Office of the Revisor of Statutes
Minnesota Session Laws - 1996, Regular Session
Key: (1) language to be deleted (2) new language
KEY: stricken = old language to be removed
underscored = new language to be added
CHAPTER 370-H.F.No. 2588
An act relating to insurance; providing a process for
resolving state claims for certain landfill cleanup
costs and associated damages with insurers;
authorizing an action by the state for recovery from
insurers after a reasonable opportunity for
settlement; proposing coding for new law in Minnesota
Statutes, chapter 115B; repealing Minnesota Statutes
1994, sections 115B.44, subdivision 1; and 115B.46;
Minnesota Statutes 1995 Supplement, sections 115B.44,
subdivision 2; and 115B.45.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. [115B.441] [INSURANCE CLAIMS SETTLEMENT AND
RECOVERY PROCESS; FINDINGS AND PURPOSE.]
(a) The legislature finds that:
(1) insurers have issued certain insurance policies to
their policyholders that may have provided coverage for
environmental response costs related to qualified facilities for
which their policyholders bear legal responsibility;
(2) because the commissioner is required by law to take
over responsibility for environmental response actions relating
to all qualified facilities, any rights to coverage based upon
the insurers' contractual obligations to their policyholders to
pay environmental response costs that are assumed by the state
related to these facilities, to the extent the obligations may
exist, are rights that should fairly accrue to the state; and
(3) the resolution of these potential insurance coverage
rights should provide a fair share of the cost to the state of
taking over these environmental responsibilities consistent with
the insurers' potential coverage obligations to their
policyholders.
(b) The purposes of sections 1 to 5 are:
(1) to provide the means for the state and insurers to
resolve claims of the state for environmental response costs
related to qualified facilities that may be covered by insurance
policies of persons who bear legal responsibility for those
costs; and
(2) to create a fair and efficient settlement process that
provides insurers with an opportunity to settle claims based
upon a reasonable approximation of the insurers' potential
coverage exposure and a fair opportunity for the state to
recover claims by legal action from nonsettling insurers.
Sec. 2. [115B.442] [SETTLEMENT PROCESS; INFORMATION
GATHERING.]
Subdivision 1. [SELECTION OF QUALIFIED FACILITIES.] The
commissioner and the attorney general shall select qualified
facilities for which they intend to make offers of settlement to
insurers under section 3. The first group of qualified
facilities, consisting of not less than ten facilities, must be
selected within 60 days after the effective date of this
section. Upon selection of a qualified facility under this
subdivision, the commissioner shall commence reasonable efforts
to identify potential insurance policyholders and insurance
coverage for the qualified facility in accordance with this
section.
Subd. 2. [POTENTIAL INSURANCE POLICYHOLDER.] For the
purpose of this section, "potential insurance policyholder"
means a person who may bear legal responsibility for
environmental response costs related to a qualified facility
including the following:
(1) a person who has been the subject of a request for
response action under section 115B.17, or an order under section
106 of the Federal Superfund Act with respect to a qualified
facility;
(2) an owner or operator of a qualified facility;
(3) a person who engaged in commercial, industrial, or
other activities generally known to produce waste containing a
hazardous substance, or pollutant or contaminant, and whose
waste was disposed of at a qualified facility; and
(4) a person who engaged in the business of hauling waste
for disposal and who accepted waste from one or more persons of
the type described in clause (3) for transport to a qualified
facility.
Subd. 3. [IDENTIFICATION OF POTENTIAL INSURANCE
POLICYHOLDERS.] The commissioner may request information from a
person that the commissioner has reason to believe is a
potential insurance policyholder or has information needed to
identify potential insurance policyholders. The recipient of
the request shall provide to the commissioner any information in
the person's possession, or which the person can reasonably
obtain, that the commissioner requires to identify potential
insurance policyholders for a qualified facility and to explain
to the commissioner the person's efforts to discover and provide
the information. An owner or operator of a qualified facility
shall retain and preserve all documents and other information
relevant to the identification of potential insurance
policyholders for the qualified facility.
