Minnesota Session Laws - 1987, Regular Session

  

                         Laws of Minnesota 1987 

                        CHAPTER 332-H.F.No. 913 
           An act relating to workers' compensation; providing a 
          general administrative reform; providing for certain 
          proceedings to be expedited; providing penalties; 
          amending Minnesota Statutes 1986, sections 14.48; 
          175.007, subdivision 1; 175.101, subdivision 2; 
          176.011, subdivisions 2, 6, 7a, 9, and by adding a 
          subdivision; 176.041, subdivision 1, 4, and by adding 
          a subdivision; 176.081, subdivision 2; 176.102, 
          subdivisions 2, 3, 3a, 4, 6, 8, 10, and 13; 176.103, 
          subdivisions 2 and 3; 176.111, subdivision 17; 
          176.129, subdivisions 9, 11, and 13; 176.131, 
          subdivisions 1 and 8; 176.133; 176.135, subdivisions 
          1, 1a, 2, 3, and by adding subdivisions; 176.136, 
          subdivision 2; 176.1361; 176.139; 176.155, 
          subdivisions 1, 3, and 5; 176.179; 176.181, 
          subdivision 3; 176.182; 176.183, subdivisions 1a and 2;
          176.185, by adding a subdivision; 176.191, 
          subdivisions 1 and 2; 176.195, subdivision 3, 176.221, 
          subdivisions 1, 3, and 7; 176.225, subdivisions 1, 2, 
          and 4; 176.231, subdivisions 2, 10, and by adding a 
          subdivision; 176.271, subdivision 1; 176.275; 176.291; 
          176.301, subdivision 1; 176.305, subdivisions 1, 2, 
          and by adding subdivisions; 176.306, subdivision 1, 
          and by adding a subdivision; 176.312; 176.321, 
          subdivisions 2 and 3; 176.331; 176.341, subdivision 3, 
          and by adding subdivisions; 176.351, subdivision 2a; 
          176.361, subdivisions 2, 5, and 7; 176.371; 176.411, 
          subdivision 1; 176.421, subdivision 4, and by adding a 
          subdivision; 176.442; 176.511, subdivisions 1, 2, and 
          3; 176.521; 176.541, subdivisions 2, 3, 4, and 6; 
          176.571, subdivisions 1 and 2; 176.572; 176.581; 
          176.591, subdivision 3; 176.603; 176.83, subdivisions 
          5, 7, and 11; 176.84; 176B.02; and 176B.05; proposing 
          coding for new law in Minnesota Statutes, chapters 60A 
          and 176; repealing Minnesota Statutes 1986, sections 
          176.012; 176.101, subdivision 3v; 176.102, subdivision 
          6a; 176.103, subdivision 4; 176.136, subdivision 4; 
          176.195, subdivisions 4, 5, and 6; 176.241; 176.242; 
          176.2421; 176.243; 176.244; 176.271, subdivision 2; 
          176.501; 176.571, subdivisions 3, 4, 5, 6, and 7; and 
          176.602. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 14.48, is 
amended to read: 
    14.48 [CREATION OF OFFICE OF ADMINISTRATIVE HEARINGS; CHIEF 
ADMINISTRATIVE LAW JUDGE APPOINTED; OTHER ADMINISTRATIVE LAW 
JUDGES APPOINTED.] 
    A state office of administrative hearings is created.  The 
office shall be under the direction of a chief administrative 
law judge who shall be learned in the law and appointed by the 
governor, with the advice and consent of the senate, for a term 
ending on June 30 of the sixth calendar year after appointment.  
Senate confirmation of the chief administrative law judge shall 
be as provided by section 15.066.  The chief administrative law 
judge may hear cases and shall appoint additional administrative 
law judges and compensation judges to serve in the office as 
necessary to fulfill the duties prescribed in sections 14.48 to 
14.56 and chapter 176.  The chief administrative law judge may 
delegate to a subordinate employee the exercise of a specified 
statutory power or duty as deemed advisable, subject to the 
control of the chief administrative law judge.  Every delegation 
must be by written order filed with the secretary of state.  All 
administrative law judges and compensation judges shall be in 
the classified service except that the chief administrative law 
judge shall be in the unclassified service, but may be removed 
only for cause.  All administrative law judges shall have 
demonstrated knowledge of administrative procedures and shall be 
free of any political or economic association that would impair 
their ability to function officially in a fair and objective 
manner.  All workers' compensation judges shall be learned in 
the law, shall have demonstrated knowledge of workers' 
compensation laws and shall be free of any political or economic 
association that would impair their ability to function 
officially in a fair and objective manner. 
    Sec. 2.  [60A.101] [SELF-INSURERS; DEPOSIT OF SECURITIES.] 
    Subdivision 1.  [REQUIREMENT.] A workers' compensation 
self-insurer, except the state and its political subdivisions, 
as well as political subdivision self-insurance pools exempted 
by sections 471.98 to 471.982 must deposit securities or surety 
bonds acceptable to the commissioner of commerce of a value at 
least equal to: 
    (1) 110 percent of its total outstanding workers' 
compensation liability provided that the deposit shall be no 
less than the retention level selected with the workers' 
compensation reinsurance association, for an employer who has 
been self-insured for at least two years.  The total outstanding 
workers' compensation liability incurred must be certified by an 
actuary who is a member of the casualty actuarial society one 
year after the date of authority to self-insure and every fourth 
year thereafter unless requested more frequently by the 
commissioner of commerce.  Self-insurers authorized to 
self-insure on the effective date of this section must provide 
this actuarial certification of outstanding liabilities by July 
1, 1988, or upon the anniversary of their authority to 
self-insure, whichever comes first; or 
    (2) the greater of the retention level selected with the 
workers' compensation reinsurance association, or 70 percent of 
the employer's estimated current modified premium as developed 
using the rates currently utilized by the Minnesota workers' 
compensation assigned risk plan for an employer who has been 
self-insured less than two years. 
    Subd. 2.  [SURETY BOND FORM.] The bond shall be in the form 
as follows: 
    "KNOW ALL PERSONS BY THESE PRESENTS:  That we, (entity to 
be bonded), of (location), (hereinafter called the 
"principal(s)"), as principal(s), and (bonding company name), a 
(name of state) corporation, of (location) (hereinafter called 
the "surety"), as surety, are held and firmly bound unto the 
commissioner of commerce of the STATE OF MINNESOTA for the use 
and benefit of the employees of the principal(s) and to pay 
workers' compensation obligations of the principal(s) in the sum 
of (amount in writing), for the payment of which well and truly 
to be made, the principal(s) bind themselves, their successors 
and assigns, and the surety binds itself and its successors and 
assigns, jointly and severally, firmly by these presents. 
    WHEREAS, in accordance with the provisions of Minnesota 
Statutes, section 176.181, the principal(s) has by written order 
of the commissioner of commerce of the state of Minnesota been 
exempted from insuring their liability for compensation 
according to the Minnesota workers' compensation act and have 
been permitted by order to self-insure all liability hereafter 
arising under the workers' compensation act.  
    NOW, THEREFORE, the condition of this obligation is such 
that if the principal(s) shall, according to the terms, 
provisions, and limitations of the Minnesota workers' 
compensation act, pay all of the principal's liabilities and 
obligations under the act, including all benefits as provided by 
the act, then this obligation shall be null and void, otherwise 
to remain in full force and effect subject, however, to the 
following terms and conditions. 
    (a) The liability of the surety is limited to the payment 
of all legal liabilities and obligations, including payment of 
compensation and medical benefits, provided by the workers' 
compensation act of Minnesota which are payable by the 
principals for or on account of personal injuries or 
occupational diseases sustained during or attributable to the 
entire period that the bond is in effect, subject to 
cancellation, as provided in paragraphs (b) and (e).  In no 
event shall the total liability of the surety exceed the penal 
amount of the bond. 
    (b) In the event of a default, whenever occurring, on the 
part of the principal(s) to abide by any award, order, or 
decision directing and awarding payment of such legal 
liabilities, obligations, or benefits to or on behalf of any 
employee or the dependents of any deceased employee, which 
occurred during the period this bond remains in force regardless 
of whether this bond has been canceled prior to the making of 
the claim or the award, order, or decision, the commissioner of 
commerce may, upon 20-days notice to the surety and 
opportunity to be heard, require the surety to pay the amount of 
the award, order, or decision to be enforced in the same manner 
as an award may be enforced against said principal(s). 
    (c) Service on the surety shall be deemed to be service on 
the principals. 
    (d) This bond shall continue in force from year to year 
unless canceled as herein provided.  However, the penal amount 
of the bond must be revised each year to comply with all 
statutory requirements and rules.  Regardless of the number of 
years this bond remains in force or the number of annual 
premiums paid or payable, the total liability of the surety 
hereunder may not exceed the penal amount of the bond. 
    (e) This bond may be canceled at any time by the surety by 
giving 60-days notice in writing to the commissioner of commerce 
of the state of Minnesota at its offices in the city of St. 
Paul, Minnesota, and upon expiration of said 60 days, the 
liability of the surety hereunder shall cease, except as to 
liability incurred hereunder prior to the expiration of said 60 
days, as set out in paragraph (a). 
    (f) This bond shall become effective at (time of day, 
month, day, year). 
    IN TESTIMONY WHEREOF, said principal(s) and said surety 
have caused this instrument to be signed by their respective 
duly-authorized officers and their corporate seals to be 
hereunto affixed this (day, month, year). 
Signed, sealed, and delivered in 
the presence of:                      Corporation Name 
.............................         By:  ................. 
.............................         Bonding Company Name  
.............................         By:  ................. 
    Subd. 3.  [DEFINITIONS.] For the purposes of this section, 
the terms defined in this subdivision have the meanings given 
them. 
    "Control" means, with respect to a company or organization 
authorized to self-insure under Minnesota Statutes, section 
176.181, and Minnesota Rules, parts 2780.0100 to 2780.9920: 
    (1) the ownership of, directly or indirectly, or acting 
through one or more other persons, control of or the power to 
vote, 25 percent of more of any class of voting securities; and 
    (2) control in any manner over the election of a majority 
of the directors.  
    Sec. 3.  Minnesota Statutes 1986, section 175.007, 
subdivision 1, is amended to read:  
    Subdivision 1.  The commissioner shall appoint an advisory 
council on workers' compensation, which consists of five 
representatives of employers and five representatives of 
employees; five nonvoting members representing the general 
public; and two persons who have received or are currently 
receiving workers' compensation benefits under chapter 176 and 
the chairpersons of the rehabilitation review panel and the 
medical services review board.  The council may consult with any 
party it desires.  The terms and removal of members shall be as 
provided in section 15.059.  The council is not subject to 
section 15.059, subdivision 5. 
    Sec. 4.  Minnesota Statutes 1986, section 175.101, 
subdivision 2, is amended to read: 
    Subd. 2.  The commissioner shall keep a full and true 
record of all proceedings of the workers' compensation division, 
issue all necessary processes, writs, warrants, and notices 
which the division is required or authorized to issue and 
generally act as the administrator of the division of workers' 
compensation in the department of labor and industry.  Notices 
and other documents required to be served or filed on the 
division of workers' compensation or the workers' compensation 
court of appeals shall be served on the commissioner. 
    Sec. 5.  Minnesota Statutes 1986, section 176.011, 
subdivision 2, is amended to read:  
    Subd. 2.  [CHILD.] "Child" includes a posthumous child, a 
child entitled by law to inherit as a child of a deceased 
person, a child of a person adjudged by a court of competent 
jurisdiction to be the father of the child, and a stepchild, 
grandchild, or foster child who was a member of the family of a 
deceased employee at the time of injury and dependent upon the 
employee for support.  A stepchild is a "child" within the 
meaning of section 176.041. 
    Sec. 6.  Minnesota Statutes 1986, section 176.011, 
subdivision 6, is amended to read:  
    Subd. 6.  (1) "Court of appeals" means the workers' 
compensation court of appeals of Minnesota. 
    (2) "Division" means the workers' compensation division of 
the department of labor and industry. 
    (3) "Department" means the department of labor and industry.
    (4) "Commissioner", unless the context clearly indicates 
otherwise, means the commissioner of labor and industry.  
    (5) "Office" means the office of administrative hearings. 
    Sec. 7.  Minnesota Statutes 1986, section 176.011, 
subdivision 7a, is amended to read:  
    Subd. 7a.  [COMPENSATION JUDGE.] The title referee as used 
in this chapter, relating to workers' compensation is hereby 
changed to (1) Compensation judge means a workers' compensation 
judge at the office of administrative hearings.  
    (2) "Calendar judge" means a workers' compensation judge at 
the office of administrative hearings.  
     (3) "Settlement judge" means a compensation judge at the 
department of labor and industry.  Settlement judges may conduct 
settlement conferences, issue summary decisions, approve 
settlements and issue awards thereon, determine petitions for 
attorney fees and costs, and make other determinations, 
decisions, orders, and awards as may be delegated to them by the 
commissioner. 
    Sec. 8.  Minnesota Statutes 1986, section 176.011, 
subdivision 9, is amended to read:  
    Subd. 9.  [EMPLOYEE.] "Employee" means any person who 
performs services for another for hire including the following: 
    (1) an alien; 
    (2) a minor; 
    (3) a sheriff, deputy sheriff, constable, marshal, police 
officer, firefighter, county highway engineer, and peace officer 
while engaged in the enforcement of peace or in the pursuit or 
capture of any person charged with or suspected of crime and any 
person requested or commanded to aid an officer in arresting any 
person, or in retaking any person who has escaped from lawful 
custody, or in executing any legal process in which case, for 
purposes of calculating compensation payable under this chapter, 
the daily wage of the person requested or commanded to assist an 
officer or to execute a legal process shall be the prevailing 
wage for similar services where the services are performed by 
paid employees; 
    (4) a county assessor; 
    (5) an elected or appointed official of the state, or of 
any county, city, town, school district or governmental 
subdivision in it.  An officer of a political subdivision 
elected or appointed for a regular term of office, or to 
complete the unexpired portion of a regular term, shall be 
included only after the governing body of the political 
subdivision has adopted an ordinance or resolution to that 
effect; 
    (6) an executive officer of a corporation, except an 
officer of a family farm corporation as defined in section 
500.24, subdivision 1, clause (c), or an executive officer of a 
closely held corporation who is referred to in section 
176.012 those executive officers excluded by section 176.041; 
    (7) a voluntary uncompensated worker, other than an inmate, 
rendering services in state institutions under the commissioner 
of human services and state institutions under the commissioner 
of corrections similar to those of officers and employees of 
these institutions, and whose services have been accepted or 
contracted for by the commissioner of human services or the 
commissioner of corrections as authorized by law, shall be 
employees.  In the event of injury or death of the voluntary 
uncompensated worker, the daily wage of the worker, for the 
purpose of calculating compensation payable under this chapter, 
shall be the usual going wage paid at the time of the injury or 
death for similar services in institutions where the services 
are performed by paid employees; 
    (8) a voluntary uncompensated worker engaged in peace time 
in the civil defense program when ordered to training or other 
duty by the state or any political subdivision of it, shall be 
an employee.  The daily wage of the worker for the purpose of 
calculating compensation payable under this chapter, shall be 
the usual going wage paid at the time of the injury or death for 
similar services where the services are performed by paid 
employees; 
       (9) a voluntary uncompensated worker participating in a 
program established by a county welfare board shall be an 
employee.  In the event of injury or death of the voluntary 
uncompensated worker, the wage of the worker, for the purpose of 
calculating compensation payable under this chapter, shall be 
the usual going wage paid in the county at the time of the 
injury or death for similar services where the services are 
performed by paid employees working a normal day and week; 
       (10) a voluntary uncompensated worker accepted by the 
commissioner of natural resources who is rendering services as a 
volunteer pursuant to section 84.089 shall be an employee.  The 
daily wage of the worker for the purpose of calculating 
compensation payable under this chapter, shall be the usual 
going wage paid at the time of injury or death for similar 
services where the services are performed by paid employees; 
       (11) a member of the military forces, as defined in section 
190.05, while in state active service, as defined in section 
190.05, subdivision 5a.  The daily wage of the member for the 
purpose of calculating compensation payable under this chapter 
shall be based on the member's usual earnings in civil life.  If 
there is no evidence of previous occupation or earning, the 
trier of fact shall consider the member's earnings as a member 
of the military forces; 
       (12) a voluntary uncompensated worker, accepted by the 
director of the Minnesota historical society, rendering services 
as a volunteer, pursuant to chapter 138, shall be an employee.  
The daily wage of the worker, for the purposes of calculating 
compensation payable under this chapter, shall be the usual 
going wage paid at the time of injury or death for similar 
services where the services are performed by paid employees; 
       (13) a voluntary uncompensated worker, other than a 
student, who renders services at the Minnesota School for the 
Deaf or the Minnesota Braille and Sight-Saving School, and whose 
services have been accepted or contracted for by the state board 
of education, as authorized by law, shall be an employee.  In 
the event of injury or death of the voluntary uncompensated 
worker, the daily wage of the worker, for the purpose of 
calculating compensation payable under this chapter, shall be 
the usual going wage paid at the time of the injury or death for 
similar services in institutions where the services are 
performed by paid employees; 
     (14) a voluntary uncompensated worker, other than a 
resident of the veterans home, who renders services at a 
Minnesota veterans home, and whose services have been accepted 
or contracted for by the commissioner of veterans affairs, as 
authorized by law, is an employee.  In the event of injury or 
death of the voluntary uncompensated worker, the daily wage of 
the worker, for the purpose of calculating compensation payable 
under this chapter, shall be the usual going wage paid at the 
time of the injury or death for similar services in institutions 
where the services are performed by paid employees;  
     (15) a worker who renders in-home attendant care services 
to a physically handicapped person, and who is paid directly by 
the commissioner of human services for these services, shall be 
an employee of the state within the meaning of this subdivision, 
but for no other purpose;  
     (16) those students enrolled in and regularly attending the 
medical school of the University of Minnesota, whether in the 
graduate school program or the post-graduate program, 
notwithstanding that the students shall not be considered 
employees for any other purpose.  In the event of the student's 
injury or death, the weekly wage of the student for the purpose 
of calculating compensation payable under this chapter, shall be 
the annualized educational stipend awarded to the student, 
divided by 52 weeks.  The institution in which the student is 
enrolled shall be considered the "employer" for the limited 
purpose of determining responsibility for paying benefits 
payable under this chapter;  
     (17) a faculty member of the University of Minnesota 
employed for the current academic year is also an employee for 
the period between that academic year and the succeeding 
academic year if: 
     (a) the faculty member has a contract or reasonable 
assurance of a contract from the University of Minnesota for the 
succeeding academic year; and 
    (b) the personal injury for which compensation is sought 
arises out of and in the course of activities related to the 
faculty member's employment by the University of Minnesota; and 
    (18) a worker who performs volunteer ambulance driver or 
attendant services is an employee of the political subdivision, 
nonprofit hospital, nonprofit corporation, or other entity for 
which the worker performs the services.  The daily wage of the 
worker for the purpose of calculating compensation payable under 
this chapter is the usual going wage paid at the time of injury 
or death for similar services if the services are performed by 
paid employees; and 
    (19) a voluntary uncompensated worker, accepted by the 
commissioner of administration, rendering services as a 
volunteer at the department of administration.  In the event of 
injury or death of the voluntary uncompensated worker, the daily 
wage of the worker, for the purpose of calculating compensation 
payable under this chapter, shall be the usual going wage paid 
at the time of the injury or death for similar services in 
institutions where the services were performed by paid employees.
