this section, 
"health care provider" means a physician, surgeon, dentist, or 
other health care professional or hospital, including all 
persons or entities providing health care as defined in section 
145.61, subdivisions 2 and 4, or a certified health care 
professional employed by or providing services as an independent 
contractor in a hospital. 
    Subd. 2.  [REQUIREMENT.] In an action alleging malpractice, 
error, mistake, or failure to cure, whether based on contract or 
tort, against a health care provider which includes a cause of 
action as to which expert testimony is necessary to establish a 
prima facie case, the plaintiff must:  (1) unless otherwise 
provided in subdivision 3, paragraph (b), serve upon defendant 
with the summons and complaint an affidavit as provided in 
subdivision 3; and (2) serve upon defendant within 180 days 
after commencement of the suit an affidavit as provided by 
subdivision 4. 
    Subd. 3.  [AFFIDAVIT OF EXPERT REVIEW.] The affidavit 
required by subdivision 2, clause (1), must be by the 
plaintiff's attorney and state that:  
    (a) the facts of the case have been reviewed by the 
plaintiff's attorney with an expert whose qualifications provide 
a reasonable expectation that the expert's opinions could be 
admissible at trial and that, in the opinion of this expert, one 
or more defendants deviated from the applicable standard of care 
and by that action caused injury to the plaintiff; or 
    (b) the expert review required by paragraph (a) could not 
reasonably be obtained before the action was commenced because 
of the applicable statute of limitations.  If an affidavit is 
executed pursuant to this paragraph, the affidavit in paragraph 
(a) must be served on defendant or the defendant's counsel 
within 90 days after service of the summons and complaint. 
    Subd. 4.  [IDENTIFICATION OF EXPERTS TO BE CALLED.] The 
affidavit required by subdivision 2, clause (2), must be by the 
plaintiff's attorney and state the identity of each person whom 
plaintiff expects to call as an expert witness at trial to 
testify with respect to the issues of malpractice or causation, 
the substance of the facts and opinions to which the expert is 
expected to testify, and a summary of the grounds for each 
opinion.  Answers to interrogatories that state the information 
required by this subdivision satisfy the requirements of this 
subdivision if they are signed by the plaintiff's attorney and 
served upon the defendant within 180 days after commencement of 
the suit against the defendant. 
    The parties or the court for good cause shown, may by 
agreement, provide for extensions of the time limits specified 
in subdivision 2, 3, or this subdivision.  Nothing in this 
subdivision may be construed to prevent either party from 
calling additional expert witnesses or substituting other expert 
witnesses. 
    Subd. 5.  [RESPONSIBILITIES OF PLAINTIFF AS ATTORNEY.] If 
the plaintiff is acting pro se, the plaintiff shall sign the 
affidavit or answers to interrogatories referred to in this 
section and is bound by those provisions as if represented by an 
attorney. 
    Subd. 6.  [PENALTY FOR NONCOMPLIANCE.] Failure to comply 
with subdivision 2, clause (1), within 60 days after demand for 
the affidavit results, upon motion, in mandatory dismissal with 
prejudice of each cause of action as to which expert testimony 
is necessary to establish a prima facie case.  
    Failure to comply with subdivision 2, clause (2), and 
subdivision 4 results, upon motion, in mandatory dismissal with 
prejudice of each cause of action as to which expert testimony 
is necessary to establish a prima facie case. 
    Subd. 7.  [CONSEQUENCES OF SIGNING AFFIDAVIT.] The 
signature of the plaintiff or the plaintiff's attorney 
constitutes a certification that the person has read the 
affidavit or answers to interrogatories, and that to the best of 
the person's knowledge, information, and belief formed after a 
reasonable inquiry, it is true, accurate, and made in good 
faith.  A certification made in violation of this subdivision 
subjects the attorney or plaintiff responsible for such conduct 
to reasonable attorney's fees, costs, and disbursements.  
    Sec. 61.  Minnesota Statutes 1984, section 245.814, is 
amended to read: 
    245.814 [LIABILITY INSURANCE FOR FOSTER PARENTS LICENSED 
PROVIDERS.] 
    Subdivision 1.  [INSURANCE FOR FOSTER PARENTS.] The 
commissioner of human services shall within the appropriation 
provided purchase and provide insurance to foster parents to 
cover their liability for: 
    (1) injuries or property damage caused or sustained by 
foster children in their home; and 
    (2) actions arising out of alienation of affections 
sustained by the natural parents of a foster child. 
    Coverage shall apply to all foster boarding homes licensed 
by the department of human services, licensed by a federally 
recognized tribal government, or established by the juvenile 
court and certified by the commissioner of corrections pursuant 
to section 260.185, subdivision 1, clause (c) (5), to the extent 
that the liability is not covered by the provisions of the 
standard homeowner's or automobile insurance policy.  The 
insurance shall not cover property owned by the foster parents, 
damage caused intentionally by a child over 12 years of age, or 
property damage arising out of business pursuits or the 
operation of any vehicle, machinery, or equipment. 
