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                            CHAPTER 374-S.F.No. 2552 
                  An act relating to workers' compensation; modifying 
                  provisions governing calculation of premiums; 
                  modifying provisions relating to independent 
                  contractors; exempting certain rules from expiration; 
                  changing terms of a pilot program; making technical 
                  changes; amending Minnesota Statutes 1995 Supplement, 
                  sections 79.53, subdivision 1; 79.55, subdivision 5; 
                  176.136, subdivision 1a; 176.1812, subdivisions 1 and 
                  6; and 176.261; proposing coding for new law in 
                  Minnesota Statutes, chapter 176. 
           Section 1.  Minnesota Statutes 1995 Supplement, section 
        79.53, subdivision 1, is amended to read: 
           Subdivision 1.  [METHOD OF CALCULATION.] Each insurer shall 
        establish premiums to be paid by an employer according to its 
        filed rates and rating plan as follows: 
           Rates shall be applied to an exposure base to yield a base 
        premium which may be further increased or decreased up to 25 
        percent modified by merit rating, premium discounts, and other 
        appropriate factors contained in the rating plan of an insurer 
        to produce premium if the increase or decrease is not unfairly 
        discriminatory.  Nothing in this chapter shall be deemed to 
        prohibit the use of any premium, provided the premium is not 
        excessive, inadequate or unfairly discriminatory. 
           Sec. 2.  Minnesota Statutes 1995 Supplement, section 79.55, 
        subdivision 5, is amended to read: 
           Subd. 5.  [DISCOUNTS PERMITTED.] An insurer may offer a 
        scheduled credit or debit to discount from a manual premium of 
        up to 25 percent if the premium otherwise complies with this 
        section.  The commissioner shall not by rule, or otherwise, 
        prohibit a credit or discount from a manual premium solely 
        because it is greater than a certain fixed percentage of the 
           Sec. 3.  [176.042] [INDEPENDENT CONTRACTORS.] 
           Subdivision 1.  [GENERAL RULE; ARE EMPLOYEES.] Except as 
        provided in subdivision 2, every independent contractor doing 
        commercial or residential building construction or improvements 
        in the public or private sector is, for the purpose of this 
        chapter, an employee of any employer under this chapter for whom 
        the independent contractor is performing service in the course 
        of the trade, business, profession, or occupation of that 
        employer at the time of the injury. 
           Subd. 2.  [EXCEPTION.] An independent contractor, as 
        described in subdivision 1, is not an employee of an employer 
        for whom the independent contractor performs work or services if 
        the independent contractor meets all of the following conditions:
           (1) maintains a separate business with the independent 
        contractor's own office, equipment, materials, and other 
           (2) holds or has applied for a federal employer 
        identification number; 
           (3) operates under contracts to perform specific services 
        or work for specific amounts of money and under which the 
        independent contractor controls the means of performing the 
        services or work; 
           (4) incurs the main expenses related to the service or work 
        that the independent contractor performs under contract; 
           (5) is responsible for the satisfactory completion of work 
        or services that the independent contractor contracts to perform 
        and is liable for a failure to complete the work or service; 
           (6) receives compensation for work or service performed 
        under a contract on a commission or per-job or competitive bid 
        basis and not on any other basis; 
           (7) may realize a profit or suffer a loss under contracts 
        to perform work or service; 
           (8) has continuing or recurring business liabilities or 
        obligations; and 
           (9) the success or failure of the independent contractor's 
        business depends on the relationship of business receipts to 
           Sec. 4.  Minnesota Statutes 1995 Supplement, section 
        176.136, subdivision 1a, is amended to read: 
           Subd. 1a.  [RELATIVE VALUE FEE SCHEDULE.] The liability of 
        an employer for services included in the medical fee schedule is 
        limited to the maximum fee allowed by the schedule in effect on 
        the date of the medical service, or the provider's actual fee, 
        whichever is lower.  The medical fee schedule effective on 
        October 1, 1991, shall remain in effect until the commissioner 
        adopts a new schedule by permanent rule.  The commissioner shall 
        adopt permanent rules regulating fees allowable for medical, 
        chiropractic, podiatric, surgical, and other health care 
        provider treatment or service, including those provided to 
        hospital outpatients, by implementing a relative value fee 
        schedule to be effective on October 1, 1993.  The commissioner 
        may adopt by reference the relative value fee schedule adopted 
        for the federal Medicare program or a relative value fee 
        schedule adopted by other federal or state agencies.  The 
        relative value fee schedule shall contain reasonable 
        classifications including, but not limited to, classifications 
        that differentiate among health care provider disciplines.  The 
        conversion factors for the original relative value fee schedule 
        must reasonably reflect a 15 percent overall reduction from the 
        medical fee schedule most recently in effect.  The reduction 
        need not be applied equally to all treatment or services, but 
        must represent a gross 15 percent reduction. 
           After permanent rules have been adopted to implement this 
        section, the conversion factors must be adjusted annually on 
        October 1 by no more than the percentage change computed under 
        section 176.645, but without the annual cap provided by that 
        section.  The commissioner shall annually give notice in the 
        State Register of the adjusted conversion factors and may also 
        give annual notice of any additions, deletions, or changes to 
        the relative value units or service codes adopted by the federal 
        Medicare program.  The relative value units may be statistically 
        adjusted in the same manner as for the original workers' 
        compensation relative value fee schedule.  The notices of the 
        adjusted conversion factors and additions, deletions, or changes 
        to the relative value units and service codes shall be in lieu 
        of the requirements of chapter 14.  The commissioner shall 
        follow the requirements of section 14.386, paragraph (a).  The 
        annual adjustments to the conversion factors and the medical fee 
        schedules adopted pursuant to this section, including all 
        previous fee schedules, are not subject to expiration under 
        section 14.387. 