    In the event it is difficult to determine the daily wage as 
provided in this subdivision, then the trier of fact may 
determine the wage upon which the compensation is payable. 
    Sec. 9.  Minnesota Statutes 1986, section 176.011, is 
amended by adding a subdivision to read:  
    Subd. 27.  [ADMINISTRATIVE CONFERENCE.] An "administrative 
conference" is a meeting conducted by a commissioner's designee 
where parties can discuss on an expedited basis and in an 
informal setting their viewpoints concerning disputed issues 
arising under section 176.102, 176.103, 176.135, 176.136, or 
176.239.  If the parties are unable to resolve the dispute, the 
commissioner's designee shall issue an administrative decision 
under section 176.106 or section 66.  
    Sec. 10.  Minnesota Statutes 1986, section 176.041, 
subdivision 1, is amended to read:  
    Subdivision 1.  [EMPLOYMENTS EXCLUDED.] This chapter does 
not apply to any of the following:  
    (a) a person employed by a common carrier by railroad 
engaged in interstate or foreign commerce and who is covered by 
the Federal Employers' Liability Act, United States Code, title 
45, sections 51 to 60, or other comparable federal law; 
    to (b) a person employed by a family farm as defined by 
section 176.011, subdivision 11a, 
    or (c) the spouse, parent, and child, regardless of age, of 
a farmer-employer working for the farmer-employer; 
    (d) a sole proprietor, or the spouse, parent, and child, 
regardless of age, of a sole proprietor; 
     to (e) a partner engaged in a farm operation or a partner 
engaged in a business and the spouse, parent, and child, 
regardless of age, of a partner in the farm operation or 
business; 
    to (f) an executive officer of a family farm corporation; 
    to (g) an executive officer of a closely held corporation 
referred to in section 176.012 having less than 22,880 hours of 
payroll in the preceding calendar year, if that executive 
officer owns at least 25 percent of the stock of the corporation;
    to (h) a spouse, parent, or child, regardless of age, of an 
executive officer of a family farm corporation as defined in 
section 500.24, subdivision 2, and employed by that family farm 
corporation; 
    to (i) a spouse, parent, or child, regardless of age, of an 
executive officer of a closely held corporation referred to in 
section 176.012 who is referred to in paragraph (g); 
    to (j) another farmer or to a member of the other farmer's 
family exchanging work with the farmer-employer or family farm 
corporation operator in the same community; 
    to (k) a person whose employment at the time of the injury 
is casual and not in the usual course of the trade, business, 
profession, or occupation of the employer; 
    (l) persons who are independent contractors as defined by 
rules adopted by the commissioner pursuant to section 176.83 
except that this exclusion does not apply to an employee of an 
independent contractor; nor does this chapter apply to 
    (m) an officer or a member of a veterans' organization 
whose employment relationship arises solely by virtue of 
attending meetings or conventions of the veterans' organization, 
unless the veterans' organization elects by resolution to 
provide coverage under this chapter for the officer or member.;  
    Neither does the chapter apply to (n) a person employed as 
a household worker in, for, or about a private home or household 
who earns less than $1,000 in cash in a three-month period from 
a single private home or household provided that a household 
worker who has earned $1,000 or more from the household worker's 
present employer in a three-month period within the previous 
year is covered by this chapter regardless of whether or not the 
household worker has earned $1,000 in the present quarter.;  
    This chapter does not apply to those (o) persons employed 
by a closely held corporation if those persons who are related 
by blood or marriage, within the third degree of kindred 
according to the rules of civil law, to the officers an officer 
of the corporation, and who is referred to in paragraph (g), if 
the corporation files a written election with the commissioner 
to have those persons excluded from this chapter except 
that exclude such individuals.  A written election is not 
required for a person who is otherwise excluded from this 
chapter by this section.;  
    This chapter does not apply to (p) a nonprofit association 
which does not pay more than $1,000 in salary or wages in a 
year.; 
    This chapter does not apply to (q) persons covered under 
the Domestic Volunteer Service Act of 1973, as amended, United 
States Code, title 42, sections 5011, et. seq.  
    Sec. 11.  Minnesota Statutes 1986, section 176.041, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [ELECTION OF COVERAGE.] The persons, 
partnerships and corporations described in this subdivision may 
elect to provide the insurance coverage required by this chapter.
    (a) An owner or owners of a business or farm may elect 
coverage for themselves.  
    (b) A partnership owning a business or farm may elect 
coverage for any partner.  
    (c) A family farm corporation as defined in section 500.24, 
subdivision 2, clause (c) may elect coverage for any executive 
officer.  
    (d) A closely held corporation which had less than 22,880 
hours of payroll in the previous calendar year may elect 
coverage for any executive officer if that executive officer is 
also an owner of at least 25 percent of the stock of the 
corporation.  
    (e) A person, partnership, or corporation hiring an 
independent contractor, as defined by rules adopted by the 
commissioner, may elect to provide coverage for that independent 
contractor.  
    A person, partnership, or corporation may charge the 
independent contractor a fee for providing the coverage only if 
the independent contractor (1) elects in writing to be covered, 
(2) is issued an endorsement setting forth the terms of the 
coverage, the name of the independent contractors, and the fee 
and how it is calculated. 
    The persons, partnerships and corporations described in 
this subdivision may also elect coverage for an employee who is 
a spouse, parent or child, regardless of age, of an owner, 
partner, or executive officer, who is eligible for coverage 
under this subdivision.  Coverage may be elected for a spouse, 
parent or child whether or not coverage is elected for the 
related owner, partner or executive director and whether or not 
the person, partnership or corporation employs any other person 
to perform a service for hire.  Any person for whom coverage is 
elected pursuant to this subdivision shall be included within 
the meaning of the term employee for the purposes of this 
chapter. 
    Notice of election of coverage or of termination of 
election under this subdivision shall be provided in writing to 
the insurer.  Coverage or termination of coverage is effective 
the day following receipt of notice by the insurer or at a 
subsequent date if so indicated in the notice.  The insurance 
policy shall be endorsed to indicate the names of those persons 
for whom coverage has been elected or terminated under this 
subdivision.  An election of coverage under this subdivision 
shall continue in effect as long as a policy or renewal policy 
of the same insurer is in effect.  
    Nothing in this subdivision shall be construed to limit the 
responsibilities of owners, partnerships or corporations to 
provide coverage for their employees, if any, as required under 
this chapter. 
     Sec. 12.  Minnesota Statutes 1986, section 176.041, 
subdivision 4, is amended to read:  
    Subd. 4.  [OUT-OF-STATE EMPLOYMENTS.] If an employee who 
regularly performs the primary duties of employment outside of 
this state or is hired to perform the primary duties of 
employment outside of this state, receives an injury within this 
state in the employ of the same employer, such injury shall be 
covered within the provisions of this chapter if the employee 
chooses to forego any workers' compensation claim resulting from 
the injury that the employee may have a right to pursue in some 
other state, provided that the special compensation fund is not 
liable for payment of benefits pursuant to section 176.183 if 
the employer is not insured against workers' compensation 
liability pursuant to this chapter and the employee is a 
nonresident of Minnesota on the date of the personal injury. 
    Sec. 13.  Minnesota Statutes 1986, section 176.081, 
subdivision 2, is amended to read:  
    Subd. 2.  An application for attorney fees in excess of the 
amount authorized in subdivision 1 shall be made to the division 
commissioner, compensation judge, or district judge, before whom 
the matter was heard.  An appeal of a decision by the 
commissioner, a compensation judge, or district court judge on 
additional fees may be made to the workers' compensation court 
of appeals.  The application shall set forth the fee requested 
and the basis for the request and whether or not a hearing is 
requested.  The application, with affidavit of service upon the 
employee, shall be filed by the attorney requesting the fee.  If 
a hearing is requested by an interested party, a hearing shall 
be set with notice of the hearing served upon known interested 
parties.  In all cases the employee shall be served with notice 
of hearing.  
    Sec. 14.  Minnesota Statutes 1986, section 176.102, 
subdivision 2, is amended to read:  
    Subd. 2.  [ADMINISTRATORS.] The commissioner shall hire a 
director of rehabilitation services in the classified service. 
The commissioner shall monitor and supervise rehabilitation 
services, including, but not limited to, making determinations 
regarding the selection and delivery of rehabilitation services 
and the criteria used to approve qualified rehabilitation 
consultants and rehabilitation vendors.  The commissioner may 
also make determinations regarding fees for rehabilitation 
services, the fitness of qualified rehabilitation consultants 
and vendors to continue to be approved under this section and 
has authority to discipline, by fine or otherwise, the 
consultants or vendors who act in violation of this chapter or 
rules adopted pursuant to this chapter.  The commissioner may 
hire qualified personnel to assist in the commissioner's duties 
under this section and may delegate the duties and performance.  
    Sec. 15.  Minnesota Statutes 1986, section 176.102, 
subdivision 3, is amended to read:  
    Subd. 3.  [REVIEW PANEL.] There is created a rehabilitation 
review panel composed of the commissioner or a designee, who 
shall serve as an ex officio member and two members each from 
employers, insurers, rehabilitation, and medicine, one member 
representing chiropractors, and four members representing 
labor.  The members shall be appointed by the commissioner and 
shall serve four-year terms which may be renewed.  Compensation 
for members shall be governed by section 15.0575.  The panel 
shall select a chair.  The panel shall review and make a 
determination with respect to (a) appeals regarding eligibility 
for rehabilitation services, rehabilitation plans and 
rehabilitation benefits under subdivisions 9 and 11; (b) appeals 
on any other rehabilitation issue the commissioner determines 
under this section; and (c) appeals from orders of the 
commissioner regarding fee disputes, penalties, discipline, 
certification approval or revocation of registration of 
qualified rehabilitation consultants and approved vendors.  The 
hearings are de novo and initiated by the panel under the 
contested case procedures of chapter 14, and are appealable to 
the workers' compensation court of appeals in the manner 
provided by section 176.421.  
    Subd. 3a.  [DISCIPLINARY ACTIONS.] The panel has authority 
to discipline qualified rehabilitation consultants and vendors 
and may impose a penalty of up to $1,000 per violation, and may 
suspend or revoke certification.  Complaints against registered 
qualified rehabilitation consultants and vendors shall be made 
to the commissioner who shall investigate all complaints.  If 
the investigation indicates a violation of this chapter or rules 
adopted under this chapter, the commissioner may initiate a 
contested case proceeding under the provisions of chapter 14.  
In these cases, the rehabilitation review panel shall make the 
final decision following receipt of the report of an 
administrative law judge.  The decision of the panel is 
appealable to the workers' compensation court of appeals in the 
manner provided by section 176.421.  The panel shall 
continuously study rehabilitation services and delivery and, 
develop and recommend rehabilitation rules to the commissioner, 
and assist the commissioner in accomplishing public education. 
    The commissioner may appoint alternates for one-year terms 
to serve as a member when a member is unavailable.  The number 
of alternates shall not exceed one labor member, one employer or 
insurer member, and one member representing medicine, 
chiropractic, or rehabilitation. 
    Sec. 16.  Minnesota Statutes 1986, section 176.102, 
subdivision 3a, is amended to read:  
    Subd. 3a. 3b.  [REVIEW PANEL APPEALS 
DETERMINATIONS.] Appeals to the review panel Recommendations 
from the administrative law judge following a contested case 
hearing shall be heard before determined by a panel of five 
members designated by the review panel.  Each five-member panel 
shall consist of at least one labor member, at least one 
employer or insurer member, and at least one member representing 
medicine, chiropractic, or rehabilitation.  The number of labor 
members and employer or insurer members on the five-member panel 
shall be equal.  The determination of the five-member panel 
shall be by a majority vote and shall represent the 
determination of the entire review panel and is not subject to 
review by the panel as a whole.  When conducting a review of the 
commissioner's determination regarding any rehabilitation issue 
or plan the panel shall give the parties notice that the appeal 
will be heard.  This notice shall be given at least ten working 
days prior to the hearing.  The notice shall state that parties 
may be represented by counsel at the hearing.  In conducting its 
review the panel shall permit an interested party to present 
relevant, competent, oral or written evidence and to 
cross-examine opposing evidence.  Evidence presented is not 
limited to the evidence previously submitted to the 
commissioner.  A record of the proceeding shall be made by the 
panel.  Upon determination of the issue presented, the panel 
shall issue to the interested parties a written decision and 
order.  The decision need not contain a recitation of the 
evidence presented at the hearing, but shall be limited to the 
panel's basis for the decision.  The panel may adopt rules of 
procedure which may be joint rules with the medical services 
review board.  
    Sec. 17.  Minnesota Statutes 1986, section 176.102, 
subdivision 4, is amended to read:  
    Subd. 4.  [REHABILITATION PLAN; DEVELOPMENT.] (a) An 
employer or insurer shall provide rehabilitation consultation by 
a qualified rehabilitation consultant or by another person 
permitted by rule to provide consultation to an injured employee 
within five days after the employee has 60 days of lost work 
time due to the personal injury, except as otherwise provided in 
this subdivision.  Where an employee has incurred an injury to 
the back, the consultation shall be made within five days after 
the employee has 30 days of lost work time due to the injury.  
The lost work time in either case may be intermittent lost work 
time.  If an employer or insurer has medical information at any 
time prior to the time specified in this subdivision that the 
employee will be unable to return to the job the employee held 
at the time of the injury rehabilitation consultation shall be 
provided immediately after receipt of this information.  
    For purposes of this section "lost work time" means only 
those days during which the employee would actually be working 
but for the injury.  In the case of the construction industry, 
mining industry, or other industry where the hours and days of 
work are affected by seasonal conditions, "lost work time" shall 
be computed by using the normal schedule worked when employees 
are working full time.  
    The qualified rehabilitation consultant appointed by the 
employer or insurer shall disclose in writing at the first 
meeting or written communication with the employee any ownership 
interest or affiliation between the firm which employs the 
qualified rehabilitation consultant and the employer, insurer, 
adjusting or servicing company, including the nature and extent 
of the affiliation or interest.  
    The consultant shall also disclose to all parties any 
affiliation, business referral or other arrangement between the 
consultant or the firm employing the consultant and any other 
party to the case, including any attorneys, doctors, or 
chiropractors. 
    If the employee objects to the employer's selection of a 
qualified rehabilitation consultant, the employee shall notify 
the employer and the commissioner in writing of the 
objection.  The notification shall include the name, address, 
and telephone number of the qualified rehabilitation consultant 
chosen by the employee to provide rehabilitation consultation.  
    Upon receipt of the notice of objection, the commissioner 
may schedule an administrative conference for the purpose of 
determining which qualified rehabilitation consultant may be 
mutually acceptable.  The employee has the final decision on 
which qualified rehabilitation consultant is to be utilized.  
    The employee may choose a different qualified 
rehabilitation consultant as follows:  
    (1) once during the first 60 days following the first 
in-person contact between the employee and the original 
consultant;  
    (2) once after the 60-day period referred to in clause (1); 
and 
    (3) subsequent requests shall be determined by the 
commissioner or compensation judge according to the best 
interests of the parties. 
    The employee and employer shall enter into a program if one 
is prescribed in a rehabilitation plan.  A copy of the plan, 
including a target date for return to work, shall be submitted 
to the commissioner.  
    (b) If the employer does not provide rehabilitation 
consultation as required by this section, the commissioner or 
compensation judge shall notify the employer that if the 
employer fails to appoint a qualified rehabilitation consultant 
or other persons as permitted by clause (a) within 15 days to 
conduct a rehabilitation consultation, the commissioner or 
compensation judge shall appoint a qualified rehabilitation 
consultant to provide the consultation at the expense of the 
employer unless the commissioner or compensation judge 
determines the consultation is not required.  
    (c) In developing a rehabilitation plan consideration shall 
be given to the employee's qualifications, including but not 
limited to age, education, previous work history, interest, 
transferable skills, and present and future labor market 
conditions.  
    (d) The commissioner or compensation judge may waive 
rehabilitation consultation services under this section if the 
commissioner or compensation judge is satisfied that the 
employee will return to work in the near future or that 
rehabilitation consultation services will not be useful in 
returning an employee to work.  
    Sec. 18.  Minnesota Statutes 1986, section 176.102, 
subdivision 6, is amended to read:  
    Subd. 6.  [PLAN, ELIGIBILITY FOR REHABILITATION, APPROVAL 
AND APPEAL.] The commissioner or a compensation judge shall 
determine eligibility for rehabilitation services and shall 
review, approve, modify or reject rehabilitation plans developed 
under subdivision 4.  The commissioner or a compensation judge 
shall also make determinations regarding rehabilitation issues 
not necessarily part of a plan including, but not limited to, 
determinations regarding whether an employee is eligible for 
further rehabilitation and the benefits under subdivisions 9 and 
11 to which an employee is entitled.  A decision of the 
commissioner may be appealed to the rehabilitation review panel 
within 30 days of the commissioner's decision.  The decision of 
the panel may be appealed to the workers' compensation court of 
appeals in the same manner as other matters appealed to the 
court.  
    Sec. 19.  Minnesota Statutes 1986, section 176.102, 
subdivision 8, is amended to read:  
    Subd. 8.  [PLAN MODIFICATION.] Upon request to the 
commissioner or compensation judge by the employer, the insurer, 
or employee, or upon the commissioner's own request, the plan 
may be suspended, terminated or altered upon a showing of good 
cause, including:  
    (a) a physical impairment that does not allow the employee 
to pursue the rehabilitation plan;  
    (b) the employee's performance level indicates the plan 
will not be successfully completed;  
    (c) an employee does not cooperate with a plan;  
    (d) that the plan or its administration is substantially 
inadequate to achieve the rehabilitation plan objectives;  
    (e) that the employee is not likely to benefit from further 
rehabilitation services. 
    An employee may request a change in a rehabilitation plan 
once because the employee feels ill-suited for the type of work 
for which rehabilitation is being provided.  If the 
rehabilitation plan includes retraining, this request must be 
made within 90 days of the beginning of the retraining program.  
Any decision of the commissioner regarding a change in a plan 
may be appealed to the rehabilitation review panel within 30 
days of the decision.  
    Sec. 20.  Minnesota Statutes 1986, section 176.102, 
subdivision 10, is amended to read:  
    Subd. 10.  [REHABILITATION; CONSULTANTS AND VENDORS.] The 
commissioner shall approve rehabilitation consultants who may 
propose and implement plans if they satisfy rules adopted by the 
commissioner for rehabilitation consultants.  A consultant may 
be an individual or public or private entity, but and except for 
the division of rehabilitation services, department of jobs and 
training, a consultant may not be a vendor or the agent of a 
vendor of rehabilitation services.  The commissioner shall also 
approve rehabilitation vendors if they satisfy rules adopted by 
the commissioner. 
    Sec. 21.  Minnesota Statutes 1986, section 176.102, 
subdivision 13, is amended to read:  
    Subd. 13.  [DISCONTINUANCE.] All benefits payable under 
chapter 176 may, after a determination and order by the 
commissioner or compensation judge, be discontinued or forfeited 
for any time during which the employee refuses to submit to any 
reasonable examinations and evaluative procedures ordered by the 
commissioner or compensation judge to determine the need for and 
details of a plan of rehabilitation, or refuses to participate 
in rehabilitation evaluation as required by this section or does 
not make a good faith effort to participate in a rehabilitation 
plan.  A discontinuance under this section is governed by 
section 176.242 sections 65 and 66. 
    Sec. 22.  [176.1021] [CONTINUING EDUCATION; COMPENSATION 
JUDGES.] 