    Subd. 2.  [LIABILITY INSURANCE; RISK POOL.] If the 
commissioner determines that appropriate commercial liability 
insurance coverage is not available for a licensed foster home, 
group home, developmental achievement center, or day care 
provider, and that coverage available through the joint 
underwriting authority of the commissioner of commerce or other 
public entity is not appropriate for the provider or a class of 
providers, the commissioner of human services and the 
commissioner of commerce may jointly establish a risk pool to 
provide coverage for licensed providers out of premiums or fees 
paid by providers.  The commissioners may set limits on 
coverage, establish premiums or fees, determine the 
proportionate share of each provider to be collected in a 
premium or fee based on the provider's claim experience and 
other factors the commissioners consider appropriate, establish 
eligibility and application requirements for coverage, and take 
other action necessary to accomplish the purposes of this 
subdivision.  A human services risk pool fund is created for the 
purposes of this subdivision.  Fees and premiums collected from 
providers for risk pool coverage are appropriated to the risk 
pool fund.  Interest earned from the investment of money in the 
fund must be credited to the fund and money in the fund is 
appropriated to the commissioner of human services to pay 
administrative costs and covered claims for participating 
providers.  In the event that money in the fund is insufficient 
to pay outstanding claims and associated administrative costs, 
the commissioner of human services may assess providers 
participating in the risk pool amounts sufficient to pay the 
costs.  The commissioner of human services may not assess a 
provider an amount exceeding one year's premiums collected from 
that provider. 
    Sec. 62.  [317.201] [UNPAID DIRECTORS OR TRUSTEES; 
LIABILITY FOR DAMAGES.] 
    A director or trustee of a nonprofit corporation or 
association who is not paid for services to the corporation or 
association is not individually liable for damages occasioned 
solely by reason of membership on or participation in board 
activities.  
    Sec. 63.  Minnesota Statutes 1984, section 398A.04, 
subdivision 6, is amended to read: 
    Subd. 6.  [INSURANCE AND INDEMNITY.] (a) The authority 
shall be subject to tort liability to the extent provided in 
chapter 466 and may procure insurance against the liability, and 
may indemnify and purchase and maintain insurance on behalf of 
any of its commissioners, officers, employees, or agents, in 
connection with any threatened, pending, or completed action, 
suit, or proceeding, as provided in chapter 466, and to the same 
extent and in the same manner and with the same force and effect 
as provided in the case of a private corporation by section 
300.082 300.083.  It may also procure insurance against loss of 
or damage to property in the amounts, by reason of the risks, 
and from the insurers as it deems prudent.  
    (b) A railroad leasing its tracks and right-of-way to a 
railroad authority that is created under this chapter and 
affiliated with a railroad museum is subject to tort liability 
only to the extent provided for municipalities in chapter 466 as 
to any claims arising out of fare-paying passenger operations 
carried on by the railroad authority primarily for the purpose 
of promoting tourism on tracks and right-of-way leased from the 
railroad. 
    Sec. 64.  Minnesota Statutes 1984, section 466.01, 
subdivision 1, is amended to read: 
    Subdivision 1.  [MUNICIPALITY.] For the purposes of 
sections 466.01 to 466.15, "municipality" means any city, 
whether organized under home rule charter or otherwise, any 
county, town, public authority, public corporation, special 
district, school district, however organized, county 
agricultural society organized pursuant to chapter 38, joint 
powers board or organization created under section 471.59 or 
other statute, public library, regional public library system, 
multicounty multitype library system, or other political 
subdivision. 
    Sec. 65.  Minnesota Statutes 1984, section 466.03, 
subdivision 4, is amended to read: 
    Subd. 4.  [ACCUMULATIONS OF SNOW AND ICE.] Any claim based 
on snow or ice conditions on any highway or other public place 
or public sidewalk that does not abut a publicly-owned building 
or publicly-owned parking lot, except when the condition is 
affirmatively caused by the negligent acts of the municipality. 
    Sec. 66.  Minnesota Statutes 1984, section 466.03, is 
amended by adding a subdivision to read: 
    Subd. 6e.  [PARKS AND RECREATION AREAS.] Any claim based 
upon the construction, operation, or maintenance of any property 
owned or leased by the municipality that is intended or 
permitted to be used as a park, as an open area for recreational 
purposes, or for the provision of recreational services, or from 
any claim based on the clearing of land, removal of refuse, and 
creation of trails or paths without artificial surfaces, if the 
claim arises from a loss incurred by a user of park and 
recreation property or services.  Nothing in this subdivision 
limits the liability of a municipality for conduct that would 
entitle a trespasser to damages against a private person. 
    Sec. 67.  Minnesota Statutes 1984, section 466.03, is 
amended by adding a subdivision to read: 
    Subd. 8.  Any claim for a loss other than injury to or loss 
of property or personal injury or death. 