           Sec. 5.  Minnesota Statutes 1995 Supplement, section 
        176.1812, subdivision 1, is amended to read: 
           Subdivision 1.  [REQUIREMENTS.] Upon appropriate filing, 
        the commissioner, compensation judge, workers' compensation 
        court of appeals, and courts shall recognize as valid and 
        binding a provision in a collective bargaining agreement between 
        a qualified employer or qualified groups of employers engaged in 
        construction, construction maintenance, and related activities 
        and the certified and exclusive representative of its employees 
        to establish certain obligations and procedures relating to 
        workers' compensation.  For purposes of this section, "qualified 
        employer" means any self-insured employer, any employer, through 
        itself or any affiliate as defined in section 60D.15, 
        subdivision 2, who is responsible for the first $100,000 or more 
        of any claim, or a private employer developing or projecting an 
        annual workers' compensation premium, in Minnesota, of $250,000 
        or more.  For purposes of this section, a "qualified group of 
        employers" means a group of private employers engaged in 
        workers' compensation group self-insurance complying 
        with section 79A.03, subdivision 6 chapter 79A, or a group of 
        private employers who purchase workers' compensation insurance 
        as a group, which develops or projects annual workers' 
        compensation insurance premiums of $2,000,000 or more.  This 
        agreement must be limited to, but need not include, all of the 
           (a) an alternative dispute resolution system to supplement, 
        modify, or replace the procedural or dispute resolution 
        provisions of this chapter.  The system may include mediation, 
        arbitration, or other dispute resolution proceedings, the 
        results of which may be final and binding upon the parties.  A 
        system of arbitration shall provide that the decision of the 
        arbiter is subject to review either by the workers' compensation 
        court of appeals in the same manner as an award or order of a 
        compensation judge or, in lieu of review by the workers' 
        compensation court of appeals, by the office of administrative 
        hearings, by the district court, by the Minnesota court of 
        appeals, or by the supreme court in the same manner as the 
        workers' compensation court of appeals and may provide that any 
        arbiter's award disapproved by a court be referred back to the 
        arbiter for reconsideration and possible modification; 
           (b) an agreed list of providers of medical treatment that 
        may be the exclusive source of all medical and related treatment 
        provided under this chapter which need not be certified under 
        section 176.1351; 
           (c) the use of a limited list of impartial physicians to 
        conduct independent medical examinations; 
           (d) the creation of a light duty, modified job, or return 
        to work program; 
           (e) the use of a limited list of individuals and companies 
        for the establishment of vocational rehabilitation or retraining 
        programs which list is not subject to the requirements of 
        section 176.102; 
           (f) the establishment of safety committees and safety 
        procedures; or 
           (g) the adoption of a 24-hour health care coverage plan if 
        a 24-hour plan pilot project is authorized by law, according to 
        the terms and conditions authorized by that law. 
           Sec. 6.  Minnesota Statutes 1995 Supplement, section 
        176.1812, subdivision 6, is amended to read: 
           Subd. 6.  [PILOT PROGRAM.] The commissioner shall establish 
        a pilot program ending December 31, 2001, in which up to ten 
        private and up to ten public employers shall be authorized to 
        enter into valid agreements under this section with their 
        employees.  The agreements shall be recognized and enforced as 
        provided by this section.  Employers shall participate in the 
        pilot program through collectively bargained agreements with the 
        certified and exclusive representatives of their employees and 
        without regard to the dollar insurance premium limitations in 
        subdivision 1.  A group of employers engaged in workers' 
        compensation group self-insurance complying with chapter 79A, or 
        a group of employers who purchase workers' compensation 
        insurance as a group, may not participate in any pilot program 
        under this subdivision. 
           Sec. 7.  Minnesota Statutes 1995 Supplement, section 
        176.261, is amended to read: 
           When requested by an employer or an employee or an 
        employee's dependent, the commissioner of the department of 
        labor and industry may designate one or more of the division 
        employees to advise that party of rights under this chapter, and 
        as far as possible to assist in adjusting differences between 
        the parties.  The person so designated may appear in person in 
        any proceedings under this chapter as the representative or 
        adviser of the party.  In such case, the party need not be 
        represented by an attorney at law.  
           Prior to advising an employee or employer to seek 
        assistance outside of the department, the department must refer 
        employers and employees seeking advice or requesting assistance 
        in resolving a dispute to an attorney or rehabilitation and 
        medical specialist employed by the department other technical, 
        paraprofessional, or professional workers' compensation division 
        employee, whichever is appropriate. 
           The department must make efforts to settle problems of 
        employees and employers by contacting third parties, including 
        attorneys, insurers, and health care providers, on behalf of 
        employers and employees and using the department's persuasion to 
        settle issues quickly and cooperatively.  The obligation to make 
        efforts to settle problems exists whether or not a formal claim 
        has been filed with the department. 
           Sec. 8.  [EFFECTIVE DATE.] 
           Sections 1 and 2 are effective retroactive to January 1, 
        1996.  Section 3 is effective July 1, 1996.  Sections 4 to 7 are 
        effective the day following final enactment. 
           Presented to the governor March 23, 1996 
           Signed by the governor March 26, 1996, 10:42 a.m.

Official Publication of the State of Minnesota
Revisor of Statutes