Subd. 4. [IDENTIFICATION OF POTENTIAL INSURANCE COVERAGE.]
The commissioner may request a person that the commissioner has
reason to believe is a potential insurance policyholder to
provide, and the recipient of the request shall provide to the
commissioner, any information in the person's possession, or
which the person can reasonably obtain, regarding the person's
potential liability insurance coverage for environmental
response costs related to a qualified facility. A potential
insurance policyholder for which evidence of potential coverage
has been identified shall cooperate with reasonable requests of
the commissioner or the attorney general for assistance in
preparing for and negotiating a settlement under this section or
in preparing or pursuing a claim under section 4 related to that
policyholder's potential coverage. Nothing in this subdivision
relieves a potential insurance policyholder of any duties
imposed upon it pursuant to the terms, conditions, and
provisions of its insurance policy, including any duty to
cooperate with its insurer in the investigation, negotiation,
and settlement of claims or demands, or the defense of suits.
The commissioner may contract for the services of persons to
assist in reconstructing insurance policies and potential
coverage from incomplete insurance information. The
commissioner may authorize the attorney general to carry out all
or a portion of the authority provided in this section.
Subd. 5. [IDENTIFICATION OF POTENTIAL COVERAGE BY
INSURERS.] The commissioner may request an insurer to make
reasonable efforts to identify or confirm potential insurance
coverage of any potential insurance policyholder identified
under subdivision 4, or may direct the potential insurance
policyholder to make this request of an insurer. An insurer
that is requested to identify or confirm potential coverage of a
potential insurance policyholder under this subdivision has 90
days after receiving the request to confirm coverage or to
provide all information in the possession of the insurer that
may assist in identifying potential coverage, and to explain the
insurer's efforts to discover and provide such information. An
insurer requested to provide information under this subdivision
shall preserve all information relevant to the request until any
claim relating to the request is resolved.
Subd. 6. [ENFORCEMENT.] Subdivisions 3 to 5 are
enforceable under sections 115.071 and 116.072.
Sec. 3. [115B.443] [SETTLEMENT PROCESS.]
Subdivision 1. [DETERMINATION OF FACILITY COSTS.]
Beginning not later than one year after selection of a qualified
facility under section 2, subdivision 1, the commissioner shall
determine the current total estimated amount of environmental
response costs incurred and to be incurred by the state for the
qualified facility under sections 115B.39 to 115B.43, including
reimbursement under section 115B.43.
Subd. 2. [SETTLEMENT OFFERS.] The attorney general and the
commissioner shall select one or more insurers who have been
identified by the commissioner as providing potential coverage
to persons identified under section 2 as potential insurance
policyholders for a qualified facility and shall make settlement
offers with respect to one or more of the qualified facilities
to the selected insurers. The attorney general and the
commissioner shall base the settlement offer on their evaluation
of the potential coverage available for environmental response
costs under policies issued by the insurer to persons identified
as potential insurance policyholders for that qualified facility
and on the total estimated costs for the qualified facility, as
determined under subdivision 1. The attorney general shall
provide written notice of the settlement to the insurer together
with a written explanation of how the offer was calculated. The
attorney general may exclude from a settlement offer claims
relating to policyholders who are known by the attorney general
to have claims against the insurer for coverage for
environmental liabilities at locations other than qualified
facilities, or who are actively litigating or settling claims
against their insurers relating to any qualified facility.
Subd. 3. [SETTLEMENT NEGOTIATIONS; MEDIATION.] An insurer
shall have 60 days after receipt of a settlement offer and
written explanation from the state to evaluate the offer, after
which the insurer, the commissioner, and the attorney general
shall commence negotiations to attempt to reach a settlement
with respect to the potential insurance coverage and qualified
facilities subject to the settlement offer. The insurer shall
have 180 days to negotiate and commit to a settlement with the
state before the attorney general may commence an action under
section 4, unless the commissioner and the attorney general
agree to extend the negotiation period upon request by the
insurer made before expiration of the 180-day period. Any
extension shall be limited to one additional 60-day period.