    Sec. 68.  Minnesota Statutes 1984, section 466.03, is 
amended by adding a subdivision to read: 
    Subd. 9.  Any claim for a loss of benefits or compensation 
due under a program of public assistance or public welfare, 
except where municipal compensation for loss is expressly 
required by federal law in order for the municipality to receive 
federal grants-in-aid. 
    Sec. 69.  Minnesota Statutes 1984, section 466.03, is 
amended by adding a subdivision to read: 
    Subd. 10.  Any claim for a loss based on the failure of any 
person to meet the standards needed for a license, permit, or 
other authorization issued by the municipality or its agents. 
    Sec. 70.  Minnesota Statutes 1984, section 466.03, is 
amended by adding a subdivision to read: 
    Subd. 11.  Any claim for a loss based on the usual care and 
treatment, or lack of care and treatment, of any person at a 
municipal hospital or corrections facility where reasonable use 
of available funds has been made to provide care. 
    Sec. 71.  Minnesota Statutes 1984, section 466.03, is 
amended by adding a subdivision to read: 
    Subd. 12.  Any claim for a loss, damage, or destruction of 
property of a patient or inmate of a municipal institution. 
    Sec. 72.  Minnesota Statutes 1984, section 466.03, is 
amended by adding a subdivision to read: 
    Subd. 13.  Any claim for a loss caused by the condition of 
unimproved real property owned by a municipality, which means 
land that the municipality has not improved, and appurtenances, 
fixtures and attachments to land that the municipality has 
neither affixed nor improved. 
    Sec. 73.  Minnesota Statutes 1984, section 466.03, is 
amended by adding a subdivision to read: 
    Subd. 14.  Any claim for a loss for which recovery is 
prohibited by section 169.121, subdivision 9. 
    Sec. 74.  Minnesota Statutes 1984, section 466.03, is 
amended by adding a subdivision to read: 
     Subd. 15.  Any claim against a municipality, if the same 
claim would be excluded under section 3.736, if brought against 
the state. 
    Sec. 75.  Minnesota Statutes 1984, section 466.05, is 
amended to read:  
    466.05 [NOTICE OF CLAIM.] 
    Subdivision 1.  [NOTICE REQUIRED.] Except as provided in 
subdivisions 2 and 3, every person, whether plaintiff, defendant 
or third party plaintiff or defendant, who claims damages from 
any municipality or municipal employee acting within the scope 
of employment for or on account of any loss or injury within the 
scope of section 466.02 shall cause to be presented to the 
governing body of the municipality within 180 days after the 
alleged loss or injury is discovered a notice stating the time, 
place and circumstances thereof, the names of the municipal 
employees known to be involved, and the amount of compensation 
or other relief demanded.  Actual notice of sufficient facts to 
reasonably put the governing body of the municipality or its 
insurer on notice of a possible claim shall be construed to 
comply with the notice requirements of this section. Failure to 
state the amount of compensation or other relief demanded does 
not invalidate the notice; but in such case, the claimant shall 
furnish full information regarding the nature and extent of the 
injuries and damages within 15 days after demand by the 
municipality.  No action therefor shall be maintained unless 
such notice has been given and unless the action is commenced 
within one year after such notice.  The time for giving such 
notice does not include the time, not exceeding 90 days, during 
which the person injured is incapacitated by the injury from 
giving the notice. 
    Subd. 2.  [EXCEPTIONS TO THE NOTICE REQUIREMENT.] Notice 
shall not be required to maintain an action for damages for or 
on account of any loss or injury within the scope of section 
466.02 if such injury or loss: 
    (a) arises out of an intentional tort committed by an 
officer, employee or agent of the municipality; or 
    (b) involves a motor vehicle or other equipment owned by 
the municipality or operated by an officer, employee or agent of 
the municipality. 
    Where no notice of claim is required under this chapter, no 
action shall be maintained unless the action is commenced within 
two years after the date of the incident, accident or 
transaction out of which the cause of action arises. 
    Subd. 3 2.  [CLAIMS FOR WRONGFUL DEATH; NOTICE.] When the 
claim is one for death by wrongful act or omission, the notice 
may be presented by the personal representative, surviving 
spouse, or next of kin, or the consular officer of the foreign 
country of which the deceased was a citizen, within one year 
after the alleged injury or loss resulting in such death; if the 
person for whose death the claim is made has presented a notice 
that would have been sufficient had he lived an action for 
wrongful death may be brought without any additional notice. 
    Sec. 76.  Minnesota Statutes 1984, section 466.07, is 
amended by adding a subdivision to read: 
    Subd. 4.  [PUNITIVE DAMAGES.] A municipality may not save 
harmless, indemnify or insure an officer or employee for 
punitive damages levied against the officer or employer.  The 
municipality may provide a defense against a claim for punitive 
damages as a necessary incident to other elements of a defense. 
    Sec. 77.  [466.101] [LAW ENFORCEMENT COSTS.] 
    When costs are assessed against a municipality for injuries 
incurred or other medical expenses connected with the arrest of 
individuals violating Minnesota Statutes, the municipality 
responsible for the hiring, firing, training, and control of the 
law enforcement and other employees involved in the arrest is 
responsible for those costs. 
    Sec. 78.  Minnesota Statutes 1984, section 471.982, 
subdivision 3, is amended to read: 
    Subd. 3.  Self-insurance pools established and open for 
enrollment on a statewide basis by the Minnesota league of 
cities insurance trust, the Minnesota school boards association 
insurance trust or the Minnesota association of counties 
insurance trust and the political subdivisions that belong to 
them are exempt from the requirements of this section and 
section 65B.48, subdivision 3. 
    Sec. 79.  Minnesota Statutes 1984, section 541.15, is 
amended to read: 
    541.15 [PERIODS OF DISABILITY NOT COUNTED.] 
    (a) Except as provided in paragraph (b), any of the 
following grounds of disability, existing at the time when a 
cause of action accrued or arising anytime during the period of 
limitation, shall suspend the running of the period of 
limitation until the same is removed; provided that such period, 
except in the case of infancy, shall not be extended for more 
than five years, nor in any case for more than one year after 
the disability ceases: 
    (1) That the plaintiff is within the age of 18 years; 
    (2) His insanity; 
    (3) His imprisonment on a criminal charge, or under a 
sentence of a criminal court for a term less than his natural 
life; 
    (4) Is an alien and the subject or citizen of a country at 
war with the United States; 
    (5) When the beginning of the action is stayed by 
injunction or by statutory prohibition.  
    If two or more disabilities shall coexist, the suspension 
shall continue until all are removed. 
    (b) In actions alleging malpractice, error, mistake, or 
failure to cure, whether based on contract or tort, against a 
health care provider, the ground of disability specified in 
paragraph (a), clause (1), suspends the period of limitation 
until the disability is removed.  The suspension may not be 
extended for more than seven years, or for more than one year 
after the disability ceases. 
    For purposes of this paragraph, health care provider means 
a physician, surgeon, dentist, or other health care professional 
or hospital, including all persons or entities providing health 
care as defined in section 145.61, subdivisions 2 and 4, or a 
certified health care professional employed by or providing 
services as an independent contractor in a hospital. 
    Sec. 80.  [548.36] [COLLATERAL SOURCE CALCULATIONS.] 
    Subdivision 1.  [DEFINITION.] For purposes of this section, 
"collateral sources" means payments related to the injury or 
disability in question made to the plaintiff, or on the 
plaintiff's behalf up to the date of the verdict, by or pursuant 
to: 
    (1) a federal, state, or local income disability or 
workers' compensation act; or other public program providing 
medical expenses, disability payments, or similar benefits; 
    (2) health, accident and sickness, or automobile accident 
insurance or liability insurance that provides health benefits 
or income disability coverage; except life insurance benefits 
available to the plaintiff, whether purchased by the plaintiff 
or provided by others, payments made pursuant to the United 
States Social Security Act, or pension payments;  
    (3) a contract or agreement of a group, organization, 
partnership, or corporation to provide, pay for, or reimburse 
the costs of hospital, medical, dental or other health care 
services; or 
    (4) a contractual or voluntary wage continuation plan 
provided by employers or any other system intended to provide 
wages during a period of disability, except benefits received 
from a private disability insurance policy where the premiums 
were wholly paid for by the plaintiff. 
    Subd. 2.  [MOTION.] In a civil action, whether based on 
contract or tort, when liability is admitted or is determined by 
the trier of fact, and when damages include an award to 
compensate the plaintiff for losses available to the date of the 
verdict by collateral sources, a party may file a motion within 
ten days of the date of entry of the verdict requesting 
determination of collateral sources.  If the motion is filed, 
the parties shall submit written evidence of, and the court 
shall determine: 
    (1) amounts of collateral sources that have been paid for 
the benefit of the plaintiff or are otherwise available to the 
plaintiff as a result of losses except those for which a 
subrogation right has been asserted; and 
    (2) amounts that have been paid, contributed, or forfeited 
by, or on behalf of, the plaintiff or members of the plaintiff's 
immediate family for the two-year period immediately before the 
accrual of the action to secure the right to a collateral source 
benefit that the plaintiff is receiving as a result of losses.  
    Subd. 3.  [DUTIES OF THE COURT.] (a) The court shall reduce 
the award by the amounts determined under subdivision 2, clause 
(1), and offset any reduction in the award by the amounts 
determined under subdivision 2, clause (2).  
    (b) If the court cannot determine the amounts specified in 
paragraph (a) from the written evidence submitted, the court may 
within ten days request additional written evidence or schedule 
a conference with the parties to obtain further evidence. 
    Subd. 4.  [CALCULATION OF ATTORNEYS' FEES.] If the fees for 
legal services provided to the plaintiff are based on a 
percentage of the amount of money awarded to the plaintiff, the 
percentage must be based on the amount of the award as adjusted 
under subdivision 3.  Any subrogated provider of a collateral 
source not separately represented by counsel shall pay the same 
percentage of attorneys' fees as paid by the plaintiff and shall 
pay its proportionate share of the costs.  
    Subd. 5.  [JURY NOT INFORMED OF COLLATERAL SOURCES.] The 
jury shall not be informed of the existence of collateral 
sources or any future benefits which may or may not be payable 
to the plaintiff.  
    Sec. 81.  Minnesota Statutes 1984, section 549.09, 
subdivision 1, is amended to read: 
    Subdivision 1.  [WHEN OWED; RATE.] (a) When the judgment is 
for the recovery of money, including a judgment for the recovery 
of taxes, interest from the time of the verdict or report until 
judgment is finally entered shall be computed by the clerk as 
provided in clause (c) and added to the judgment.  (b) Except as 
otherwise provided by contract or allowed by law, pre-verdict or 
pre-report interest on pecuniary damages shall be computed as 
provided in clause (c) from the time of the commencement of the 
action, or the time of a written settlement demand, whichever 
occurs first, except as provided herein.  The action must be 
commenced within 60 days of a written settlement demand for 
interest to begin to accrue from the time of the demand.  If 
either party serves a written offer of settlement, the other 
party may serve a written acceptance or a written counter-offer 
within 60 days.  After that time interest on the judgment shall 
be calculated by the judge in the following manner.  The 
prevailing party shall receive interest on any judgment from the 
time the action was commenced or a written settlement demand was 
made, or as to special damages from the time when special 
damages were incurred, if later than commencement of the action, 
until the time of verdict or report only if the amount of its 
offer is closer to the judgment than the amount of the opposing 
party's offer.  If the amount of the losing party's offer was 
closer to the judgment than the prevailing party's offer, the 
prevailing party shall receive interest only on the amount of 
the settlement offer or the judgment, whichever is less, and 
only from the time the action was commenced or a written 
settlement demand was made, or as to special damages from when 
the special damages were incurred, if later than commencement of 
the action, until the time the settlement offer was 
made.  Subsequent offers and counteroffers supersede the legal 
effect of earlier offers and counteroffers.  For the purposes of 
clause (3), the amount of settlement offer must be allocated 
between past and future damages in the same proportion as 
determined by the trier of fact.  Except as otherwise provided 
by contract or allowed by law, pre-verdict or pre-report 
interest shall not be awarded on the following:  
    (1) judgments, awards, or benefits in workers' compensation 
cases, but not including third-party actions;  
    (2) judgments, decrees, or orders in dissolution, 
annulment, or legal separation actions; 
    (3) judgments for future damages; 
    (4) punitive damages, fines, or other damages that are 
noncompensatory in nature;  
    (4) (5) judgments not in excess of the amount specified in 
section 487.30; and 
    (5) (6) that portion of any verdict or report which is 
founded upon interest, or costs, disbursements, attorney fees, 
or other similar items added by the court.  (c) The interest 
shall be computed as simple interest per annum.  The rate of 
interest shall be based on the secondary market yield of one 
year United States treasury bills, calculated on a bank discount 
basis as provided in this section. 
    On or before the 20th day of December of each year the 
state court administrator shall determine the rate from the 
secondary market yield on one year United States treasury bills 
for the most recent calendar month, reported on a monthly basis 
in the latest statistical release of the board of governors of 
the federal reserve system.  This yield, rounded to the nearest 
one percent, shall be the annual interest rate during the 
succeeding calendar year; provided, however, that in no event 
shall the rate of interest be less than eight percent per 
annum.  The state court administrator shall also determine the 
average rate of interest on judgments to be used during the 
succeeding calendar year for computation of the discount rate 
under section 86, subdivision 4.  The state court administrator 
shall communicate the interest rate rates to the clerks of court 
for their use in computing the interest on verdicts and the 
discount rate under section 86. 
    Sec. 82.  [549.191] [CLAIM FOR PUNITIVE DAMAGES.] 
    Upon commencement of a civil action, the complaint must not 
seek punitive damages.  After filing the suit a party may make a 
motion to amend the pleadings to claim punitive damages.  The 
motion must allege the applicable legal basis under section 
549.20 or other law for awarding punitive damages in the action 
and must be accompanied by one or more affidavits showing the 
factual basis for the claim.  At the hearing on the motion, if 
the court finds prima facie evidence in support of the motion, 
the court shall grant the moving party permission to amend the 
pleadings to claim punitive damages.  For purposes of tolling 
the statute of limitations, pleadings amended under this section 
relate back to the time the action was commenced. 
    Sec. 83.  Minnesota Statutes 1984, section 549.21, is 
amended to read: 
    549.21 [REIMBURSEMENT FOR CERTAIN COSTS IN CIVIL ACTIONS.] 
    Subdivision 1.  [ACKNOWLEDGEMENT IN PLEADINGS.] The parties 
by their attorneys in any civil action shall attach to and make 
a part of the pleading served on the opposite party or parties a 
signed acknowledgment stating that the parties acknowledge that 
costs, disbursements, and reasonable attorney and witness fees 
may be awarded to the opposing party or parties pursuant to 
subdivision 2. 
    Subd. 2.  [AWARD OF COSTS.] Upon motion of a party, or upon 
the court's own motion, the court in its discretion may award to 
that party costs, disbursements, reasonable attorney fees and 
witness fees if the party or attorney against whom costs, 
disbursements, reasonable attorney and witness fees are charged 
acted in bad faith; asserted a claim or defense knowing it to be 
that is frivolous and that is costly to the other party; 
asserted an unfounded position solely to delay the ordinary 
course of the proceedings or to harass; or committed a fraud 
upon the court.  To qualify for an award under this section, a 
party shall give timely notice of intent to claim an award.  An 
award under this section shall be without prejudice and as an 
alternative to any claim for sanctions that may be asserted 
under the rules of civil procedure.  Nothing herein shall 
authorize the award of costs, disbursements or fees against a 
party or attorney advancing a claim or defense unwarranted under 
existing law, if it is supported by a good faith argument for an 
extension, modification, or reversal of the existing law. 
    Sec. 84.  Minnesota Statutes 1984, section 595.02, is 
amended by adding a subdivision to read: 
    Subd. 5.  [WAIVER OF PRIVILEGE FOR HEALTH CARE 
PROVIDERS.] A party who commences an action for malpractice, 
error, mistake, or failure to cure, whether based on contract or 
tort, against a health care provider on the person's own behalf 
or in a representative capacity, waives in that action any 
privilege existing under subdivision 1, paragraphs (d) and (g), 
as to any information or opinion in the possession of a health 
care provider who has examined or cared for the party or other 
person whose health or medical condition has been placed in 
controversy in the action.  This waiver must permit all parties 
to the action, and their attorneys or authorized 
representatives, to informally discuss the information or 
opinion with the health care provider if the provider consents.  
Prior to an informal discussion with a health care provider, the 
defendant must mail written notice to the other party at least 
15 days before the discussion.  The plaintiff's attorney or 
authorized representative must have the opportunity to be 
present at any informal discussion.  Appropriate medical 
authorizations permitting discussion must be provided by the 
party commencing the action upon request from any other party. 
    A health care provider may refuse to consent to the 
discussion but, in that event, the party seeking the information 
or opinion may take the deposition of the health care provider 
with respect to that information and opinion, without obtaining 
a prior court order. 
    For purposes of this subdivision, "health care provider" 
means a physician, surgeon, dentist, or other health care 
professional or hospital, including all persons or entities 
providing health care as defined in section 145.61, subdivisions 
2 and 4, or a certified health care professional employed by or 
providing services as an independent contractor in a hospital. 
    Sec. 85.  Minnesota Statutes 1984, section 604.02, 
subdivision 1, is amended to read: 
    Subdivision 1.  When two or more persons are jointly 
liable, contributions to awards shall be in proportion to the 
percentage of fault attributable to each, except that each is 
jointly and severally liable for the whole award.  If the state 
or a municipality as defined in section 466.01 is jointly 
liable, and its fault is less than 35 percent, it is jointly and 
severally liable for an amount no greater than twice the amount 
of fault. 
    Sec. 86.  [604.07] [DISCOUNT, FUTURE DAMAGE AWARDS.] 
    Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
section, the following terms have the meanings given them.  
    (b) "Economic loss" means all pecuniary harm for which 
damages are recoverable, including, but not limited to, medical 
expenses, loss of earnings, and loss of earning capacity. 
    (c) "Future damages" means all damages which the trier of 
fact finds will accrue after the damage findings are made. 
    (d) "Intangible loss" means embarrassment, emotional 
distress, and loss of consortium. 
    (d) "Noneconomic loss" means pain, disability, and 
disfigurement. 
    (e) "Past damages" means all damages that have accrued when 
the damage findings are made. 
    Subd. 2.  [DISCOUNT REQUIRED.] In all actions seeking 
damages for personal injury, wrongful death, or loss of means of 
support, awards of all future damages, including economic, 
noneconomic and intangible loss, reasonably certain to occur 
must be discounted to present value as provided in this section. 
    Subd. 3.  [FUTURE DAMAGES; EVIDENCE.] The amount of all 
future damages, including economic, noneconomic and intangible 
loss reasonably certain to occur, must be ascertained at the 
time of trial without reference to projected inflationary or 
noninflationary changes.  Evidence of noninflationary changes in 
earnings or earning capacity that are reasonably certain to 
occur are admissible, but this evidence is limited to the 
present value of the future changes without regard to 
inflationary changes.  Projected increases in earnings or 
earning capacity dependent upon general economic statistics are 
not admissible.  
    Subd. 4.  [DISCOUNT RATE.] The award calculated under 
subdivision 3 must be reduced to present value at the time of 
trial by application of a discount rate equal to: 
    (1) the average rate of interest on judgments under section 
549.09 for the five calendar years immediately preceding the 
commencement of trial, rounded to the nearest one-tenth, less 
    (2) the average increase in the Consumer Price Index for 
all Urban Consumers, all items, as published by the U.S. 
Department of Labor, Bureau of Labor Statistics, rounded to the 
nearest one-tenth, for the same five-year period.  If the Labor 
Department statistics are not published by the time of trial, 
the court shall employ the average increase over the most recent 
five-year period available in the published statistics. 
    In no instance may the discount rate fall below two percent 
or rise above six percent. 
    Sec. 87.  Minnesota Statutes 1985 Supplement, section 
62B.05, is amended to read: 
    62B.05 [TERM OF CREDIT LIFE INSURANCE AND CREDIT ACCIDENT 
AND HEALTH INSURANCE.] 
    The term of any credit life insurance or credit accident 
and health insurance shall, subject to acceptance by the 
insurer, commence on the date when the debtor becomes obligated 
to the creditor, except that, where a group policy provides 
coverage with respect to existing obligations, the insurance on 
a debtor with respect to the indebtedness shall commence on the 
effective date of the policy.  Where evidence of insurability is 
required and the evidence is furnished more than 30 days after 
the date when the debtor becomes obligated to the creditor, the 
term of the insurance may commence on the date on which the 
insurance company determines the evidence to be satisfactory, 
and in that event there shall be an appropriate refund or 
adjustment of any charge to the debtor for insurance.  The term 
of the insurance shall not extend more than 15 days beyond the 
scheduled maturity date of the indebtedness except when extended 
without additional cost to the debtor. 
    If an indebtedness is prepaid in full before its scheduled 
maturity, except by performance of the insurer's obligation 
under the policy, the insurance shall be deemed canceled and a 
refund shall be paid or credited as provided in section 62B.08.  
Upon prepayment in full, the creditor shall make the refund of 
unearned premium, unless the credit insurance was originated by 
a third party, in which case the creditor shall promptly notify 
the third party who shall make the refund. 
    Sec. 88.  [549.23] [INTANGIBLE LOSSES; LIMITATIONS.] 
    Subdivision 1.  [DEFINITION.] For purposes of this section, 
"intangible loss" means embarrassment, emotional distress, and 
loss of consortium.  Intangible loss does not include pain, 
disability or disfigurement. 
    Subd. 2.  [LIMITATION.] In civil actions, whether based on 
contract or tort, the amount of damages per person for 
intangible losses may not exceed $400,000. 
    Subd. 3. [JURY NOT INFORMED OF LIMITATION.] The court may 
not inform the jury of the existence of the limitation in 
subdivision 2. 
     Subd. 4.  [NOT NEW ACTION.] This section does not create a 
new cause of action for intangible loss. 
    Sec. 89.  [549.24] [SPECIFIC DAMAGE FINDINGS BY JURY.] 
    The court shall require the jury to specify amounts for 
past damages and future damages as defined in section 86.  
Within each category of damages, the jury must further specify 
amounts for intangible loss as defined in section 88. 
    Sec. 90.  [466.132] [INDEMNIFICATION BY STATE.] 
    Municipalities, when performing, as required or mandated by 
state law, inspections or investigations of persons prior to the 
issuance of state licenses, are employees of the state for 
purposes of the indemnification provisions of section 3.736, 
subdivision 9.  A municipality is not, however, an employee of 
the state for purposes of this section if in hiring, 
supervising, or continuing to employ the person performing an 
inspection or investigation for the municipality, the 
municipality was clearly negligent.  
    Sec. 91.  Minnesota Statutes 1984, section 465.72, is 
amended to read: 
    465.72 [SEVERANCE PAY.] 
    Subdivision 1.  [PAYMENT; LIMITS.] Except as may otherwise 
be provided in Laws 1959, Chapter 690, as amended, any county, 
city, township, school district or other governmental 
subdivision may pay severance pay to its employees and 
promulgate rules for the payment of severance pay to an employee 
who leaves employment on or before or subsequent to the normal 
retirement date.  Severance pay shall also include the payment 
of accumulated vacation leave, accumulated sick leave or a 
combination thereof.  The severance pay shall be excluded from 
retirement deductions and from any calculations in retirement 
benefits.  It shall be paid in a manner mutually agreeable to 
the employee and employer and, except as provided in subdivision 
2, over a period not to exceed five years from retirement or 
termination of employment.  If a retired or terminated employee 
dies before all or a portion of the severance pay has been 
disbursed, that balance due shall be paid to a named beneficiary 
or, lacking same, to the deceased's estate.  Except as provided 
in subdivision 2, in no event shall severance pay provided for 
an employee leaving employment exceed an amount equivalent to 
one year of pay. 