    The commissioner and the chief administrative law judge 
shall provide continuing education and training for workers' 
compensation judges in the conduct of administrative hearings, 
new trends in workers' compensation, techniques of alternative 
dispute resolution and, at least annually, continuing education 
in the areas of physical and vocational rehabilitation.  
    Sec. 23.  Minnesota Statutes 1986, section 176.103, 
subdivision 2, is amended to read:  
    Subd. 2.  [SCOPE.] (a) The commissioner shall monitor the 
medical and surgical treatment provided to injured employees, 
the services of other health care providers and shall also 
monitor hospital utilization as it relates to the treatment of 
injured employees.  This monitoring shall include determinations 
concerning the appropriateness of the service, whether the 
treatment is necessary and effective, the proper cost of 
services, the quality of the treatment, the right of providers 
to receive payment under this chapter for services rendered or 
the right to receive payment under this chapter for future 
services.  The commissioner may penalize, disqualify, or suspend 
a provider from receiving payment for services rendered under 
this chapter, if the commissioner determines that the provider 
has violated any part of this chapter or rule adopted under this 
chapter.  The commissioner shall report the results of the 
monitoring to the medical services review board.  The 
commissioner may, either as a result of the monitoring or as a 
result of an investigation following receipt of a complaint, if 
the commissioner believes that any provider of health care 
services has violated any provision of this chapter or rules 
adopted under this chapter, initiate a contested case proceeding 
under chapter 14.  In these cases, the medical services review 
board shall make the final decision following receipt of the 
report of an administrative law judge.  The commissioner's 
authority under this section also includes the authority to make 
determinations regarding any other activity involving the 
questions of utilization of medical services, and any other 
determination the commissioner deems necessary for the proper 
administration of this section, but does not include the 
authority to make the initial determination of primary 
liability, except as provided by section 176.305. 
    Except as provided in paragraph (b), the commissioner has 
the sole authority to make determinations under this section 
with a right of appeal to the medical services review board as 
provided in subdivision 3 and the workers' compensation court of 
appeals.  A compensation judge has no jurisdiction in making 
determinations under this section. 
    (b) The commissioner has authority under this section to 
make determinations regarding medical causation.  Objections to 
these determinations shall be referred to the chief 
administrative law judge for a de novo hearing before a 
compensation judge, with a right to review by the workers' 
compensation court of appeals, as provided in this chapter. 
    Sec. 24.  Minnesota Statutes 1986, section 176.103, 
subdivision 3, is amended to read:  
    Subd. 3.  [MEDICAL SERVICES REVIEW BOARD; SELECTION; 
POWERS.] (a) There is created a medical services review board 
composed of the commissioner or the commissioner's designee as 
an ex officio member, two persons representing chiropractic, one 
person representing hospital administrators, and six physicians 
representing different specialties which the commissioner 
determines are the most frequently utilized by injured 
employees.  The board shall also have one person representing 
employees, one person representing employers or insurers, and 
one person representing the general public.  The members shall 
be appointed by the commissioner and shall be governed by 
section 15.0575.  Terms of the board's members may be 
renewed.  The board shall appoint from among its clinical 
members a clinical advisory subcommittee on clinical quality and 
a clinical advisory subcommittee on clinical cost containment. 
Each subcommittee shall consist of at least three members one of 
whom shall be a member who is not a chiropractor or licensed 
physician The board may appoint from its members whatever 
subcommittees it deems appropriate.  
    The commissioner may appoint alternates for one-year terms 
to serve as a member when a member is unavailable.  The number 
of alternates shall not exceed one chiropractor, one hospital 
administrator, three physicians, one employee representative, 
one employer or insurer representative, and one representative 
of the general public. 
    The clinical quality subcommittee board shall review 
clinical results for adequacy and recommend to the commissioner 
scales for disabilities and apportionment.  
    The clinical cost containment subcommittee board shall 
review and recommend to the commissioner rates for individual 
clinical procedures and aggregate costs.  The subcommittees 
shall make regular reports to the board and the commissioner 
which shall evaluate the reports for the purpose of determining 
whether or not a particular health care provider continues to 
qualify for payment under this chapter or is subject to any 
other sanctions or penalties authorized under this section and 
to determine whether an employee has been off work longer than 
necessary.  The board shall assist the commissioner in 
accomplishing public education.  
    In evaluating the clinical consequences of the services 
provided to an employee by a clinical health care provider, the 
board shall consider the following factors in the priority 
listed:  
    (1) the clinical effectiveness of the treatment;  
    (2) the clinical cost of the treatment; and 
    (3) the length of time of treatment.  
    In its consideration of these factors, the board shall 
utilize the information and recommendations developed by the 
subcommittees.  In addition, the board shall utilize any other 
data developed by the subcommittees pursuant to the duties 
assigned to the subcommittees under this section.  
    After making a determination, the board shall submit its 
recommendation in writing to the commissioner.  The board shall 
advise the commissioner on the adoption of rules regarding all 
aspects of medical care and services provided to injured 
employees.  
    (b) The board shall appoint three of its members to hear 
appeals from decisions of the commissioner regarding quality 
control and supervision of medical care; any other disputes 
regarding medical, surgical, and hospital care; decisions 
regarding the eligibility of medical providers to receive 
payments; or any other determinations of the commissioner 
pursuant to subdivision 2.  The three-member panel shall be 
composed of one member who does not represent a health care 
specialty, one member who represents the same specialty as the 
specialty at issue or, if the same specialty is not available, 
one member whose specialty is as close as possible considering 
the board's composition, and one member representing a different 
specialty.  The three-member panel shall conduct a hearing in 
the same manner, giving the same notice and following other 
procedures required of the rehabilitation review panel in 
section 176.102, subdivision 3a.  A majority vote of the 
three-member panel constitutes the decision of the full board.  
This decision may be appealed to the workers' compensation court 
of appeals The medical services review board may upon petition 
from the commissioner and after hearing, issue a penalty of $100 
per violation, disqualify, or suspend a provider from receiving 
payment for services rendered under this chapter if a provider 
has violated any part of this chapter or rule adopted under this 
chapter.  The hearings are initiated by the commissioner under 
the contested case procedures of chapter 14.  The board shall 
make the final decision following receipt of the recommendation 
of the administrative law judge.  The board's decision is 
appealable to the workers' compensation court of appeals in the 
manner provided by section 176.421. 
    (c) In any situation where a conflict of interest prevents 
the appointment of a full three-member panel or in any other 
situation where the commissioner deems it necessary to resolve a 
conflict of interest, the commissioner may appoint a temporary 
substitute board member to serve until the situation creating 
the conflict of interest has been resolved.  
    (d) The board may adopt rules of procedure.  The rules may 
be joint rules with the rehabilitation review panel.  
    Sec. 25.  [176.106] [ADMINISTRATIVE CONFERENCE.] 
    Subdivision 1.  [SCOPE.] All determinations by the 
commissioner pursuant to sections 176.102, 176.103, 176.135, or 
176.136 shall be in accordance with the procedures contained in 
this section.  
    Subd. 2.  [REQUEST FOR CONFERENCE.] Any party may request 
an administrative conference by filing a request on a form 
prescribed by the commissioner.  
    Subd. 3.  [CONFERENCE.] The matter shall be scheduled for 
an administrative conference within 60 days after receipt of the 
request for a conference.  Notice of the conference shall be 
served on all parties no later than 14 days prior to the 
conference, unless the commissioner determines that a conference 
shall not be held.  The commissioner may order an administrative 
conference whether or not a request for conference is filed.  
    The commissioner, at his discretion, may refuse to hold an 
administrative conference and refer the matter for a settlement 
or pretrial conference or may certify the matter to the office 
of administrative hearings for a full hearing before a 
compensation judge.  
    Subd. 4.  [APPEARANCES.] All parties shall appear either 
personally, by telephone, by representative, or by written 
submission.  The commissioner shall determine the issues in 
dispute based upon the information available at the conference. 
    Subd. 5.  [DECISION.] A written decision shall be issued by 
the commissioner or an authorized representative determining all 
issues considered at the conference or if a conference was not 
held, based on the written submissions.  Disputed issues of fact 
shall be determined by a preponderance of the evidence.  The 
decision must be issued within 30 days after the close of the 
conference or if no conference was held, within 60 days after 
receipt of the request for conference.  The decision must 
include a statement indicating the right to request a de novo 
hearing before a compensation judge and how to initiate the 
request.  
    Subd. 6.  [PENALTY.] At a conference, if the insurer does 
not provide a specific reason for nonpayment of the items in 
dispute, the commissioner may assess a penalty of $300 payable 
to the special compensation fund, unless it is determined that 
the reason for the lack of specificity was the failure of the 
insurer, upon timely request, to receive information necessary 
to remedy the lack of specificity.  This penalty is in addition 
to any penalty that may be applicable for nonpayment.  
    Subd. 7.  [REQUEST FOR HEARING.] Any party aggrieved by the 
decision of the commissioner may request a formal hearing by 
filing the request with the commissioner no later than 30 days 
after the decision.  The request shall be referred to the office 
of administrative hearings for a de novo hearing before a 
compensation judge.  The commissioner shall refer a timely 
request to the office of administrative hearings within five 
working days after filing of the request and the hearing at the 
office of administrative hearings must be held on the first date 
that all parties are available but not later than 60 days after 
the office of administrative hearings receives the matter. 
Following the hearing, the compensation judge must issue the 
decision within 30 days.  The decision of the compensation judge 
is appealable pursuant to section 176.421. 
    Subd. 8.  [DENIAL OF PRIMARY LIABILITY.] The commissioner 
does not have authority to make determinations relating to 
medical or rehabilitation benefits when there is a genuine 
dispute over whether the injury initially arose out of and in 
the course of employment, except as provided by section 176.305. 
    Subd. 9.  [SUBSEQUENT CAUSATION ISSUES.] If initial 
liability for an injury has been admitted or established and an 
issue subsequently arises regarding causation between the 
employee's condition and the work injury, the commissioner may 
make the subsequent causation determination subject to de novo 
hearing by a compensation judge with a right to review by the 
court of appeals, as provided in this chapter.  
    Sec. 26.  Minnesota Statutes 1986, section 176.111, 
subdivision 17, is amended to read:  
    Subd. 17.  [PARTIAL DEPENDENTS.] Partial dependents are 
entitled to receive only that proportion of the benefits 
provided for actual dependents which the average amount of wages 
regularly contributed by the deceased to such partial dependents 
at the time of and for a reasonable time immediately prior to 
the injury bore to the total income of the dependent during the 
same time; and if the amount regularly contributed by the 
deceased to such partial dependents cannot be ascertained 
because of the circumstances of the case, the commissioner, 
compensation judge, or workers' compensation court of appeals, 
in cases upon appeal, shall make a reasonable estimate thereof 
taking into account all pertinent factors of the case. 
     Sec. 27.  Minnesota Statutes 1986, section 176.129, 
subdivision 9, is amended to read:  
    Subd. 9.  [POWERS OF FUND.] In addition to powers granted 
to the special compensation fund by this chapter the fund may do 
the following:  
    (a) sue and be sued in its own name;  
    (b) intervene in or commence an action under this chapter 
or any other law, including, but not limited to, intervention or 
action as a subrogee to the division's right in a third-party 
action, any proceeding under this chapter in which liability of 
the special compensation fund is an issue, or any proceeding 
which may result in other liability of the fund or to protect 
the legal right of the fund;  
    (c) enter into settlements including but not limited to 
structured, annuity purchase agreements with appropriate parties 
under this chapter;  
    (d) contract with another party to administer the special 
compensation fund; and 
    (e) take any other action which an insurer is permitted by 
law to take in operating within this chapter; and 
    (f) conduct a financial audit of indemnity claim payments 
and assessments reported to the fund.  This may be contracted by 
the fund to a private auditing firm.  
    Sec. 28.  Minnesota Statutes 1986, section 176.129, 
subdivision 11, is amended to read:  
    Subd. 11.  [ADMINISTRATIVE PROVISIONS.] The accounting, 
investigation, and legal costs necessary for the administration 
of the programs financed by the special compensation fund shall 
be paid from the fund during each biennium commencing July 1, 
1981.  Staffing and expenditures related to the administration 
of the special compensation fund shall be approved through the 
regular budget and appropriations process.  All sums recovered 
by the special compensation fund as a result of action under 
section 176.061, or recoveries of payments made by the special 
compensation fund under section 176.183 or 176.191 shall be 
credited to the special compensation fund. 
    Sec. 29.  Minnesota Statutes 1986, section 176.129, 
subdivision 13, is amended to read:  
    Subd. 13.  [EMPLOYER REPORTS.] All employers and insurers 
shall make reports to the commissioner as required for the 
proper administration of this section and section sections 
176.131 and 176.132.  Employers and insurers may not be 
reimbursed from the special compensation fund for any periods 
for which the employer has not properly filed reports as 
required by this section and made all payments due to the 
special compensation fund under subdivision 3.  
    Sec. 30.  Minnesota Statutes 1986, section 176.131, 
subdivision 1, is amended to read:  
    Subdivision 1.  If an employee incurs personal injury and 
suffers disability from that injury alone that is substantially 
greater, because of a preexisting physical impairment, than what 
would have resulted from the personal injury alone, the employer 
or insurer shall pay all compensation provided by this chapter, 
but the employer shall be reimbursed from the special 
compensation fund for all compensation paid in excess of 52 
weeks of monetary benefits and $2,000 in medical expenses, 
subject to the following exceptions in paragraphs (a), (b), and 
(c):  
    (a) If the disability caused by the subsequent injury is 
made substantially greater by the employee's registered 
preexisting physical impairment, there shall be apportionment of 
liability among all injuries.  The special compensation fund 
shall only reimburse for that portion of the compensation, 
medical expenses, and rehabilitation expenses attributed to the 
subsequent injury after the applicable deductible has been met. 
    (b) If the subsequent personal injury alone results in 
permanent partial disability to a scheduled member under the 
schedule adopted by the commissioner pursuant to section 
176.105, the monetary and medical expense limitations shall not 
apply and the employer is liable for the compensation, medical 
expense, and rehabilitation attributable to the permanent 
partial disability, and may be reimbursed from the special 
compensation fund only for compensation paid in excess of the 
disability the special compensation fund shall not reimburse 
permanent partial disability, medical expenses, or 
rehabilitation expenses. 
    Sec. 31.  Minnesota Statutes 1986, section 176.131, 
subdivision 8, is amended to read:  
    Subd. 8.  As used in this section the following terms have 
the meanings given them: 
    "Physical impairment" means any physical or mental 
condition that is permanent in nature, whether congenital or due 
to injury, disease or surgery and which is or is likely to be a 
hindrance or obstacle to obtaining employment except that 
physical impairment is limited to the following: 
    (a) Epilepsy, 
    (b) Diabetes, 
    (c) Hemophilia, 
    (d) Cardiac disease, provided that objective medical 
evidence substantiates at least the minimum permanent partial 
disability listed in the workers' compensation permanent partial 
disability schedule, 
    (e) Partial or entire absence of thumb, finger, hand, foot, 
arm or leg, 
    (f) Lack of sight in one or both eyes or vision in either 
eye not correctable to 20/40, 
    (g) Residual disability from poliomyelitis, 
    (h) Cerebral Palsy, 
    (i) Multiple Sclerosis, 
    (j) Parkinson's disease, 
    (k) Cerebral vascular accident, 
    (l) Chronic Osteomyelitis, 
    (m) Muscular Dystrophy, 
    (n) Thrombophlebitis, 
    (o) Brain tumors, 
    (p) Pott's disease, 
    (q) Seizures, 
    (r) Cancer of the bone, 
    (s) Leukemia, 
    (t) Any other physical impairment resulting in a disability 
rating of at least ten percent of the whole body if the physical 
impairment were evaluated according to standards used in 
workers' compensation proceedings, and 
    (u) Any other physical impairments of a permanent nature 
which the commissioner may by rule prescribe; 
    "Compensation" has the meaning defined in section 176.011; 
    "Employer" includes insurer; 
    "Disability" means, unless otherwise indicated, any 
condition causing either temporary total, temporary partial, 
permanent total, permanent partial, death, medical expense, or 
rehabilitation. 
    Sec. 32.  Minnesota Statutes 1986, section 176.133, is 
amended to read:  
    176.133 [ATTORNEY'S FEES, SUPPLEMENTARY BENEFITS.] 
    Attorney's fees may be approved by the commissioner, a 
compensation judge, or by the workers' compensation court of 
appeals from the supplementary workers' compensation benefits 
provided by section 176.132 if the case involves the obtaining 
of supplementary workers' compensation benefits.  When such fees 
are allowed an amount equal to 25 percent of that portion of the 
fee which is in excess of $250 shall be added to the employee's 
benefit as provided in section 176.081 rather than deducted as a 
portion thereof.  The fees shall be determined according to 
section 176.081. 
    Sec. 33.  Minnesota Statutes 1986, section 176.135, 
subdivision 1, is amended to read:  
    Subdivision 1.  [MEDICAL, CHIROPRACTIC, PODIATRIC, 
SURGICAL, HOSPITAL.] (a) The employer shall furnish any medical, 
chiropractic, podiatric, surgical and hospital treatment, 
including nursing, medicines, medical, chiropractic, podiatric, 
and surgical supplies, crutches and apparatus, including 
artificial members, or, at the option of the employee, if the 
employer has not filed notice as hereinafter provided, Christian 
Science treatment in lieu of medical treatment, chiropractic 
medicine and medical supplies, as may reasonably be required at 
the time of the injury and any time thereafter to cure and 
relieve from the effects of the injury.  This treatment shall 
include treatments necessary to physical rehabilitation.  The 
employer shall furnish replacement or repair for artificial 
members, glasses, or spectacles, artificial eyes, podiatric 
orthotics, dental bridge work, dentures or artificial teeth, 
hearing aids, canes, crutches or wheel chairs damaged by reason 
of an injury arising out of and in the course of the 
employment.  In case of the employer's inability or refusal 
seasonably to do so the employer is liable for the reasonable 
expense incurred by or on behalf of the employee in providing 
the same, including costs of copies of any medical records or 
medical reports that are in existence, obtained from health care 
providers, and that directly relate to the items for which 
payment is sought under this chapter, limited to the charges 
allowed by subdivision 7, and attorney fees incurred by the 
employee.  No action to recover the cost of copies may be 
brought until the commissioner adopts a schedule of reasonable 
charges under subdivision 7.  Attorney's fees shall be 
determined on an hourly basis according to the criteria in 
section 176.081, subdivision 5.  The employer shall pay for the 
reasonable value of nursing services by a member of the 
employee's family in cases of permanent total disability. Except 
as provided in paragraph (b), orders of the commissioner with 
respect to this subdivision may be reviewed by the medical 
services review board pursuant to section 176.103.  Orders of 
the medical services review board with respect to this 
subdivision may be reviewed by the workers' compensation court 
of appeals on petition of an aggrieved party pursuant to section 
176.103.  Orders of the court of appeals may be reviewed by writ 
of certiorari to the supreme court.  
    (b) The commissioner has authority to make determinations 
regarding medical causation and regarding the question whether 
the medical condition, which required the furnished treatment or 
supplies, is a consequence of the injury.  Objections to any 
order of the commissioner with respect to this paragraph shall 
be referred to the chief administrative law judge for a de novo 
hearing before a compensation judge, with a right to review by 
the workers' compensation court of appeals, as provided in this 
chapter Both the commissioner and the compensation judges have 
authority to make determinations under this section in 
accordance with section 25 and section 176.305.  