The attorney general, commissioner, and the insurer may
agree to use any method of alternative dispute resolution for
all or a portion of the issues in the negotiation, or may agree
to negotiate all matters directly among themselves. If the
parties do not agree in writing on the manner in which they will
negotiate a settlement within 60 days after commencement of the
negotiation period, the parties shall submit the negotiation of
the settlement to mediation by an independent and neutral
mediator selected by the Minnesota office of dispute
resolution. The attorney general shall submit on behalf of all
parties a request to the office of dispute resolution to appoint
a mediator for the negotiations. The cost of mediation under
this subdivision shall be divided equally between the state and
the insurer.
Any settlement offer or any proposal, statement, or view
expressed or document prepared in the course of negotiation
under this section shall not be considered an admission by any
party and shall not be admissible in evidence in any judicial
proceeding affecting matters subject to settlement negotiation,
provided that any matter otherwise admissible in a judicial
proceeding is not made inadmissible by virtue of its use in
negotiation under this section.
Subd. 4. [PARTICIPATION BY AFFECTED POLICYHOLDERS.] (a)
Within 30 days of notifying an insurer of a settlement offer,
the attorney general shall make reasonable efforts to notify
policyholders who may be affected by settlement negotiations
under subdivision 3. The notification shall inform the
policyholder of the commencement of negotiations between the
state and the insurer and the manner in which a policyholder,
with agreement of the insurer, may participate in the
negotiation process. If the insurer and the state reach a
settlement of the state's claims, the attorney general shall
provide notice of any proposed settlement to any affected
policyholder who makes a written request for such notice.
(b) Subject to the limitations of this paragraph, an
insurer to whom a settlement offer is made under subdivision 3,
and any policyholder who may be affected by the negotiation, may
agree to negotiate a resolution of any other outstanding
environmental claims, related to the qualified facility or
facilities that are subject to the state's settlement offer,
within the settlement negotiation process provided under this
section. Environmental claims unrelated to the qualified
facility or facilities that are subject to the state settlement
offer may be included within the settlement negotiation process
provided under this section at the discretion of the attorney
general, provided that the state will not bear any costs of
mediation or alternative dispute resolution arising from the
unrelated claims. The agreement of the insurer and affected
policyholders to negotiate must be reached by the time that the
insurer and the state commence negotiations as provided under
subdivision 3. The policyholder shall not participate in the
selection of the method of negotiation by the state and the
insurer under subdivision 3. If the attorney general in the
attorney general's discretion determines, at any time after the
first 60 days of the negotiation period, that continued
participation of the policyholders in the negotiation process
with the state and the insurer is detrimental to the effective
negotiation of a settlement between the state and the insurer,
the attorney general shall so notify the insurer and the
policyholders. After such notification by the attorney general,
the insurer and policyholders may continue to negotiate
separately from the negotiation between the insurer and the
state, and may use the same mediator or other person who is
facilitating negotiation between the state and the insurer.
Policyholders shall be responsible for an equitable share of any
costs of mediation or other alternative dispute resolution
process in which they participate. Notwithstanding a
determination to discontinue negotiations involving
policyholders, the attorney general may engage in an additional
30 days of negotiation with the insurer and policyholders if,
within the time limit for committing to a settlement provided
under subdivision 3, the attorney general finds, in the
discretion of the attorney general, that participation by the
policyholders in a settlement between the state and the insurer
would be beneficial to that settlement.
Inability of the insurer or the state to reach a settlement with
policyholders under this subdivision shall not preclude a
settlement between the state and the insurer.