    Subd. 2.  [EXCEPTIONS.] The provisions of subdivision 1 
requiring that severance pay be paid over a period not to exceed 
five years from retirement or termination of employment and 
limiting severance pay to an amount equal to one year of pay do 
not apply to severance pay constituting compensation for 
accumulated sick leave in the form of periodic contributions 
toward premiums for group insurance policies provided for a 
former employee by a governmental subdivision. 
    This subdivision applies only to periodic contributions 
that have commenced before the effective date of this act or 
that are required under contracts, or, with respect to employees 
not covered by contracts, personnel policies, formally adopted 
by the governing body of the governmental subdivision, in 
existence on the effective date of this act.  After the 
effective date of this act, a governmental subdivision may not 
enter into a contract or adopt a personnel policy providing for 
a payment in violation of subdivision 1.  A personnel policy or 
portion of a personnel policy in existence on the effective date 
of this act and providing for a payment in violation of 
subdivision 1 is null and void (i) upon the expiration of a 
collective bargaining agreement containing a similar provision 
and covering employees of the governmental subdivision that has 
adopted the policy, or (ii) two years from the effective date of 
this act, whichever is earlier.  Any payments by governmental 
subdivisions in accordance with this subdivision before the 
effective date of this act are validated. 
    Sec. 92.  Minnesota Statutes 1984, section 541.051, is 
amended to read: 
    541.051 [LIMITATION OF ACTION FOR DAMAGES BASED ON SERVICES 
OR CONSTRUCTION TO IMPROVE REAL PROPERTY.] 
    Subdivision 1.  Except where fraud is involved, no action 
by any person in contract, tort, or otherwise to recover damages 
for any injury to property, real or personal, or for bodily 
injury or wrongful death, arising out of the defective and 
unsafe condition of an improvement to real property, nor any 
action for contribution or indemnity for damages sustained on 
account of the injury, shall be brought against any person 
performing or furnishing the design, planning, supervision, 
materials, or observation of construction or construction of the 
improvement to real property or against the owner of the real 
property more than two years after discovery thereof, nor, in 
any event shall such a cause of action accrue more than 15 ten 
years after substantial completion of the construction.  Date of 
substantial completion shall be determined by the date when 
construction is sufficiently completed so that the owner or his 
representative can occupy or use the improvement for the 
intended purpose.  
    Nothing in this section shall apply to actions for damages 
resulting from negligence in the maintenance, operation or 
inspection of the real property improvement against the owner or 
other person in possession. 
    Subd. 2.  Notwithstanding the provisions of subdivision 1, 
in the case of an action which accrues during the 14th ninth or 
15th tenth year after substantial completion of the 
construction, an action to recover damages may be brought within 
two years after the date on which the action accrued, but in no 
event may an action be brought more than 17 twelve years after 
substantial completion of the construction. 
    Subd. 3.  Nothing in this section shall be construed as 
extending the period prescribed by the laws of this state for 
the bringing of any action. 
    Subd. 4.  This section shall not apply to actions based on 
breach of the statutory warranties set forth in section 327A.02, 
or to actions based on breach of an express written warranty, 
provided such actions shall be brought within two years of the 
discovery of the breach.  
    Sec. 93.  [541.052] [LIMITATION OF ACTIONS FOR DAMAGES 
BASED ON ERRORS IN LAND SURVEYS.] 
    Subdivision 1.  Except where fraud is involved, no action 
to recover damages for an error in the survey of land, nor any 
action for contribution or indemnity for damages sustained on 
account of an error, may be brought against any person 
performing the survey more than two years after the discovery of 
the error, nor in any event more than ten years after the date 
of the survey.  
    Subd. 2.  Notwithstanding the provisions of subdivision 1, 
in the case of action which occurs during the ninth or tenth 
year after the date of the survey, an action to recover damages 
may be brought within two years after the date on which the 
action occurred, but in no event may an action be brought more 
than twelve years after the date of the survey.  
    Sec. 94.  [REPEALER.] 
    Minnesota Statutes 1984, section 70A.06, subdivision 4, is 
repealed. 
    Sec. 95.  [EFFECTIVE DATES.] 
    Sections 2, 63 to 77, and 90 are effective July 1, 1986, 
and apply to claims arising from incidents that occur on or 
after that date.  
    Sections 60, 79, 82, and 83 apply to all actions commenced 
on or after the effective date of those sections.  Sections 80, 
84, 85, 86, 88, and 89 apply to actions pending on or commenced 
on or after the effective date of those sections. 
    Sections 3 to 59, 61, 62, 78, and 94 are effective the day 
following final enactment.  Section 79 is effective January 1, 
1987. 
    Approved March 25, 1986