    Sec. 34.  Minnesota Statutes 1986, section 176.135, 
subdivision 1a, is amended to read:  
    Subd. 1a.  [NONEMERGENCY SURGERY; SECOND SURGICAL OPINION.] 
The employer is required to furnish surgical treatment pursuant 
to subdivision 1 only after the employee has obtained two 
surgical opinions concerning whether when the surgery is 
reasonably required to cure and relieve the effects of the 
personal injury or occupational disease.  If at least one of the 
opinions affirms that the surgery is reasonably required, the 
employee may choose to undergo the surgery.  An employee may not 
be compelled to undergo surgery.  If an employee desires a 
second opinion on the necessity of the surgery, the employer 
shall pay the costs of obtaining the second opinion.  Except in 
cases of emergency surgery, the employer or insurer may require 
the employee to obtain a second opinion on the necessity of the 
surgery, at the expense of the employer, before the employee 
undergoes surgery.  Failure to obtain a second surgical opinion 
shall not be reason for nonpayment of the charges for the 
surgery.  The employer is required to pay the reasonable value 
of the surgery unless the commissioner or compensation judge 
determines that the surgery is not reasonably required.  A 
second surgical opinion is not required in cases of emergency 
surgery or when the employer and employee agree that the opinion 
is not necessary.  
    Sec. 35.  Minnesota Statutes 1986, section 176.135, 
subdivision 2, is amended to read:  
    Subd. 2.  [CHANGE OF PHYSICIANS, PODIATRISTS, OR 
CHIROPRACTORS.] The commissioner of the department of labor and 
industry shall make the necessary adopt rules for establishing 
standards and criteria to be used when a dispute arises over a 
change of physicians, podiatrists, or chiropractors in the case 
that either the employee or the employer desire a change and for 
the designation of a physician, podiatrist, or chiropractor 
suggested by the injured employee or the commissioner of the 
department of labor and industry.  In such case If a change is 
agreed upon or ordered, the expense thereof medical expenses 
shall be borne by the employer upon the same terms and 
conditions as provided in subdivision 1 and for medical, 
podiatric, chiropractic and surgical treatment and attendance. 
    Sec. 36.  Minnesota Statutes 1986, section 176.135, 
subdivision 3, is amended to read:  
    Subd. 3.  [LIMITATION OF LIABILITY.] The pecuniary 
liability of the employer for the treatment, articles and 
supplies required by this section shall be limited to the 
charges therefor as prevail in the same community for similar 
treatment, articles and supplies furnished to injured persons of 
a like standard of living when the same are paid for by the 
injured persons.  On this basis the commissioner, medical 
services review board, or workers' compensation court of appeals 
on appeal or compensation judge may determine the reasonable 
value of all such services and supplies and the liability of the 
employer is limited to the amount so determined. 
    Sec. 37.  Minnesota Statutes 1986, section 176.135, is 
amended by adding a subdivision to read: 
    Subd. 6.  [COMMENCEMENT OF PAYMENT.] As soon as reasonably 
possible, and no later than 30 calendar days after receiving the 
bill, the employer or insurer shall pay the charge or any 
portion of the charge which is not denied, deny all or a part of 
the charge on the basis of excessiveness or noncompensability, 
or specify the additional data needed, with written notification 
to the employee and the provider.  
    Sec. 38.  Minnesota Statutes 1986, section 176.135, is 
amended by adding a subdivision to read:  
    Subd. 7.  [MEDICAL BILLS AND RECORDS.] Health care 
providers shall submit to the insurer an itemized statement of 
charges.  Health care providers other than hospitals shall also 
submit copies of medical records or reports that substantiate 
the nature of the charge and its relationship to the work 
injury, provided, however, that hospitals must submit any copies 
of records or reports requested under subdivision 6.  Health 
care providers may charge for copies of any records or reports 
that are in existence and directly relate to the items for which 
payment is sought under this chapter.  Charges for copies 
provided under this subdivision shall be reasonable.  The 
commissioner shall adopt a schedule of reasonable charges by 
emergency rules. 
    A health care provider shall not collect, attempt to 
collect, refer a bill for collection, or commence an action for 
collection against the employee, employer, or any other party 
until the information required by this section has been 
furnished.  
    Sec. 39.  Minnesota Statutes 1986, section 176.136, 
subdivision 2, is amended to read:  
    Subd. 2.  [EXCESSIVE FEES.] If the payer employer or 
insurer determines that the charge for a health service or 
medical service is excessive, no payment in excess of the 
reasonable charge for that service shall be made under this 
chapter nor may the provider collect or attempt to collect from 
the injured employee or any other insurer or government amounts 
in excess of the amount payable under this chapter unless the 
commissioner, medical services review board compensation judge, 
or workers' compensation court of appeals determines otherwise.  
In such a case, the health care provider may initiate an action 
under this chapter for recovery of the amounts deemed excessive 
by the employer or insurer, but the employer or insurer shall 
have the burden of proving excessiveness.  
    Sec. 40.  Minnesota Statutes 1986, section 176.1361, is 
amended to read:  
    176.1361 [TESTIMONY OF PROVIDERS.] 
    When the commissioner, a compensation judge, or the 
workers' compensation court of appeals has reason to believe 
that a medical or other provider of treatment services has 
submitted false testimony or a false report in any proceeding 
under this chapter, the commissioner, compensation judge, or the 
workers' compensation court of appeals shall refer the matter to 
an appropriate licensing body or other professional certifying 
organization for review and recommendations.  Based upon their 
recommendation, the commissioner medical services review board, 
after hearing, may bar the provider from making an appearance, 
and disallow the admission into evidence of written reports of 
the provider, in any proceeding under this chapter for a period 
not to exceed one year in the first instance and three years in 
the second instance, and may permanently bar the provider from 
appearance and the provider's reports from admission in evidence 
thereafter. 
    Sec. 41.  Minnesota Statutes 1986, section 176.139, is 
amended to read:  
    176.139 [NOTICE OF RIGHTS POSTED.] 
    A notice, in form approved by the commissioner of labor and 
industry, shall be posted in a conspicuous place at each place 
of employment Subdivision 1.  [POSTING REQUIREMENT.] All 
employers required or electing to carry workers' compensation 
coverage in the state of Minnesota shall post and display in a 
conspicuous location a notice, in a form approved by the 
commissioner, advising employees of their rights and obligations 
under this chapter, assistance available to them, and the 
operation of the workers' compensation system, the name and 
address of the workers' compensation carrier insuring them or 
the fact that the employer is self-insured.  
    The notice shall be displayed at all locations where the 
employer is engaged in business.  
    Subd. 2.  [FAILURE TO POST; PENALTY.] The commissioner may 
assess a penalty of $300 against the employer payable to the 
special compensation fund if, after notice from the 
commissioner, the employer violates the posting requirement of 
this section.  
    Sec. 42.  Minnesota Statutes 1986, section 176.155, 
subdivision 1, is amended to read:  
    Subdivision 1.  [EMPLOYER'S PHYSICIAN.] The injured 
employee must submit to examination by the employer's physician, 
if requested by the employer, and at reasonable times thereafter 
upon the employer's request.  The employee is entitled upon 
request to have a personal physician present at any such 
examination.  Each party shall defray the cost of that party's 
physician.  Any report or written statement made by the 
employer's physician as a result of an examination of the 
employee, regardless of whether the examination preceded the 
injury or was made subsequent to the injury, shall be made 
available, upon request and without charge, to the injured 
employee or representative of the employee.  The employer shall 
pay reasonable travel expenses incurred by the employee in 
attending the examination including mileage, parking, and, if 
necessary, lodging and meals.  The employer shall also pay the 
employee for any lost wages resulting from attendance at the 
examination.  A self-insured employer or insurer who is served 
with a claim petition pursuant to section 176.271, subdivision 
1, or 176.291, shall schedule any necessary examinations of the 
employee, if an examination by the employer's physician or 
health care provider is necessary to evaluate benefits claimed.  
The examination shall be completed and the report of the 
examination shall be served on the employee and filed with the 
commissioner within 120 days of service of the claim petition.  
    No evidence relating to the examination or report shall be 
received or considered by the commissioner, a compensation 
judge, or the court of appeals in determining any issues unless 
the report has been served and filed as required by this 
section, unless a written extension has been granted by the 
commissioner or compensation judge.  The commissioner or a 
compensation judge shall extend the time for completing the 
adverse examination and filing the report upon good cause 
shown.  The extension must not be for the purpose of delay and 
the insurer must make a good faith effort to comply with this 
subdivision.  Good cause shall include but is not limited to:  
    (1) that the extension is necessary because of the limited 
number of physicians or health care providers available with 
expertise in the particular injury or disease, or that the 
extension is necessary due to the complexity of the medical 
issues, or 
    (2) that the extension is necessary to gather addition 
information which was not included on the petition as required 
by section 176.291.  
    Sec. 43.  Minnesota Statutes 1986, section 176.155, 
subdivision 3, is amended to read:  
    Subd. 3.  [REFUSAL TO BE EXAMINED.] If the injured employee 
refuses to comply with any reasonable request for examination, 
the right to compensation may be suspended by order of the 
division, commissioner or a compensation judge or workers' 
compensation court of appeals in a matter before it, and no 
compensation shall be paid while the employee continues in the 
refusal.  
    Sec. 44.  Minnesota Statutes 1986, section 176.155, 
subdivision 5, is amended to read:  
    Subd. 5.  [TESTIMONY OF HEALTH CARE PROVIDER.] Any 
physician or other health care provider designated by the 
commissioner, or compensation judge, or workers' compensation 
court of appeals or whose services are furnished or paid for by 
the employer, or who treats, examines, or is present at any 
examination, of an injured employee, may be required to testify 
as to any knowledge acquired by the physician or health care 
provider in the course of the treatment or examination relative 
to the injury or disability resulting from the injury only if 
the commissioner or a compensation judge makes a written finding 
that the appearance of the physician or health care provider is 
crucial to the accurate determination of the employee's 
disability in cases involving occupational disease, 
cardiopulmonary injuries or diseases, injuries resulting from 
cumulative trauma, issues of apportionment of liability, and 
mental disorders, or upon an order of a compensation judge.  In 
all other cases all evidence related to health care must be 
submitted by written report as prescribed by the chief 
administrative law judge.  A party may cross-examine by 
deposition a physician or health care provider who has examined 
or treated the employee.  If a physician or health care provider 
is not available for cross-examination prior to the hearing and 
the physician's or health care provider's written report is 
submitted at the hearing, the compensation judge shall, upon 
request of the adverse party, require the physician or health 
care provider to testify at the hearing or to be present at a 
posthearing deposition for the purpose of being cross-examined 
by the adverse party.  All written evidence relating to health 
care must be submitted prior to or at the time of the hearing 
and no evidence shall be considered which was submitted after 
the hearing unless the compensation judge orders otherwise, and, 
in no case later than 30 days following the final hearing date 
unless an extension is granted by the chief administrative law 
judge.  Existing medical reports must be submitted with a claim 
petition or answer as provided in sections 176.291 and 176.321.  
All reports shall substantially conform to rules prescribed by 
the chief administrative law judge.  When a written report is 
used to present the testimony, it shall be admitted into 
evidence without the necessity for foundational testimony and 
shall be considered as prima facie evidence of the opinions it 
contains.  
    Sec. 45.  Minnesota Statutes 1986, section 176.179, is 
amended to read:  
    176.179 [PAYMENTS OF COMPENSATION RECEIVED IN GOOD FAITH.] 
    Notwithstanding section 176.521, subdivision 3, or any 
other provision of this chapter to the contrary, except as 
provided in this section, no lump sum or weekly payment, or 
settlement, which is voluntarily paid to an injured employee or 
the survivors of a deceased employee in apparent or seeming 
accordance with the provisions of this chapter by an employer or 
insurer, or is paid pursuant to an order of the workers' 
compensation division, a compensation judge, or court of appeals 
relative to a claim by an injured employee or the employee's 
survivors, and received in good faith by the employee or the 
employee's survivors shall be refunded to the paying employer or 
insurer in the event that it is subsequently determined that the 
payment was made under a mistake in fact or law by the employer 
or insurer.  When the payments have been made to a person who is 
entitled to receive further payments of compensation for the 
same injury, the mistaken compensation may be taken as a full 
credit against future lump sum benefit entitlement and as a 
partial credit against future weekly benefits.  The credit 
applied against further payments of temporary total disability, 
temporary partial disability, permanent total disability, 
retraining benefits, death benefits, or weekly payments of 
economic recovery or impairment compensation shall not exceed 20 
percent of the amount that would otherwise be payable. 
    A credit may not be applied against medical expenses due or 
payable.  
     Sec. 46.  Minnesota Statutes 1986, section 176.181, 
subdivision 3, is amended to read:  
    Subd. 3.  [FAILURE TO INSURE, PENALTY.] Any employer who 
fails to comply with the provisions of subdivision 2 to secure 
payment of compensation is liable to the state of Minnesota for 
a penalty of $100 $750, if the number of uninsured employees is 
less than five and for a penalty of $400 $1,500 if the number of 
such uninsured employees is five or more.  If the commissioner 
determines that the failure to comply with the provisions of 
subdivision 2 was willful and deliberate, the employer shall be 
liable to the state of Minnesota for a penalty of $500 $2,500, 
if the number of uninsured employees is less than five, and for 
a penalty of $2,000 $5,000 if the number of uninsured employees 
is five or more.  If the employer continues noncompliance, the 
employer is liable for five times the lawful premium for 
compensation insurance for such employer for the period the 
employer fails to comply with such provisions, commencing ten 
days after notice has been served upon the employer by the 
commissioner of the department of labor and industry by 
certified mail.  These penalties may be recovered jointly or 
separately in a civil action brought in the name of the state by 
the attorney general in any court having jurisdiction.  Whenever 
any such failure occurs the commissioner of the department of 
labor and industry shall immediately certify the that 
fact thereof to the attorney general.  Upon receipt of such 
certification the attorney general shall forthwith commence and 
prosecute such the action.  All penalties recovered by the state 
in any such action shall be paid into the state treasury and 
credited to the special compensation fund.  If an employer fails 
to comply with the provisions of subdivision 2, to secure 
payment of compensation after having been notified of the 
employer's duty, the attorney general, upon request of the 
commissioner, may proceed against the employer in any court 
having jurisdiction for an order restraining the employer from 
having any person in employment at any time when the employer is 
not complying with the provisions of subdivision 2 or for an 
order compelling the employer to comply with subdivision 2. 
    Sec. 47.  Minnesota Statutes 1986, section 176.182, is 
amended to read:  
    176.182 [BUSINESS LICENSES OR PERMITS; COVERAGE REQUIRED.] 
    Every state or local licensing agency shall withhold the 
issuance or renewal of a license or permit to operate a business 
in Minnesota until the applicant presents acceptable evidence of 
compliance with the workers' compensation insurance coverage 
requirement of section 176.181, subdivision 2, by providing the 
name of the insurance company, the policy number, and dates of 
coverage or the permit to self-insure.  The commissioner shall 
assess a penalty to the employer of $1,000 payable to the 
special compensation fund, if the information is not reported or 
is falsely reported.  
    Neither the state nor any governmental subdivision of the 
state shall enter into any contract for the doing of any public 
work before receiving from all other contracting parties 
acceptable evidence of compliance with the workers' compensation 
insurance coverage requirement of section 176.181, subdivision 2.
    This section shall not be construed to create any liability 
on the part of the state or any governmental subdivision to pay 
workers' compensation benefits or to indemnify the special 
compensation fund, an employer, or insurer who pays workers' 
compensation benefits.  
    Sec. 48.  Minnesota Statutes 1986, section 176.183, 
subdivision 1a, is amended to read:  
    Subd. 1a.  When an employee or the employee's dependent is 
entitled to benefits under this chapter from a self-insurer, 
present or past, other than the state and its municipal 
subdivisions, but the self-insurer fails to pay the benefits, 
the employee or the employee's dependents, regardless of the 
date when the accident, personal injury, occupational disease, 
or death occurred, shall nevertheless receive the benefits from 
the special compensation fund.  The commissioner has a cause of 
action against the self-insuring employer for reimbursement for 
all benefits and other expenditures paid out or to be paid out 
and, in the discretion of the court, the self-insurer is liable 
for punitive damages in an amount not to exceed 50 percent of 
the total of all benefits and other expenditures paid out or to 
be paid out.  The commissioner shall institute an action to 
recover the total expenditures from the fund unless the 
commissioner determines that no recovery is possible.  All 
proceeds recovered shall be deposited in the general special 
compensation fund. 
     By assumption of the obligations of a self-insured employer 
pursuant to this subdivision, the special compensation fund 
shall have the right to direct reimbursement under the same 
conditions and in the same amounts from the workers' 
compensation insurers reinsurance association and from any other 
agreement, contract, or insurance policies which would have 
reimbursed or indemnified the self-insured employer for payments 
made pursuant to this chapter. 
    Sec. 49.  Minnesota Statutes 1986, section 176.183, 
subdivision 2, is amended to read:  
    Subd. 2.  The commissioner of labor and industry, in 
accordance with the terms of the order awarding compensation, 
shall pay compensation to the employee or the employee's 
dependent from the special compensation fund.  The commissioner 
of labor and industry shall certify to the commissioner of 
finance and to the legislature annually the total amount of 
compensation paid from the special compensation fund under 
subdivisions 1 and 1a.  The commissioner of finance shall upon 
proper certification reimburse the special compensation fund 
from the general fund appropriation provided for this purpose.  
The amount reimbursed shall be limited to the certified amount 
paid under this section or the appropriation made for this 
purpose, whichever is the lesser amount.  Compensation paid 
under this section which is not reimbursed by the general fund 
shall remain a liability of the special compensation fund and 
shall be financed by the percentage assessed under 
section 176.131, subdivision 10 176.129. 
    Sec. 50.  [176.184] [INSPECTIONS; ENFORCEMENT.] 
    Subdivision 1.  [PROOF OF INSURANCE.] The commissioner of 
labor and industry, in order to carry out the purpose of section 
176.181, may request satisfactory proof of authority to self 
insure workers' compensation liability or satisfactory proof of 
insurance coverage for workers' compensation liability.  If an 
employer does not provide satisfactory proof as requested within 
seven working days of the mailing of the request, the 
commissioner may proceed in accordance with the provisions of 
subdivisions 2 to 7. 
    Subd. 2.  [AT PLACE OF EMPLOYMENT.] In order to carry out 
the purposes of section 176.181, the commissioner, upon 
presenting appropriate credentials to the owner, operator, or 
agent in charge, is authorized to enter without delay and at 
reasonable times any place of employment and to inspect and 
investigate during regular working hours and at other reasonable 
times, within reasonable limits, and in a reasonable manner, any 
records pertaining to that employer's workers' compensation 
insurance policy, number of employees, documents governing 
conditions and benefits of employment, contracts with employees 
and their authorized representatives, and any other documents 
which may be relevant to the enforcement of section 176.181 and 
to question privately any employer, owner, operator, agent, or 
employee with respect to matters relevant to the enforcement of 
section 176.181.  
    Subd. 3.  [POWERS; COMMISSIONER AND DISTRICT COURT.] In 
making inspections and investigations under this chapter, the 
commissioner shall have the power to administer oaths, certify 
official acts, take and cause to be taken depositions of 
witnesses, issue subpoenas, and compel the attendance of 
witnesses and production of papers, books, documents, records, 
and testimony.  In case of failure of any person to comply with 
any subpoena lawfully issued, or on the refusal of any witness 
to produce evidence or to testify to any matter regarding which 
the person may be lawfully interrogated, the district court 
shall, upon application of the commissioner, compel obedience in 
proceedings for contempt, as in the case of disobedience of the 
requirements of a subpoena issued by the court or a refusal to 
testify. 
    Subd. 4.  [RIGHTS OF EMPLOYER AND EMPLOYEE REPRESENTATIVE.] 
A representative of the employer and a representative authorized 
by employees shall be given an opportunity to participate in any 
conference or discussion held prior to, during, or after any 
inspection.  Where there is no authorized employee 
representative, the commissioner shall consult with a reasonable 
number of employees.  No employee as a consequence of aiding an 
inspection shall lose any privilege or payment that the employee 
would otherwise earn. 
    Subd. 5.  [REQUEST FOR INVESTIGATION BY EMPLOYEE.] (a) Any 
employee or representative of an employee who believes that 
their employer is uninsured against workers' compensation 
liability, may request an inspection by giving notice to the 
commissioner of the belief and grounds for the belief.  Any 
notice shall be written, shall set forth with reasonable 
particularity the grounds for the notice, and shall be signed by 
the employee or representative of employees.  A copy of the 
notice shall be provided the employer, representative, or agent 
no later than the time of inspection, except that, upon the 
request of a person giving the notice, the employee's name and 
the names of individual employees referred to in the notice 
shall not appear in the copy or on any record published, 
released, or made available.  If upon receipt of the 
notification the commissioner determines that reasonable grounds 
exist to believe that the employer is uninsured against workers' 
compensation liability, the commissioner shall make an 
inspection in accordance with this section as soon as 
practicable.  If the commissioner determines that there are not 
reasonable grounds to believe that a violation exists, the 
commissioner shall so notify the employee or representative of 
employees in writing.  Upon notification, the employee or the 
employee representative may request the commissioner to 
reconsider the determination.  Upon receiving the request, the 
commissioner shall review the determination. 
     (b) The commissioner, upon receipt of a report of violation 
of the mandatory insurance provisions of sections 176.181 or 
176.185 verified by review of the department's insurance 
registration records and other relevant information, shall 
initiate a preliminary investigation to determine if reasonable 
grounds exist to believe that the employer is uninsured against 
workers' compensation liability, and upon certification of 
reasonable belief that the employer is uninsured the 
commissioner shall make an inspection in accordance with 
paragraph (a). 
    Subd. 6.  [ORDER PERMITTING ENTRY.] Upon the refusal of an 
owner, operator, or agent in charge to permit entry as specified 
in this section, the commissioner may apply for an order in the 
district court in the county which entry was refused, to compel 
the employer to permit the commissioner to enter and inspect the 
place of employment. 
    Subd. 7.  [ADVANCE NOTICE.] Advance notice may not be 
authorized by the commissioner except: 
     (1) in circumstances where the inspection can most 
effectively be conducted after regular business hours or where 
special preparations are necessary for an inspection; 
     (2) where necessary to assure the presence of 
representatives of the employer and employees or the appropriate 
personnel needed to aid in the inspection; and 
     (3) in other circumstances where the commissioner 
determines that the giving of advance notice would enhance the 
probability of an effective and thorough inspection. 
     When advance notice is given to an employer, notice shall 
also be given by the commissioner to the authorized 
representative of employees if the identity of the 
representative is known to the employer. 
    Sec. 51.  Minnesota Statutes 1986, section 176.185, is 
amended by adding a subdivision to read: 
    Subd. 5a.  [PENALTY FOR IMPROPER WITHHOLDING.] An employer 
who violates subdivision 5 after notice from the commissioner is 
subject to a penalty of 200 percent of the amount withheld from 
or charged the employee.  The penalty shall be imposed by the 
commissioner.  Fifty percent of this penalty is payable to the 
special compensation fund and 50 percent is payable to the 
employee. 
    Sec. 52.  Minnesota Statutes 1986, section 176.191, 
subdivision 1, is amended to read:  
    Subdivision 1.  Where compensation benefits are payable 
under this chapter, and a dispute exists between two or more 
employers or two or more insurers as to which is liable for 
payment, the commissioner, compensation judge, or workers' 
compensation court of appeals upon appeal shall direct, unless 
action is taken under subdivision 2, that one or more of the 
employers or insurers make payment of the benefits pending a 
determination of liability.  A temporary order may be issued 
under this subdivision whether or not the employers or insurers 
agree to pay under the order.  
    When liability has been determined, the party held liable 
for the benefits shall be ordered to reimburse any other party 
for payments which the latter has made, including interest at 
the rate of 12 percent a year.  The claimant shall also be 
awarded a reasonable attorney fee, to be paid by the party held 
liable for the benefits. 
    An order directing payment of benefits pending a 
determination of liability may not be used as evidence before a 
compensation judge, the workers' compensation court of appeals, 
or court in which the dispute is pending. 
    Sec. 53.  Minnesota Statutes 1986, section 176.191, 
subdivision 2, is amended to read:  
    Subd. 2.  Where compensation benefits are payable under 
this chapter, and a dispute exists between two or more employers 
or two or more insurers as to which is liable for payment, the 
commissioner or a compensation judge upon petition shall 
authorize order, unless action is taken under subdivision 1, the 
special compensation fund established in section 176.131 to make 
payment of the benefits pending a determination of liability. 
    The personal injury for which the commissioner or a 
compensation judge shall order compensation from the special 
fund is not limited by section 176.131, subdivision 8. 
    When liability has been determined, the party held liable 
for benefits shall be ordered to reimburse the special 
compensation fund for payments made, including interest at the 
rate of 12 percent a year.  
    Sec. 54.  [176.194] [PROHIBITED PRACTICES.] 
    Subdivision 1.  [APPLICATION.] This section applies to 
insurers, self-insurers, group self-insurers, political 
subdivisions of the state, and the administrator of state 
employees' claims. 
    This section also applies to adjusters and third-party 
administrators who act on behalf of an insurer, self-insurer, 
group self-insurer, the assigned risk plan, the Minnesota 
insurance guaranty association, a political subdivision, or any 
other entity. 
    This section shall be enforceable only by the commissioner 
of labor and industry.  Evidence of violations under this 
section shall not be admissible in any civil action. 
    Subd. 2.  [PURPOSE.] This section is not intended to 
replace existing requirements of this chapter which govern the 
same or similar conduct; these requirements and penalties are in 
addition to any others provided by this chapter. 
    Subd. 3.  [PROHIBITED CONDUCT.] The following conduct is 
prohibited: 
    (1) failing to reply, within 30 calendar days after 
receipt, to all written communication about a claim from a 
claimant that requests a response; 
    (2) failing, within 45 calendar days after receipt of a 
written request, to commence benefits or to advise the claimant 
of the acceptance or denial of the claim by the insurer; 
    (3) failing to pay or deny medical bills within 45 days 
after the receipt of all information requested from medical 
providers; 
    (4) filing a denial of liability for workers' compensation 
benefits without conducting an investigation; 
    (5) failing to regularly pay weekly benefits in a timely 
manner as prescribed by rules adopted by the commissioner once 
weekly benefits have begun.  Failure to regularly pay weekly 
benefits means failure to pay an employee on more than three 
occasions in any 12-month period within three business days of 
when payment was due; 
    (6) failing to respond to the department within 30 calendar 
days after receipt of a written inquiry from the department 
about a claim; 
    (7) failing to pay pursuant to an order of the department, 
compensation judge, court of appeals, or the supreme court, 
within 45 days from the filing of the order unless the order is 
under appeal; or 
    (8) advising a claimant not to obtain the services of an 
attorney or representing that payment will be delayed if an 
attorney is retained by the claimant. 
    Subd. 4.  [PENALTIES.] The penalties for violations of 
clauses (1) through (6) are as follows: 
    1st through 5th violation
    of each paragraph                   written warning 
    6th through 10th violation          $2,500 per violation 
    of each paragraph                   in excess of five 
    11th through 30th violation         $5,000 per violation 
    of each paragraph                   in excess of ten 
For violations of clauses (7) and (8), the penalties are: 
    1st through 5th violation
    of each paragraph                   $2,500 per violation 
    6th through 30th violation          $5,000 per violation 
    of each paragraph                   in excess of five 
    The penalties under this section may be imposed in addition 
to other penalties under this chapter that might apply for the 
same violation.  The penalties under this section are assessed 
by the commissioner and are payable to the special compensation 
fund.  A party may object to the penalty and request a formal 
hearing under section 176.85.  If an entity has more than 30 
violations within any 12-month period, in addition to the 
monetary penalties provided, the commissioner may refer the 
matter to the commissioner of commerce with recommendation for 
suspension or revocation of the entity's (a) license to write 
workers' compensation insurance; (b) license to administer 
claims on behalf of a self-insured, the assigned risk plan, or 
the Minnesota insurance guaranty association; (c) authority to 
self-insure; or (d) license to adjust claims.  The commissioner 
of commerce shall follow the procedures specified in section 
176.195. 
    Subd. 5.  [RULES.] The commissioner may, by rules adopted 
in accordance with chapter 14, specify additional misleading, 
deceptive, or fraudulent practices or conduct which are subject 
to the penalties under this section. 
    Sec. 55.  Minnesota Statutes 1986, section 176.195, 
subdivision 3, is amended to read:  
    Subd. 3.  [COMPLAINT, ANSWER; HEARING.] A complaint against 
an insurer shall include a notice and order for hearing, shall 
be in writing and shall specify clearly the grounds upon which 
the license is sought to be suspended or revoked.  The insurer 
may shall file a written answer to the complaint and is entitled 
to receive a hearing in its own behalf before the commissioner 
of commerce within 20 days of service of the complaint.  The 
hearing shall be conducted under chapter 14. 
    Sec. 56.  Minnesota Statutes 1986, section 176.221, 
subdivision 1, is amended to read:  
    Subdivision 1.  [COMMENCEMENT OF PAYMENT.] Within 14 days 
of notice to or knowledge by the employer of an injury 
compensable under this chapter the payment of temporary total 
compensation shall commence.  Within 14 days of notice to or 
knowledge by an employer of a new period of temporary total 
disability which is caused by an old injury compensable under 
this chapter, the payment of temporary total compensation shall 
commence; provided that the employer or insurer may file for an 
extension with the commissioner within this 14-day period, in 
which case the compensation need not commence within the 14-day 
period but shall commence no later than 30 days from the date of 
the notice to or knowledge by the employer of the new period of 
disability.  Commencement of payment by an employer or insurer 
does not waive any rights to any defense the employer has on any 
claim or incident either with respect to the compensability of 
the claim under this chapter or the amount of the compensation 
due.  Where there are multiple employers, the first employer 
shall pay, unless it is shown that the injury has arisen out of 
employment with the second or subsequent employer.  Liability 
for compensation under this chapter may be denied by the 
employer or insurer by giving the employee written notice of the 
denial of liability.  If liability is denied for an injury which 
is required to be reported to the commissioner under section 
176.231, subdivision 1, the denial of liability must be filed 
with the commissioner within 14 days after notice to or 
knowledge by the employer of an injury which is alleged to be 
compensable under this chapter.  If the employer or insurer has 
commenced payment of compensation under this subdivision but 
determines within 30 days of notice to or knowledge by the 
employer of the injury that the disability is not a result of a 
personal injury, payment of compensation may be terminated upon 
the filing of a notice of denial of liability within 30 days of 
notice or knowledge.  After the 30-day period, payment may be 
terminated only by the filing of a notice as provided under 
section 176.242 66.  Upon the termination, payments made may be 
recovered by the employer if the commissioner or compensation 
judge finds that the employee's claim of work related disability 
was not made in good faith.  A notice of denial of liability 
must state in detail specific reasons explaining why the claimed 
injury or occupational disease was determined not to be within 
the scope and course of employment and shall include the name 
and telephone number of the person making this determination.  
    Sec. 57.  Minnesota Statutes 1986, section 176.221, 
subdivision 3, is amended to read:  
    Subd. 3.  [PENALTY.] If the employer or insurer does not 
begin payment of compensation within the time limit prescribed 
under subdivision 1 or 8, the commissioner may assess a penalty, 
payable to the special compensation fund, of up to 100 
percent which shall be a percentage of the amount of 
compensation to which the employee is entitled because of the 
injury to receive up to the date compensation payment is made to 
the employee or the compensation to which the employee is 
entitled to receive up to the date the penalty is imposed, in 
addition to any other penalty otherwise provided by statute.  
This penalty may also be imposed on an employer or insurer who 
violates section 176.242 or 176.243 including, but not limited 
to, violating the commissioner's decision not to discontinue 
compensation. 
    The amount of penalty shall be determined as follows: 
          Numbers of days late           Penalty  
                1 - 15               25 percent of 
                                       compensation due,  
                                       not to exceed $375, 
               16 - 30               50 percent of 
                                       compensation due, 
                                       not to exceed $1,140, 
               31 - 60               75 percent of 
                                       compensation due, 
                                       not to exceed $2,878, 
               61 or more           100 percent of 
                                       compensation due, 
                                       not to exceed $3,838. 
    The penalty under this section is in addition to any 
penalty otherwise provided by statute.  
    Sec. 58.  Minnesota Statutes 1986, section 176.221, 
subdivision 7, is amended to read:  
    Subd. 7.  [INTEREST.] Any payment of compensation, charges 
for treatment under section 176.135 or, rehabilitation expenses 
under 176.102, subdivision 9, or penalties assessed under this 
chapter not made when due shall bear interest at the rate of 
eight percent a year from the due date to the date the payment 
is made or the rate set by section 549.09, subdivision 1, 
whichever is greater.  
    For the purposes of this subdivision, permanent partial 
disability payment is due 14 days after receipt of the first 
medical report which contains a disability rating if such 
payment is otherwise due under this chapter, and charges for 
treatment under section 176.135 are due 30 calendar days after 
receiving the bill and necessary medical data.  
    If the claim of the employee or dependent for compensation 
is contested in a proceeding before a compensation judge or the 
commissioner, the decision of the judge or commissioner shall 
provide for the payment of unpaid interest on all compensation 
awarded, including interest accruing both before and after the 
filing of the decision. 
    Sec. 59.  Minnesota Statutes 1986, section 176.225, 
subdivision 1, is amended to read:  
    Subdivision 1.  [GROUNDS.] Upon reasonable notice and 
hearing or opportunity to be heard, the division commissioner, a 
compensation judge, or upon appeal, the workers' compensation 
court of appeals or the supreme court may award compensation, in 
addition to the total amount of compensation award, of up to 25 
percent of that total amount where an employer or insurer has: 
    (a) instituted a proceeding or interposed a defense which 
does not present a real controversy but which is frivolous or 
for the purpose of delay; or, 
    (b) unreasonably or vexatiously delayed payment; or, 
    (c) neglected or refused to pay compensation; or, 
    (d) intentionally underpaid compensation; or 
    (e) unreasonably or vexatiously discontinued compensation 
in violation of section 176.242 sections 65 and 66. 
     Sec. 60.  Minnesota Statutes 1986, section 176.225, 
subdivision 2, is amended to read:  
    Subd. 2.  [EXAMINATION OF BOOKS AND RECORDS.] To determine 
whether an employer or insurer is liable for the payment 
provided by subdivision 1, the division, a compensation judge, 
or the workers' compensation court of appeals upon appeal may 
examine the books and records of the employer or insurer 
relating to the payment of compensation, and may require the 
employer or insurer to furnish any other information relating to 
the payment of compensation. 
    The right of the division to review the records of an 
employer or insurer includes the right of the special 
compensation fund to examine records for the proper 
administration of sections 176.129, 176.131, 176.132, 176.181, 
and 176.183.  The special compensation fund may not review the 
records of the employer or insurer relating to a claim under 
section 176.131 until the special compensation fund has accepted 
liability under that section or a final determination of 
liability under that section has been made.  The special 
compensation fund may withhold reimbursement to the employer or 
insurer under section 176.131 or 176.132 if the employer or 
insurer denies access to records requested for the proper 
administration of section 176.129, 176.131, 176.132, 176.181, or 
176.183. 
    Sec. 61.  Minnesota Statutes 1986, section 176.225, 
subdivision 4, is amended to read:  
    Subd. 4.  [HEARING BEFORE COMMISSIONER OF COMMERCE.] Upon 
receipt of a complaint filed under subdivision 3, the 
commissioner of commerce shall hear and determine the matter in 
the manner provided by this chapter 14.  On finding that a 
charge made by the complaint is true, the commissioner of 
commerce shall may suspend or revoke the license of the insurer 
to do business in this state.  The insurer may appeal from the 
action of the commissioner revoking the license in the manner 
provided in this chapter 14. 
    Sec. 62.  Minnesota Statutes 1986, section 176.231, 
subdivision 2, is amended to read:  
    Subd. 2.  [INITIAL REPORT, WRITTEN REPORT.] Where 
subdivision 1 requires an injury to be reported within 48 hours, 
the employer may make an initial report by telephone, telegraph, 
or personal notice, and file a written report of the injury 
within seven days from its occurrence or within such time as the 
commissioner of labor and industry designates.  All written 
reports of injuries required by subdivision 1 shall include the 
date of injury, amounts of payments made, if any, and the date 
of the first payment.  The reports shall be in quadruplicate on 
a form designed by the commissioner, with two copies the 
original to the commissioner and, one copy to the insurer, and 
one copy to the employee.  
    If an insurer or self-insurer repeatedly fails to pay 
benefits within three days of the due date, pursuant to section 
176.221, the insurer or self-insurer shall be ordered by the 
commissioner to explain, in person, the failure to pay benefits 
due in a reasonable time.  If prompt payments are not thereafter 
made, the commissioner shall refer the insurer or self-insurer 
to the commissioner of commerce for action pursuant to section 
176.225, subdivision 4.  
    Sec. 63.  Minnesota Statutes 1986, section 176.231, 
subdivision 10, is amended to read:  
    Subd. 10.  [FAILURE TO FILE REQUIRED REPORT, PENALTY.] If 
an employer, insurer, physician, chiropractor, or other health 
provider fails to file with the commissioner any report required 
by this section in the manner and within the time limitations 
prescribed, or otherwise fails to provide a report required by 
this section in the manner provided by this section, the 
commissioner may impose a penalty of up to $200 for each failure.
    The imposition of a penalty may be appealed to a 
compensation judge within 30 days of notice of the penalty. 
    Penalties collected by the state under this subdivision 
shall be paid into the special compensation fund. 
    Sec. 64.  Minnesota Statutes 1986, section 176.231, is 
amended by adding a subdivision to read: 
    Subd. 11.  [FAILURE TO FILE REQUIRED REPORT; SUBSTITUTE 
FILING.] Where this section requires the employer to file a 
report of injury with the commissioner, and the employer is 
unable or refuses to file the report, the insurer shall file the 
report within ten days of a request from the division.  The 
report shall be filed in the manner prescribed by this section.  
If both the employer and the insurer fail to file the report 
within 30 days of notice of the injury, the commissioner shall 
file the report.  
    The filing of a report of injury by the commissioner does 
not subject an employee or the dependents of an employee to the 
three-year time limitations under section 176.151, paragraphs 1 
and 2.  
    A substitute filing under this subdivision shall not be a 
defense to a penalty assessed under subdivision 10.  
    Sec. 65.  [176.238] [NOTICE OF DISCONTINUANCE OF TEMPORARY 
TOTAL, TEMPORARY PARTIAL, OR PERMANENT TOTAL COMPENSATION.] 
    Subdivision 1.  [NECESSITY FOR NOTICE AND SHOWING;  
CONTENTS.] Except as provided in section 176.221, subdivision 1, 
once the employer has commenced payment of benefits, the 
employer may not discontinue payment of compensation until it 
provides the employee with notice in writing of intention to do 
so.  A copy of the notice shall be filed with the division by 
the employer.  The notice to the employee and the copy to the 
division shall state the date of intended discontinuance and set 
forth a statement of facts clearly indicating the reason for the 
action.  Copies of whatever medical reports or other written 
reports in the employer's possession which are relied on for the 
discontinuance shall be attached to the notice.  
     Subd. 2.  [CONTINUANCE OF EMPLOYER'S LIABILITY; 
SUSPENSION.] (a) [DISCONTINUANCE BECAUSE OF RETURN TO WORK.] If 
the reason for discontinuance is that the employee has returned 
to work, temporary total compensation may be discontinued 
effective the day the employee returned to work.  Written notice 
shall be served on the employee and filed with the division 
within 14 days of the date the insurer or self-insured employer 
has notice that the employee has returned to work.  
    (b) [DISCONTINUANCE FOR REASONS OTHER THAN RETURN TO WORK.] 
If the reason for the discontinuance is for other than that the 
employee has returned to work, the liability of the employer to 
make payments of compensation continues until the copy of the 
notice and reports have been filed with the division.  When the 
division has received a copy of the notice of discontinuance, 
the statement of facts and available medical reports, the duty 
of the employer to pay compensation is suspended, except as 
provided in the following subdivisions and in section 66.  
    Subd. 3.  [INTERIM ADMINISTRATIVE DECISION.] An employee 
may request the commissioner to schedule an administrative 
discontinuance conference to obtain an expedited interim 
decision concerning the discontinuance of compensation.  
Procedures relating to discontinuance conferences are set forth 
in section 66.  
    Subd. 4.  [OBJECTION TO DISCONTINUANCE.] An employee may 
serve on the employer and file with the commissioner an 
objection to discontinuance if:  
    (a) the employee elects not to request an administrative 
conference under section 66;  
    (b) if the employee fails to timely proceed under that 
section;  
    (c) if the discontinuance is not governed by that section; 
or 
    (d) if the employee disagrees with the commissioner's 
decision issued under that section.  Within ten calendar days 
after receipt of an objection to discontinuance, the 
commissioner shall refer the matter to the office for a de novo 
hearing before a compensation judge to determine the right of 
the employee to further compensation.  
    Subd. 5.  [PETITION TO DISCONTINUE.] Instead of filing a 
notice of discontinuance, an employer may serve on the employee 
and file with the commissioner a petition to discontinue 
compensation.  A petition to discontinue compensation may also 
be used when the employer disagrees with the commissioner's 
decision under section 66.  Within ten calendar days after 
receipt of a petition to discontinue, the commissioner shall 
refer the matter to the office for a de novo hearing before a 
compensation judge to determine the right of the employer to 
discontinue compensation.  
    The petition shall include copies of medical reports or 
other written reports or evidence in the possession of the 
employer bearing on the physical condition or other present 
status of the employee which relate to the proposed 
discontinuance.  The employer shall continue payment of 
compensation until the filing of the decision of the 
compensation judge and thereafter as the compensation judge, 
court of appeals, or the supreme court directs, unless, during 
the interim, occurrences arise justifying the filing of a notice 
under subdivision 1 or 2 and the discontinuance is permitted by 
the commissioner's order or no conference under section 66 is 
requested.  
    Subd. 6.  [EXPEDITED HEARING BEFORE A COMPENSATION 
JUDGE.] A hearing before a compensation judge shall be held 
within 30 calendar days after the office receives the file from 
the commissioner if:  
    (a) an objection to discontinuance has been filed under 
subdivision 4 within 60 calendar days after the notice of 
discontinuance was filed and where no administrative conference 
has been held;  
    (b) an objection to discontinuance has been filed under 
subdivision 4 within 60 calendar days after the commissioner's 
decision under this section has been issued;  
    (c) a petition to discontinue has been filed by the insurer 
in lieu of filing a notice of discontinuance; or 
    (d) a petition to discontinue has been filed within 60 
calendar days after the commissioner's decision under this 
section has been issued.  
    If the petition or objection is filed later than the 
deadlines listed above, the expedited procedures in this section 
apply only where the employee is unemployed at the time of 
filing the objection and shows, to the satisfaction of the chief 
administrative judge, by sworn affidavit, that the failure to 
file the objection within the deadlines was due to some 
infirmity or incapacity of the employee or to circumstances 
beyond the employee's control.  The hearing shall be limited to 
the issues raised by the notice or petition unless all parties 
agree to expanding the issues.  If the issues are expanded, the 
time limits for hearing and issuance of a decision by the 
compensation judge under this subdivision shall not apply.  
    Once a hearing date has been set, a continuance of the 
hearing date will be granted only under the following 
circumstances:  
    (a) the employer has agreed, in writing, to a continuation 
of the payment of benefits pending the outcome of the hearing; 
or 
    (b) the employee has agreed, in a document signed by the 
employee, that benefits may be discontinued pending the outcome 
of the hearing.  
    Absent a clear showing of surprise at the hearing or the 
unexpected unavailability of a crucial witness, all evidence 
must be introduced at the hearing.  If it is necessary to accept 
additional evidence or testimony after the scheduled hearing 
date, it must be submitted no later than 14 days following the 
hearing, unless the compensation judge, for good cause, 
determines otherwise.  
    The compensation judge shall issue a decision pursuant to 
this subdivision within 30 days following the close of the 
hearing record.  
    Subd. 7.  [ORDER OF COMPENSATION JUDGE.] If the order of 
the compensation judge confirms a discontinuance of 
compensation, the service and filing of the order relieves the 
employer from further liability for compensation subject to the 
right of review provided by this chapter, and to the right of 
the compensation judge to set aside the order at any time prior 
to the review and to grant a new hearing pursuant to this 
chapter.  Once an appeal to the workers' compensation court of 
appeals is filed, a compensation judge may not set aside the 
order.  In any appeal from the compensation judge's decision 
under this section, the court of appeals shall conclude any oral 
arguments by the parties within 60 days following certification 
of the record from the office.  
    Subd. 8.  [NOTICE FORMS.] Notices under this section shall 
be on forms prescribed by the commissioner.  
    Subd. 9.  [SERVICE ON ATTORNEY.] If the employee has been 
presently represented by an attorney for the same injury, all 
notices required by this section shall also be served on the 
last attorney of record.  
    Subd. 10.  [FINES; VIOLATION.] An employer who violates 
requirements set forth in this section or section 66 is subject 
to a fine of up to $500 for each violation payable to the 
special compensation fund.  
    Subd. 11.  [APPLICATION OF SECTION.] This section shall not 
apply to those employees who have been adjudicated permanently 
totally disabled, or to those employees who have been 
administratively determined pursuant to division rules to be 
permanently totally disabled.  
    Sec. 66.  [176.239] [ADMINISTRATIVE DECISION CONCERNING 
DISCONTINUANCE OF COMPENSATION.] 
    Subdivision 1.  [PURPOSE.] The purpose of this section is 
to provide a procedure for parties to obtain an expedited 
interim administrative decision in disputes over discontinuance 
of temporary total, temporary partial, or permanent total 
compensation.  
    Subd. 2.  [REQUEST FOR ADMINISTRATIVE CONFERENCE.] If the 
employee disagrees with the notice of discontinuance, the 
employee may request that the commissioner schedule an 
administrative conference to be conducted pursuant to this 
section.  
    If temporary total, temporary partial, or permanent total 
compensation has been discontinued because the employee has 
returned to work, and the employee believes benefits should be 
reinstated due to occurrences during the initial 14 calendar 
days of the employee's return to work, the employee's request 
must be received by the commissioner within 30 calendar days 
after the employee has returned to work.  If the employer has 
failed to properly serve and file the notice as provided in 
section 65, the employee's time period to request an 
administrative conference is extended up to and including the 
40th calendar day subsequent to the return to work.  
    If temporary total, temporary partial, or permanent total 
compensation has been discontinued for a reason other than a 
return to work, the employee's request must be received by the 
commissioner within 12 calendar days after the notice of 
discontinuance is received by the commissioner.  If the employer 
discontinues compensation without giving notice as required by 
section 66, the employee's time period for requesting an 
administrative conference is extended up to and including the 
40th calendar day after which the notice should have been served 
and filed.  
    The commissioner may determine that an administrative 
conference is not necessary under this section for reasons 
prescribed by rule and permit the employer to discontinue 
compensation, subject to the employee's right to file an 
objection to discontinuance under section 65, subdivision 4. 
    In lieu of making a written request for an administrative 
conference with the commissioner, an employee may make an 
in-person or telephone request for the administrative conference.
    Subd. 3.  [PAYMENT THROUGH DATE OF DISCONTINUANCE 
CONFERENCE.] If a notice of discontinuance has been served and 
filed due to the employee's return to work, and the employee 
requests a conference, the employer is not obligated to 
reinstate or otherwise pay temporary total, temporary partial, 
or permanent total compensation unless so ordered by the 
commissioner.  
    When an administrative conference is conducted under 
circumstances in which the employee has not returned to work, 
compensation shall be paid through the date of the 
administrative conference unless:  
    (a) the employee has returned to work since the notice was 
filed;  
    (b) the employee fails to appear at the scheduled 
administrative conference; or 
    (c) due to unusual circumstances or pursuant to the rules 
of the division, the commissioner orders otherwise.  
    Subd. 4.  [SCHEDULING OF CONFERENCE.] If the employee 
timely requests an administrative conference under this section, 
the commissioner shall schedule a conference within ten calendar 
days after receiving the request.  
    Subd. 5.  [CONTINUANCES.] An employee or employer may 
request a continuance of a scheduled administrative conference.  
If the commissioner determines there is good cause for a 
continuance, the commissioner may grant the continuance for not 
more than 14 calendar days unless the parties agree to a longer 
continuance.  If compensation is payable through the day of the 
administrative conference pursuant to subdivision 3, and the 
employee is granted a continuance, compensation need not be paid 
during the period of continuance unless the commissioner orders 
otherwise.  If the employer is granted a continuance and 
compensation is payable through the day of the administrative 
conference pursuant to subdivision 3, then compensation shall 
continue to be paid during the continuance.  The commissioner 
may grant an unlimited number of continuances provided that 
payment of compensation during any continuance is subject to 
this subdivision.  
    Subd. 6.  [SCOPE OF THE ADMINISTRATIVE DECISION.] If 
benefits have been discontinued due to the employee's return to 
work, the commissioner shall determine whether, as a result of 
occurrences arising during the initial 14 calendar days after 
the return to work, the employee is entitled to additional 
payment of temporary total, temporary partial, or permanent 
total compensation.  
    If periodic payment of temporary total, temporary partial, 
or permanent total compensation has been discontinued for 
reasons other than a return to work, the commissioner shall 
determine whether the employer has reasonable grounds to support 
the discontinuance.  Only information or reasons specified on 
the notice of discontinuance shall provide a basis for a 
discontinuance, unless the parties agree otherwise.  
    Subd. 7.  [INTERIM ADMINISTRATIVE DECISION.] After 
considering the information provided by the parties at the 
administrative conference, the commissioner shall issue to all 
interested parties a written decision on payment of 
compensation.  Administrative decisions under this section shall 
be issued within five working days from the close of the 
conference.  Disputed issues of fact shall be determined by a 
preponderance of the evidence.  
    Subd. 8.  [DISAGREEMENT WITH ADMINISTRATIVE DECISION.] An 
employee who disagrees with the commissioner's decision under 
this section may file an objection to discontinuance under 
section 65, subdivision 4.  An employer who disagrees with the 
commissioner's decision under this section may file a petition 
to discontinue under section 65, subdivision 5.  
    Subd. 9.  [ADMINISTRATIVE DECISION BINDING; EFFECT OF 
SUBSEQUENT DETERMINATIONS.] The commissioner's decision under 
this section is binding upon the parties and the rights and 
obligations of the parties are governed by the decision.  
    If an objection or a petition is filed under subdivision 8, 
the commissioner's administrative decision remains in effect and 
the parties' obligations or rights to pay or receive 
compensation are governed by the commissioner's administrative 
decision, pending a determination by a compensation judge 
pursuant to section 65, subdivision 6.  
    If the commissioner has denied a discontinuance or 
otherwise ordered commencement of benefits, the employer shall 
continue paying compensation until an order is issued by a 
compensation judge, the court of appeals, or the supreme court, 
allowing compensation to be discontinued, or unless, during the 
interim, occurrences arise justifying the filing of a notice 
under section 65, subdivisions 1 or 2, and the discontinuance is 
permitted by the commissioner or no conference is requested.  If 
a compensation judge, the court of appeals, or the supreme court 
later rules that the discontinuance was proper or that benefits 
were otherwise not owing the employee, payments made under the 
commissioner's administrative decision and order shall be 
treated as an overpayment which the insurer may recover from the 
employee subject to section 176.179. 
    If the commissioner has permitted a discontinuance or 
otherwise not ordered commencement of benefits, the service and 
filing of the administrative decision relieves the employer from 
further liability for compensation subject to the right of 
review afforded by this chapter.  
    Subd. 10.  [APPLICATION OF SECTION.] This section is 
applicable to all cases in which the employee's request for an 
administrative conference is received by the division after the 
effective date of this section even if the injury occurred prior 
to the effective date.  This section shall not apply to those 
employees who have been adjudicated permanently totally 
disabled, or to those employees who have been administratively 
determined pursuant to division rules to be permanently totally 
disabled.  
    Sec. 67.  Minnesota Statutes 1986, section 176.271, 
subdivision 1, is amended to read:  
    Subdivision 1.  Unless otherwise provided by this chapter 
or by the commissioner of labor and industry, all 
proceedings before the division under this chapter are initiated 
by the filing of a written petition on a prescribed form with 
the commissioner of labor and industry at the commissioner's 
principal office.  All claim petitions shall include the 
information required by section 176.291. 
    Sec. 68.  Minnesota Statutes 1986, section 176.275, is 
amended to read:  
    176.275 [FILING OF PAPERS; PROOF OF SERVICE.] 
    Subdivision 1.  [FILING.] If a document is required to be 
filed by this chapter or any rules adopted pursuant to authority 
granted by this chapter, the filing shall be completed by the 
receipt of the document at the division, department, office, or 
the court of appeals.  The workers' compensation division, 
department, office, and the workers' compensation court of 
appeals shall file accept any paper document which has been 
delivered to it for legal filing immediately upon its receipt in 
the office of the commissioner of the department of labor and 
industry.  The commissioner of the department of labor and 
industry shall file any paper which has been delivered to the 
commissioner for filing immediately upon its receipt. 
    A notice or other document required to be served or filed 
at either the department, the office, or the court of appeals 
which is inadvertently served or filed at the wrong one of these 
agencies shall be deemed to have been served or filed with the 
proper agency.  The receiving agency shall note the date of 
receipt of a document and shall forward the documents to the 
proper agency no later than two working days following receipt.  
    Subd. 2.  [PROOF OF SERVICE.] Whenever a provision of this 
chapter or rules adopted pursuant to authority granted by this 
chapter require either a proof of service or affidavit of 
service, the requirement is satisfied by the inclusion of a 
proof of service on the document which has been served, in a 
form acceptable by the state district courts or approved by the 
commissioner.  
    Sec. 69.  Minnesota Statutes 1986, section 176.291, is 
amended to read:  
    176.291 [DISPUTES AND DEFAULTS; PETITIONS; PROCEDURE.] 
    Where there is a dispute as to a question of law or fact in 
connection with a claim for compensation, or where there has 
been a default in the payment of compensation for a period of 
ten days, a party may present serve on all other parties and 
file a verified notarized petition to with the commissioner 
stating the matter in dispute or the fact of default.  The 
petition shall be on a form prescribed by the commissioner. 
    The petition shall also state and include, where applicable:
    (1) names and residence or business address of parties; 
    (2) facts relating to the employment at the time of injury, 
including amount of wages received; 
    (3) extent and character of injury; 
    (4) notice to or knowledge by employer of injury; 
     (5) facts which the commissioner by rule requires; and, 
    (6) such other facts as are necessary for the information 
of the commissioner, a compensation judge or the workers' 
compensation court of appeals copies of written medical reports 
or other information in support of the claim; 
    (6) names and addresses of all known witnesses intended to 
be called in support of the claim; 
    (7) the desired location of any hearing and estimated time 
needed to present evidence at the hearing; 
    (8) any requests for a prehearing or settlement conference; 
    (9) a list of all known third parties, including the 
departments of human services and jobs and training, who may 
have paid any medical bills or other benefits to the employee 
for the injuries or disease alleged in the petition or for the 
time the employee was unable to work due to the injuries or 
disease, together with a listing of the amounts paid by each; 
    (10) the nature and extent of the claim; and 
    (11) a request for an expedited hearing which must include 
an attached affidavit of significant financial hardship which 
complies with the requirements of section 176.341, subdivision 6.
    Incomplete petitions may be stricken from the calendar as 
provided by section 176.305, subdivision 4.  Within 30 days of a 
request by a party, an employee who has filed a claim petition 
pursuant to section 176.271 or this section shall furnish a list 
of physicians and health care providers from whom the employee 
has received treatment for the same or a similar condition as 
well as authorizations to release relevant information, data, 
and records to the requester.  The petition may be stricken from 
the calendar upon motion of a party for failure to timely 
provide the required list of health care providers or 
authorizations.  
    Sec. 70.  Minnesota Statutes 1986, section 176.301, 
subdivision 1, is amended to read:  
    Subdivision 1.  [TRIAL BY COURT; REFERENCE TO COMMISSIONER 
CHIEF ADMINISTRATIVE LAW JUDGE.] When a workers' compensation 
issue has been joined is present in the district court action, 
the court may try the action itself without a jury, or refer the 
matter to the commissioner.  In the latter case, the 
commissioner shall refer the matter to the chief administrative 
law judge for assignment to a compensation judge.  The 
compensation judge shall report findings and decisions to the 
district court.  The court may approve or disapprove such 
decision in the same manner as it approves or disapproves the 
report of a referee.  The court shall enter judgment upon such 
decision. 
    Sec. 71.  Minnesota Statutes 1986, section 176.305, 
subdivision 1, is amended to read:  
    Subdivision 1.  [HEARINGS ON PETITIONS.] The petitioner 
shall serve a copy of the petition on each adverse party 
personally or by first class mail.  The original petition shall 
then be filed with the commissioner together with an appropriate 
affidavit of service.  When any petition has been filed with the 
workers' compensation division, the commissioner shall, within 
ten days, refer the matter presented by the petition to a 
settlement judge.  The settlement judge shall schedule a 
settlement conference if appropriate within 60 days.  If a 
settlement conference is not appropriate, or if such a 
conference or conferences do not result in progress toward a 
settlement, the settlement judge shall certify the matter for a 
hearing before a compensation judge and shall refer the matter 
to the chief administrative law judge to be heard by a 
compensation judge for a settlement conference under this 
section, for an administrative conference under section 25, or 
for hearing to the office.  
    Sec. 72.  Minnesota Statutes 1986, section 176.305, is 
amended by adding a subdivision to read:  
    Subd. 1a.  [SETTLEMENT AND PRETRIAL CONFERENCES; SUMMARY 
DECISION.] The commissioner shall schedule a settlement 
conference, if appropriate, within 60 days after receiving the 
petition.  All parties must appear at the conference, either 
personally or by representative, must be prepared to discuss 
settlement of all issues, and must be prepared to discuss or 
present the information required by the joint rules of the 
division and the office.  If a representative appears on behalf 
of a party, the representative must have authority to fully 
settle the matter.  
    If settlement is not reached, the presiding officer may 
require the parties to present copies of all documentary 
evidence not previously filed and a summary of the evidence they 
will present at a formal hearing.  If appropriate, a written 
summary decision shall be issued within ten days after the 
conference stating the issues and a determination of each 
issue.  If a party fails to appear at the conference, all issues 
may be determined contrary to the absent party's interest, 
provided the party in attendance presents a prima facie case.  
    The summary decision is final unless a written request for 
a formal hearing is served on all parties and filed with the 
commissioner within 30 days after the date of service and filing 
of the summary decision.  Within ten days after receipt of the 
request, the commissioner shall certify the matter to the office 
for a de novo hearing.  
    Sec. 73.  Minnesota Statutes 1986, section 176.305, 
subdivision 2, is amended to read:  
    Subd. 2.  [COPY OF PETITION.] The commissioner shall 
deliver the original petition and answer, after certification 
for a hearing before a compensation judge by a settlement judge, 
to the office of administrative hearings for assignment to a 
compensation judge. 
    Sec. 74.  Minnesota Statutes 1986, section 176.305, is 
amended by adding a subdivision to read: 
    Subd. 4.  [STRIKING FROM CALENDAR.] A compensation judge or 
the commissioner, after receiving a properly served motion, may 
strike a case from the active trial calendar after the employee 
has been given 30 days to correct the deficiency if it is shown 
that the information on the petition or included with the 
petition is incomplete.  Once a case is stricken, it may not be 
reinstated until the missing information is provided to the 
adverse parties and filed with the commissioner or compensation 
judge.  If a case has been stricken from the calendar for one 
year or more and no corrective action has been taken, the 
commissioner or a compensation judge may, upon the 
commissioner's or judge's own motion or a motion of a party 
which is properly served on all parties, dismiss the case.  The 
petitioner must be given at least 30 days advance notice of the 
proposed dismissal before the dismissal is effective.  
    Sec. 75.  Minnesota Statutes 1986, section 176.306, 
subdivision 1, is amended to read:  
    Subdivision 1.  [CHIEF ADMINISTRATIVE LAW JUDGE.] The chief 
administrative law judge shall schedule workers' compensation 
hearings on as regular a schedule as may be practicable in no 
fewer than six widely separated locations throughout the state, 
including at least four locations outside of the seven county 
metropolitan area and Duluth, for the purpose of providing a 
convenient forum for parties to a compensation hearing and shall 
maintain a permanent office in Duluth staffed by at least one 
compensation judge.  Continuances of the scheduled hearing date 
may be granted only under section 176.341, subdivision 4. 
    Sec. 76.  Minnesota Statutes 1986, section 176.306, is 
amended by adding a subdivision to read: 
    Subd. 3.  [SCHEDULING MATTERS.] A compensation judge may 
schedule a pretrial or settlement conference, whether or not a 
party requests such a conference. 
    Sec. 77.  Minnesota Statutes 1986, section 176.312, is 
amended to read:  
    176.312 [AFFIDAVIT AFFIDAVITS OF PREJUDICE AND PETITIONS 
FOR REASSIGNMENT.] 
    In accordance with rules adopted by the chief 
administrative law judge, an affidavit of prejudice for cause 
may be filed by a each party to the claim against a compensation 
judge, in the same manner as an affidavit of prejudice is filed 
pursuant to law or rule of district court assigned to hear a 
case.  The filing of an affidavit of prejudice against a 
compensation judge has the same effect and shall be treated in 
the same manner as in district court.  
    A petition for reassignment of a case to a different 
compensation judge for hearing may be filed once, in any case, 
by each party to the claim within ten days after the filing 
party has received notice of the assigned judge.  Upon receipt 
of a timely petition for reassignment, the chief administrative 
law judge shall assign the case to another judge. 
    An affidavit of prejudice or a petition for reassignment 
shall be filed with the chief administrative law judge and shall 
not result in the continuance or delay of a hearing scheduled 
under section 176.341. 
    This section does not apply to prehearing or settlement 
conferences.  
    Sec. 78.  Minnesota Statutes 1986, section 176.321, 
subdivision 2, is amended to read:  
    Subd. 2.  [CONTENTS.] The answer shall admit, deny, or 
affirmatively defend against the substantial averments of the 
petition, and shall state the contention of the adverse party 
with reference to the matter in dispute. 
    Each fact alleged by the petition or answer and not 
specifically denied by the answer or reply is deemed admitted, 
but the failure to deny such a fact does not preclude the 
workers' compensation court of appeals, commissioner, or 
compensation judge from requiring proof of the fact. 
    The answer shall include the names and addresses of all 
known witnesses; whether or not the employer intends to schedule 
an adverse examination and, if known, the date, time, and place 
of all adverse examinations; the desired location for a hearing; 
any request for a prehearing or settlement conference; the 
estimated time needed to present evidence at a hearing; and, if 
an affidavit of significant financial hardship and request for 
an expedited hearing are included with the petition, any 
objection the employer may have to that request.  If the date, 
time, and place of all adverse examinations is unknown at the 
time the answer is filed, the employer must notify the 
commissioner in writing of the date, time, and place of all 
adverse examinations within 50 days of the filing of the claim 
petition.  
    Sec. 79.  Minnesota Statutes 1986, section 176.321, 
subdivision 3, is amended to read:  
    Subd. 3.  [EXTENSION OF TIME IN WHICH TO FILE ANSWER.] Upon 
showing of cause, the commissioner of the department of labor 
and industry may extend the time in which to file an answer or 
reply for not more than 30 additional days.  The time to file an 
answer or reply may also be extended upon agreement of the 
petitioner, and provided that the commissioner must be notified 
in writing by the employer no later than five days beyond the 
time required for the filing of the answer of the fact that an 
agreement has been reached, including the length of the 
extension.  If an answer is not filed and there has been no 
extension by order of the commissioner or by agreement, the 
failure to file an answer shall be treated as a default Any case 
received by the office that does not include an answer, written 
extension order, or written notification of the extension 
agreement shall be immediately set for a hearing at the first 
available date under section 176.331. 
    Sec. 80.  [176.322] [DECISIONS BASED ON STIPULATED FACTS.] 
    If the parties agree to a stipulated set of facts and only 
legal issues remain, the commissioner or compensation judge may 
determine the matter without a hearing based upon the stipulated 
facts and the determination is appealable to the court of 
appeals pursuant to sections 176.421 and 176.442.  In any case 
where a stipulated set of facts has been submitted pursuant to 
this section, upon receipt of the file or the stipulated set of 
facts the chief administrative law judge shall immediately 
assign the case to a compensation judge for a determination.  
The judge shall issue a determination within 60 days after 
receipt of the stipulated facts.  
    Sec. 81.  Minnesota Statutes 1986, section 176.331, is 
amended to read:  
    176.331 [AWARD BY DEFAULT PROCEEDINGS WHEN ANSWER NOT 
FILED.] 
    Except in cases involving multiple employers or multiple 
insurers, if an adverse party fails to file and serve an answer 
and the petitioner presents proof of this fact, the commissioner 
or compensation judge may enter whatever award or order to which 
the petitioner is entitled on the basis of the facts alleged in 
the petition, but the compensation judge may require proof of an 
alleged fact.  If the commissioner requires proof or obtain an 
extension from the commissioner or the petitioner as required by 
section 176.321, subdivision 3, the commissioner shall request 
refer the matter to the chief administrative law judge to assign 
the matter to a compensation judge for an immediate hearing and 
prompt award or other order.  The adverse party that failed to 
file an answer may appear at the hearing, present evidence and 
question witnesses, but shall not be granted a continuance for 
any reason.  
    If an adverse party who fails to serve and file an answer 
is neither insured for workers' compensation liability nor a 
licensed self-insured as required by section 176.181 and the 
special compensation fund is a party to the proceeding, the 
commissioner or compensation judge may enter an order awarding 
benefits to the petitioning party without a hearing if so 
requested by the special compensation fund.  
    Where in a default case the petition does not state facts 
sufficient to support an award, the compensation judge shall 
give the petitioner or the petitioner's attorney written notice 
of this deficiency.  The petitioner may thereupon serve and file 
another petition as in the case of an original petition. 
    Sec. 82.  Minnesota Statutes 1986, section 176.341, 
subdivision 3, is amended to read:  
    Subd. 3.  [NOTICE MAILED TO EACH PARTY.] Unless subdivision 
6 applies, at least 30 days prior to the date of hearing, the 
chief administrative law judge shall mail a notice of the time 
and place of hearing to each interested party.  This subdivision 
does not apply to hearings which have been continued from an 
earlier date.  In those cases, the notice shall be given in a 
manner deemed appropriate by the chief administrative law judge 
after considering the particular circumstances in each case.  
    Sec. 83.  Minnesota Statutes 1986, section 176.341, is 
amended by adding a subdivision to read: 
    Subd. 4.  [CONTINUANCES.] Only the chief administrative law 
judge or designee, on a showing of good cause, may grant a 
continuance of a hearing at the office.  Except in cases of 
emergency or other good cause shown, any request for a 
continuance must be signed by both the party and the attorney 
seeking the continuance. 
    A continuance of a hearing will be granted only upon a 
showing of good cause.  Good cause is established when the 
underlying eventuality is unforeseen, is not due to lack of 
preparation, is relevant, is brought to the chief administrative 
law judge's attention in a timely manner and does not prejudice 
the adversary.  
    Continuances will not be granted for the reason that an 
attorney for one of the parties has scheduled a vacation for the 
date set for the hearing unless the attorney has, prior to the 
setting of the hearing date, notified the office of the 
unavailable dates.  
    Continuances which are requested during the course of a 
hearing are subject to the same standards but may be granted or 
denied by the compensation judge assigned to the hearing.  
Continuances of prehearing or settlement conferences at the 
department or at the office are subject to the same standards 
but may be granted or denied by a settlement judge, the calendar 
judge, compensation judge, or other presiding officer assigned 
to the prehearing or settlement conference. 
    Sec. 84.  Minnesota Statutes 1986, section 176.341, is 
amended by adding a subdivision to read: 
    Subd. 5.  [EVIDENCE.] Absent a clear showing of surprise at 
the hearing or the unexpected unavailability of a crucial 
witness, all evidence must be submitted at the time of the 
hearing.  Upon a showing of good cause, the compensation judge 
may grant an extension not to exceed 30 days following the 
hearing date.  
    Sec. 85.  Minnesota Statutes 1986, section 176.341, is 
amended by adding a subdivision to read: 
    Subd. 6.  [SIGNIFICANT FINANCIAL HARDSHIP; EXPEDITED 
HEARINGS.] An employee may file a request for an expedited 
hearing which must be granted upon a showing of significant 
financial hardship.  In determining whether a significant 
financial hardship exists, consideration shall be given to 
whether the employee is presently employed, the employee's 
income from all sources, the nature and extent of the employee's 
expenses and debts, whether the employee is the sole support of 
any dependents, whether either foreclosure of homestead property 
or repossession of necessary personal property is imminent, and 
any other matters which have a direct bearing on the employee's 
ability to provide food, clothing, and shelter for the employee 
and any dependents.  
    A request for an expedited hearing must be accompanied by a 
sworn affidavit of the employee providing facts necessary to 
satisfy the criteria for a significant financial hardship.  The 
request may be made at the time a claim petition is filed or any 
time thereafter.  Unless the employer objects to the request in 
the answer to the claim petition or within 20 calendar days of 
the filing of a request made subsequent to the filing of the 
claim petition, the affidavit is a sufficient showing of 
significant financial hardship.  
    If a request for an expedited hearing has been served and 
filed, the commissioner or compensation judge shall issue an 
order granting or denying the request, provided that where the 
parties agree that significant financial hardship exists or no 
objection to the request is timely filed, the request is 
automatically granted and the compensation judge or commissioner 
need not issue an order.  If it is denied, the matter will be 
returned to the regular calendar of cases and the request for an 
expedited hearing may be renewed at a settlement conference.  If 
no objection has been timely filed or if the request is granted, 
the commissioner shall immediately refer the matter to the 
office to commence prehearing procedures.  
    The calendar judge shall issue a prehearing order and 
notice of the date, time, and place for a prehearing conference 
which shall be set for no later than 45 days following the 
filing of the affidavit of significant financial hardship.  The 
prehearing order shall require the parties to serve and file 
prehearing statements no later than five working days prior to 
the date set for the prehearing conference.  The prehearing 
statements shall include those items listed in the joint rules 
of the division and the office which the calendar judge deems 
appropriate. 
    Following any prehearing conference and absent an agreement 
or stipulation from the parties, the commissioner or 
compensation judge shall issue an order establishing deadlines 
for the parties to complete their preparation for hearing and, 
after consultation with the calendar judge, establishing the 
date, time, and place for a hearing.  
    Sec. 86.  Minnesota Statutes 1986, section 176.351, 
subdivision 2a, is amended to read:  
    Subd. 2a.  [SUBPOENAS NOT PERMITTED.] A member of the 
rehabilitation review panel or medical services board or an 
employee of the department who has conducted an 
administrative or settlement conference or hearing under section 
176.102, 176.103, 176.135, 176.136, 176.242, or 176.243 section 
25 or 66, shall not be subpoenaed to testify regarding the 
conference, hearing, or concerning a mediation session.  A 
member of the rehabilitation review panel, medical services 
board, or an employee of the department may be required to 
answer written interrogatories limited to the following 
questions:  
    (a) Were all statutory and administrative procedural rules 
adhered to in reaching the decision?  
     (b) If the answer to question (a) is no, what deviations 
took place?  
     (c) Did the person making the decision consider all the 
information presented prior to rendering a decision?  
    (d) Did the person making the decision rely on information 
outside of the information presented at the conference or 
hearing in making the decision?  
    (e) If the answer to question (d) is yes, what other 
information was relied upon in making the decision?  
    In addition, for a hearing with a compensation judge and 
with the consent of the compensation judge, an employee of the 
department who conducted an administrative conference, hearing, 
or mediation session, may be requested to answer written 
interrogatories relating to statements made by a party at the 
prior proceeding.  These interrogatories shall be limited to 
affirming or denying that specific statements were made by a 
party.  
    Sec. 87.  Minnesota Statutes 1986, section 176.361, 
subdivision 2, is amended to read:  
    Subd. 2.  [WRITTEN APPLICATION.] A person desiring to 
intervene in a workers' compensation case as a party, including 
but not limited to a health care provider who has rendered 
services to an employee or an insurer who has paid benefits 
under section 176.191, shall submit a timely written application 
to intervene to the compensation or settlement judge to whom the 
case has been assigned.  If the case has not yet been assigned, 
the application shall be made to the calendar judge if the case 
has been certified to the office, or to the division if the case 
has not been certified to commissioner, the office, or to the 
mediation or rehabilitation and medical services section if the 
matter is pending in that section court of appeals, whichever is 
applicable.  
    (a) The application must be served on all parties either 
personally, by first class mail, or registered mail, return 
receipt requested.  An application to intervene must be served 
and filed within 30 days after a person has received notice that 
a claim has been filed or a request for mediation made.  An 
untimely application is subject to denial under subdivision 7.  
    (b) In any other situation, timeliness will be determined 
by the commissioner, compensation judge, or awarding authority 
in each case based on circumstances at the time of filing.  The 
application must show how the applicant's legal rights, duties, 
or privileges may be determined or affected by the case; state 
the grounds and purposes for which intervention is sought; and 
indicate the statutory right to intervene.  The application must 
be accompanied by the following, if applicable, except that if 
the action is pending in the mediation or rehabilitation and 
medical services section, clause (6) is not required and the 
information listed in clauses (1) to (5) may be brought to the 
conference rather than attached to the application:  
    (1) an itemization of disability payments showing the 
period during which the payments were or are being made; the 
weekly or monthly rate of the payments; and the amount of 
reimbursement claimed;  
    (2) a summary of the medical or treatment payments, or 
rehabilitation services provided by the division of vocational 
rehabilitation, broken down by creditor, showing the total bill 
submitted, the period of treatment or rehabilitation covered by 
that bill, the amount of payment on that bill, and to whom the 
payment was made;  
    (3) copies of all medical or treatment bills on which some 
payment was made;  
    (4) copies of the work sheets or other information stating 
how the payments on medical or treatment bills were calculated;  
    (5) a copy of the relevant policy or contract provisions 
upon which the claim for reimbursement is based;  
    (6) a proposed order allowing intervention with sufficient 
copies to serve on all parties;  
    (7) the name and telephone number of the person 
representing the intervenor who has authority to reach a 
settlement of the issues in dispute;  
    (8) proof of service or copy of the registered mail receipt;
    (9) at the option of the intervenor, a proposed stipulation 
which states that all of the payments for which reimbursement is 
claimed are related to the injury or condition in dispute in the 
case and that, if the petitioner is successful in proving the 
compensability of the claim, it is agreed that the sum be 
reimbursed to the intervenor; and 
    (10) if represented by an attorney, the name, address, 
telephone number, and Minnesota Supreme Court license number of 
the attorney. 
    Sec. 88.  Minnesota Statutes 1986, section 176.361, 
subdivision 5, is amended to read:  
    Subd. 5.  [ORDER.] If an objection to intervention remains 
following settlement or pretrial conferences, the calendar 
commissioner or compensation judge shall rule on the 
intervention and the order is binding on the compensation judge 
to whom the case is assigned for hearing.  
    Sec. 89.  Minnesota Statutes 1986, section 176.361, 
subdivision 7, is amended to read:  
    Subd. 7.  [EFFECTS OF NONCOMPLIANCE.] Failure to comply 
with this section shall not result in a denial of the claim for 
reimbursement unless the compensation judge, or commissioner, or 
settlement judge determines that the noncompliance has 
materially prejudiced the interests of the other parties.  
    Sec. 90.  Minnesota Statutes 1986, section 176.371, is 
amended to read:  
    176.371 [AWARD OR DISALLOWANCE OF COMPENSATION.] 
    The compensation judge to whom a petition has been assigned 
for hearing, shall hear all competent, relevant evidence 
produced at the hearing.  All questions of fact and law 
submitted to a compensation judge at the hearing shall be 
disposed of and the judge's decision shall be filed with the 
commissioner, except where expedited procedures require a 
shorter time, within 60 days after the submission, unless 
sickness or casualty prevents a timely filing, or the time is 
extended by written consent of the parties, or the chief 
administrative law judge extends the time for good cause.  The 
compensation judge's decision shall include a determination of 
all contested issues of fact and law and an award or 
disallowance of compensation or other order as the pleadings, 
evidence, this chapter and rule require.  A compensation judge's 
decision shall include a memorandum only if necessary to 
delineate the reasons for the decision or to discuss the 
credibility of witnesses.  A memorandum shall not contain a 
recitation of the evidence presented at the hearing but shall be 
limited to the compensation judge's basis for the decision.  
    No part of the salary of a compensation judge shall be paid 
unless the chief administrative law judge determines that all 
decisions of that judge have been issued within the time limit 
limits prescribed by this section chapter.  
    Sec. 91.  Minnesota Statutes 1986, section 176.411, 
subdivision 1, is amended to read:  
    Subdivision 1.  [CONDUCT OF HEARINGS AND INVESTIGATIONS.] 
Except as otherwise provided by this chapter, when a 
compensation judge makes an investigation or conducts a hearing, 
the compensation judge is bound neither by the common law or 
statutory rules of evidence nor by technical or formal rules of 
pleading or procedure.  Hearsay evidence which is reliable is 
admissible.  The investigation or hearing shall be conducted in 
a manner to ascertain the substantial rights of the parties. 
    Findings of fact shall be based upon competent relevant and 
material evidence only, as presented by competent witnesses, and 
shall comport with section 176.021. 
    Sec. 92.  Minnesota Statutes 1986, section 176.421, is 
amended by adding a subdivision to read: 
    Subd. 3a.  [CROSS-APPEAL.] The respondent may cross-appeal 
within the 30-day period for taking an appeal, or within 15 days 
after service of the notice of appeal on that respondent, 
whichever is later.  
    Sec. 93.  Minnesota Statutes 1986, section 176.421, 
subdivision 4, is amended to read:  
    Subd. 4.  [SERVICE AND FILING OF NOTICE; COST OF 
TRANSCRIPT.] Within the 30-day period for taking an appeal, the 
appellant shall: 
    (1) serve a copy of the notice of appeal on each adverse 
party; 
    (2) file the original notice, with proof of service by 
admission or affidavit, with the chief administrative law judge 
and file a copy with the commissioner; 
    (3) in order to defray the cost of the preparation of the 
record of the proceedings appealed from, pay to the state 
treasurer, office of administrative hearings account the sum of 
$25. 
    The first party to file an appeal is liable for the 
original cost of preparation of the transcript.  
Cross-appellants or any other persons requesting a copy of the 
transcript are liable for the cost of the copy.  The chief 
administrative law judge may require payment for transcription 
costs to be made in advance of the transcript preparation.  The 
cost of a transcript prepared by a nongovernmental source shall 
be paid directly to that source and shall not exceed the cost 
that the source would be able to charge the state for the same 
service.  
    Upon a showing of cause, the chief administrative law judge 
may direct that a transcript be prepared without expense to the 
party requesting its preparation, in which case the cost of the 
transcript shall be paid by the office of administrative 
hearings. 
    All fees received by the office of administrative hearings 
for the preparation of the record for submission to the workers' 
compensation court of appeals or for the cost of transcripts 
prepared by the office shall be deposited in the office of 
administrative hearings account in the state treasury and shall 
be used solely for the purpose of keeping the record of hearings 
conducted under this chapter and the preparation of transcripts 
of those hearings.  
    Sec. 94.  Minnesota Statutes 1986, section 176.442, is 
amended to read:  
    176.442 [APPEALS FROM DECISIONS OF COMMISSIONER.] 
    Except for a commissioner's decision which may be heard de 
novo in another proceeding including but not limited to a 
decision from an administrative conference under section 
176.102, 176.103, 176.242, or 176.243, 36, 73, or a summary 
decision under section 176.305, any decision or determination of 
the commissioner affecting a right, privilege, benefit, or duty 
which is imposed or conferred under this chapter is subject to 
review by the workers' compensation court of appeals.  A person 
aggrieved by the determination may appeal to the workers' 
compensation court of appeals by filing a notice of appeal with 
the commissioner in the same manner and within the same time as 
if the appeal were from an order or decision of a compensation 
judge to the workers' compensation court of appeals. 
    Sec. 95.  Minnesota Statutes 1986, section 176.511, 
subdivision 1, is amended to read:  
    Subdivision 1.  [PARTIES NOT AWARDED COSTS.] Except as 
provided otherwise by this chapter and specifically by this 
section, in appeals before the workers' compensation court of 
appeals or hearings proceedings before the division or a 
compensation judge, the rehabilitation review panel, or the 
medical services review board costs shall not be awarded to 
either any party. 
    Sec. 96.  Minnesota Statutes 1986, section 176.511, 
subdivision 2, is amended to read:  
    Subd. 2.  [DISBURSEMENTS, TAXATION.] The commissioner or 
compensation judge, the commissioner on behalf of the 
rehabilitation review panel or the medical services review board 
or on appeals to appeal the workers' compensation court of 
appeals, the workers' compensation court of appeals may award 
the prevailing party reimbursement for actual and necessary 
disbursements.  These disbursements shall be taxed upon five 
days written notice to adverse parties. 
    Sec. 97.  Minnesota Statutes 1986, section 176.511, 
subdivision 3, is amended to read:  
    Subd. 3.  [ATTORNEY'S FEE, ALLOWANCE.] Where upon an appeal 
to the workers' compensation court of appeals, an award of 
compensation is affirmed, or modified and affirmed, or an order 
disallowing compensation is reversed, the workers' compensation 
court of appeals may include in its award as an incident to its 
review on appeal an amount to cover a reasonable attorney's fee, 
or it may allow the fee in a proceeding to tax disbursements. 
    If the employer or insurer files a notice of discontinuance 
of an employee's benefits and an administrative conference is 
held to resolve the dispute, but the employer or insurer fails 
to attend the administrative conference, the commissioner or 
compensation judge may order the employer or insurer to pay the 
employee's attorney fees as a cost under this section if the 
employee's benefits are continued. 
    Sec. 98.  Minnesota Statutes 1986, section 176.521, is 
amended to read:  
    176.521 [SETTLEMENT OF CLAIMS.] 
    Subdivision 1.  [VALIDITY.] An agreement between an 
employee or an employee's dependent and the employer or insurer 
to settle any claim, which is not upon appeal before 
the workers' compensation court of appeals, for compensation 
under this chapter is valid where it has been executed in 
writing and signed by the parties and intervenors in the matter, 
and, where one or more of the parties is not represented by an 
attorney, the division commissioner or a compensation judge has 
approved the settlement and made an award thereon.  If the 
matter is upon appeal before the workers' compensation court of 
appeals or district court, the workers' compensation court of 
appeals or district court is the approving body. 
    Subd. 2.  [APPROVAL.] Settlements shall be approved only if 
the terms conform with this chapter. 
    The division commissioner, a compensation judge, 
the workers' compensation court of appeals, and the district 
court shall exercise discretion in approving or disapproving a 
proposed settlement. 
    The parties to the agreement of settlement have the burden 
of proving that the settlement is reasonable, fair, and in 
conformity with this chapter.  A settlement agreement where both 
the employee or the employee's dependent and the employer or 
insurer and intervenors in the matter are represented by an 
attorney shall be conclusively presumed to be reasonable, fair, 
and in conformity with this chapter except when the settlement 
purports to be a full, final, and complete settlement of an 
employee's right to medical compensation under this chapter or 
rehabilitation under section 176.102.  A settlement which 
purports to do so must be approved by the division commissioner, 
a compensation judge, or workers' compensation court of appeals. 
    The conclusive presumption in this subdivision applies to a 
settlement agreement entered into on or after January 15, 1982, 
whether the injury to which the settlement applies occurred 
prior to or on or after January 15, 1982.  
    Subd. 2a.  [SETTLEMENTS NOT SUBJECT TO APPROVAL.] When a 
settled case is not subject to approval, upon receipt of the 
stipulation for settlement, the commissioner, a compensation 
judge, a settlement judge, or the workers' compensation court of 
appeals shall immediately sign the award and file it with the 
commissioner.  Payment pursuant to the award shall be made 
within 14 days after it is filed with the commissioner.  The 
commissioner may correct mathematical or clerical errors at any 
time.  
    Subd. 3.  [SETTING ASIDE AWARD UPON SETTLEMENT.] 
Notwithstanding the provisions of subdivision 1, 2, or 2a, or 
any provision in the agreement of settlement to the contrary, 
upon the filing of a petition by any party to the settlement, 
the workers' compensation court of appeals may set aside an 
award made upon a settlement, pursuant to this chapter.  In 
appropriate cases, the workers' compensation court of appeals 
may refer the matter to the chief administrative law judge for 
assignment to a compensation judge for hearing.  
    Sec. 99.  [176.540] [TRANSFER OF STATE CLAIMS UNIT TO 
DEPARTMENT OF EMPLOYEE RELATIONS.] 
    The responsibilities of the commissioner of labor and 
industry relating to the administration and payment of workers' 
compensation benefits to state employees under chapter 176 and 
the administration of the peace officers benefits fund under 
chapter 176B, and the staff assigned to administer these 
responsibilities, are hereby transferred to the department of 
employee relations under section 15.039.  The complement 
positions to be transferred shall be determined by the 
commissioner of administration in consultation with the 
commissioners of employee relations and labor and industry.  
    Sec. 100.  Minnesota Statutes 1986, section 176.541, 
subdivision 2, is amended to read:  
    Subd. 2.  [DEFENSE OF CLAIM AGAINST STATE.] When the 
commissioner of the department of labor and industry employee 
relations believes that a claim against the state for 
compensation should be contested, the commissioner shall defend 
the state claim. 
    Sec. 101.  Minnesota Statutes 1986, section 176.541, 
subdivision 3, is amended to read:  
    Subd. 3.  [DUTIES OF ATTORNEY GENERAL.] At any stage in 
such a compensation proceeding, the attorney general may assume 
the duty of defending the state.  When the commissioner of the 
department of labor and industry employee relations or a 
department of this state requests the attorney general to assume 
the defense, the attorney general shall do so. 
    Sec. 102.  Minnesota Statutes 1986, section 176.541, 
subdivision 4, is amended to read:  
    Subd. 4.  [MEDICAL EXAMINATION OF EMPLOYEE; WITNESSES; 
CONDUCT OF DEFENSE.] In conducting a defense against a claim for 
compensation, the commissioner of the department of labor and 
industry employee relations or the attorney general, as the case 
may be, may require that an employee submit to a medical 
examination, procure the attendance of expert and other 
witnesses at a hearing, and do any other act necessary to 
conduct a proper defense. 
    Sec. 103.  Minnesota Statutes 1986, section 176.541, 
subdivision 6, is amended to read:  
    Subd. 6.  [LEGAL AND CLERICAL HELP.] The commissioner of 
the department of labor and industry employee relations may 
employ such legal and clerical help as authorized by the 
department of administration.  The salaries of these persons 
shall be paid from the state compensation revolving fund, but 
shall be apportioned among the several departments of the state 
in relation to the amount of compensation paid to employees of 
any department as against the total amount of compensation paid 
to employees of all departments. 
    Sec. 104.  Minnesota Statutes 1986, section 176.571, 
subdivision 1, is amended to read:  
    Subdivision 1.  [PRELIMINARY INVESTIGATION.] When the head 
of a department has filed a report or the commissioner of the 
department of labor and industry employee relations has 
otherwise received information of the occurrence of an injury to 
a state employee for which liability to pay compensation may 
exist, the commissioner of the department of labor and industry 
employee relations shall make a preliminary investigation to 
determine the question of probable liability.  
    In making this investigation, the commissioner of the 
department of labor and industry employee relations may require 
the assistance of the head of any department or any employee of 
the state.  The commissioner of the department of labor and 
industry employee relations may require that all facts be 
furnished which appear in the records of any state department 
bearing on the issue.  
    Sec. 105.  Minnesota Statutes 1986, section 176.571, 
subdivision 2, is amended to read:  
    Subd. 2.  [FINDINGS OF FACT, PROPOSED ORDER DETERMINATION 
BY DEPARTMENT.] When the commissioner of the department of labor 
and industry employee relations has completed an investigation, 
the commissioner shall make findings of fact and shall enter an 
award or other order which the commissioner proposes to make 
relating to the liability of the state to pay 
compensation inform the claimant, the head of the employing 
department, and the commissioner of finance in writing of the 
action taken.  
    Sec. 106.  Minnesota Statutes 1986, section 176.572, is 
amended to read:  
    176.572 [CONTRACT WITH INSURANCE CARRIERS.] 
    The commissioner of employee relations may contract with 
group health insurance carriers or health maintenance 
organizations to provide health care services and reimburse 
health care payments for injured state employees entitled to 
benefits under this chapter.  
    Sec. 107.  Minnesota Statutes 1986, section 176.581, is 
amended to read:  
    176.581 [FINDINGS AND FINAL ORDER PAYMENT TO STATE 
EMPLOYEES.] 
    Subdivision 1.  [FILING OF CERTIFIED COPIES.] The 
commissioner of the department of labor and industry shall file 
a certified copy of the findings and final order with the 
attorney general and the commissioner of finance.  
    Subd. 2.  [PAYMENT OF COMPENSATION.] Upon a warrant 
prepared by the commissioner of the department of labor and 
industry employee relations and approved by the commissioner of 
finance, and in accordance with the terms of the order awarding 
compensation, the state treasurer shall pay compensation to the 
employee or the employee's dependent.  These payments shall be 
made from money appropriated for this purpose.  
    Subd. 3.  [RECEIPTS FILED.] The person to whom compensation 
is paid shall file with the commissioner of the department of 
labor and industry all current interim and final receipts for 
such payment as is required of employers.  
    Sec. 108.  Minnesota Statutes 1986, section 176.591, 
subdivision 3, is amended to read:  
    Subd. 3.  [COMPENSATION PAYMENTS UPON WARRANTS.] The state 
treasurer shall make compensation payments from the fund only as 
authorized by this chapter upon warrants of the commissioner of 
the department of labor and industry employee relations.  
    Sec. 109.  Minnesota Statutes 1986, section 176.603, is 
amended to read:  
    176.603 [COST OF ADMINISTERING CHAPTER, PAYMENT.] 
    The annual cost to the commissioner of the department of 
labor and industry employee relations of administering this 
chapter in relation to state employees and the necessary 
expenses which the department of labor and industry employee 
relations or the attorney general incurs in investigating, 
administering, and defending a claim against the state for 
compensation shall be paid from the state compensation revolving 
fund. 
    Sec. 110.  Minnesota Statutes 1986, section 176.83, 
subdivision 5, is amended to read:  
    Subd. 5.  [EXCESSIVE MEDICAL SERVICES.] In consultation 
with the medical services review board or the rehabilitation 
review panel, rules establishing standards and procedures for 
determining whether a provider of health care services and 
rehabilitation services, including a provider of medical, 
chiropractic, podiatric, surgical, hospital or other services, 
is performing procedures or providing services at a level or 
with a frequency that is excessive, based upon accepted medical 
standards for quality health care and accepted rehabilitation 
standards.  
    If it is determined by the payer that the level, frequency 
or cost of a procedure or service of a provider is excessive 
according to the standards established by the rules, the 
provider shall not be paid for the excessive procedure, service, 
or cost by an insurer, self-insurer, or group self-insurer, and 
the provider shall not be reimbursed or attempt to collect 
reimbursement for the excessive procedure, service, or cost from 
any other source, including the employee, another insurer, the 
special compensation fund, or any government program unless the 
commissioner, medical services review board, or workers' 
compensation court of appeals or compensation judge determines 
at a hearing or administrative conference that the level, 
frequency, or cost was not excessive in which case the insurer, 
self-insurer, or group self-insurer shall make the payment 
deemed reasonable.  
    A health or rehabilitation provider who is determined by 
the commissioner rehabilitation review panel or medical services 
review board, after hearing, to be consistently performing 
procedures or providing services at an excessive level or cost 
may be prohibited from receiving any further reimbursement for 
procedures or services provided under this chapter.  A 
prohibition imposed on a provider under this subdivision may be 
grounds for revocation or suspension of the provider's license 
or certificate of registration to provide health care or 
rehabilitation service in Minnesota by the appropriate licensing 
or certifying body.  
    The rules adopted under this subdivision shall require 
insurers, self-insurers, and group self-insurers to report 
medical and other data necessary to implement the procedures 
required by this clause.  
    Sec. 111.  Minnesota Statutes 1986, section 176.83, 
subdivision 7, is amended to read:  
    Subd. 7.  [MISCELLANEOUS RULES.] Rules necessary for 
implementing and administering the provisions of sections 
176.131, 176.132, 176.134, sections 176.242 52 and 176.243 53; 
sections 176.251, 176.66 to 176.669, and rules regarding proper 
allocation of compensation under section 176.111.  Under the 
rules adopted under section 176.111 a party may petition for a 
hearing before a compensation judge to determine the proper 
allocation.  In this case the compensation judge may order a 
different allocation than prescribed by rule.  
    Sec. 112.  Minnesota Statutes 1986, section 176.83, 
subdivision 11, is amended to read:  
    Subd. 11.  [SUITABLE GAINFUL EMPLOYMENT INDEPENDENT 
CONTRACTORS.] Rules establishing criteria to be used by the 
division, compensation judge, and workers' compensation court of 
appeals to determine "suitable gainful employment" 
and "independent contractor."  
    Sec. 113.  Minnesota Statutes 1986, section 176.84, is 
amended to read:  
    176.84 [SPECIFICITY OF NOTICE OR STATEMENT.] 
    Subdivision 1.  [SPECIFICITY REQUIRED.] All Notices or 
statements required by this chapter including, but not limited 
to, notices or statements pursuant to sections 176.102; 176.221; 
176.241; 176.242; and 176.243 of discontinuance and denials of 
liability shall be sufficiently specific to convey clearly, 
without further inquiry, the basis upon which the party issuing 
the notice or statement is acting.  If the commissioner or 
compensation judge determines that a notice or statement is not 
sufficiently specific to meet the standard under this section, 
the notice or statement may be rejected as unacceptable and the 
party issuing it shall be informed of this.  The rejected notice 
or statement may be amended to meet the requirement of this 
section or a new one may be filed.  
     Subd. 2.  [PENALTY.] The commissioner or compensation judge 
may impose a penalty of $300 for each violation of subdivision 1.
    Subd. 3.  [EFFECTIVE DATE.] This section shall not be 
effective until the commissioner adopts rules which specify what 
is required to be contained in the notice of discontinuance and 
the denial of liability.  
    Sec. 114.  Minnesota Statutes 1986, section 176B.02, is 
amended to read:  
    176B.02 [PEACE OFFICERS BENEFIT FUND.] 
    There is hereby created in the state treasury an account to 
be known as peace officers benefit fund.  Funds in the peace 
officers benefit fund shall consist of moneys appropriated to 
that fund.  The administrator of the fund is the commissioner of 
labor and industry employee relations, who shall follow the 
procedures specified in section 176.541, subdivisions 2, 3, and 
4. 
    Sec. 115.  Minnesota Statutes 1986, section 176B.05, is 
amended to read:  
    176B.05 [ATTORNEY'S FEES FOR CLAIMING BENEFITS.] 
    No fee for legal services which is claimed for the work of 
an attorney relating to a claim made pursuant to the provisions 
of sections 176B.01 to 176B.05 is binding unless the amount of 
the fee charged is determined and approved in writing by the 
commissioner, compensation judge, or the workers' compensation 
court of appeals. 
    Sec. 116.  [PREMIUM REDUCTION RECOMMENDATIONS.] 
    The commissioner of labor and industry shall make detailed 
recommendations to the legislature proposing changes in the 
workers' compensation system, before January 1, 1988, which will 
result in reducing workers' compensation insurance premiums of 
employers.  The proposal shall consider the level of wage 
replacement of benefits and shall be designed to reduce the high 
rate of litigation and to increase the equity of the system. 
    Sec. 117.  [REPEALER.] 
    Minnesota Statutes 1986, sections 176.012; 176.101, 
subdivision 3v; 176.102, subdivision 6a; 176.103, subdivision 4; 
176.136, subdivision 4; 176.195, subdivisions 4, 5, and 6; 
176.241; 176.242; 176.2421; 176.243; 176.244; 176.271, 
subdivision 2; 176.501; 176.571, subdivisions 3, 4, 5, 6, and 7; 
and 176.602, are repealed. 
    Sec. 118.  [EFFECTIVE DATES.] 
    Sections 42, 44, 54, 62, 63, 64, 67, 69, 78, and 79 are 
effective October 1, 1987.  All other sections are effective 
July 1, 1987. 
    Approved May 29, 1987