Subd. 5. [ADJUSTMENT FOR RETROSPECTIVE PREMIUMS.] A
settlement that includes payment of any amount under a policy
subject to a retrospective premium plan shall include terms
which assure that the settlement does not result in the
imposition of any retrospective premium on any policyholder. In
negotiating with respect to any state offer of settlement which
is based in whole or in part on coverage known to the insurer to
be subject to a retrospective premium plan:
(1) the insurer shall calculate the amount of any
retrospective premium that would result from payment of the
state's settlement offer amount and shall disclose the
calculation and the basis for it to the attorney general and the
commissioner; and
(2) the attorney general and commissioner may reduce the
settlement offer amount by the amount of the retrospective
premium or agree to assume the obligation to pay the
retrospective premium in order to assure that no retrospective
premium is imposed on the policyholder.
Subd. 6. [OPTION TO SETTLE NATURAL RESOURCE DAMAGES.] An
insurer who has received a settlement offer may request the
attorney general and the commissioner to address in any
settlement under this section natural resource damages related
to qualified facilities subject to the settlement offer. The
attorney general and the commissioner, after receiving a request
under this subdivision, shall determine an amount to be added to
the state's settlement offer that would be sufficient to address
and resolve in the settlement any state claims for natural
resource damages related to the qualified facilities subject to
the settlement.
Subd. 7. [SETTLEMENT OPTION FOR ALL QUALIFIED FACILITIES.]
If an insurer has entered settlements with the state under this
section with respect to qualified facilities for which the
aggregate amount of total estimated environmental response costs
equals at least 60 percent of the total estimated environmental
response costs for all qualified facilities as determined by the
commissioner, the attorney general and the commissioner, upon
request of the insurer, may settle with the insurer with respect
to the remaining qualified facilities for the amount determined
in this subdivision. The amount of the settlement for the
remaining qualified facilities must be the amount that bears the
same proportion to the total estimated costs for the remaining
facilities that the amount payable under all of the insurer's
existing settlements under this section bears to the aggregate
of the total estimated costs for the qualified facilities
subject to those settlements.
Subd. 8. [SCOPE OF RELEASE BY STATE; EFFECT OF
SETTLEMENT.] Except for any claims excluded from the settlement
process under section 3, subdivision 2, a settlement under this
section shall release a settling insurer, and its policyholders
to the extent of their insurance coverage under policies of that
insurer, from all liability for all environmental response costs
incurred and to be incurred by the state related to the
qualified facility or facilities that are the subject of the
settlement, including natural resource damages if addressed in
the settlement. Except for claims excluded under section 3,
subdivision 2, the settlement shall release a settling insurer
and its policyholders from liability as described in this
subdivision under all insurance policies issued by the insurer,
regardless of whether the policies or policyholders were
identified by the commissioner or attorney general under section
2.
Subd. 9. [OTHER SETTLEMENT TERMS.] (a) An insurer who
enters a settlement under this section is not liable for claims
for contribution regarding matters addressed in the settlement.
As a condition of settlement, an insurer shall waive its rights
to seek contribution for any amounts paid in the settlement or
to bring a subrogation action against any other person for any
amounts paid in the settlement.
(b) Settlement under this section does not discharge the
liability of an insurer that has not entered a settlement under
this section nor of a person to whom a nonsettling insurer has
issued insurance coverage to the extent of that coverage.
(c) No settlement offer, settlement, or negotiation under
this section shall affect any joint and several liability for
environmental response costs or damages related to the facility
of any person whose liability has not been settled under this
section.
(d) A settlement under this section or section 4,
subdivision 2, paragraph (b), reduces the state's claims for
environmental response costs, and natural resource damages if
addressed in the settlement, related to qualified facilities
subject to the settlement by the amounts paid to the state under
the settlement for the facilities.
(e) A settlement agreement approved by the attorney general
and the commissioner under this section shall be presumed to be
a reasonable settlement of the state's claims.
Subd. 10. [REDUCTION OF OUTSTANDING COVERAGE.] Any amounts
paid by an insurer pursuant to a judgment under section 4 or
settlement under this section reduce the outstanding coverage
available under policies of the insurer to the extent permitted
under applicable law and policy provisions.
Sec. 4. [115B.444] [STATE ACTION AGAINST INSURERS.]
Subdivision 1. [STATE ACTION.] The state, by the attorney
general, may bring a state action against any insurer for
recovery of all environmental response costs incurred and to be
incurred by the state, which costs are related to qualified
facilities for which the state has assumed response action
obligations or responsibilities under sections 115B.39 to
115B.43, and for which costs policyholders of the insurer may be
liable. No assignment of any rights of a policyholder to the
state and no judgment against the policyholder is required as a
condition for the state bringing an action under this
subdivision. The state shall make reasonable efforts to notify
affected policyholders of the state's commencement of an action
under this section. An affected policyholder may intervene in
an action under this section. For purposes of this section, an
"affected policyholder" means a policyholder whose rights under
an insurance policy relevant to an action under this section may
be affected by the action. All defenses available to a
policyholder to any claim of liability for environmental
response costs asserted or which could be asserted against it
shall be available to the insurer in an action brought by the
state under this subdivision. In any action under this
subdivision, the claim of the state shall be limited by the
applicable terms, conditions, and provisions of the relevant
insurance policy under which coverage may be provided, and the
state shall have no greater rights than the rights of the
policyholder under its insurance policy subject to the statutory
and common law that applies to the determination of those rights.
Nothing in sections 1 to 5 shall be construed to relieve any
policyholder of liability for environmental response costs to
the extent of any insurance coverage of the policyholder by
reason of the assumption of obligations or responsibilities by
the state for environmental response actions under sections
115B.39 to 115B.43. Before the attorney general may commence an
action against an insurer under this subdivision, for any claims
with respect to a qualified facility, the attorney general and
the commissioner shall present to the insurer a written
settlement offer, and shall provide the insurer with an
opportunity to negotiate and enter a settlement with the state
as provided in section 3. In any action under this subdivision,
the state shall have the same rights as individual policyholders
to recover its reasonable expenses and costs of litigation,
including attorney fees.
Subd. 2. [ACTIONS BY POLICYHOLDERS; STATE APPROVAL OF
SETTLEMENTS.] (a) Except as provided in paragraph (b), nothing
in sections 1 to 4 affects the right of a policyholder to bring
or pursue any action against, or enter any settlement with, an
insurer for any claims for which the state has a right of action
against the insurer under this section and that have not been
resolved by a settlement or judgment under this section. The
state may intervene in an action in which a policyholder seeks
to recover a claim for which the state has a right of action
under this section.
(b) A policyholder may not enter a settlement that releases
an insurer from any claims for which the state has an action
under subdivision 1, unless the attorney general has given prior
written approval to the settlement and the policyholder agrees
to assign to the state any amounts recovered under the
settlement from the insurer that are attributable to the
resolution of the claims.
Sec. 5. [115B.445] [DEPOSIT OF PROCEEDS.]
All amounts paid to the state by an insurer pursuant to any
settlement under section 3 or judgment under section 4 must be
deposited in the state treasury and credited to the solid waste
fund.
Sec. 6. [REPORT TO THE LEGISLATURE.]
The attorney general and the commissioner shall report to
the finance division of the senate environment and natural
resources committee and the house of representatives environment
and natural resources finance committee by January 15, 1998,
concerning the results achieved in carrying out the settlement
and recovery process established under sections 1 to 5. The
report must include any recommendations for further legislation
that the attorney general and the commissioner believe will
assist in the fair and efficient resolution of claims related to
qualified facilities by the state and insurers.
Sec. 7. [REPEALER.]
Minnesota Statutes 1994, sections 115B.44, subdivision 1;
and 115B.46; and Minnesota Statutes 1995 Supplement, sections
115B.44, subdivision 2; and 115B.45, are repealed.
Sec. 8. [EFFECTIVE DATE.]
Sections 1 to 7 are effective the day following final
enactment.
Presented to the governor March 23, 1996
Signed by the governor March 26, 1996, 10:25 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes