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 446-S.F.No. 1980
An act relating to insurance; regulating coverages;
regulating premium taxes; modifying agent
cancellations or terminations; providing certain
filing requirements for domestic insurers; regulating
disclosures and policy and contract provisions;
providing for the operation and administration of the
medical malpractice joint underwriting association and
the Minnesota joint underwriting association;
regulating policy cancellations or terminations and
claims practices; regulating information handling
practices; establishing solvency requirements; making
technical changes; regulating the provision of certain
insured services; requiring a study and a report;
amending Minnesota Statutes 1994, sections 60A.07,
subdivision 8; 60A.08, subdivision 14; 60A.09,
subdivision 4a; 60A.11, subdivision 21; 60A.171,
subdivision 7, and by adding a subdivision; 60A.36,
subdivision 1; 60C.09, subdivision 2; 60C.11, by
adding a subdivision; 61A.02, subdivision 2, and by
adding a subdivision; 61A.072, subdivision 4; 61A.32;
61B.20, subdivision 15; 61B.28, subdivision 7; 62A.02,
by adding a subdivision; 62A.31, subdivisions 1p, 1r,
1s, and 3; 62A.315; 62A.318; 62A.39; 62A.44,
subdivision 2; 62A.49, subdivision 1; 62A.60; 62F.03,
subdivision 6; 62F.04, subdivision 1a; 62I.02,
subdivisions 2, 5, and by adding a subdivision;
62I.07; 62L.09, subdivision 3; 65A.01, subdivision 3;
65A.10, subdivision 1; 65A.295; 65B.14, by adding a
subdivision; 65B.15, subdivision 1; 65B.64,
subdivision 3; 70A.07; 72A.20, subdivisions 17, 23,
26, 30, and by adding a subdivision; 148.235,
subdivisions 2 and 4; 471.617, subdivision 2, as
amended; and 471.98, subdivision 3, as amended;
Minnesota Statutes 1995 Supplement, sections 60A.07,
subdivision 10; 60A.15, subdivision 1; 60A.67,
subdivision 2; 60K.03, subdivision 7; 61A.09,
subdivision 1; 62A.042; 62A.135, subdivision 1;
62A.31, subdivision 1h; 62A.46, subdivision 2; 62A.48,
subdivision 1; 62C.14, subdivision 14; 62E.05,
subdivision 1; 62F.02, subdivision 2; 62L.045; and
65B.47, subdivision 1a; proposing coding for new law
in Minnesota Statutes, chapters 60A; 61A; 62A; 62Q;
and 72A; repealing Minnesota Statutes 1994, sections
60A.13, subdivision 8; 60A.40; 60B.27; 62I.20; 65A.25;
and 72A.205; Laws 1995, chapter 140, section 1.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
Section 1. Minnesota Statutes 1994, section 60A.08,
subdivision 14, is amended to read:
Subd. 14. [AGREEMENT TO RESCIND POLICY OR RELEASE BAD
FAITH CLAIM.] (a) If the insurer has knowledge of any claims
against the insured that would remain unsatisfied due to the
financial condition of the insured, the insurer and the insured
may not agree to:
(1) rescind the policy; or
(2) directly or indirectly transfer to, or release to, the
insurer the insured's claim or potential claim against the
insurer based upon the insurer's refusal to settle a claim
against the insured.
(b) Before entering into an agreement to rescind a policy
described in paragraph (a), an insurer must make a good faith
effort to ascertain: (1) the existence and identity of all
claims against the policy; and (2) the financial condition of
the insured.
(c) The insured must provide reasonable financial
information upon request of the insurer.
(d) An agreement made in violation of this section is void
and unenforceable.
Sec. 2. Minnesota Statutes 1994, section 60A.09,
subdivision 4a, is amended to read:
Subd. 4a. [ASSUMPTION TRANSACTIONS REGULATED.] No life
company, whether domestic, foreign, or alien, shall perform an
assumption transaction, including an assumption reinsurance
agreement, with respect to a policy issued to a Minnesota
resident, unless:
(1) the assumption agreement has been filed with the
commissioner;
(2) the assumption agreement specifically provides that the
original insurer remains liable to the insured in the event the
assuming insurer is unable to fulfill its obligations or the
original insurer acknowledges in writing to the commissioner
that it remains liable to the insured in the event the assuming
insurer is unable to fulfill its obligations;
(3) the proposed certificate of assumption to be provided
to the policyholder has been filed with the commissioner for
review and approval as provided in section 61A.02; and
(4) the proposed certificate of assumption contains, in
bold face type, the following language:
"Policyholder: Please be advised that you retain all
rights with respect to your policy against your original insurer
in the event the assuming insurer is unable to fulfill its
obligations. In such event, your original insurer remains
liable to you notwithstanding the terms of its assumption
agreement."
With respect to residents of Minnesota, the notice to
policyholders shall also include a statement as to the effect on
guaranty fund coverage, if any, that will result from the
transfer.
Clauses (2) and (4) above do not apply if the policyholder
consents in a signed writing to a release of the original
insurer from liability and to a waiver of the protections
provided in clauses (2) and (4) after being informed in writing
by the insurer of the circumstances relating to and the effect
of the assumption, provided that the consent form signed by the
policyholder has been filed with and approved by the
commissioner.
If a company is deemed by the commissioner to be in a
hazardous condition or is under a court ordered supervision,
rehabilitation, liquidation, conservation or receivership, and
the transfer of policies is in the best interest of the
policyholders, as determined by the commissioner, a transfer may
be effected notwithstanding the provisions in this subdivision
by using a different form of consent by policyholders. This may
include a form of implied consent and adequate notification to
the policyholder of the circumstances requiring the transfer as
approved by the commissioner. This paragraph does not apply
when a policy is transferred to the Minnesota life and health
guaranty association or to the Minnesota insurance guaranty
association.
Sec. 3. Minnesota Statutes 1995 Supplement, section
60A.15, subdivision 1, is amended to read:
Subdivision 1. [DOMESTIC AND FOREIGN COMPANIES.] (a) On or
before April 1, June 1, and December 1 of each year, every
domestic and foreign company, including town and farmers' mutual
insurance companies, domestic mutual insurance companies, marine
insurance companies, health maintenance organizations,
integrated service networks, community integrated service
networks, and nonprofit health service plan corporations, shall
pay to the commissioner of revenue installments equal to
one-third of the insurer's total estimated tax for the current
year. Except as provided in paragraphs (d) and (e),
installments must be based on a sum equal to two percent of the
premiums described in paragraph (b).
(b) Installments under paragraph (a), (d), or (e) are
percentages of gross premiums less return premiums on all direct
business received by the insurer in this state, or by its agents
for it, in cash or otherwise, during such year.
(c) Failure of a company to make payments of at least
one-third of either (1) the total tax paid during the previous
calendar year or (2) 80 percent of the actual tax for the
current calendar year shall subject the company to the penalty
and interest provided in this section, unless the total tax for
the current tax year is $500 or less.
(d) For health maintenance organizations, nonprofit health
services plan corporations, integrated service networks, and
community integrated service networks, the installments must be
based on an amount equal to one percent of premiums described in
paragraph (b) that are paid after December 31, 1995.
(e) For purposes of computing installments for town and
farmers' mutual insurance companies and for mutual property
casualty companies with total assets on December 31, 1989, of
$1,600,000,000 or less, the following rates apply:
(1) for all life insurance, two percent;
(2) for town and farmers' mutual insurance companies and
for mutual property and casualty companies with total assets of
$5,000,000 or less, on all other coverages, one percent; and
(3) for mutual property and casualty companies with total
assets on December 31, 1989, of $1,600,000,000 or less, on all
other coverages, 1.26 percent.
(f) Premiums under medical assistance, general assistance
medical care, the MinnesotaCare program, and the Minnesota
comprehensive health insurance plan are not subject to tax under
this section.
Sec. 4. Minnesota Statutes 1994, section 60A.171,
subdivision 7, is amended to read:
Subd. 7. The provisions of this section do not apply to
the termination of an agent's contract for insolvency,
abandonment, gross and willful misconduct, or failure to pay
over to the company money due to the company after receipt by
the agent of a written demand therefor, or after revocation of
the agent's license by the commissioner of commerce; nor to the
termination of agents who write insurance business exclusively
for one company or agents in the direct employ of the
company. This section does not apply to the termination of an
agent's contract if the agent is directly employed by the
company or if the agent writes 80 percent or more of the agent's
gross annual insurance business for one company or any or all of
its subsidiaries.
Sec. 5. Minnesota Statutes 1994, section 60A.171, is
amended by adding a subdivision to read:
Subd. 12. For purposes of this section, a cancellation or
termination of an agent's contract is considered to have
occurred if the company cancels a line of insurance business or
a volume of insurance business that equals or exceeds 75 percent
of the insurance business placed by that agent with the company.
Sec. 6. [60A.179] [LIFE OR HEALTH INSURANCE POLICY QUOTAS
FOR EXCLUSIVE AGENTS.]
Subdivision 1. [APPLICATION.] This section applies to
licensed insurance agents as defined by section 60A.176.
Subd. 2. [PROHIBITED PRACTICE.] No insurer shall require
an agent who has been licensed as an agent three years or more
to sell a specified number of life or health insurance policies
or a specified dollar amount of life and health insurance in
relation to the sale of other insurance products. No insurer
may terminate an agent's contract or reduce or restrict an
agent's underwriting authority on property and casualty
insurance policies based upon the sale of life or health
insurance.
Sec. 7. Minnesota Statutes 1994, section 60A.36,
subdivision 1, is amended to read:
Subdivision 1. [REASON FOR CANCELLATION.] No insurer may
cancel a policy of commercial liability and/or property
insurance during the term of the policy, except for one or more
of the following reasons:
(1) nonpayment of premium;
(2) misrepresentation or fraud made by or with the
knowledge of the insured in obtaining the policy or in pursuing
a claim under the policy;
(3) actions by the insured that have substantially
increased or substantially changed the risk insured;
(4) refusal of the insured to eliminate known conditions
that increase the potential for loss after notification by the
insurer that the condition must be removed;
(5) substantial change in the risk assumed, except to the
extent that the insurer should reasonably have foreseen the
change or contemplated the risk in writing the contract;
(6) loss of reinsurance by the insurer which provided
coverage to the insurer for a significant amount of the
underlying risk insured. A notice of cancellation under this
clause shall advise the policyholder that the policyholder has
ten days from the date of receipt of the notice to appeal the
cancellation to the commissioner of commerce and that the
commissioner will render a decision as to whether the
cancellation is justified because of the loss of reinsurance
within five 30 business days after receipt of the appeal;
(7) a determination by the commissioner that the
continuation of the policy could place the insurer in violation
of the insurance laws of this state; or
(8) nonpayment of dues to an association or organization,
other than an insurance association or organization, where
payment of dues is a prerequisite to obtaining or continuing the
insurance. This provision for cancellation for failure to pay
dues does not apply to persons who are retired at 62 years of
age or older or who are disabled according to social security
standards.
Sec. 8. Minnesota Statutes 1995 Supplement, section
60K.03, subdivision 7, is amended to read:
Subd. 7. [EXCEPTIONS.] The following are exempt from the
general licensing requirements prescribed by this section:
(1) agents of township mutuals who are exempted pursuant to
section 60K.04;
(2) fraternal benefit society representatives exempted
pursuant to section 60K.05;
(3) any regular salaried officer or employee of a licensed
insurer, without license or other qualification, may act on
behalf of that licensed insurer in the negotiation of insurance
for that insurer, provided that a licensed agent must
participate in the sale of the insurance;
(4) employers and their officers or employees, and the
trustees or employees of any trust plan, to the extent that the
employers, officers, employees, or trustees are engaged in the
administration or operation of any program of employee benefits
for the employees of the employers or employees of their
subsidiaries or affiliates involving the use of insurance issued
by a licensed insurance company; provided that the activities of
the officers, employees and trustees are incidental to clerical
or administrative duties and their compensation does not vary
with the volume of insurance or applications for insurance;
(5) employees of a creditor who enroll debtors for credit
life, credit accident and health, or credit involuntary
unemployment insurance; provided the employees receive no
commission or fee for it;
(6) clerical or administrative employees of an insurance
agent who take insurance applications or receive premiums in the
office of their employer, if the activities are incidental to
clerical or administrative duties and the employee's
compensation does not vary with the volume of the applications
or premiums;
(7) rental vehicle companies and their employees in
connection with the offer of rental vehicle personal accident
insurance under section 72A.125; and
(8) employees of a retailer who enroll purchasers for
credit insurance associated with a retail purchase; provided the
employees receive no commission, fee, bonus, or other form of
compensation for it; and
(9) representatives of prepaid legal service plans in
connection with the sale and marketing of these plans.
Sec. 9. Minnesota Statutes 1994, section 61A.02,
subdivision 2, is amended to read:
Subd. 2. [APPROVAL REQUIRED.] No policy or certificate of
life insurance or annuity contract, issued to an individual,
group, or multiple employer trust, nor any rider of any kind or
description which is made a part thereof shall be issued or
delivered in this state, or be issued by a life insurance
company organized under the laws of this state, until the form
of the same has been approved by the commissioner. In making a
determination under this section, the commissioner may require
the insurer to provide rates and advertising materials related
to policies or contracts, certificates, or similar evidence of
coverage issued or delivered in this state.
This section applies Subdivisions 1 to 5 apply to a policy,
certificate of insurance, or similar evidence of coverage issued
to a Minnesota resident or issued to provide coverage to a
Minnesota resident. This section does Subdivisions 1 to 5 do
not apply to a certificate of insurance or similar evidence of
coverage that meets the conditions of section 61A.093,
subdivision 2.
Sec. 10. Minnesota Statutes 1994, section 61A.02, is
amended by adding a subdivision to read:
Subd. 6. [FILING BY DOMESTIC INSURERS FOR PURPOSES OF
COMPLYING WITH ANOTHER STATE'S FILING REQUIREMENTS.] A domestic
insurer may file with the commissioner for informational
purposes only a policy, certificate of insurance, or annuity
contract that is not intended to be offered or sold within this
state. This subdivision only applies to the filing in Minnesota
of a policy, certificate of insurance, or annuity contract
issued to an insured, certificate holder, or annuitant located
outside of this state when the filing is for the express purpose
of complying with the law of the state in which the insured,
certificate holder, or annuitant resides. In no event may a
policy, certificate of insurance, or annuity contract filed
under this subdivision for out-of-state use be issued or
delivered in Minnesota unless and until the policy, certificate
of insurance, or annuity contract is approved under subdivision
2.
Sec. 11. Minnesota Statutes 1994, section 61A.072,
subdivision 4, is amended to read:
Subd. 4. [LONG-TERM CARE EXPENSES.] If the right to
receive accelerated benefits is contingent upon the insured
receiving long-term care services, the contract or supplemental
contract shall include the following provisions:
(1) the minimum accelerated benefit shall be $1,200 per
month if the insured is receiving nursing facility services and
$750 per month if the insured is receiving home services with a
minimum lifetime benefit limit of $50,000;
(2) coverage is effective immediately and benefits shall
commence with the receipt of services as defined in section
62A.46, subdivision 3, 4, or 5, but may include a waiting period
of not more than 90 days, provided that no more than one waiting
period may be required per benefit period as defined in section
62A.46, subdivision 11;
(3) premium shall be waived during any period in which
benefits are being paid to the insured during confinement to a
nursing home facility;
(4) coverage may not be canceled or renewal refused except
on the grounds of nonpayment of premium;
(5) coverage must include preexisting conditions during the
first six months of coverage if the insured was not diagnosed or
treated for the particular condition during the 90 days
immediately preceding the effective date of coverage;
(6) the contract or supplemental contract shall contain the
following disclosure:
"THE ACCELERATED LIFE INSURANCE BENEFITS PROVIDED UNDER
THIS CONTRACT MAY NOT COVER ALL NURSING HOME, HOME CARE, OR
ADULT DAY CARE EXPENSES. BENEFITS ARE NOT PAYABLE UPON RECEIPT
OF RESIDENTIAL CARE. READ YOUR POLICY CAREFULLY TO DETERMINE
YOUR BENEFIT AMOUNT.";
(7) coverage must include mental or nervous disorders which
have a demonstrable organic cause such as Alzheimer's and
related dementias;
(8) (7) no prior hospitalization requirement shall be
allowed unless a similar requirement is allowed by section
62A.48, subdivision 1; and
(9) (8) the contract shall include a cancellation provision
that meets the requirements of section 62A.50, subdivision 2.
Sec. 12. Minnesota Statutes 1995 Supplement, section
61A.09, subdivision 1, is amended to read:
Subdivision 1. No group life insurance policy or group
annuity shall be issued for delivery in this state until the
form thereof and the form of any certificates issued thereunder
have been filed in accordance with and subject to the provisions
of section 61A.02. Each person insured under such a group life
insurance policy (excepting policies which insure the lives of
debtors of a creditor or vendor to secure payment of
indebtedness) shall be furnished a certificate of insurance
issued by the insurer and containing the following:
(a) Name and location of the insurance company;
(b) A statement as to the insurance protection to which the
certificate holder is entitled, including any changes in such
protection depending on the age of the person whose life is
insured;
(c) Any and all provisions regarding the termination or
reduction of the certificate holder's insurance protection;
(d) A statement that the master group policy may be
examined at a reasonably accessible place;
(e) The maximum rate of contribution to be paid by the
certificate holder;
(f) Beneficiary and method required to change such
beneficiary;
(g) A statement that alternative methods for the payment of
group life policy proceeds of $15,000 or more must be offered to
beneficiaries in lieu of a lump sum distribution, at their
request. Alternative payment methods which must be offered at
the request of the beneficiaries must include, but are not
limited to, a life income option, an income option for fixed
amounts or fixed time periods, and the option to select an
interest-bearing account with the company with the right to
select another option at a later date;
(h) In the case of a group term insurance policy if the
policy provides that insurance of the certificate holder will
terminate, in case of a policy issued to an employer, by reason
of termination of the certificate holder's employment, or in
case of a policy issued to an organization of which the
certificate holder is a member, by reason of termination of
membership, a provision to the effect that in case of
termination of employment or membership, or in case of
termination of the group policy, the certificate holder shall be
entitled to have issued by the insurer, without evidence of
insurability, upon application made to the insurer within 31
days after the termination, and upon payment of the premium
applicable to the class of risk to which that person belongs and
to the form and amount of the policy at that person's then
attained age, a policy of life insurance only, in any one of the
forms customarily issued by the insurer except term insurance,
in an amount equal to the amount of the life insurance
protection under such group insurance policy at the time of such
termination; and shall contain a further provision to the effect
that upon the death of the certificate holder during such 31-day
period and before any such individual policy has become
effective, the amount of insurance for which the certificate
holder was entitled to make application shall be payable as a
death benefit by the insurer.
This section applies to a policy, certificate of insurance,
or similar evidence of coverage issued to a Minnesota resident
or issued to provide coverage to a Minnesota resident. This
section does not apply to a certificate of insurance or similar
evidence of coverage that meets the conditions of section
61A.093, subdivision 2.
Sec. 13. [61A.53] [DEFINITIONS.]
Subdivision 1. [APPLICABILITY.] For purposes of sections
61A.53 to 61A.60, the terms defined in this section have the
meanings given.
Subd. 2. [REPLACEMENT.] "Replacement" means any
transaction in which new life insurance or a new annuity is to
be purchased, and it is known or should be known to the
proposing agent or broker or to the proposing insurer if there
is no agent, that by reason of the transaction, existing life
insurance or annuity has been or is to be:
(1) lapsed, forfeited, surrendered, or otherwise
terminated;
(2) converted to reduced paid-up insurance, continued as
extended term insurance, or otherwise reduced in value by the
use of nonforfeiture benefits or other policy values;
(3) amended so as to effect either a reduction in benefits
or in the term for which coverage would otherwise remain in
force or for which benefits would be paid;
(4) reissued with any reduction in cash value; or
(5) pledged as collateral or subjected to borrowing,
whether in a single loan or under a schedule of borrowing over a
period of time for amounts in the aggregate exceeding 25 percent
of the loan value set forth in the policy.
Subd. 3. [CONSERVATION.] "Conservation" means any attempt
by the existing insurer or its agent or broker to dissuade a
policy owner or contract holder from the replacement of existing
life insurance or annuity. Conservation does not include
routine administrative procedures such as late payment
reminders, late payment offers, or reinstatement offers.
Subd. 4. [DIRECT-RESPONSE SALE.] "Direct-response sale"
means any sale of life insurance or annuity where the insurer
does not use an agent in the sale or delivery of the policy or
contract.
Subd. 5. [EXISTING INSURER.] "Existing insurer" means the
insurance company whose policy or contract is or will be changed
or terminated in such a manner as described within the
definition of "replacement."
Subd. 6. [EXISTING LIFE INSURANCE OR ANNUITY.] "Existing
life insurance or annuity" means any life insurance or annuity
in force, including life insurance under a binding or
conditional receipt or a life insurance policy or annuity
contract that is within an unconditional refund period.
Subd. 7. [REPLACING INSURER.] "Replacing insurer" means
the insurance company that issues or proposes to issue a new
policy or contract which is a replacement of existing life
insurance or annuity.
Sec. 14. [61A.54] [EXEMPTIONS.]
Unless otherwise specifically included, sections 61A.53 to
61A.60 do not apply to transactions involving:
(1) credit life insurance;
(2) group life insurance or group annuities;
(3) an application to the existing insurer that issued the
existing life insurance or annuity, where a contractual change
or a conversion privilege is being exercised;
(4) proposed life insurance that is to replace life
insurance under a binding or conditional receipt issued by the
same company; or
(5) transactions where the replacing insurer and the
existing insurer are the same, or are subsidiaries or affiliates
under common ownership or control; provided, however, that
agents or brokers proposing replacement shall comply with
section 61A.55, subdivision 1.
Sec. 15. [61A.55] [DUTIES OF AGENTS AND BROKERS.]
Subdivision 1. [SUBMISSION TO INSURER.] Each agent or
broker who initiates the application shall submit to the insurer
to which an application for life insurance or annuity is
presented, with or as part of each application:
(1) a statement signed by the applicant as to whether
replacement of existing life insurance or annuity is involved in
the transaction; and
(2) a signed statement as to whether the agent or broker
knows replacement is or may be involved in the transaction.
Subd. 2. [REPLACEMENT INFORMATION.] Where a replacement is
involved, the agent or broker shall:
(1) present to the applicant, not later than at the time of
taking the application, a "notice regarding replacement" in the
form as described in section 61A.60, subdivision 1, or other
substantially similar form approved by the commissioner. The
notice shall be fully completed and signed by both the applicant
and the agent or broker and left with the applicant. The
completed notice must list all existing life insurance and
annuity to be replaced, properly identified by name of insurer,
the insured, and contract number. If a contract number has not
been assigned by the existing insurer, alternative
identification, such as an application or receipt number, shall
be listed;
(2) leave with the applicant the original or a copy of any
written or printed communications used for presentation to the
applicant; and
(3) submit to the replacing insurer with the application a
copy of the fully completed and signed replacement notice
provided under this subdivision.
Subd. 3. [MATERIALS USED TO DISSUADE REPLACEMENT.] Each
agent or broker who uses written or printed communications in a
conservation shall leave with the applicant the original or a
copy of the communications.
Sec. 16. [61A.56] [DUTIES OF ALL INSURERS.]
Each insurer shall:
(1) inform its field representatives or other personnel
responsible for compliance with sections 61A.53 to 61A.60 of the
requirements of those sections; and
(2) require with or as a part of each completed application
for life insurance or annuity a statement signed by the
applicant as to whether the proposed insurance or annuity will
replace existing life insurance or annuity.
Sec. 17. [61A.57] [DUTIES OF INSURERS THAT USE AGENTS OR
BROKERS.]
Each insurer that uses an agent or broker in a life
insurance or annuity sale shall:
(a) require with or as part of each completed application
for life insurance or annuity, a statement signed by the agent
or broker as to whether the agent or broker knows replacement is
or may be involved in the transaction;
(b) where a replacement is involved:
(1) require from the agent or broker with the application
for life insurance or annuity, a copy of the fully completed and
signed replacement notice provided the applicant under section
61A.55. The existing life insurance or annuity must be
identified by name of insurer, insured, and contract number. If
a number has not been assigned by the existing insurer,
alternative identification, such as an application or receipt
number, must be listed; and
(2) send to each existing insurer a written communication
advising of the replacement or proposed replacement and the
identification information obtained under this section. This
written communication must be made within five working days of
the date that the application is received in the replacing
insurer's home or regional office, or the date the proposed
policy or contract is issued, whichever is sooner.
(c) The replacing insurer shall maintain evidence of the
"notice regarding replacement" and a replacement register,
cross-indexed, by replacing agent and existing insurer to be
replaced. Evidence that all requirements were met shall be
maintained for at least six years.
(d) The replacing insurer shall provide in its policy or
contract, or in a separate written notice that is delivered with
the policy or contract, that the applicant has a right to an
unconditional refund of all premiums paid, which right may be
exercised within a period of 20 days beginning from the date of
delivery of the policy.
Sec. 18. [61A.58] [DUTIES OF INSURERS WITH RESPECT TO
DIRECT RESPONSE SALES.]
(a) If in the solicitation of a direct response sale, the
insurer did not propose the replacement, and a replacement is
involved, the insurer shall send to the applicant with the
policy or contract a replacement notice as described in section
61A.60, subdivision 2, or other substantially similar form
approved by the commissioner.
(b) If the insurer proposed the replacement, it shall:
(1) provide to applicants or prospective applicants with or
as a part of the application a replacement notice as described
in section 61A.60, subdivision 2, or other substantially similar
form approved by the commissioner;
(2) request from the applicant with or as part of the
application, a list of all existing life insurance policies or
annuity contracts to be replaced and properly identified by name
of insurer and insured; and
(3) comply with the requirements of section 61A.57,
paragraph (b), clause (2), if the applicant furnishes the names
of the existing insurers, and the requirements of section
61A.57, paragraphs (c) and (d), except that it need not index
the replacement register by replacing agent.
Sec. 19. [61A.59] [ENFORCEMENT; EFFECT OF COMPLIANCE.]
(a) An agent, broker or insurer shall not recommend the
replacement or conservation of an existing policy or contract by
use of a substantially inaccurate presentation or comparison of
an existing policy's or contract's premiums and benefits or
dividends and values, if any. An insurer, agent,
representative, officer, or employee of the insurer failing to
comply with the requirements of sections 61A.53 to 61A.60 is
subject to such penalties as may be appropriate under this
chapter.
(b) Patterns of action by policyholders or contract holders
who purchase replacing policies or contracts from the same agent
or broker, after indicating on applications that replacement is
not involved, are prima facie evidence of the agent's or
broker's knowledge that replacement was intended in connection
with the sale of those policies, and the patterns of action are
prima facie evidence of the agent's or broker's intent to
violate sections 61A.53 to 61A.60.
(c) Sections 61A.53 to 61A.60 do not prohibit the use of
additional material other than that which is required that does
not violate those sections or any other statute or rule.
(d) Compliance by an insurer, agent, or broker with
sections 61A.53 to 61A.60 does not limit any cause of action or
other remedies that the insured may otherwise have against an
insurer, agent, or broker. In a proceeding in which the
insured's knowledge or understanding is an issue, compliance
with those sections may be admitted as evidence on that issue,
but shall not be conclusive.
Sec. 20. [61A.60] [REQUIRED REPLACEMENT NOTICE AND FORM.]
Subdivision 1. [NOTICE FORM; AGENT SALES.] The notice
required where sections 61A.53 to 61A.60 refer to this
subdivision is as follows:
IMPORTANT NOTICE
DEFINITION: REPLACEMENT IS any transaction where, in connection
with the purchase of New Insurance or a New
Annuity, you LAPSE, SURRENDER, CONVERT to
Paid-up Insurance, Place on Extended Term,
or BORROW all or part of the policy loan
values on an existing insurance policy or an
annuity. (See reverse side for DEFINITIONS.)
IF YOU In connection with the purchase of this insurance
INTEND TO or annuity, if you have REPLACED or intend to
REPLACE REPLACE your present life insurance coverage
COVERAGE or annuity(ies), you should be certain that you
understand all the relevant factors involved.
You should BE AWARE that you may be required to
provide [EVIDENCE OF INSURABILITY] and
1) If your HEALTH condition has CHANGED since
the application was taken on your present
policies, you may be required to pay ADDITIONAL
PREMIUMS under the NEW POLICY, or be DENIED
coverage.
2) Your present occupation or activities [may not
be covered or could require additional premiums.]
3) The INCONTESTABLE and SUICIDE CLAUSE will
begin anew in a new policy. This could RESULT
in a [CLAIM under the new policy BEING DENIED]
that would otherwise have been paid.
4) Current law DOES NOT REQUIRE your present
insurer(s) to REFUND any premiums.
5) It is to your advantage to OBTAIN INFORMATION
regarding your existing policies or annuity
contracts [from the insurer or agent from whom
you purchased the policy or annuity contract.]
(If you are purchasing an annuity, clauses (1),
(2), and (3) above would not apply to the new
annuity contract.)
THE INSURANCE OR ANNUITY I INTEND TO PURCHASE FROM
_______________________________________INSURANCE CO.
MAY REPLACE OR ALTER EXISTING LIFE INSURANCE
POLICY(IES) OR ANNUITY CONTRACT(S).
The following policy(ies) or annuity contract(s)
may be replaced as a result of this transaction:
[Insurer [Insured
as it appears on the policy as it appears on the policy
or contract] or contract]
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
[Policy or Contract Number] [Insured Birthdate]
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
The proposed policy or contract is:
______________________________________ $_______________
type of policy- or contract-generic name face amount
________________________________________________________
signature of applicant date
________________________________________________________
address of applicant city state
I certify that this form was given to and completed by
________________________________________________________
(applicant-please print or type)
prior to taking an application and that I am leaving a
signed copy for the applicant.
___________________________________________________
agent's signature date
___________________________________________________
address
___________________________________________________
city state
[NOTE IMPORTANT STATEMENT ON REVERSE SIDE]
Subd. 2. [NOTICE FORM; DIRECT RESPONSE SALES.] The notice
required where sections 61A.53 to 61A.60 refer to this
subdivision is as follows:
IMPORTANT NOTICE
REQUIRED BY
MINNESOTA INSURANCE LAW
DEFINITION: REPLACEMENT is any transaction where, in connection
with the purchase of New Insurance or a New Annuity,
you LAPSE, SURRENDER, CONVERT to Paid-up Insurance,
Place on Extended Term, or BORROW all or part of
the policy loan values on an existing insurance
policy or an annuity. (See reverse side for
DEFINITIONS.)
IF YOU In connection with the purchase of this insurance
INTEND TO or annuity, if you have REPLACED or intend to
REPLACE REPLACE your present life insurance coverage or
COVERAGE annuity(ies), you should be certain that you
understand all the relevant factors involved.
You should BE AWARE that you may be required
to provide [Evidence of insurability] and
(1) If your HEALTH condition has CHANGED since
the application was taken on your present
policies, you may be required to pay
ADDITIONAL PREMIUMS under the NEW POLICY,
or be DENIED coverage.
(2) Your present occupation or activities [may
not be covered or could require additional
premiums.]
(3) The INCONTESTABLE and SUICIDE CLAUSE will
begin anew in a new policy. This could
RESULT in a [CLAIM under the new policy
BEING DENIED] that would otherwise have
been paid.
(4) Current law DOES NOT REQUIRE your present
insurer(s) to REFUND any premiums.
(5) It may be to your advantage to OBTAIN
INFORMATION regarding your existing
policies or annuity contracts [from the insurer
or agent from whom you purchased the policy
or annuity contract.]
(If an annuity is being purchased, Items 1,
2 and 3 above would not apply to the new
contract.)
CAUTION If after studying the information made
available to you, you decide to replace your
existing life insurance or annuity with our policy
or annuity contract, you are urged not to
take action to terminate or alter your existing
coverage or annuity(ies) until after you have
been issued the new policy or annuity contract,
examined it and found it to be acceptable to you. If
you should terminate or otherwise materially alter
your existing coverage or annuity(ies) and
fail to qualify for the life insurance for which
you have applied, you may find yourself unable to
purchase other life insurance or be able to
purchase it only at substantially higher rates.
INSURER'S MAILING DATE:...............................
Subd. 3. [DEFINITIONS.] The following definitions must
appear on the back of the notice forms provided in subdivisions
1 and 2:
DEFINITIONS
PREMIUMS: Premiums are the payments you make in exchange
for an insurance policy or annuity contract. They are unlike
deposits in a savings or investment program, because if you drop
the policy or contract, you might get back less than you paid in.
CASH SURRENDER VALUE: This is the amount of money you can
get in cash if you surrender your life insurance policy or
annuity. If there is a policy loan, the cash surrender value is
the difference between the cash value printed in the policy and
the loan value. Not all policies have cash surrender values.
LAPSE: A life insurance policy may lapse when you do not
pay the premiums within the grace period. If you had a cash
surrender value, the insurer might change your policy to as much
extended term insurance or paid-up insurance as the cash
surrender value will buy. Sometimes the policy lets the insurer
borrow from the cash surrender value to pay the premiums.
SURRENDER: You surrender a life insurance policy when you
either let it lapse or tell the company you want to drop it.
Whenever a policy has a cash surrender value, you can get it in
cash if you return the policy to the company with a written
request. Most insurers will also let you exchange the cash
value of the policy for paid-up or extended term insurance.
CONVERT TO PAID-UP INSURANCE: This means you use your cash
surrender value to change your insurance to a paid-up policy
with the same insurer. The death benefit generally will be
lower than under the old policy, but you will not have to pay
any more premiums.
PLACE ON EXTENDED TERM: This means you use your cash
surrender value to change your insurance to term insurance with
the same insurer. In this case, the net death benefit will be
the same as before. However, you will only be covered for a
specified period of time stated in the policy.
BORROW POLICY LOAN VALUES: If your life insurance policy
has a cash surrender value, you can almost always borrow all or
part of it from the insurer. Interest will be charged according
to the terms of the policy, and if the loan with unpaid interest
ever exceeds the cash surrender value, your policy will be
surrendered. If you die, the amount of the loan and any unpaid
interest due will be subtracted from the death benefits.
EVIDENCE OF INSURABILITY: This means proof that you are an
acceptable risk. You have to meet the insurer's standards
regarding age, health, occupation, etc., to be eligible for
coverage.
INCONTESTABLE CLAUSE: This says that after two years,
depending on the policy or insurer, the life insurer will not
resist a claim because you made a false or incomplete statement
when you applied for the policy. For the early years, though,
if there are wrong answers on the application and the insurer
finds out about them, the insurer can deny a claim as if the
policy had never existed.
SUICIDE CLAUSE: This says that if you commit suicide after
being insured for less than two years, depending on the policy
and insurer, your beneficiaries will receive only a refund of
the premiums that were paid.
Subd. 4. [PRINTING OF NOTICES.] The notices in
subdivisions 1 and 2 must be reproduced in their entirety on one
side of an 8-1/2 by 11 inch sheet of plain paper. The
definitions contained in subdivision 3 must be printed on the
reverse side. The insurer may print its legal name in the space
provided.
Sec. 21. Minnesota Statutes 1994, section 61B.28,
subdivision 7, is amended to read:
Subd. 7. [NOTICE CONCERNING LIMITATIONS AND EXCLUSIONS.]
(a) No person, including an insurer, agent, or affiliate of an
insurer or agent, shall offer for sale in this state a covered
life insurance, annuity, or health insurance policy or contract
without delivering at the time of application for that policy or
contract a notice in the form specified in subdivision 8, or in
a form approved by the commissioner under paragraph (b),
relating to coverage provided by the Minnesota life and health
insurance guaranty association. The notice may be part of the
application. A copy of the notice must be given to the
applicant. The notice must be delivered to the applicant at the
time of application for the policy or contract, except that if
the application is not taken from the applicant in person, the
notice must be sent to the applicant within 72 hours after the
application is taken. The person offering the policy or
contract shall document the fact that the notice was given at
the time of application or was sent within the specified time.
This does not require that the receipt of the notice be
acknowledged by the applicant.
(b) The association may prepare, and file with the
commissioner for approval, a form of notice as an alternative to
the form of notice specified in subdivision 8 describing the
general purposes and limitations of this chapter. The form of
notice shall:
(1) state the name, address, and telephone number of the
Minnesota life and health insurance guaranty association;
(2) prominently warn the policy or contract holder that the
Minnesota life and health insurance guaranty association may not
cover the policy or, if coverage is available, it will be
subject to substantial limitations and exclusions and
conditioned on continued residence in the state;
(3) state that the insurer and its agents are prohibited by
law from using the existence of the Minnesota life and health
insurance guaranty association for the purpose of sales,
solicitation, or inducement to purchase any form of insurance;
(4) emphasize that the policy or contract holder should not
rely on coverage under the Minnesota life and health insurance
guaranty association when selecting an insurer;
(5) provide other information as directed by the
commissioner. The commissioner may approve any form of notice
proposed by the association and, as to the approved form of
notice, the association may notify all member insurers by mail
that the form of notice is available as an alternative to the
notice specified in subdivision 8.
(c) A policy or contract not covered by the Minnesota Life
and Health Insurance Guaranty Association or the Minnesota
Insurance Guaranty Association must contain the following notice
in ten-point type, stamped in red ink or contrasting type on the
policy or contract and the application:
"THIS POLICY OR CONTRACT IS NOT PROTECTED BY THE MINNESOTA
LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION OR THE
MINNESOTA INSURANCE GUARANTY ASSOCIATION. IN THE CASE OF
INSOLVENCY, PAYMENT OF CLAIMS IS NOT GUARANTEED. ONLY THE
ASSETS OF THIS INSURER WILL BE AVAILABLE TO PAY YOUR CLAIM."
This section does not apply to fraternal benefit societies
regulated under chapter 64B.
Sec. 22. Minnesota Statutes 1994, section 62A.02, is
amended by adding a subdivision to read:
Subd. 7. [FILING BY DOMESTIC INSURERS FOR PURPOSES OF
COMPLYING WITH ANOTHER STATE'S FILING REQUIREMENTS.] A domestic
insurer may file with the commissioner for informational
purposes only a policy or certificate of insurance that is not
intended to be offered or sold within this state. This
subdivision only applies to the filing in Minnesota of a policy
or certificate of insurance issued to an insured or certificate
holder located outside of this state when the filing is for the
express purpose of complying with the law of the state in which
the insured or certificate holder resides. In no event may a
policy or certificate of insurance filed under this subdivision
for out-of-state use be issued or delivered in Minnesota unless
and until the policy or certificate of insurance is approved
under subdivision 2.
Sec. 23. Minnesota Statutes 1995 Supplement, section
62A.042, is amended to read:
62A.042 [FAMILY COVERAGE; COVERAGE OF NEWBORN INFANTS.]
Subdivision 1. [INDIVIDUAL FAMILY POLICIES; RENEWALS.] (a)
No policy of individual accident and sickness insurance which
provides for insurance for more than one person under section
62A.03, subdivision 1, clause (3), and no individual health
maintenance contract which provides for coverage for more than
one person under chapter 62D, shall be renewed to insure or
cover any person in this state or be delivered or issued for
delivery to any person in this state unless the policy or
contract includes as insured or covered members of the family
any newborn infants, including dependent grandchildren who
reside with a covered grandparent, immediately from the moment
of birth and thereafter which insurance or contract shall
provide coverage for illness, injury, congenital malformation,
or premature birth. For purposes of this paragraph, "newborn
infants" includes grandchildren who are financially dependent
upon a covered grandparent and who reside with that covered
grandparent continuously from birth. No policy or contract
covered by this section may require notification to a health
carrier as a condition for this dependent coverage. However, if
the policy or contract mandates an additional premium for each
dependent, the health carrier shall be entitled to all premiums
that would have been collected had the health carrier been aware
of the additional dependent. The health carrier may withhold
payment of any health benefits for the new dependent until it
has been compensated with the applicable premium which would
have been owed if the health carrier had been informed of the
additional dependent immediately.
(b) The coverage under paragraph (a) includes benefits for
inpatient or outpatient expenses arising from medical and dental
treatment up to age 18, including orthodontic and oral surgery
treatment, involved in the management of birth defects known as
cleft lip and cleft palate. If orthodontic services are
eligible for coverage under a dental insurance plan and another
policy or contract, the dental plan shall be primary and the
other policy or contract shall be secondary in regard to the
coverage required under paragraph (a). Payment for dental or
orthodontic treatment not related to the management of the
congenital condition of cleft lip and cleft palate shall not be
covered under this provision.
Subd. 2. [GROUP POLICIES; RENEWALS.] (a) No group accident
and sickness insurance policy and no group health maintenance
contract which provide for coverage of family members or other
dependents of an employee or other member of the covered group
shall be renewed to cover members of a group located in this
state or delivered or issued for delivery to any person in this
state unless the policy or contract includes as insured or
covered family members or dependents any newborn infants,
including dependent grandchildren who reside with a covered
grandparent, immediately from the moment of birth and thereafter
which insurance or contract shall provide coverage for illness,
injury, congenital malformation, or premature birth. For
purposes of this paragraph, "newborn infants" includes
grandchildren who are financially dependent upon a covered
grandparent and who reside with that covered grandparent
continuously from birth. No policy or contract covered by this
section may require notification to a health carrier as a
condition for this dependent coverage. However, if the policy
or contract mandates an additional premium for each dependent,
the health carrier shall be entitled to all premiums that would
have been collected had the health carrier been aware of the
additional dependent. The health carrier may reduce the health
benefits owed to the insured, certificate holder, member, or
subscriber by the amount of past due premiums applicable to the
additional dependent.
(b) The coverage under paragraph (a) includes benefits for
inpatient or outpatient expenses arising from medical and dental
treatment up to age 18, including orthodontic and oral surgery
treatment, involved in the management of birth defects known as
cleft lip and cleft palate. If orthodontic services are
eligible for coverage under a dental insurance plan and another
policy or contract, the dental plan shall be primary and the
other policy or contract shall be secondary in regard to the
coverage required under paragraph (a). Payment for dental or
orthodontic treatment not related to the management of the
congenital condition of cleft lip and cleft palate shall not be
covered under this provision.
Sec. 24. [62A.3091] [NONDISCRIMINATE COVERAGE OF TESTS.]
Subdivision 1. [SCOPE OF REQUIREMENT.] This section
applies to any of the following if issued or renewed to a
Minnesota resident or to cover a Minnesota resident:
(1) a health plan, as defined in section 62A.011;
(2) coverage described in section 62A.011, subdivision 3,
clauses (2), (3), or (6) to (12); and
(3) a policy, contract, or certificate issued by a
community integrated service network or an integrated service
network licensed under chapter 62N.
Subd. 2. [REQUIREMENT.] Coverage described in subdivision
1 that covers laboratory tests, diagnostic tests, and X-rays
must provide the same coverage, without requiring additional
signatures, for all such tests ordered by an advanced practice
nurse operating pursuant to chapter 148. Nothing in this
section shall be construed to interfere with any written
agreement between a physician and an advanced practice nurse.
Sec. 25. [62A.3092] [EQUAL TREATMENT OF SURGICAL FIRST
ASSISTING SERVICES.]
Subdivision 1. [SCOPE OF REQUIREMENT.] This section
applies to any of the following if issued or renewed to a
Minnesota resident or to cover a Minnesota resident:
(1) a health plan, as defined in section 62A.011;
(2) coverage described in section 62A.011, subdivision 3,
clauses (2), (3), or (6) to (12); and
(3) a policy, contract, or certificate issued by a
community integrated service network or an integrated service
network licensed under chapter 62N.
Subd. 2. [REQUIREMENT.] Coverage described in subdivision
1 that provides for payment for surgical first assisting
benefits or services shall be construed as providing for payment
for a registered nurse who performs first assistant functions
and services that are within the scope of practice of a
registered nurse.
Sec. 26. Minnesota Statutes 1995 Supplement, section
62A.135, subdivision 1, is amended to read:
Subdivision 1. [DEFINITIONS.] For purposes of this
section, the following terms have the meanings given them:
(a) "fixed indemnity policy" is a policy form, other than
an accidental death and dismemberment policy, a disability
income policy, or a long-term care policy as defined in section
62A.46, subdivision 2, that pays a predetermined, specified,
fixed benefit for services provided. Claim costs under these
forms are generally not subject to inflation, although they may
be subject to changes in the utilization of health care
services. For policy forms providing both expense-incurred and
fixed benefits, the policy form is a fixed indemnity policy if
50 percent or more of the total claims are for predetermined,
specified, fixed benefits;
(b) "guaranteed renewable" means that, during the renewal
period (to a specified age) renewal cannot be declined nor
coverage changed by the insurer for any reason other than
nonpayment of premiums, fraud, or misrepresentation, but the
insurer can revise rates on a class basis upon approval by the
commissioner;
(c) "noncancelable" means that, during the renewal period
(to a specified age) renewal cannot be declined nor coverage
changed by the insurer for any reason other than nonpayment of
premiums, fraud, or misrepresentation and that rates cannot be
revised by the insurer. This includes policies that are
guaranteed renewable to a specified age, such as 60 or 65, at
guaranteed rates; and
(d) "average annualized premium" means the average of the
estimated annualized premium per covered person based on the
anticipated distribution of business using all significant
criteria having a price difference, such as age, sex, amount,
dependent status, mode of payment, and rider frequency. For
filing of rate revisions, the amount is the anticipated average
assuming the revised rates have fully taken effect.
Sec. 27. Minnesota Statutes 1995 Supplement, section
62A.31, subdivision 1h, is amended to read:
Subd. 1h. [LIMITATIONS ON DENIALS, CONDITIONS, AND PRICING
OF COVERAGE.] No issuer of Medicare supplement policies,
including policies that supplement Medicare issued by health
maintenance organizations or those policies governed by section
1833 or 1876 of the federal Social Security Act, United States
Code, title 42, section 1395, et seq., health carrier issuing
Medicare-related coverage in this state may impose preexisting
condition limitations or otherwise deny or condition the
issuance or effectiveness of any Medicare supplement insurance
policy form such coverage available for sale in this state, nor
may it discriminate in the pricing of such a policy coverage,
because of the health status, claims experience, receipt of
health care, medical condition, or age of an applicant where an
application for such insurance coverage is submitted prior to or
during the six-month period beginning with the first day of the
month in which an individual first enrolled for benefits under
Medicare Part B. This paragraph subdivision applies to each
Medicare-related coverage offered by a health carrier regardless
of whether the individual has attained the age of 65 years. If
an individual who is enrolled in Medicare Part B due to
disability status is involuntarily disenrolled due to loss of
disability status, the individual is eligible for the another
six-month enrollment period provided under this subdivision if
beginning the first day of the month in which the individual
later becomes eligible for and enrolls again in Medicare Part
B. An individual who is or was previously enrolled in Medicare
Part B due to disability status is eligible for another
six-month enrollment period under this subdivision beginning the
first day of the month in which the individual has attained the
age of 65 years and either maintains enrollment in, or enrolls
again in, Medicare Part B.
Sec. 28. Minnesota Statutes 1994, section 62A.31,
subdivision 1p, is amended to read:
Subd. 1p. [RENEWAL OR CONTINUATION PROVISIONS.] Medicare
supplement policies and certificates shall include a renewal or
continuation provision. The language or specifications of the
provision shall be consistent with the type of contract issued.
The provision shall be appropriately captioned and shall appear
on the first page of the policy or certificate, and shall
include any reservation by the issuer of the right to change
premiums. Except for riders or endorsements by which the issuer
effectuates a request made in writing by the insured, exercises
a specifically reserved right under a Medicare supplement policy
or certificate, or is required to reduce or eliminate benefits
to avoid duplication of Medicare benefits, all riders or
endorsements added to a Medicare supplement policy or
certificate after the date of issue or at reinstatement or
renewal that reduce or eliminate benefits or coverage in the
policy or certificate shall require a signed acceptance by the
insured. After the date of policy or certificate issue, a rider
or endorsement that increases benefits or coverage with a
concomitant increase in premium during the policy or certificate
term shall be agreed to in writing and signed by the insured,
unless the benefits are required by the minimum standards for
Medicare supplement policies or if the increased benefits or
coverage is required by law. Where a separate additional
premium is charged for benefits provided in connection with
riders or endorsements, the premium charge shall be set forth in
the policy, declaration page, or certificate. If a Medicare
supplement policy or certificate contains limitations with
respect to preexisting conditions, the limitations shall appear
as a separate paragraph of the policy or certificate and be
labeled as "preexisting condition limitations."
Issuers of accident and sickness policies or certificates
that provide hospital or medical expense coverage on an expense
incurred or indemnity basis, other than incidentally, to a
person persons eligible for Medicare by reason of age shall
provide to such those applicants a Medicare Supplement Buyer's "
Guide to Health Insurance for People with Medicare" in the form
developed by the Health Care Financing Administration and in a
type size no smaller than 12-point type. Delivery of
the Buyer's guide must be made whether or not such policies or
certificates are advertised, solicited, or issued as Medicare
supplement policies or certificates as defined in this section.
Except in the case of direct response issuers, delivery of
the Buyer's guide must be made to the applicant at the time of
application, and acknowledgment of receipt of the Buyer's guide
must be obtained by the issuer. Direct response issuers shall
deliver the Buyer's guide to the applicant upon request, but no
later than the time at which the policy is delivered.
Sec. 29. Minnesota Statutes 1994, section 62A.31,
subdivision 1r, is amended to read:
Subd. 1r. [COMMUNITY RATE.] Each health maintenance
organization, health service plan corporation, insurer, or
fraternal benefit society that sells coverage that supplements
Medicare-related coverage shall establish a separate community
rate for that coverage. Beginning January 1, 1993, no
Medicare-related coverage that supplements Medicare or that is
governed by section 1833 or 1876 of the federal Social Security
Act, United States Code, title 42, section 1395, et seq., may be
offered, issued, sold, or renewed to a Minnesota resident,
except at the community rate required by this subdivision. The
same community rate must apply to newly issued coverage and to
renewal coverage.
For coverage that supplements Medicare and for the Part A
rate calculation for plans governed by section 1833 of the
federal Social Security Act, United States Code, title 42,
section 1395, et seq., the community rate may take into account
only the following factors:
(1) actuarially valid differences in benefit designs or
provider networks;
(2) geographic variations in rates if preapproved by the
commissioner of commerce; and
(3) premium reductions in recognition of healthy lifestyle
behaviors, including but not limited to, refraining from the use
of tobacco. Premium reductions must be actuarially valid and
must relate only to those healthy lifestyle behaviors that have
a proven positive impact on health. Factors used by the health
carrier making this premium reduction must be filed with and
approved by the commissioner of commerce.
For insureds not residing in Anoka, Carver, Chisago,
Dakota, Hennepin, Ramsey, Scott, or Washington county, a health
plan may, at the option of the health carrier, phase in
compliance under the following timetable:
(i) a premium adjustment as of March 1, 1993, that consists
of one-half of the difference between the community rate that
would be applicable to the person as of March 1, 1993, and the
premium rate that would be applicable to the person as of March
1, 1993, under the rate schedule permitted on December 31, 1992.
A health plan may, at the option of the health carrier,
implement the entire premium difference described in this clause
for any person as of March 1, 1993, if the premium difference
would be 15 percent or less of the premium rate that would be
applicable to the person as of March 1, 1993, under the rate
schedule permitted on December 31, 1992, if the health plan does
so uniformly regardless of whether the premium difference causes
premiums to rise or to fall. The premium difference described
in this clause is in addition to any premium adjustment
attributable to medical cost inflation or any other lawful
factor and is intended to describe only the premium difference
attributable to the transition to the community rate; and
(ii) with respect to any person whose premium adjustment
was constrained under clause (i), a premium adjustment as of
January 1, 1994, that consists of the remaining one-half of the
premium difference attributable to the transition to the
community rate, as described in clause (i).
A health plan that initially follows the phase-in timetable
may at any subsequent time comply on a more rapid timetable. A
health plan that is in full compliance as of January 1, 1993,
may not use the phase-in timetable and must remain in full
compliance. Health plans that follow the phase-in timetable
must charge the same premium rate for newly issued coverage that
they charge for renewal coverage. A health plan whose premiums
are constrained by clause (i) may take the constraint into
account in establishing its community rate.
From January 1, 1993 to February 28, 1993, a health plan
may, at the health carrier's option, charge the community rate
under this paragraph or may instead charge premiums permitted as
of December 31, 1992.
Sec. 30. Minnesota Statutes 1994, section 62A.31,
subdivision 1s, is amended to read:
Subd. 1s. [PRESCRIPTION DRUG COVERAGE.] Beginning January
1, 1993, a health maintenance organization that issues
Medicare-related coverage that supplements Medicare or that
issues coverage governed by section 1833 or 1876 of the federal
Social Security Act, United States Code, title 42, section 1395
et seq., must offer, to each person to whom it offers any
contract described in this subdivision, at least one contract
that either:
(1) covers 80 percent of the reasonable and customary
charge for prescription drugs or the copayment equivalency; or
(2) offers the coverage described in clause (1) as an
optional rider that may be purchased separately from other
optional coverages.
Sec. 31. Minnesota Statutes 1994, section 62A.31,
subdivision 3, is amended to read:
Subd. 3. [DEFINITIONS.] (a) "Accident," "accidental
injury," or "accidental means" means to employ "result" language
and does not include words that establish an accidental means
test or use words such as "external," "violent," "visible
wounds," or similar words of description or characterization.
(1) The definition shall not be more restrictive than the
following: "Injury or injuries for which benefits are provided
means accidental bodily injury sustained by the insured person
which is the direct result of an accident, independent of
disease or bodily infirmity or any other cause, and occurs while
insurance coverage is in force."
(2) The definition may provide that injuries shall not
include injuries for which benefits are provided or available
under a workers' compensation, employer's liability or similar
law, or motor vehicle no-fault plan, unless prohibited by law.
(b) "Applicant" means:
(1) in the case of an individual Medicare supplement policy
or certificate, the person who seeks to contract for insurance
benefits; and
(2) in the case of a group Medicare supplement policy or
certificate, the proposed certificate holder.
(c) "Benefit period" or "Medicare benefit period" shall not
be defined more restrictively than as defined in the Medicare
program.
(d) "Certificate" means a certificate delivered or issued
for delivery in this state or offered to a resident of this
state under a group Medicare supplement policy or certificate.
(e) "Certificate form" means the form on which the
certificate is delivered or issued for delivery by the issuer.
(f) "Convalescent nursing home," "extended care facility,"
or "skilled nursing facility" shall not be defined more
restrictively than as defined in the Medicare program.
(g) "Health care expenses" means expenses of health
maintenance organizations associated with the delivery of health
care services which are analogous to incurred losses of
insurers. The expenses shall not include:
(1) home office and overhead costs;
(2) advertising costs;
(3) commissions and other acquisition costs;
(4) taxes;
(5) capital costs;
(6) administrative costs; and
(7) claims processing costs.
(h) "Hospital" may be defined in relation to its status,
facilities, and available services or to reflect its
accreditation by the joint commission on accreditation of
hospitals, but not more restrictively than as defined in the
Medicare program.
(i) "Issuer" includes insurance companies, fraternal
benefit societies, health care service plans, health maintenance
organizations, and any other entity delivering or issuing for
delivery Medicare supplement policies or certificates in this
state or offering these policies or certificates to residents of
this state.
(j) "Medicare" shall be defined in the policy and
certificate. Medicare may be defined as the Health Insurance
for the Aged Act, title XVIII of the Social Security Amendments
of 1965, as amended, or title I, part I, of Public Law Number
89-97, as enacted by the 89th Congress of the United States of
America and popularly known as the Health Insurance for the Aged
Act, as amended.
(k) "Medicare eligible expenses" means health care expenses
covered by Medicare, to the extent recognized as reasonable and
medically necessary by Medicare.
(l) "Medicare-related coverage" means a policy, contract,
or certificate issued as a supplement to Medicare, regulated
under sections 62A.31 to 62A.44, including Medicare select
coverage; policies, contracts, or certificates that supplement
Medicare issued by health maintenance organizations; or
policies, contracts, or certificates governed by section 1833
(known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA"
or "risk" contracts) of the federal Social Security Act, United
States Code, title 42, section 1395, et seq., as amended.
(m) "Medicare supplement policy or certificate" means a
group or individual policy of accident and sickness insurance or
a subscriber contract of hospital and medical service
associations or health maintenance organizations, other than a
policy or certificate issued under a contract under or those
policies or certificates covered by section 1833 or 1876 of the
federal Social Security Act, United States Code, title 42,
section 1395, et seq., or an issued policy under a demonstration
project authorized specified under amendments to the federal
Social Security Act, which is advertised, marketed, or designed
primarily as a supplement to reimbursements under Medicare for
the hospital, medical, or surgical expenses of persons eligible
for Medicare.
(m) (n) "Physician" shall not be defined more restrictively
than as defined in the Medicare program or section 62A.04,
subdivision 1, or 62A.15, subdivision 3a.
(n) (o) "Policy form" means the form on which the policy is
delivered or issued for delivery by the issuer.
(o) (p) "Sickness" shall not be defined more restrictively
than the following:
"Sickness means illness or disease of an insured person
which first manifests itself after the effective date of
insurance and while the insurance is in force."
The definition may be further modified to exclude
sicknesses or diseases for which benefits are provided under a
workers' compensation, occupational disease, employer's
liability, or similar law.
Sec. 32. Minnesota Statutes 1994, section 62A.315, is
amended to read:
62A.315 [EXTENDED BASIC MEDICARE SUPPLEMENT PLAN;
COVERAGE.]
The extended basic Medicare supplement plan must have a
level of coverage so that it will be certified as a qualified
plan pursuant to section 62E.07, and will provide:
(1) coverage for all of the Medicare part A inpatient
hospital deductible and coinsurance amounts, and 100 percent of
all Medicare part A eligible expenses for hospitalization not
covered by Medicare;
(2) coverage for the daily copayment amount of Medicare
part A eligible expenses for the calendar year incurred for
skilled nursing facility care;
(3) coverage for the copayment amount of Medicare eligible
expenses under Medicare part B regardless of hospital
confinement, and the Medicare part B deductible amount;
(4) 80 percent of the usual and customary hospital and
medical expenses and supplies described in section 62E.06,
subdivision 1, not to exceed any charge limitation established
by the Medicare program or state law, the usual and customary
hospital and medical expenses and supplies, described in section
62E.06, subdivision 1, while in a foreign country, and
prescription drug expenses, not covered by Medicare's eligible
expenses Medicare;
(5) coverage for the reasonable cost of the first three
pints of blood, or equivalent quantities of packed red blood
cells as defined under federal regulations under Medicare parts
A and B, unless replaced in accordance with federal regulations;
(6) 100 percent of the cost of immunizations and routine
screening procedures for cancer, including mammograms and pap
smears;
(7) preventive medical care benefit: coverage for the
following preventive health services:
(i) an annual clinical preventive medical history and
physical examination that may include tests and services from
clause (ii) and patient education to address preventive health
care measures;
(ii) any one or a combination of the following preventive
screening tests or preventive services, the frequency of which
is considered medically appropriate:
(A) fecal occult blood test and/or digital rectal
examination;
(B) dipstick urinalysis for hematuria, bacteriuria, and
proteinuria;
(C) pure tone (air only) hearing screening test
administered or ordered by a physician;
(D) serum cholesterol screening every five years;
(E) thyroid function test;
(F) diabetes screening;
(iii) any other tests or preventive measures determined
appropriate by the attending physician.
Reimbursement shall be for the actual charges up to 100
percent of the Medicare-approved amount for each service as if
Medicare were to cover the service as identified in American
Medical Association current procedural terminology (AMA CPT)
codes to a maximum of $120 annually under this benefit. This
benefit shall not include payment for any procedure covered by
Medicare;
(8) at-home recovery benefit: coverage for services to
provide short-term at-home assistance with activities of daily
living for those recovering from an illness, injury, or surgery:
(i) for purposes of this benefit, the following definitions
shall apply:
(A) "activities of daily living" include, but are not
limited to, bathing, dressing, personal hygiene, transferring,
eating, ambulating, assistance with drugs that are normally
self-administered, and changing bandages or other dressings;
(B) "care provider" means a duly qualified or licensed home
health aide/homemaker, personal care aide, or nurse provided
through a licensed home health care agency or referred by a
licensed referral agency or licensed nurses registry;
(C) "home" means a place used by the insured as a place of
residence, provided that the place would qualify as a residence
for home health care services covered by Medicare. A hospital
or skilled nursing facility shall not be considered the
insured's place of residence;
(D) "at-home recovery visit" means the period of a visit
required to provide at-home recovery care, without limit on the
duration of the visit, except each consecutive four hours in a
24-hour period of services provided by a care provider is one
visit;
(ii) coverage requirements and limitations:
(A) at-home recovery services provided must be primarily
services that assist in activities of daily living;
(B) the insured's attending physician must certify that the
specific type and frequency of at-home recovery services are
necessary because of a condition for which a home care plan of
treatment was approved by Medicare;
(C) coverage is limited to:
(I) no more than the number and type of at-home recovery
visits certified as medically necessary by the insured's
attending physician. The total number of at-home recovery
visits shall not exceed the number of Medicare-approved home
health care visits under a Medicare-approved home care plan of
treatment;
(II) the actual charges for each visit up to a maximum
reimbursement of $40 per visit;
(III) $1,600 per calendar year;
(IV) seven visits in any one week;
(V) care furnished on a visiting basis in the insured's
home;
(VI) services provided by a care provider as defined in
this section;
(VII) at-home recovery visits while the insured is covered
under the policy or certificate and not otherwise excluded;
(VIII) at-home recovery visits received during the period
the insured is receiving Medicare-approved home care services or
no more than eight weeks after the service date of the last
Medicare-approved home health care visit;
(iii) coverage is excluded for:
(A) home care visits paid for by Medicare or other
government programs; and
(B) care provided by family members, unpaid volunteers, or
providers who are not care providers.
Sec. 33. Minnesota Statutes 1994, section 62A.318, is
amended to read:
62A.318 [MEDICARE SELECT POLICIES AND CERTIFICATES.]
(a) This section applies to Medicare select policies and
certificates, as defined in this section, including those issued
by health maintenance organizations. No policy or certificate
may be advertised as a Medicare select policy or certificate
unless it meets the requirements of this section.
(b) For the purposes of this section:
(1) "complaint" means any dissatisfaction expressed by an
individual concerning a Medicare select issuer or its network
providers;
(2) "grievance" means dissatisfaction expressed in writing
by an individual insured under a Medicare select policy or
certificate with the administration, claims practices, or
provision of services concerning a Medicare select issuer or its
network providers;
(3) "Medicare select issuer" means an issuer offering, or
seeking to offer, a Medicare select policy or certificate;
(4) "Medicare select policy" or "Medicare select
certificate" means a Medicare supplement policy or certificate
that contains restricted network provisions;
(5) "network provider" means a provider of health care, or
a group of providers of health care, that has entered into a
written agreement with the issuer to provide benefits insured
under a Medicare select policy or certificate;
(6) "restricted network provision" means a provision that
conditions the payment of benefits, in whole or in part, on the
use of network providers; and
(7) "service area" means the geographic area approved by
the commissioner within which an issuer is authorized to offer a
Medicare select policy or certificate.
(c) The commissioner may authorize an issuer to offer a
Medicare select policy or certificate pursuant to this section
and section 4358 of the Omnibus Budget Reconciliation Act (OBRA)
of 1990, Public Law Number 101-508, if the commissioner finds
that the issuer has satisfied all of the requirements of
Minnesota Statutes.
(d) A Medicare select issuer shall not issue a Medicare
select policy or certificate in this state until its plan of
operation has been approved by the commissioner.
(e) A Medicare select issuer shall file a proposed plan of
operation with the commissioner, in a format prescribed by the
commissioner. The plan of operation shall contain at least the
following information:
(1) evidence that all covered services that are subject to
restricted network provisions are available and accessible
through network providers, including a demonstration that:
(i) the services can be provided by network providers with
reasonable promptness with respect to geographic location, hours
of operation, and after-hour care. The hours of operation and
availability of after-hour care shall reflect usual practice in
the local area. Geographic availability shall reflect the usual
travel times within the community;
(ii) the number of network providers in the service area is
sufficient, with respect to current and expected policyholders,
either:
(A) to deliver adequately all services that are subject to
a restricted network provision; or
(B) to make appropriate referrals;
(iii) there are written agreements with network providers
describing specific responsibilities;
(iv) emergency care is available 24 hours per day and seven
days per week; and
(v) in the case of covered services that are subject to a
restricted network provision and are provided on a prepaid
basis, there are written agreements with network providers
prohibiting the providers from billing or otherwise seeking
reimbursement from or recourse against an individual insured
under a Medicare select policy or certificate. This section
does not apply to supplemental charges or coinsurance amounts as
stated in the Medicare select policy or certificate;
(2) a statement or map providing a clear description of the
service area;
(3) a description of the grievance procedure to be used;
(4) a description of the quality assurance program,
including:
(i) the formal organizational structure;
(ii) the written criteria for selection, retention, and
removal of network providers; and
(iii) the procedures for evaluating quality of care
provided by network providers, and the process to initiate
corrective action when warranted;
(5) a list and description, by specialty, of the network
providers;
(6) copies of the written information proposed to be used
by the issuer to comply with paragraph (i); and
(7) any other information requested by the commissioner.
(f) A Medicare select issuer shall file proposed changes to
the plan of operation, except for changes to the list of network
providers, with the commissioner before implementing the
changes. The changes shall be considered approved by the
commissioner after 30 days unless specifically disapproved.
An updated list of network providers shall be filed with
the commissioner at least quarterly.
(g) A Medicare select policy or certificate shall not
restrict payment for covered services provided by nonnetwork
providers if:
(1) the services are for symptoms requiring emergency care
or are immediately required for an unforeseen illness, injury,
or condition; and
(2) it is not reasonable to obtain the services through a
network provider.
(h) A Medicare select policy or certificate shall provide
payment for full coverage under the policy or certificate for
covered services that are not available through network
providers.
(i) A Medicare select issuer shall make full and fair
disclosure in writing of the provisions, restrictions, and
limitations of the Medicare select policy or certificate to each
applicant. This disclosure must include at least the following:
(1) an outline of coverage sufficient to permit the
applicant to compare the coverage and premiums of the Medicare
select policy or certificate with:
(i) other Medicare supplement policies or certificates
offered by the issuer; and
(ii) other Medicare select policies or certificates;
(2) a description, including address, phone number, and
hours of operation, of the network providers, including primary
care physicians, specialty physicians, hospitals, and other
providers;
(3) a description of the restricted network provisions,
including payments for coinsurance and deductibles when
providers other than network providers are used;
(4) a description of coverage for emergency and urgently
needed care and other out-of-service area coverage;
(5) a description of limitations on referrals to restricted
network providers and to other providers;
(6) a description of the policyholder's rights to purchase
any other Medicare supplement policy or certificate otherwise
offered by the issuer; and
(7) a description of the Medicare select issuer's quality
assurance program and grievance procedure.
(j) Before the sale of a Medicare select policy or
certificate, a Medicare select issuer shall obtain from the
applicant a signed and dated form stating that the applicant has
received the information provided pursuant to paragraph (i) and
that the applicant understands the restrictions of the Medicare
select policy or certificate.
(k) A Medicare select issuer shall have and use procedures
for hearing complaints and resolving written grievances from the
subscribers. The procedures shall be aimed at mutual agreement
for settlement and may include arbitration procedures.
(1) The grievance procedure must be described in the policy
and certificates and in the outline of coverage.
(2) At the time the policy or certificate is issued, the
issuer shall provide detailed information to the policyholder
describing how a grievance may be registered with the issuer.
(3) Grievances must be considered in a timely manner and
must be transmitted to appropriate decision makers who have
authority to fully investigate the issue and take corrective
action.
(4) If a grievance is found to be valid, corrective action
must be taken promptly.
(5) All concerned parties must be notified about the
results of a grievance.
(6) The issuer shall report no later than March 31 of each
year to the commissioner regarding the grievance procedure. The
report shall be in a format prescribed by the commissioner and
shall contain the number of grievances filed in the past year
and a summary of the subject, nature, and resolution of the
grievances.
(l) At the time of initial purchase, a Medicare select
issuer shall make available to each applicant for a Medicare
select policy or certificate the opportunity to purchase a
Medicare supplement policy or certificate otherwise offered by
the issuer.
(m)(1) At the request of an individual insured under a
Medicare select policy or certificate, a Medicare select issuer
shall make available to the individual insured the opportunity
to purchase a Medicare supplement policy or certificate offered
by the issuer that has comparable or lesser benefits and that
does not contain a restricted network provision. The issuer
shall make the policies or certificates available without
requiring evidence of insurability after the Medicare supplement
policy or certificate has been in force for six months. If the
issuer does not have available for sale a policy or certificate
without restrictive network provisions, the issuer shall provide
enrollment information for the Minnesota comprehensive health
association Medicare supplement plans.
(2) For the purposes of this paragraph, a Medicare
supplement policy or certificate will be considered to have
comparable or lesser benefits unless it contains one or more
significant benefits not included in the Medicare select policy
or certificate being replaced. For the purposes of this
paragraph, a significant benefit means coverage for the Medicare
part A deductible, coverage for prescription drugs, coverage for
at-home recovery services, or coverage for part B excess charges.
(n) Medicare select policies and certificates shall provide
for continuation of coverage if the secretary of health and
human services determines that Medicare select policies and
certificates issued pursuant to this section should be
discontinued due to either the failure of the Medicare select
program to be reauthorized under law or its substantial
amendment.
(1) Each Medicare select issuer shall make available to
each individual insured under a Medicare select policy or
certificate the opportunity to purchase a Medicare supplement
policy or certificate offered by the issuer that has comparable
or lesser benefits and that does not contain a restricted
network provision. The issuer shall make the policies and
certificates available without requiring evidence of
insurability.
(2) For the purposes of this paragraph, a Medicare
supplement policy or certificate will be considered to have
comparable or lesser benefits unless it contains one or more
significant benefits not included in the Medicare select policy
or certificate being replaced. For the purposes of this
paragraph, a significant benefit means coverage for the Medicare
part A deductible, coverage for prescription drugs, coverage for
at-home recovery services, or coverage for part B excess charges.
(o) A Medicare select issuer shall comply with reasonable
requests for data made by state or federal agencies, including
the United States Department of Health and Human Services, for
the purpose of evaluating the Medicare select program.
(p) Medicare select policies and certificates under this
section shall be regulated and approved by the department of
commerce.
(q) Medicare select policies and certificates must be
either a basic plan or an extended basic plan. Before a
Medicare select policy or certificate is sold or issued in this
state, the applicant must be provided with an explanation of
coverage for both a Medicare select basic and a Medicare select
extended basic policy or certificate and must be provided with
the opportunity of purchasing either a Medicare select basic or
a Medicare select extended basic policy. The basic plan may
also include any of the optional benefit riders authorized by
section 62A.316. Preventive care provided by Medicare select
policies or certificates must be provided as set forth in
section 62A.315 or 62A.316, except that the benefits are as
defined in chapter 62D.
(r) Medicare select policies and certificates are exempt
from the requirements of section 62A.31, subdivision 1,
paragraph (d). This paragraph expires January 1, 1994.
Sec. 34. Minnesota Statutes 1994, section 62A.39, is
amended to read:
62A.39 [DISCLOSURE.]
No individual Medicare supplement plan shall be delivered
or issued in this state and no certificate shall be delivered
under a group Medicare supplement plan delivered or issued in
this state unless the plan is shown on the cover page and an
outline containing at least the following information in no less
than 12-point type is delivered to the applicant at the time the
application is made:
(a) A description of the principal benefits and coverage
provided in the policy;
(b) A statement of the exceptions, reductions, and
limitations contained in the policy including the following
language, as applicable, in bold print: "THIS POLICY DOES NOT
COVER ALL MEDICAL EXPENSES BEYOND THOSE COVERED BY MEDICARE.
THIS POLICY DOES NOT COVER ALL SKILLED NURSING HOME CARE
EXPENSES AND DOES NOT COVER CUSTODIAL OR RESIDENTIAL NURSING
CARE. READ YOUR POLICY CAREFULLY TO DETERMINE WHICH NURSING
HOME FACILITIES AND EXPENSES ARE COVERED BY YOUR POLICY.";
(c) A statement of the renewal provisions including any
reservations by the insurer of a right to change premiums. The
premium and manner of payment shall be stated for all plans that
are offered to the prospective applicant. All possible premiums
for the prospective applicant shall be illustrated;
(d) [READ YOUR POLICY OR CERTIFICATE VERY CAREFULLY.] A
statement that the outline of coverage is a summary of the
policy issued or applied for and that the policy should be
consulted to determine governing contractual provisions.
Additionally, it does not give all the details of Medicare
coverage. Contact your local Social Security office or consult
the Medicare handbook for more details;
(e) A statement of the policy's loss ratio as follows:
"This policy provides an anticipated loss ratio of (..%). This
means that, on the average, policyholders may expect that
($....) of every $100.00 in premium will be returned as benefits
to policyholders over the life of the contract.";
(f) When the outline of coverage is provided at the time of
application and the Medicare supplement policy or certificate is
issued on a basis that would require revision of the outline, a
substitute outline of coverage properly describing the policy or
certificate shall accompany the policy or certificate when it is
delivered and contain the following statement, in no less than
12-point type, immediately above the company name:
"NOTICE: Read this outline of coverage carefully. It is not
identical to the outline of coverage provided upon application,
and the coverage originally applied for has not been issued.";
(g) [RIGHT TO RETURN POLICY OR CERTIFICATE.] "If you find
that you are not satisfied with your policy or certificate for
any reason, you may return it to (insert issuer's address). If
you send the policy or certificate back to us within 30 days
after you receive it, we will treat the policy or certificate as
if it had never been issued and return all of your payments
within ten days.";
(h) [POLICY OR CERTIFICATE REPLACEMENT.] "If you are
replacing another health insurance policy or certificate, do NOT
cancel it until you have actually received your new policy or
certificate and are sure you want to keep it.";
(i) [NOTICE.] "This policy or certificate may not fully
cover all of your medical costs."
A. (for agents:)
"Neither (insert company's name) nor its agents are
connected with Medicare."
B. (for direct response:)
"(insert company's name) is not connected with Medicare."
(j) Notice regarding policies or certificates which are not
Medicare supplement policies.
Any accident and sickness insurance policy or certificate,
other than a Medicare supplement policy, or a policy or
certificate issued pursuant to a contract under the federal
Social Security Act, section 1833 or 1876 (United States Code,
title 42, section 1395, et seq.), disability income policy;
basic, catastrophic, or major medical expense policy; single
premium nonrenewable policy; or other policy, issued for
delivery in this state to persons eligible for Medicare shall
notify insureds under the policy that the policy is not a
Medicare supplement policy or certificate. The notice shall
either be printed or attached to the first page of the outline
of coverage delivered to insureds under the policy, or if no
outline of coverage is delivered, to the first page of the
policy or certificate delivered to insureds. The notice shall
be in no less than 12-point type and shall contain the following
language:
"THIS (POLICY OR CERTIFICATE) IS NOT A MEDICARE SUPPLEMENT
(POLICY OR CONTRACT). If you are eligible for Medicare,
review the Medicare supplement buyer's "Guide to Health
Insurance for People with Medicare" available from the
company."
(k) [COMPLETE ANSWERS ARE VERY IMPORTANT.] "When you fill
out the application for the new policy or certificate, be sure
to answer truthfully and completely all questions about your
medical and health history. The company may cancel your policy
or certificate and refuse to pay any claims if you leave out or
falsify important medical information." If the policy or
certificate is guaranteed issue, this paragraph need not appear.
"Review the application carefully before you sign it. Be
certain that all information has been properly recorded."
Include for each plan, prominently identified in the cover
page, a chart showing the services, Medicare payments, plan
payments, and insured payments for each plan, using the same
language, in the same order, using uniform layout and format.
The outline of coverage provided to applicants pursuant to
this section consists of four parts: a cover page, premium
information, disclosure pages, and charts displaying the
features of each benefit plan offered by the insurer.
Sec. 35. Minnesota Statutes 1994, section 62A.44,
subdivision 2, is amended to read:
Subd. 2. [QUESTIONS.] (a) Application forms shall include
the following questions designed to elicit information as to
whether, as of the date of the application, the applicant has
another Medicare supplement or other health insurance policy or
certificate in force or whether a Medicare supplement policy or
certificate is intended to replace any other accident and
sickness policy or certificate presently in force. A
supplementary application or other form to be signed by the
applicant and agent containing the questions and statements may
be used.
"(1) You do not need more than one Medicare supplement
policy or certificate.
(2) If you are 65 or older, purchase this policy, you may
want to evaluate your existing health coverage and decide
if you need multiple coverages.
(3) You may be eligible for benefits under Medicaid and may
not need a Medicare supplement policy or certificate.
(3) (4) The benefits and premiums under your Medicare
supplement policy or certificate will can be suspended, if
requested, during your entitlement to benefits under
Medicaid for 24 months. You must request this suspension
within 90 days of becoming eligible for Medicaid. If you
are no longer entitled to Medicaid, your policy or
certificate will be reinstated if requested within 90 days
of losing Medicaid eligibility.
(5) Counseling services may be available in Minnesota to
provide advice concerning medical assistance through state
Medicaid, Qualified Medicare Beneficiaries (QMBs), and
Specified Low-Income Medicare Beneficiaries (SLMBs).
To the best of your knowledge:
(1) Do you have another Medicare supplement policy or
certificate in force, including health care service
contract or health maintenance organization contract?
(a) If so, with which company?
(b) If so, do you intend to replace your current Medicare
supplement policy with this policy or certificate?
(2) Do you have any other health insurance policies that
provide benefits that which this Medicare supplement policy
or certificate would duplicate?
(a) If you do so, please name the company and the.
(b) What kind of policy.?
(3) If the answer to question 1 or 2 is yes, do you intend
to replace these medical or health policies with this
policy or certificate?
(4) Are you covered by for medical assistance through the
state Medicaid program? If so, which of the following
programs provides coverage for you?
a. Specified Low-Income Medicare Beneficiary (SLMB),
b. Qualified Medicare Beneficiary (QMB), or
c. full Medicaid Beneficiary?"
(b) Agents shall list any other health insurance policies
they have sold to the applicant.
(1) List policies sold that are still in force.
(2) List policies sold in the past five years that are no
longer in force.
(c) In the case of a direct response issuer, a copy of the
application or supplemental form, signed by the applicant, and
acknowledged by the insurer, shall be returned to the applicant
by the insurer on delivery of the policy or certificate.
(d) Upon determining that a sale will involve replacement
of Medicare supplement coverage, any issuer, other than a direct
response issuer, or its agent, shall furnish the applicant,
before issuance or delivery of the Medicare supplement policy or
certificate, a notice regarding replacement of Medicare
supplement coverage. One copy of the notice signed by the
applicant and the agent, except where the coverage is sold
without an agent, shall be provided to the applicant and an
additional signed copy shall be retained by the issuer. A
direct response issuer shall deliver to the applicant at the
time of the issuance of the policy or certificate the notice
regarding replacement of Medicare supplement coverage.
(e) The notice required by paragraph (d) for an issuer
shall be provided in substantially the following form in no less
than 12-point type:
"NOTICE TO APPLICANT REGARDING REPLACEMENT
OF MEDICARE SUPPLEMENT INSURANCE
(Insurance company's name and address)
SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.
According to (your application) (information you have
furnished), you intend to terminate existing Medicare supplement
insurance and replace it with a policy or certificate to be
issued by (Company Name) Insurance Company. Your new policy or
certificate will provide 30 days within which you may decide
without cost whether you desire to keep the policy or
certificate.
You should review this new coverage carefully. Compare it
with all accident and sickness coverage you now have. Terminate
your present policy only If, after due consideration, you find
that purchase of this Medicare supplement coverage is a wise
decision you should terminate your present Medicare supplement
policy. You should evaluate the need for other accident and
sickness coverage you have that may duplicate this policy.
STATEMENT TO APPLICANT BY ISSUER, AGENT, (BROKER OR OTHER
REPRESENTATIVE): I have reviewed your current medical or
health insurance coverage. The replacement of insurance
involved in this transaction does not duplicate coverage,
To the best of my knowledge this Medicare supplement policy
will not duplicate your existing Medicare supplement policy
because you intend to terminate the existing Medicare
supplement policy. The replacement policy or certificate
is being purchased for the following reason(s) (check one):
______ Additional benefits
______ No change in benefits, but lower premiums
______ Fewer benefits and lower premiums
______ Other (please specify)
____________________________________________________________
____________________________________________________________
____________________________________________________________
(1) Health conditions which you may presently have
(preexisting conditions) may not be immediately or fully
covered under the new policy or certificate. This could
result in denial or delay of a claim for benefits under the
new policy or certificate, whereas a similar claim might
have been payable under your present policy or certificate.
(2) State law provides that your replacement policy or
certificate may not contain new preexisting conditions,
waiting periods, elimination periods, or probationary
periods. The insurer will waive any time periods
applicable to preexisting conditions, waiting periods,
elimination periods, or probationary periods in the new
policy (or coverage) for similar benefits to the extent the
time was spent (depleted) under the original policy or
certificate.
(3) If you still wish to terminate your present policy or
certificate and replace it with new coverage, be certain to
truthfully and completely answer all questions on the
application concerning your medical and health history.
Failure to include all material medical information on an
application may provide a basis for the company to deny any
future claims and to refund your premium as though your
policy or certificate had never been in force. After the
application has been completed and before you sign it,
review it carefully to be certain that all information has
been properly recorded. (If the policy or certificate is
guaranteed issue, this paragraph need not appear.)
Do not cancel your present policy or certificate until you
have received your new policy or certificate and you are
sure that you want to keep it.
_____________________________________________________
(Signature of Agent, Broker, or Other Representative)*
_____________________________________________________
(Typed Name and Address of Issuer, Agent, or Broker)
_____________________
(Date)
__________________________________
(Applicant's Signature)
_____________________
(Date)
*Signature not required for direct response sales."
(f) Paragraph (e), clauses (1) and (2), of the replacement
notice (applicable to preexisting conditions) may be deleted by
an issuer if the replacement does not involve application of a
new preexisting condition limitation.
Sec. 36. Minnesota Statutes 1995 Supplement, section
62A.46, subdivision 2, is amended to read:
Subd. 2. [LONG-TERM CARE POLICY.] "Long-term care policy"
means an individual or group policy, certificate, subscriber
contract, or other evidence of coverage that provides benefits
for prescribed long-term care, including nursing facility
services and or home care services, or both nursing facility
services and home care services, pursuant to the requirements of
sections 62A.46 to 62A.56.
Sections 62A.46, 62A.48, and 62A.52 to 62A.56 do not apply
to a long-term care policy issued to (a) an employer or
employers or to the trustee of a fund established by an employer
where only employees or retirees, and dependents of employees or
retirees, are eligible for coverage or (b) to a labor union or
similar employee organization. The associations exempted from
the requirements of sections 62A.31 to 62A.44 under 62A.31,
subdivision 1, clause (c) shall not be subject to the provisions
of sections 62A.46 to 62A.56 until July 1, 1988.
Sec. 37. Minnesota Statutes 1995 Supplement, section
62A.48, subdivision 1, is amended to read:
Subdivision 1. [POLICY REQUIREMENTS.] No individual or
group policy, certificate, subscriber contract, or other
evidence of coverage of nursing home care or other long-term
care services shall be offered, issued, delivered, or renewed in
this state, whether or not the policy is issued in this state,
unless the policy is offered, issued, delivered, or renewed by a
qualified insurer and the policy satisfies the requirements of
sections 62A.46 to 62A.56. A long-term care policy must cover
prescribed long-term care in nursing facilities and at least or
the prescribed long-term home care services in section 62A.46,
subdivision 4, clauses (1) to (5), provided by a home health
agency. A long-term care policy may cover both prescribed
long-term care in nursing facilities and the prescribed
long-term home care services in section 62A.46, subdivision 4,
clauses (1) to (5), provided by a home health agency. Coverage
under a long-term care policy, other than one that covers only
nursing facility services, must include: a minimum lifetime
benefit limit of at least $25,000 for services, and. A
long-term care policy that covers only nursing facility services
must include a minimum lifetime benefit limit of not less than
one year of nursing facility services. Nursing facility and
home care coverages under a long-term care policy must not be
subject to separate lifetime maximums for policies that cover
both nursing facility and home health care. Prior
hospitalization may not be required under a long-term care
policy.
The policy must cover preexisting conditions during the
first six months of coverage if the insured was not diagnosed or
treated for the particular condition during the 90 days
immediately preceding the effective date of coverage. Coverage
under the policy may include a waiting period of up to 90 days
before benefits are paid, but there must be no more than one
waiting period per benefit period; for purposes of this
sentence, "days" can mean calendar or benefit days. If benefit
days are used, an appropriate premium reduction and disclosure
must be made. No policy may exclude coverage for mental or
nervous disorders which have a demonstrable organic cause, such
as Alzheimer's and related dementias. No policy may require the
insured to be homebound or house confined to receive home care
services. The policy must include a provision that the plan
will not be canceled or renewal refused except on the grounds of
nonpayment of the premium, provided that the insurer may change
the premium rate on a class basis on any policy anniversary
date. A provision that the policyholder may elect to have the
premium paid in full at age 65 by payment of a higher premium up
to age 65 may be offered. A provision that the premium would be
waived during any period in which benefits are being paid to the
insured during confinement in a nursing facility must be
included. A nongroup policyholder may return a policy within 30
days of its delivery and have the premium refunded in full, less
any benefits paid under the policy, if the policyholder is not
satisfied for any reason.
No individual long-term care policy shall be offered or
delivered in this state until the insurer has received from the
insured a written designation of at least one person, in
addition to the insured, who is to receive notice of
cancellation of the policy for nonpayment of premium. The
insured has the right to designate up to a total of three
persons who are to receive the notice of cancellation, in
addition to the insured. The form used for the written
designation must inform the insured that designation of one
person is required and that designation of up to two additional
persons is optional and must provide space clearly designated
for listing between one and three persons. The designation
shall include each person's full name, home address, and
telephone number. Each time an individual policy is renewed or
continued, the insurer shall notify the insured of the right to
change this written designation.
The insurer may file a policy form that utilizes a plan of
care prepared as provided under section 62A.46, subdivision 5,
clause (1) or (2).
Sec. 38. Minnesota Statutes 1994, section 62A.49,
subdivision 1, is amended to read:
Subdivision 1. [GENERALLY.] Section 62A.48 does not
prohibit the sale of policies, certificates, subscriber
contracts, or other evidences of coverage that provide home care
services only. This does not, however, remove the requirement
that home care service benefits must be provided as part of a
long-term care policy pursuant to that section. Home care
services only policies may be sold, provided that they meet the
requirements set forth in sections 62A.46 to 62A.56, except that
they do not have to meet those conditions that relate to
long-term care in nursing facilities. Disclosures and
representations regarding these policies must be adjusted
accordingly to remove references to coverage for nursing home
care.
Sec. 39. Minnesota Statutes 1994, section 62A.60, is
amended to read:
62A.60 [RETROACTIVE DENIAL OF EXPENSES.]
In cases where the subscriber or insured is liable for
costs beyond applicable copayments or deductibles, no insurer
may retroactively deny payment to a person who is covered when
the services are provided for health care services that are
otherwise covered, if the insurer or its representative failed
to provide prior or concurrent review or authorization for the
expenses when required to do so under the policy, plan, or
certificate. If prior or concurrent review or authorization was
provided by the insurer or its representative, and the
preexisting condition limitation provision, the general
exclusion provision and any other coinsurance, or other policy
requirements have been met, the insurer may not deny payment for
the authorized service or time period except in cases where
fraud or substantive misrepresentation occurred.
Sec. 40. Minnesota Statutes 1995 Supplement, section
62C.14, subdivision 14, is amended to read:
Subd. 14. No subscriber's individual contract or any group
contract which provides for coverage of family members or other
dependents of a subscriber or of an employee or other group
member of a group subscriber, shall be renewed, delivered, or
issued for delivery in this state unless such contract includes
as covered family members or dependents any newborn infants,
including dependent grandchildren, immediately from the moment
of birth and thereafter which insurance shall provide coverage
for illness, injury, congenital malformation or premature
birth. For purposes of this paragraph, "newborn infants"
includes grandchildren who are financially dependent upon a
covered grandparent and who reside with that covered grandparent
continuously from birth. No policy, contract, or agreement
covered by this section may require notification to a health
carrier as a condition for this dependent coverage. However, if
the policy, contract, or agreement mandates an additional
premium for each dependent, the health carrier shall be entitled
to all premiums that would have been collected had the health
carrier been aware of the additional dependent. The health
carrier may withhold payment of any health benefits for the new
dependent until it has been compensated with the applicable
premium which would have been owed if the health carrier had
been informed of the additional dependent immediately.
Sec. 41. Minnesota Statutes 1995 Supplement, section
62E.05, subdivision 1, is amended to read:
Subdivision 1. [CERTIFICATION.] Upon application by an
insurer, fraternal, or employer for certification of a plan of
health coverage as a qualified plan or a qualified medicare
supplement plan for the purposes of sections 62E.01 to 62E.16,
the commissioner shall make a determination within 90 days as to
whether the plan is qualified. All plans of health coverage,
except Medicare supplement policies, shall be labeled as
"qualified" or "nonqualified" on the front of the policy or
evidence of insurance contract, or on the schedule page. All
qualified plans shall indicate whether they are number one, two,
or three coverage plans.
Sec. 42. Minnesota Statutes 1995 Supplement, section
62F.02, subdivision 2, is amended to read:
Subd. 2. [DIRECTORS.] The association shall have a board
of directors composed of 11 persons chosen for a term of four
years as follows: five persons elected by members of the
association at a meeting called by the commissioner; three
members who are health care providers appointed by the
commissioner prior to the election by the association; and three
public members, as defined in section 214.02, appointed by the
governor prior to the election by the association. If the
commissioner determines that it is no longer cost-effective or
efficient to operate a separate board of directors to administer
the medical malpractice joint underwriting association, the
commissioner shall deactivate the board and assign all of the
board's authority and responsibilities under this chapter to the
Minnesota joint underwriting association board of directors
established under section 62I.02.
Sec. 43. Minnesota Statutes 1994, section 62F.03,
subdivision 6, is amended to read:
Subd. 6. "Net direct premiums" means gross direct premiums
written on personal injury liability insurance, including the
liability component of multiple peril package policies as
computed by the commissioner, less return premiums for the
unused or unabsorbed portions of premium deposits. Net direct
premiums do not include policyholder dividends.
Sec. 44. Minnesota Statutes 1994, section 62F.04,
subdivision 1a, is amended to read:
Subd. 1a. [REAUTHORIZATION.] The authorization to issue
insurance is valid for a period of two years from the date it
was made. The commissioner may reauthorize the issuance of
insurance for additional two-year periods under the terms of
subdivision 1 according to the procedures set forth in sections
62I.21 and 62I.22. This subdivision is not a limitation on the
number of times the commissioner may reauthorize the issuance of
insurance.
Sec. 45. Minnesota Statutes 1994, section 62I.02,
subdivision 2, is amended to read:
Subd. 2. [DIRECTOR BOARD OF DIRECTORS.] The association
shall have a board of directors composed of 11 persons chosen as
follows: five persons elected by members of the association at
a meeting called by the commissioner; three public members, as
defined in section 214.02, appointed by the commissioner; and
three members, appointed by the commissioner representing groups
to whom coverage has been extended by the association. The
terms of the members shall be four years. Terms may be
staggered so that no more than six members are appointed or
elected every two years. Members may serve until their
successors are appointed or elected. If at any time no coverage
is currently extended by the association, then either additional
public members may be appointed to fill these three positions
or, at the option of the commissioner, representatives from
groups who had previously been covered by the association may
serve as directors. In the event that the commissioner assigns
the responsibility for administering chapter 62F to the
Minnesota joint underwriting association, the board of directors
must be increased by four additional members. The commissioner
shall appoint two of the additional members, one of whom must be
a licensed health care provider, and one of whom must be a
public member. Association members shall elect the other two
members, one of whom must be a representative of medical
malpractice insurers, and one of whom must be a representative
of personal injury liability insurers.
Sec. 46. Minnesota Statutes 1994, section 62I.02,
subdivision 5, is amended to read:
Subd. 5. [ACCOUNTS.] (a) For the purposes of
administration and assessment, and except as otherwise
authorized under paragraph (b), the association shall be divided
into two separate accounts:
(1) the property and casualty insurance account; and
(2) the personal injury liability insurance account
account-liquor.
(b) If the association is authorized by the commissioner to
issue medical malpractice insurance, the association shall
establish a third account for purposes of administration and
assessment. This account must be identified as the personal
injury liability insurance account-medical malpractice.
Sec. 47. Minnesota Statutes 1994, section 62I.02, is
amended by adding a subdivision to read:
Subd. 6. [MEDICAL MALPRACTICE.] If the association is
authorized by the commissioner to issue medical malpractice
insurance, it shall administer the medical malpractice insurance
program according to chapter 62F.
Sec. 48. Minnesota Statutes 1994, section 62I.07, is
amended to read:
62I.07 [MEMBERSHIP ASSESSMENTS.]
Subdivision 1. [GENERAL ASSESSMENT.] Each member of the
association that is authorized to write property and casualty
insurance in the state shall participate in its losses and
expenses in the proportion that the direct written premiums of
the member on the kinds of insurance in that account bears to
the total aggregate direct written premiums written in this
state by all members on the kinds of insurance in that account.
The members' participation in the association shall be
determined annually on the direct written premiums written
during the preceding calendar year as reported on the annual
statements and other reports filed by the member with the
commissioner. Direct written premiums mean that amount at page
14, column (2), lines 5, 8, 9, 17, 21.2, 22, 23, 24, 25, 26, and
27 of the annual statement filed annually with the department of
commerce under section 60A.13.
Subd. 2. [PERSONAL INJURY LIABILITY INSURANCE ASSESSMENT;
LIQUOR LIABILITY.] A member of the association shall participate
in its writings, expenses, servicing allowance, management fees,
and losses in the proportion that the net direct premiums of the
member, excluding that portion of premiums attributable to the
operation of the association, written during the preceding
calendar year on the kinds of insurance in that account bears to
the aggregate net direct premiums written in this state by all
members on the kinds of insurance in that account. The member's
participation in the association shall be determined annually on
the basis of net direct premiums written during the preceding
calendar year, as reported in the annual statements and other
reports filed by the member with the commissioner. Net direct
premiums mean gross direct premiums written on personal injury
liability insurance, including the liability component of
multiple peril package policies as computed by the commissioner,
less return premiums for the unused or unabsorbed portions of
premium deposits. The net direct premiums are calculated using
lines 5.2 CMP, and 17-other liability from page 14, column (2)
of the annual statement filed annually with the department of
commerce pursuant to section 60A.13.
Subd. 3. [PERSONAL INJURY LIABILITY INSURANCE ASSESSMENT;
MEDICAL MALPRACTICE.] If an assessment is needed for medical
malpractice, the assessment is made using the following lines
from page 14, column (2) of the annual statement filed annually
with the department of commerce pursuant to section 60A.13 using
the following lines: 5.2 commercial multiperil liability, 11
medical malpractice, 17-other liability, 19.1 PIP-private
passenger, 19.3 PIP-commercial.
Sec. 49. Minnesota Statutes 1994, section 62L.09,
subdivision 3, is amended to read:
Subd. 3. [REENTRY PROHIBITION.] (a) Except as otherwise
provided in paragraph (b), a health carrier that ceases to do
business in the small employer market after July 1, 1993, is
prohibited from writing new business in the small employer
market in this state for a period of five years from the date of
notice to the commissioner. This subdivision applies to any
health maintenance organization that ceases to do business in
the small employer market in one service area with respect to
that service area only. Nothing in this subdivision prohibits
an affiliated health maintenance organization from continuing to
do business in the small employer market in that same service
area.
(b) The commissioner of commerce or the commissioner of
health may permit a health carrier that ceases to do business in
the small employer market in this state after July 1, 1993, to
begin writing new business in the small employer market if:
(1) since the carrier ceased doing business in the small
employer market, legislative action has occurred that has
significantly changed the effect on the carrier of its decision
to cease doing business in the small employer market; and
(2) the commissioner deems it appropriate.
Sec. 50. [62Q.49] [ENROLLEE COST SHARING; NEGOTIATED
PROVIDER PAYMENTS.]
Subdivision 1. [APPLICABILITY.] This section applies to
all health plans, as defined in section 62Q.01, subdivision 3,
that provide coverage for health care to be provided entirely or
partially:
(1) through contracts in which health care providers agree
to accept discounted charges, negotiated charges, or other
limits on health care provider charges;
(2) by employees of, or facilities or entities owned by,
the issuer of the health plan; or
(3) through contracts with health care providers that
provide for payment to the providers on a fully or partially
capitated basis or on any other non-fee-for-service basis.
Subd. 2. [DISCLOSURE REQUIRED.] (a) All health plans
included in subdivision 1 must clearly specify how the cost of
health care used to calculate any copayments, coinsurance, or
lifetime benefits will be affected by the arrangements described
in subdivision 1.
(b) Any summary or other marketing material used in
connection with marketing of a health plan that is subject to
this section must prominently disclose and clearly explain the
provisions required under paragraph (a), if the summary or other
marketing material refers to copayments, coinsurance, or maximum
lifetime benefits.
(c) A health plan that is subject to paragraph (a) must not
be used in this state if the commissioner of commerce or health,
as appropriate, has determined that it does not comply with this
section.
Sec. 51. [62Q.50] [PROSTATE CANCER SCREENING.]
A health plan must cover prostate cancer screening for men
40 years of age or over who are symptomatic or in a high-risk
category and for all men 50 years of age or older.
The screening must consist at a minimum of a
prostate-specific antigen blood test and a digital rectal
examination.
This coverage is subject to any deductible, coinsurance,
copayment, or other limitation on coverage applicable to other
coverages under the plan.
For purposes of this section, "health plan" includes
coverage that is excluded under section 62A.011, subdivision 3,
clauses (7) and (10).
Sec. 52. [62Q.51] [POINT-OF-SERVICE OPTION.]
Subdivision 1. [DEFINITION.] For purposes for this
section, "point-of-service option" means a health plan under
which the health plan company will reimburse an appropriately
licensed or registered provider for providing covered services
to an enrollee, without regard to whether the provider belongs
to a particular network and without regard to whether the
enrollee was referred to the provider by another provider.
Subd. 2. [REQUIRED POINT-OF-SERVICE OPTION.] Each health
plan company operating in the small group or large group market
shall offer at least one point-of-service option in each such
market in which it operates.
Subd. 3. [RATE APPROVAL.] The premium rates and cost
sharing requirements for each option must be submitted to the
commissioner of health or the commissioner of commerce as
required by law. A health plan that includes lower enrollee
cost sharing for services provided by network providers than for
services provided by out-of-network providers, or lower enrollee
cost sharing for services provided with prior authorization or
second opinion than for services provided without prior
authorization or second opinion, qualifies as a point-of-service
option.
Subd. 4. [EXEMPTION.] This section does not apply to a
health plan company with fewer than 50,000 enrollees.
Sec. 53. Minnesota Statutes 1994, section 65A.01,
subdivision 3, is amended to read:
Subd. 3. [POLICY PROVISIONS.] On said policy following
such matter as provided in subdivisions 1 and 2, printed in the
English language in type of such size or sizes and arranged in
such manner, as is approved by the commissioner of commerce, the
following provisions and subject matter shall be stated in the
following words and in the following sequence, but with the
convenient placing, if desired, of such matter as will act as a
cover or back for such policy when folded, with the blanks below
indicated being left to be filled in at the time of the issuing
of the policy, to wit:
(Space for listing the amounts of insurance, rates and
premiums for the basic coverages provided under the standard
form of policy and for additional coverages or perils provided
under endorsements attached. The description and location of
the property covered and the insurable value(s) of any
building(s) or structure(s) covered by the policy or its
attached endorsements; also in the above space may be stated
whether other insurance is limited and if limited the total
amount permitted.)
In consideration of the provisions and stipulations herein
or added hereto and of the premium above specified this company,
for a term of ..... from ..... (At 12:01 a.m. Standard Time) to
..... (At 12:01 a.m. Standard Time) at location of property
involved, to an amount not exceeding the amount(s) above
specified does insure ..... and legal representatives
...........................................
(In above space may be stated whether other insurance is
limited.) (And if limited the total amount permitted.)
Subject to form No.(s) ..... attached hereto.
This policy is made and accepted subject to the foregoing
provisions and stipulations and those hereinafter stated, which
are hereby made a part of this policy, together with such
provisions, stipulations and agreements as may be added hereto
as provided in this policy.
The insurance effected above is granted against all loss or
damage by fire originating from any cause, except as hereinafter
provided, also any damage by lightning and by removal from
premises endangered by the perils insured against in this
policy, to the property described hereinafter while located or
contained as described in this policy, or pro rata for five days
at each proper place to which any of the property shall
necessarily be removed for preservation from the perils insured
against in this policy, but not elsewhere. The amount of said
loss or damage, except in case of total loss on buildings, to be
estimated according to the actual value of the insured property
at the time when such loss or damage happens.
If the insured property shall be exposed to loss or damage
from the perils insured against, the insured shall make all
reasonable exertions to save and protect same.
This entire policy shall be void if, whether before a loss,
the insured has willfully, or after a loss, the insured has
willfully and with intent to defraud, concealed or
misrepresented any material fact or circumstance concerning this
insurance or the subject thereof, or the interests of the
insured therein.
This policy shall not cover accounts, bills, currency,
deeds, evidences of debt, money or securities; nor, unless
specifically named hereon in writing, bullion, or manuscripts.
This company shall not be liable for loss by fire or other
perils insured against in this policy caused, directly or
indirectly by: (a) enemy attack by armed forces, including
action taken by military, naval or air forces in resisting an
actual or immediately impending enemy attack; (b) invasion; (c)
insurrection; (d) rebellion; (e) revolution; (f) civil war; (g)
usurped power; (h) order of any civil authority except acts of
destruction at the time of and for the purpose of preventing the
spread of fire, providing that such fire did not originate from
any of the perils excluded by this policy.
Other insurance may be prohibited or the amount of
insurance may be limited by so providing in the policy or an
endorsement, rider or form attached thereto.
Unless otherwise provided in writing added hereto this
company shall not be liable for loss occurring:
(a) while the hazard is increased by any means within the
control or knowledge of the insured; or
(b) while the described premises, whether intended for
occupancy by owner or tenant, are vacant or unoccupied beyond a
period of 60 consecutive days; or
(c) as a result of explosion or riot, unless fire ensue,
and in that event for loss by fire only.
Any other peril to be insured against or subject of
insurance to be covered in this policy shall be by endorsement
in writing hereon or added hereto.
The extent of the application of insurance under this
policy and the contributions to be made by this company in case
of loss, and any other provision or agreement not inconsistent
with the provisions of this policy, may be provided for in
writing added hereto, but no provision may be waived except such
as by the terms of this policy is subject to change.
No permission affecting this insurance shall exist, or
waiver of any provision be valid, unless granted herein or
expressed in writing added hereto. No provision, stipulation or
forfeiture shall be held to be waived by any requirements or
proceeding on the part of this company relating to appraisal or
to any examination provided for herein.
This policy shall be canceled at any time at the request of
the insured, in which case this company shall, upon demand and
surrender of this policy, refund the excess of paid premium
above the customary short rates for the expired time. This
policy may be canceled at any time by this company by giving to
the insured a ten 30 days' written notice of cancellation with
or without tender of the excess of paid premium above the pro
rata premium for the expired time, which excess, if not
tendered, shall be refunded on demand. Notice of cancellation
shall state that said excess premium (if not tendered) will be
refunded on demand.
If loss hereunder is made payable, in whole or in part, to
a designated mortgagee or contract for deed vendor not named
herein as insured, such interest in this policy may be canceled
by giving to such mortgagee or vendor a ten days' written notice
of cancellation.
Notwithstanding any other provisions of this policy, if
this policy shall be made payable to a mortgagee or contract for
deed vendor of the covered real estate, no act or default of any
person other than such mortgagee or vendor or the mortgagee's or
vendor's agent or those claiming under the mortgagee or vendor,
whether the same occurs before or during the term of this
policy, shall render this policy void as to such mortgagee or
vendor nor affect such mortgagee's or vendor's right to recover
in case of loss on such real estate; provided, that the
mortgagee or vendor shall on demand pay according to the
established scale of rates for any increase of risks not paid
for by the insured; and whenever this company shall be liable to
a mortgagee or vendor for any sum for loss under this policy for
which no liability exists as to the mortgagor, vendee, or owner,
and this company shall elect by itself, or with others, to pay
the mortgagee or vendor the full amount secured by such mortgage
or contract for deed, then the mortgagee or vendor shall assign
and transfer to the company the mortgagee's or vendor's
interest, upon such payment, in the said mortgage or contract
for deed together with the note and debts thereby secured.
This company shall not be liable for a greater proportion
of any loss than the amount hereby insured shall bear to the
whole insurance covering the property against the peril involved.
In case of any loss under this policy the insured shall
give immediate written notice to this company of any loss,
protect the property from further damage, and a statement in
writing, signed and sworn to by the insured, shall within 60
days be rendered to the company, setting forth the value of the
property insured, except in case of total loss on buildings the
value of said buildings need not be stated, the interest of the
insured therein, all other insurance thereon, in detail, the
purposes for which and the persons by whom the building insured,
or containing the property insured, was used, and the time at
which and manner in which the fire originated, so far as known
to the insured.
The insured, as often as may be reasonably required, shall
exhibit to any person designated by this company all that
remains of any property herein described, and, after being
informed of the right to counsel and that any answers may be
used against the insured in later civil or criminal proceedings,
the insured shall, within a reasonable period after demand by
this company, submit to examinations under oath by any person
named by this company, and subscribe the oath. The insured, as
often as may be reasonably required, shall produce for
examination all records and documents reasonably related to the
loss, or certified copies thereof if originals are lost, at a
reasonable time and place designated by this company or its
representatives, and shall permit extracts and copies thereof to
be made.
In case the insured and this company, except in case of
total loss on buildings, shall fail to agree as to the actual
cash value or the amount of loss, then, on the written demand of
either, each shall select a competent and disinterested
appraiser and notify the other of the appraiser selected within
20 days of such demand. In case either fails to select an
appraiser within the time provided, then a presiding judge of
the district court of the county wherein the loss occurs may
appoint such appraiser for such party upon application of the
other party in writing by giving five days' notice thereof in
writing to the party failing to appoint. The appraisers shall
first select a competent and disinterested umpire; and failing
for 15 days to agree upon such umpire, then a presiding judge of
the above mentioned court may appoint such an umpire upon
application of party in writing by giving five days' notice
thereof in writing to the other party. The appraisers shall
then appraise the loss, stating separately actual value and loss
to each item; and, failing to agree, shall submit their
differences, only, to the umpire. An award in writing, so
itemized, of any two when filed with this company shall
determine the amount of actual value and loss. Each appraiser
shall be paid by the selecting party, or the party for whom
selected, and the expense of the appraisal and umpire shall be
paid by the parties equally.
It shall be optional with this company to take all of the
property at the agreed or appraised value, and also to repair,
rebuild or replace the property destroyed or damaged with other
of like kind and quality within a reasonable time, on giving
notice of its intention so to do within 30 days after the
receipt of the proof of loss herein required.
There can be no abandonment to this company of any property.
The amount of loss for which this company may be liable
shall be payable 60 days after proof of loss, as herein
provided, is received by this company and ascertainment of the
loss is made either by agreement between the insured and this
company expressed in writing or by the filing with this company
of an award as herein provided. It is moreover understood that
there can be no abandonment of the property insured to the
company, and that the company will not in any case be liable for
more than the sum insured, with interest thereon from the time
when the loss shall become payable, as above provided.
No suit or action on this policy for the recovery of any
claim shall be sustainable in any court of law or equity unless
all the requirements of this policy have been complied with, and
unless commenced within two years after inception of the loss.
This company is subrogated to, and may require from the
insured an assignment of all right of recovery against any party
for loss to the extent that payment therefor is made by this
company; and the insurer may prosecute therefor in the name of
the insured retaining such amount as the insurer has paid.
Assignment of this policy shall not be valid except with
the written consent of this company.
IN WITNESS WHEREOF, this company has executed and attested
these presents.
........................ ........................
(Signature) (Signature)
........................ ........................
(Name of office) (Name of office)
Sec. 54. Minnesota Statutes 1994, section 65A.10,
subdivision 1, is amended to read:
Subdivision 1. [BUILDINGS.] Nothing contained in sections
65A.08 and 65A.09 shall be construed to preclude insurance
against the cost, in excess of actual cash value at the time any
loss or damage occurs, of actually repairing, rebuilding or
replacing the insured property. Subject to any applicable
policy limits, where an insurer offers replacement cost
insurance,: (i) the insurance must cover the cost of replacing,
rebuilding, or repairing any loss or damaged property in
accordance with the minimum code as required by state or local
authorities; and (ii) the insurance coverage may not be
conditioned on replacing or rebuilding the damaged property at
its original location on the owner's property if the structure
must be relocated because of zoning or land use regulations of
state or local government. In the case of a partial loss,
unless more extensive coverage is otherwise specified in the
policy, this coverage applies only to the damaged portion of the
property.
Sec. 55. Minnesota Statutes 1994, section 65A.295, is
amended to read:
65A.295 [HOMEOWNER'S INSURANCE COVERAGE.]
(a) Every insurer writing homeowner's insurance in this
state shall make available at least one form of homeowner's
policy for each level of peril coverage offered by the insurer
in which the insured has the option to specify the dollar amount
of coverage provided for structures other than the dwelling and
for personal property. The premium must be reduced to reflect
the reduced risk of lesser coverage.
(b) A written notice must be provided to all applicants for
homeowner's insurance at the time of application informing them
of the options provided in paragraph (a).
(c) Coverage for structures other than the dwelling is the
coverage provided under "Coverage B, Other Structures" in the
standard homeowner's policy. Coverage for personal property is
the coverage provided under "Coverage C, Personal Property" in
the standard homeowner's package policy.
(d) (c) "Level of peril" refers to basic, broad, and all
risk levels of coverage.
Sec. 56. Minnesota Statutes 1994, section 65B.14, is
amended by adding a subdivision to read:
Subd. 5. [VIOLATIONS.] "Violations" means all moving
traffic violations that are recorded by the department of public
safety on a household member's motor vehicle record, and
violations reported by a similar authority in another state or
moving traffic violations reported by the insured.
Sec. 57. Minnesota Statutes 1994, section 65B.15,
subdivision 1, is amended to read:
Subdivision 1. No cancellation or reduction in the limits
of liability of coverage during the policy period of any policy
shall be effective unless notice thereof is given and unless
based on one or more reasons stated in the policy which shall be
limited to the following:
1. Nonpayment of premium; or
2. The policy was obtained through a material
misrepresentation; or
3. Any insured made a false or fraudulent claim or
knowingly aided or abetted another in the presentation of such a
claim; or
4. The named insured failed to disclose fully motor
vehicle accidents and moving traffic violations of the named
insured for the preceding 36 months if called for in the written
application; or
5. The named insured failed to disclose in the written
application any requested information necessary for the
acceptance or proper rating of the risk; or
6. The named insured knowingly failed to give any required
written notice of loss or notice of lawsuit commenced against
the named insured, or, when requested, refused to cooperate in
the investigation of a claim or defense of a lawsuit; or
7. The named insured or any other operator who either
resides in the same household, or customarily operates an
automobile insured under such policy, unless the other operator
is identified as a named insured in another policy as an insured:
(a) has, within the 36 months prior to the notice of
cancellation, had that person's driver's license under
suspension or revocation because the person committed a moving
traffic violation or because the person refused to be tested
under section 169.121, subdivision 1, paragraph (a); or
(b) is or becomes subject to epilepsy or heart attacks, and
such individual does not produce a written opinion from a
physician testifying to that person's medical ability to operate
a motor vehicle safely, such opinion to be based upon a
reasonable medical probability; or
(c) has an accident record, conviction record (criminal or
traffic), physical condition or mental condition, any one or all
of which are such that the person's operation of an automobile
might endanger the public safety; or
(d) has been convicted, or forfeited bail, during the 24
months immediately preceding the notice of cancellation for
criminal negligence in the use or operation of an automobile, or
assault arising out of the operation of a motor vehicle, or
operating a motor vehicle while in an intoxicated condition or
while under the influence of drugs; or leaving the scene of an
accident without stopping to report; or making false statements
in an application for a driver's license, or theft or unlawful
taking of a motor vehicle; or
(e) has been convicted of, or forfeited bail for, one or
more violations within the 18 months immediately preceding the
notice of cancellation, of any law, ordinance, or rule which
justify a revocation of a driver's license.
8. The insured automobile is:
(1) so mechanically defective that its operation might
endanger public safety; or
(2) used in carrying passengers for hire or compensation,
provided however that the use of an automobile for a car pool
shall not be considered use of an automobile for hire or
compensation; or
(3) used in the business of transportation of flammables or
explosives; or
(4) an authorized emergency vehicle; or
(5) subject to an inspection law and has not been inspected
or, if inspected, has failed to qualify within the period
specified under such inspection law; or
(6) substantially changed in type or condition during the
policy period, increasing the risk substantially, such as
conversion to a commercial type vehicle, a dragster, sports car
or so as to give clear evidence of a use other than the original
use.
Sec. 58. Minnesota Statutes 1995 Supplement, section
65B.47, subdivision 1a, is amended to read:
Subd. 1a. [EXEMPTIONS.] Subdivision 1 does not apply to:
(1) a commuter van;
(2) a vehicle being used to transport children as part of a
family or group family day care program;
(3) a vehicle being used to transport children to school or
to a school-sponsored activity;
(4) a bus while it is in operation within the state of
Minnesota as to any Minnesota resident who is an insured as
defined in section 65B.43, subdivision 5;
(5) a passenger in a taxi; or
(6) a taxi driver, provided that this clause applies only
to policies issued or renewed on or after September 1, 1996, and
prior to September 1, 1997.
Sec. 59. Minnesota Statutes 1994, section 65B.64,
subdivision 3, is amended to read:
Subd. 3. A person shall not be entitled to basic economic
loss benefits through the assigned claims plan with respect to
injury which was sustained if at the time of such injury the
injured person was the owner of a private passenger motor
vehicle for which security is required under sections 65B.41 to
65B.71 and that person failed to have such security in effect.
For purposes of determining whether security is required
under section 65B.48, an owner of any vehicle is deemed to have
contemplated the operation or use of the vehicle at all times
unless the owner demonstrates to the contrary by clear and
convincing objective evidence.
Persons, whether or not related by blood or marriage, who dwell
and function together with the owner as a family, other than
adults who have been adjudicated as incompetent and minor
children, shall also be disqualified from benefits through the
assigned claims plan.
Sec. 60. Minnesota Statutes 1994, section 70A.07, is
amended to read:
70A.07 [RATES OPEN TO INSPECTION.]
All rates and supplementary rate information, furnished to
the commissioner under this chapter shall, as soon as the rates
are effective reviewed by the commissioner, be open to public
inspection at any reasonable time.
Sec. 61. Minnesota Statutes 1994, section 72A.20,
subdivision 17, is amended to read:
Subd. 17. [RETURN OF PREMIUMS.] (a) Refusing, upon
surrender of an individual policy of life insurance in the case
of the insured's death, or in the case of a surrender prior to
death, of an individual insurance policy not covered by the
standard nonforfeiture laws under section 61A.24, to refund to
the owner all unearned premiums paid on the policy covering the
insured as of the time of the insured's death or surrender if
the unearned premium is for a period of more than one month.
(b) Refusing, upon termination or cancellation of a policy
of automobile insurance under section 65B.14, subdivision 2, or
a policy of homeowner's insurance under section 65A.27,
subdivision 4, or a policy of accident and sickness insurance
under section 62A.01, or a policy of comprehensive health
insurance under chapter 62E, to refund to the insured all
unearned premiums paid on the policy covering the insured as of
the time of the termination or cancellation if the unearned
premium is for a period of more than one month. The return of
unearned premium must be delivered to the insured within 30 days
following receipt by the insurer of the insured's request for
cancellation.
(c) This subdivision does not apply to policies of
insurance providing coverage only for motorcycles or other
seasonally rated or limited use vehicles where the rate is
reduced to reflect seasonal or limited use.
(d) For purposes of this section, a premium is unearned
during the period of time the insurer has not been exposed to
any risk of loss. Except for premiums for motorcycle coverage
or other seasonally rated or limited use vehicles where the rate
is reduced to reflect seasonal or limited use, the unearned
premium is determined by multiplying the premium by the fraction
that results from dividing the period of time from the date of
termination to the date the next scheduled premium is due by the
period of time for which the premium was paid.
(e) The owner may cancel a policy referred to in this
section at any time during the policy period. This provision
supersedes any inconsistent provision of law or any inconsistent
policy provision.
Sec. 62. Minnesota Statutes 1994, section 72A.20,
subdivision 23, is amended to read:
Subd. 23. [DISCRIMINATION IN AUTOMOBILE INSURANCE
POLICIES.] (a) No insurer that offers an automobile insurance
policy in this state shall:
(1) use the employment status of the applicant as an
underwriting standard or guideline; or
(2) deny coverage to a policyholder for the same reason.
(b) No insurer that offers an automobile insurance policy
in this state shall:
(1) use the applicant's status as a tenant, as the term is
defined in section 566.18, subdivision 2, as an underwriting
standard or guideline; or
(2) deny coverage to a policyholder for the same reason; or
(3) make any discrimination in offering or establishing
rates, premiums, dividends, or benefits of any kind, or by way
of rebate, for the same reason.
(c) No insurer that offers an automobile insurance policy
in this state shall:
(1) use the failure of the applicant to have an automobile
policy in force during any period of time before the application
is made as an underwriting standard or guideline; or
(2) deny coverage to a policyholder for the same reason.
This provision does not apply if the applicant was required
by law to maintain automobile insurance coverage and failed to
do so.
An insurer may require reasonable proof that the applicant
did not fail to maintain this coverage. The insurer is not
required to accept the mere lack of a conviction or citation for
failure to maintain this coverage as proof of failure to
maintain coverage. The insurer must provide the applicant with
information identifying the documentation that is required to
establish reasonable proof that the applicant did not fail to
maintain the coverage.
(d) No insurer that offers an automobile insurance policy
in this state shall use an applicant's prior claims for benefits
paid under section 65B.44 as an underwriting standard or
guideline if the applicant was 50 percent or less negligent in
the accident or accidents causing the claims.
Sec. 63. Minnesota Statutes 1994, section 72A.20,
subdivision 26, is amended to read:
Subd. 26. [LOSS EXPERIENCE.] An insurer shall without cost
to the insured provide an insured with the loss or claims
experience of that insured for the current policy period and for
the two policy periods preceding the current one for which the
insurer has provided coverage, within 30 days of a request for
the information by the policyholder. Claims experience data
must be provided to the insured in accordance with state and
federal requirements regarding the confidentiality of medical
data. The insurer shall not be responsible for providing
information without cost more often than once in a 12-month
period. The insurer is not required to provide the information
if the policy covers the employee of more than one employer and
the information is not maintained separately for each employer
and not all employers request the data.
An insurer, health maintenance organization, or a
third-party administrator may not request more than three years
of loss or claims experience as a condition of submitting an
application or providing coverage.
This subdivision does not apply to individual life and
health insurance policies or personal automobile or homeowner's
insurance only applies to group life policies and group health
policies.
Sec. 64. Minnesota Statutes 1994, section 72A.20,
subdivision 30, is amended to read:
Subd. 30. [RECORDS RETENTION.] An insurer shall retain
copies of all underwriting documents, policy forms, and
applications for three years from the effective date of the
policy. An insurer shall retain all claim files and
documentation related to a claim for three years from the date
the claim was paid or denied. This subdivision does not relieve
the insurer of its obligation to produce these documents to the
department after the retention period has expired in connection
with an enforcement action or administrative proceeding against
the insurer from whom the documents are requested, if the
insurer has retained the documents. Records required to be
retained by this section may be retained in paper, photograph,
microprocess, magnetic, mechanical, or electronic media, or by
any process which accurately reproduces or forms a durable
medium for the reproduction of a record.
Sec. 65. Minnesota Statutes 1994, section 72A.20, is
amended by adding a subdivision to read:
Subd. 35. [DETERMINATION OF HEALTH PLAN POLICY
LIMITS.] Any health plan that includes a specific policy limit
within its insurance policy, certificate, or subscriber
agreement shall calculate the policy limit by using the amount
actually paid on behalf of the insured, subscriber, or
dependents for services covered under the policy, subscriber
agreement, or certificate unless the amount paid is greater than
the billed charge.
Sec. 66. [72A.207] [GRADED DEATH BENEFITS.]
For the purpose of this section, a graded death benefit is
a provision within a life insurance policy in which the death
benefit, in the early years of the policy, is less than the face
amount of the policy, but which increases with the passage of
time.
No policy of life insurance paying a graded death benefit
may be issued in this state unless the graded death benefit is
equal to at least four times the first year premium. This
section does not prohibit the return of premiums or premiums
plus interest in connection with the voluntary or judicially
ordered rescission of the policy, or according to the terms of
the exclusions from coverage for suicide, aviation, or war risk.
Sec. 67. Minnesota Statutes 1994, section 148.235,
subdivision 2, is amended to read:
Subd. 2. [NURSE PRACTITIONERS.] A registered nurse who (1)
has graduated from a program of study designed to prepare
registered nurses for advanced practice as nurse practitioners,
(2) is certified through a national professional nursing
organization which certifies nurse practitioners and is included
in the list of professional nursing organizations adopted by the
board under section 62A.15, subdivision 3a, and (3) has a
written agreement with a physician based on standards
established by the Minnesota nurses association and the
Minnesota medical association that defines the delegated
responsibilities related to the prescription of drugs and
therapeutic devices, may prescribe and administer drugs and
therapeutic devices within the scope of the written agreement
and within practice as a nurse practitioner. The written
agreement required under this subdivision shall be based on
standards established by the Minnesota nurses association and
the Minnesota medical association as of January 1, 1996, unless
both associations agree to revisions. The written agreement
shall be maintained at the certified nurse practitioner's place
of employment and does not need to be filed with the board of
nursing.
Sec. 68. Minnesota Statutes 1994, section 148.235,
subdivision 4, is amended to read:
Subd. 4. [CLINICAL NURSE SPECIALISTS IN PSYCHIATRIC AND
MENTAL HEALTH NURSING.] A registered nurse who (1) has a masters
degree, (2) is certified through a national professional nursing
organization which certifies clinical specialists in psychiatric
and mental health nursing and is included in the list of
professional nursing organizations adopted by the board under
section 62A.15, subdivision 3a, (3) has successfully completed
no less than 30 hours of formal study in the prescribing of
psychotropic medications and medications to treat their side
effects which included instruction in health assessment,
psychotropic classifications, psychopharmacology, indications,
dosages, contraindications, side effects, and evidence of
application, and (4) has a verbal agreement or a written
agreement with a psychiatrist based on standards established by
the Minnesota nurses association and the Minnesota psychiatric
association that specifies and defines the delegated
responsibilities related to the prescription of drugs in
relationship to the diagnosis, may prescribe and administer
drugs used to treat psychiatric and behavioral disorders and the
side effects of those drugs within the scope of the written
agreement and within practice as a clinical specialist in
psychiatric and mental health nursing. The written agreement
required under this subdivision shall be based on standards
established by the Minnesota nurses association and the
Minnesota medical association as of January 1, 1996, unless both
associations agree to revisions. The written agreement shall be
maintained at the certified clinical nurse specialist's place of
employment and does not need to be filed with the board of
nursing.
Nothing in this subdivision removes or limits the legal
professional liability of the treating psychiatrist, clinical
nurse specialist, mental health clinic or hospital for the
prescription and administration of drugs by a clinical
specialist in accordance with this subdivision.
Sec. 69. [MEDICAL MALPRACTICE INSURANCE COVERAGE;
REAUTHORIZATION.]
Any authorization to issue insurance according to Minnesota
Statutes, section 62F.04, valid on the effective date of this
section remains valid for an additional two-year period at the
end of the initial two-year authorization. The additional
authorization period granted by this section applies only to the
types of coverages authorized as of the effective date of this
section.
Sec. 70. [COMMITTEE STUDY; DISCLOSURE OF FINANCIAL
INCENTIVES.]
The house committee on financial institutions and insurance
shall study how best to disclose to consumers any financial
arrangements between health plan companies and health care
providers that may provide financial incentives for providers to
restrict care provided to consumers.
Sec. 71. [TAXI INSURANCE REVIEW; REPORT]
The commissioner of commerce shall review the impact that
Laws of Minnesota 1995, chapter 227, has on the following:
(1) any increase in the cost of individual policies of
personal automobile insurance that is attributable to coverage
of taxi drivers as reported by insurers providing the majority
of coverage in the state;
(2) the number and dollar amount of claims for injuries
attributable to taxi drivers who carry individual policies of
insurance as reported by insurers providing the majority of
coverage in the state;
(3) the number and dollar amount of claims filed by drivers
of taxis insured under policies issued to owners of taxis leased
to drivers, to the extent that the data is available;
(4) the entry of insurers providing coverage for owners of
vehicles used as taxis;
(5) changes in the cost of coverage carried by owners of
vehicles used as taxis.
The commissioner shall provide a written report to the
chair of the committee on financial institutions and insurance
of the house of representatives and the chair of the committee
on commerce of the senate by March 1, 1997.
Sec. 72. [REPEALER.]
(a) Minnesota Statutes 1994, sections 60A.40; 60B.27;
62I.20; 65A.25; and 72A.205, are repealed.
(b) Laws 1995, chapter 140, section 1, is repealed.
(c) Section 51 is repealed effective August 1, 1998.
Sec. 73. [EFFECTIVE DATES.]
Sections 2, 5, 9, 10, 12, 21, 22, 26 to 31, 36 to 38, 41 to
48, 61, 64, 66, and 69 are effective the day following final
enactment.
Section 3 is effective retroactive to January 1, 1996.
Sections 51 and 52 are effective August 1, 1996, and
applies to all health plans issued or renewed to provide
coverage to Minnesota residents on or after that date.
Section 49 is effective retroactive to July 1, 1995.
Sections 1 and 13 to 20 are effective January 1, 1997.
Section 50 is effective June 30, 1997, and applies to
health plans issued or renewed on or after that date.
ARTICLE 2
Section 1. Minnesota Statutes 1994, section 60A.07,
subdivision 8, is amended to read:
Subd. 8. [SPECIAL PROVISIONS AS TO MUTUAL COMPANIES.] (1)
[AMENDMENT OF ARTICLES OR CERTIFICATE OF INCORPORATION.] The
certificate of incorporation or articles of association of any
domestic insurance company without capital stock, now or
hereafter organized and existing under the laws of this state,
may be amended in respect to any matter which an original
certificate of incorporation or articles of association of a
corporation of the same kind might lawfully have contained by
the adoption of a resolution specifying the proposed amendment,
at a regular meeting of the members thereof or at a special
meeting called for that expressly stated purpose, by the
affirmative vote of a majority of the members present, in person
or by proxy, at the meeting, and by causing the resolution to be
embraced in a certificate duly executed by its president and
secretary or other presiding and recording officers, under its
corporate seal, and approved, filed, recorded, and published in
the manner prescribed by law for the execution, approval,
filing, recording, and publishing of a like original certificate
of incorporation or articles of association.
(2) [RENEWAL OF CORPORATE EXISTENCE.] Any domestic
insurance company or corporation having no capital stock,
heretofore or hereafter organized and existing under the laws of
this state, whose period of duration has expired or is about to
expire, may, on or before the date of the expiration, or within
six months after the date of expiration, renew its corporate
existence from the date of such expiration for any period
permitted by the laws of this state, by the adoption of a
resolution to that effect by the affirmative vote of
three-fourths of the members present, in person or by proxy, at
a regular meeting of the members, or at any special meeting
called for that expressly stated purpose, and by causing the
resolution to be embraced in a certificate duly executed by its
president and secretary or other presiding and recording
officers, under its corporate seal, and approved, filed,
recorded, and published in the manner prescribed by law for the
execution, approval, filing, recording, and publishing of an
original certificate of incorporation or articles of association.
(3) [BYLAWS.] The bylaws of any domestic insurance
corporation without capital stock, in cases where the bylaws
must be adopted or approved by the members thereof, may be
adopted, altered, or amended at a regular meeting of the members
thereof, or at a special meeting called for that expressly
stated purpose, by the affirmative vote of a majority of the
members present, in person or by proxy, at the meeting.
(4) [CONVERSION OF A DOMESTIC MUTUAL INTO A STOCK INSURANCE
CORPORATION.] A domestic mutual corporation may be converted
into a stock insurance corporation as follows:
(a) [ACTION BY BOARD OF DIRECTORS.] The board of directors
shall adopt a plan of conversion.
(b) [PLAN OF CONVERSION.] (i) The plan of conversion shall
provide that, upon consummation of the conversion, each
policyholder at the date of the passage of the resolution by the
board of directors shall be entitled to such shares of stock of
the new company as the policyholder's equitable share of the
surplus of the company will purchase. This equitable share
shall be determined by independent certified auditors or
consulting actuaries and shall be subject to approval by the
commissioner. If a policyholder's equitable share of the
surplus of the company produces a fractional share, the
policyholder shall be given the option of either receiving the
value of the fractional share in cash or of purchasing the
fractional part of a share that will entitle the policyholder to
a full share.
(ii) No shares of the corporation being organized shall be
issued or subscribed for, formally or informally, directly or
indirectly during the conversion except as authorized under
subparagraph (i).
(iii) The corporation shall not pay compensation or
remuneration of any kind to any person in connection with the
proposed conversion, except at reasonable rates for printing
costs, and for legal and other professional fees for services
actually rendered.
(iv) The plan of conversion shall include a copy of the
proposed articles of incorporation which shall comply with the
requirements of chapter 300. Except as otherwise specifically
provided, the corporation resulting from conversion under this
section shall be deemed to have been organized as of the date of
issuance of the initial certificate of authority to the mutual
corporation being converted.
(c) [APPROVAL BY POLICYHOLDERS.] Within 30 days after its
adoption by the board of directors, the plan of conversion shall
be submitted to the policyholders for approval by the
affirmative vote of a majority of the policyholders entitled to
vote, in the manner prescribed by subparagraph (1). Every
policyholder as of the date of the adoption under subparagraph
(a) shall be entitled to one vote for each policy held. Only
such policyholders shall be entitled to vote.
(d) [APPROVAL BY THE COMMISSIONER.] (i) Within 30 days
after its adoption by the policyholders, the plan of conversion
shall be submitted to the commissioner with an application for
approval.
(ii) The commissioner shall not approve if the value of
single shares is set at a figure that substantially burdens
policyholders who wish to purchase a fractional share under
subparagraph (b)(i).
(iii) If the commissioner finds that the plan of conversion
has been duly approved by the policyholders, that the conversion
would not violate any law and would not be contrary to the
interests of the policyholders, the commissioner shall approve
the plan of conversion and shall issue a new certificate of
authority to the corporation.
(e) [CONVERSION.] After filing an amendment of the articles
of incorporation as provided by chapter 300, the corporation
shall become a stock corporation and shall no longer be a mutual
corporation, and the board of directors shall execute the plan
of conversion.
(f) [SECURITIES REGULATION.] The filing with the
commissioner of commerce of a certified copy of the plan of
conversion as adopted by the policyholders and approved by the
commissioner shall constitute registration under chapter 80A, of
the securities authorized to be issued to policyholders
thereunder.
Sec. 2. Minnesota Statutes 1995 Supplement, section
60A.07, subdivision 10, is amended to read:
Subd. 10. [SPECIAL PROVISIONS AS TO LIFE COMPANIES.] (1)
[PREREQUISITES OF LIFE COMPANIES.] No mutual life company shall
be qualified to issue any policy until applications for at least
$200,000 of insurance, upon lives of at least 200 separate
residents, have been actually and in good faith made, accepted,
and entered upon its books and at least one full annual premium
thereunder, based upon the authorized table of mortality,
received in cash or in absolutely payable and collectible
notes. A duplicate receipt for each premium, conditioned for
the return thereof unless the policy be issued within one year
thereafter, shall be issued, and one copy delivered to the
applicant and the other filed with the commissioner, together
with the certificate of a solvent authorized bank in the state,
of the deposit therein of such cash and notes, aggregating the
amount aforesaid, specifying the maker, payee, date, maturity,
and amount of each. Such cash and notes shall be held by it not
longer than one year, and at or before the expiration thereof to
be by it paid or delivered, upon the written order of the
commissioner, to such company or applicants, respectively.
(2) [FOREIGN COMPANIES MAY BECOME DOMESTIC.] Any company
organized under the laws of any other state or country, which
might have been originally incorporated under the laws of this
state, and which has been admitted to do business therein for
either or both the purpose of life or accident insurance, upon
complying with all the requirements of law relative to the
execution, filing, recording and publishing of original
certificates and payment of incorporation fees by like domestic
corporations, therein designating its principal place of
business at a place in this state, may become a domestic
corporation, and be entitled to like certificates of its
corporate existence and license to transact business in this
state, and be subject in all respects to the authority and
jurisdiction thereof.
(3) [TEMPORARY CAPITAL STOCK OF MUTUAL LIFE COMPANIES.] A
new mutual life insurance company which has complied with the
provisions of clause (1) or an existing mutual life insurance
company may establish, a temporary capital of, such amount not
less than $100,000, as may be approved by the commissioner.
Such temporary capital shall be invested by the company in the
same manner as is provided for the investment of its other
funds. Out of the net surplus of the company the holders of the
temporary capital stock may receive a dividend which may be
cumulative. This capital stock shall not be a liability of the
company but shall be retired within a reasonable time and
according to terms approved by the commissioner. At the time
for the retirement of this capital stock, the holders shall be
entitled to receive from the company the par value thereof and
any dividends thereon due and unpaid, and thereupon the stock
shall be surrendered and canceled. In the event of the
liquidation of the company, the holders of temporary capital
stock shall have the same preference in the assets of the
company as shareholders have in a stock insurance company.
Dividends on this stock are subject to section 60D.20,
subdivision 2.
Temporary capital stock may be issued with or without
voting rights. If issued with voting rights, the holders shall,
at all meetings, be entitled to one vote for each $10 of
temporary capital stock held.
Sec. 3. [60A.075] [MUTUAL COMPANY CONVERSION TO STOCK
COMPANY.]
Subdivision 1. [DEFINITIONS.] For the purposes of this
section, the terms in this subdivision have the meanings given
them.
(a) "Eligible member" means a policyholder whose policy is
in force as of the record date, which is the date that the
mutual company's board of directors adopts a plan of conversion
or some other date specified as the record date in the plan of
conversion and approved by the commissioner. Unless otherwise
provided in the plan, a person insured under a group policy is
not an eligible member, unless on the record date:
(1) the person is insured or covered under a group life
policy or group annuity contract under which funds are
accumulated and allocated to the respective covered persons;
(2) the person has the right to direct the application of
the funds so allocated;
(3) the group policyholder makes no contribution to the
premiums or deposits for the policy or contract; and
(4) the converting mutual company has the names and
addresses of the persons covered under the group life policy or
group annuity contract.
(b) "Reorganized company" means a Minnesota domestic stock
insurance company that has converted from a Minnesota domestic
mutual insurance company according to this section.
(c) "Plan of conversion" or "plan" means a plan adopted by
a Minnesota domestic mutual insurance company's board of
directors under this section to convert the mutual company into
a Minnesota domestic stock insurance company.
(d) "Policy" means a policy or contract of insurance issued
by a converting mutual company, including an annuity contract.
(e) "Commissioner" means the commissioner of commerce.
(f) "Converting mutual company" means a Minnesota domestic
mutual insurance company seeking to convert to a Minnesota
domestic stock insurance company according to this section.
(g) "Effective date of a conversion" means the date
determined according to subdivision 6.
(h) "Membership interests" means all policyholders' rights
as members of the converting mutual company, including but not
limited to, rights to vote and to participate in any
distributions of surplus, whether or not incident to the
company's liquidation.
(i) "Equitable surplus" means the converting mutual
company's surplus as regards policyholders as of the effective
date of the conversion determined in a manner that is not unfair
or inequitable to policyholders.
(j) "Permitted issuer" means: (1) a corporation organized
and owned by the converting mutual company or by any other
insurance company or insurance holding company for the purpose
of purchasing and holding all of the stock of the reorganized
company; (2) a stock insurance company owned by the converting
mutual company or by any other insurance company or insurance
holding company into which the converting mutual company will be
merged; or (3) any other corporation approved by the
commissioner.
Subd. 2. [AUTHORIZATION.] A mutual insurance company may
become a stock insurance company according to a plan of
conversion established and approved in the manner provided by
this section.
Subd. 3. [ADOPTION OF A PLAN OF CONVERSION BY THE BOARD OF
DIRECTORS.] (a) A converting mutual company shall, by the
affirmative vote of a majority of its board of directors, adopt
a plan of conversion consistent with the requirements of this
section.
(b) At any time before approval of a plan by the
commissioner, the converting mutual company, by the affirmative
vote of a majority of its board of directors, may amend or
withdraw the plan.
Subd. 4. [APPROVAL OF THE PLAN OF CONVERSION BY THE
COMMISSIONER.] (a) [DOCUMENTS TO BE FILED.] After adoption of
the plan by the converting mutual company's board of directors,
but before the members' approval of the plan, the converting
mutual company shall file the following documents with the
commissioner for review and approval:
(1) the plan of conversion, including an independent
evaluation of the pro forma market value and of the equitable
surplus of the company and of the estimated value of any shares
to be issued and an independent actuarial opinion, if required;
(2) the form of notice of meeting for eligible members to
vote on the plan;
(3) the form of any proxies to be solicited from eligible
members;
(4) the proposed articles of incorporation and bylaws of
the converted stock company;
(5) information required under chapter 60D if the plan
results in a change of control of the converting mutual company;
and
(6) other information or documentation requested by the
commissioner or required by rule.
(b) [REQUIRED FINDINGS.] The commissioner shall approve or
conditionally approve the plan upon finding that:
(1) the provisions of this section have been fully met; and
(2) the plan will not be unfair or inequitable to
policyholders.
(c) [TIME.] The plan of conversion shall, by order, be
approved, conditionally approved, or disapproved by the
commissioner within the later of 30 days from the commissioner's
receipt of all required information from the converting mutual
company or 30 days after the conclusion of a public hearing held
according to paragraph (e). An approval or conditional approval
of a plan expires if the reorganization is not completed within
180 days after the approval or conditional approval unless this
time period is extended by the commissioner for good cause shown.
(d) [CONSULTANTS.] The commissioner may retain, at the
converting mutual company's expense, qualified experts not
otherwise a part of the commissioner's staff to assist in
reviewing the plan and supplemental materials and valuations.
(e) [HEARING.] The commissioner may, but need not, conduct
a public hearing regarding the proposed plan of conversion. The
hearing must begin no later than 30 days after submission to the
commissioner of a plan of conversion and all required
information. The commissioner shall give the converting mutual
company at least 20 days' notice of the hearing. At the
hearing, the converting mutual company, its policyholders, and
any other person whose interest may be affected by the proposed
conversion may present evidence, examine and cross-examine
witnesses, and offer oral and written arguments or comments
according to the procedure for contested cases under chapter
14. The persons participating may conduct discovery proceedings
in the same manner as prescribed for the district courts of this
state. All discovery proceedings must be concluded no later
than three days before the scheduled commencement date of the
public hearing.
Subd. 5. [APPROVAL OF THE PLAN BY THE ELIGIBLE
MEMBERS.] (a) [NOTICE.] Following approval or conditional
approval of the plan by the commissioner, all eligible members
shall be given notice of a regular or special meeting of the
policyholders called for the purpose of considering the plan and
any corporate actions that are a part of, or are reasonably
attendant to, the accomplishment of the plan.
(b) [NOTICE REQUIRED.] A copy of the plan or a summary of
the plan must accompany the notice. The notice must be mailed
to each eligible member's last known address, as shown on the
converting mutual company's records, within 45 days of the
commissioner's approval of the plan, unless the commissioner
directs an earlier date for mailing. The meeting to vote upon
the plan must be set for a date no less than 45 days after the
date when the notice of the meeting is mailed by the converting
mutual company unless the commissioner directs an earlier date
for the meeting. If the meeting to vote upon the plan is held
coincident with the converting mutual company's annual meeting
of policyholders, only one combined notice of meeting is
required.
(c) [FAILURE TO GIVE NOTICE.] If the converting mutual
company complies substantially and in good faith with the notice
requirements of this section, the converting mutual company's
failure to give any member or members any required notice does
not impair the validity of any action taken under this section.
(d) [VOTING.] (1) The plan must be adopted upon receiving
the affirmative vote of a majority of the votes cast by eligible
members.
(2) Eligible members may vote in person or by proxy. The
form of any proxy must be filed with and approved by the
commissioner.
(3) The number of votes each eligible member may cast shall
be determined by the converting mutual company's bylaws. If the
bylaws are silent, or if the commissioner determines that the
voting requirements under the bylaws would be unfair or would
prejudice the rights of the eligible members, each eligible
member may cast one vote.
Subd. 6. [CONVERSION.] (a) [FILING.] Following approval by
the members, the converting mutual company shall file a copy of
the company's amended or restated articles of incorporation with
the commissioner, together with a certified copy of the minutes
of the meeting at which the plan was adopted and a certified
copy of the plan. The commissioner shall review and, if
appropriate, approve the amended or restated articles. After
approval by the commissioner, the converting mutual company
shall file the articles with the secretary of state as provided
by chapter 300.
(b) [EFFECTIVE DATE.] Effective on the date of filing an
amendment or restatement of the articles of incorporation with
the secretary of state as provided by chapter 300, or on a later
date if the plan so specifies, the converting mutual corporation
shall become a stock corporation and shall no longer be a mutual
corporation.
Subd. 7. [PLAN NOT UNFAIR OR INEQUITABLE.] A plan of
conversion shall not be unfair or inequitable to policyholders.
A plan of conversion is not unfair or inequitable if it
satisfies the conditions of subdivision 8, 9, or 10. The
commissioner may determine that any other plan proposed by a
converting mutual company is not unfair or inequitable to
policyholders.
Subd. 8. [SHARE CONVERSION.] A plan of conversion under
this subdivision shall provide for exchange of policyholders'
membership interests in return for shares in the reorganized
company, according to paragraphs (a) to (c).
(a) The policyholders' membership interests shall be
exchanged, in a manner that takes into account the estimated
proportionate contribution of equitable surplus of each class of
participating policies and contracts, for all of the common
shares of the reorganized company or its parent company or a
permitted issuer, or for a combination of the common shares of
the reorganized company or its parent company or a permitted
issuer.
(b) Unless the anticipated issuance within a shorter period
is disclosed in the plan of conversion, the issuer of common
shares shall not, within two years after the effective date of
reorganization, issue either of the following:
(1) any of its common shares or any securities convertible
with or without consideration into the common shares or carrying
any warrant to subscribe to or purchase common shares; and
(2) any warrant, right, or option to subscribe to or
purchase the common shares or other securities described in
paragraph (a), except for the issue of common shares to or for
the benefit of policyholders according to the plan of conversion
and the issue of options for the purchase of common shares being
granted to officers, directors, or employees of the reorganized
company or its parent company, if any, according to this section.
(c) Unless the common shares have a public market when
issued, the issuer shall use its best efforts to encourage and
assist in the establishment of a public market for the common
shares within two years of the effective date of the conversion
or a longer period as disclosed in the plan of conversion.
Within one year after any offering of stock other than the
initial distribution, but no later than six years after the
effective date of the conversion, the reorganized company shall
offer to make available to policyholders who received and
retained shares of common stock or securities described in
paragraph (b), clause (1), a procedure to dispose of those
shares of stock at market value without brokerage commissions or
similar fees.
Subd. 9. [SURPLUS DISTRIBUTION.] A plan of conversion
under this subdivision shall provide for the exchange of the
policyholders' membership interests in return for the operation
of the converting mutual company's participating policies as a
closed block of business and for the distribution of the
company's equitable surplus to policyholders, and shall provide
for the issuance of new shares of the reorganized company or its
parent corporation, each according to paragraphs (a) to (i).
(a) The converting mutual company's participating business,
comprised of its participating policies and contracts in force
on the effective date of the conversion or other reasonable date
as provided in the plan, shall be operated by the reorganized
company as a closed block of participating business. However,
at the option of the converting mutual company, group policies
and group contracts may be omitted from the closed block.
(b) Assets of the converting mutual company must be
allocated to the closed block of participating business in an
amount equal to the reserves and liabilities for the converting
mutual life insurer's participating policies and contracts in
force on the effective date of the conversion. The plan must be
accompanied by an opinion of an independent qualified actuary
who meets the standards set forth in the insurance laws or
regulations for the submission of actuarial opinions as to the
adequacy of reserves or assets. The opinion must relate to the
adequacy of the assets allocated to support the closed block of
business. The actuarial opinion must be based on methods of
analysis considered appropriate for those purposes by the
Actuarial Standards Board.
(c) The reorganized company shall keep a separate
accounting for the closed block and shall make and include in
the annual statement to be filed with the commissioner each year
a separate statement showing the gains, losses, and expenses
properly attributable to the closed block.
(d) Notwithstanding the establishment of a closed block,
the entire assets of the reorganized company shall be available
for the payment of benefits to policyholders. Payment must
first be made from the assets supporting the closed block until
exhausted, and then from the general assets of the reorganized
company.
(e) The converting mutual company's equitable surplus shall
be distributed to eligible participating policyholders in a form
or forms selected by the converting mutual company. The form of
distribution may consist of cash, securities of the reorganized
company, securities of another institution, a certificate of
contribution, additional life insurance, annuity benefits,
increased dividends, reduced premiums, or other equitable
consideration or any combination of forms of consideration. The
consideration, if any, given to a class or category of
policyholders may differ from the consideration given to another
class or category of policyholders. A certificate of
contribution must be repayable in ten years, be equal to 100
percent of the value of the policyholders' membership interest,
and bear interest at the highest rate charged by the reorganized
company for policy loans on the effective date of the conversion.
(f) The consideration must be allocated among the
policyholders in a manner that is fair and equitable to the
policyholders.
(g) The reorganized company or its parent corporation shall
issue and sell shares of one or more classes having a total
price equal to the estimated value in the market of the shares
on the initial offering date. The estimated value must take
into account all of the following:
(1) the pro forma market value of the reorganized company;
(2) the consideration to be given to policyholders
according to paragraph (e);
(3) the proceeds of the sale of the shares; and
(4) any additional value attributable to the shares as a
result of a purchaser or a group of purchasers who acted in
concert to obtain shares in the initial offering, attaining,
through such purchase, control of the reorganized company or its
parent corporation.
(h) If a purchaser or a group of purchasers acting in
concert is to attain control in the initial offering, the mutual
company shall not, directly or indirectly, pay for any of the
costs or expenses of conversion of the mutual company, whether
or not the conversion is effected.
(i) Periodically, with the commissioner's approval, the
reorganized company may share in the profits of the closed block
of participating business for the benefit of stockholders if the
assets allocated to the closed block are in excess of those
necessary to support the closed block.
Subd. 10. [SUBSCRIPTION RIGHTS.] A plan of conversion
under this subdivision shall provide for exchange of the
policyholders' membership interests in return for the operation
of the converting mutual company's participating policies as a
closed block of business, for the creation of a liquidation
account to protect the interests of policyholders, and for the
issuance of subscription rights to eligible policyholders, and
shall provide for the issuance of shares by the reorganized
company, each according to paragraphs (a) to (j).
(a) The converting mutual company's participating business,
comprised of its participating policies and contracts in force
on the effective date of the conversion, or such other
reasonable date specified in the plan, and excluding at the
converting mutual company's option any group policies or group
contracts, shall be operated by the reorganized company as a
closed block of participating business according to subdivision
9, paragraphs (a) to (d).
(b) The reorganized company or its parent corporation or a
permitted issuer shall issue and sell shares of one or more
classes having a total price equal to the estimated value of the
shares in the market on the initial offering date taking into
account the proceeds of the sale of shares and the consideration
given to policyholders.
(c) The policyholders shall receive nontransferable
preemptive subscription rights to purchase all of the common
shares of the issuer according to paragraph (b).
(d) The preemptive subscription rights to purchase the
common shares must be allocated among the participating
policyholders in whole shares in a manner provided in the plan
that takes into account the estimated contribution of each class
of participating policies and contracts to the total amount of
the policyholders' consideration. The plan must provide a fair
and equitable means for the allocation of shares in the event of
an oversubscription. The plan must further provide that any
shares of capital stock not subscribed by eligible members must
be sold in a public offering through an underwriter, unless the
number of shares unsubscribed is so small in number so as not to
warrant the expense of a public offering, in which case the plan
may provide for the purchase of the unsubscribed shares by
private placement or through any fair and equitable alternative
means approved by the commissioner.
(e) The number of the common shares that a person, together
with any affiliates or group of persons acting in concert, may
subscribe or purchase in the reorganization, must be limited to
not more than five percent of the common shares. For this
purpose, neither the members of the board of directors of the
reorganized company nor its parent corporation, if any, is
considered to be affiliates or a group of persons acting in
concert solely by reason of their board membership.
(f) Unless the common shares have a public market when
issued, officers and directors of the issuer and their
affiliates shall not, for at least three years after the date of
conversion, purchase common shares of the issuer, except with
the approval of the commissioner.
(g) Unless the common shares have a public market when
issued, the issuer shall use its best efforts to encourage and
assist in the establishment of a public market for the common
shares.
(h) The issuer shall not, for at least three years
following the conversion, repurchase any of its common shares
except according to a pro rata tender offer to all shareholders,
or with the approval of the commissioner.
(i) A liquidation account must be established for the
benefit of policyholders in the event of a complete liquidation
of the reorganized company. The liquidation account must be
equal to the equitable surplus of the converting mutual company
as of the effective date of the conversion. The function of the
liquidation account is solely to establish a priority on
liquidation and its existence does not restrict the use or
application of the surplus of the reorganized company except as
specified in paragraph (j). The liquidation account must be
allocated equitably as of the effective date of conversion among
the then participating policyholders. The amount allocated to a
policy or contract must not increase and must be reduced to zero
when the policy or contract terminates. In the event of a
complete liquidation of the reorganized company, the
policyholders among which the liquidation account is allocated
are entitled to receive a liquidation distribution in the amount
of the liquidation account before any liquidation distribution
is made with respect to shares.
(j) Until the liquidation account has been reduced to zero,
the issuer shall not declare or pay a cash dividend on, or
repurchase any of, its common shares in an amount in excess of
its cumulative earned surplus generated after the conversion
determined according to statutory accounting principles, if the
effect would be to cause the amount of the statutory surplus of
the reorganized company to be reduced below the then amount of
the liquidation account.
Subd. 11. [OPTIONAL PROVISIONS.] A plan under subdivision
8, 9, or 10 may include, with the approval of the commissioner,
any of the provisions in paragraphs (a) and (b).
(a) A plan may provide that any shares of the stock of the
reorganized company or its parent corporation or a permitted
issuer included in the policyholders' consideration must be
placed on the effective date of the conversion in a trust or
other entity existing for the exclusive benefit of the
participating policyholders and established solely for the
purposes of effecting the reorganization. Under this option,
the shares placed in trust must be sold over a period of not
more than ten years and the proceeds of the shares must be
distributed using the distribution priorities prescribed in the
plan.
(b) A plan may provide that the directors and officers of
the converting mutual company shall receive, without payment,
nontransferable subscription rights to purchase capital stock of
the reorganized company, its parent, or a permitted issuer.
Those subscription rights must be allocated among the directors
and officers by a fair and equitable formula.
(1) The total number of shares that may be purchased under
this clause, may not exceed 35 percent of the total number of
shares to be issued in the case of a converting mutual company
with total assets of less than $50,000,000 or 25 percent of the
total shares to be issued in the case of a converting mutual
company with total assets of more than $500,000,000. For
converting mutual companies with total assets between
$50,000,000 and $500,000,000, the total number of shares that
may be purchased may not exceed an interpolated percentage
between 25 and 35 percent.
(2) Stock purchased by a director or officer under clause
(1) may not be sold within one year following the effective date
of the conversion.
(3) The plan may also provide that a director or officer,
or person acting in concert with a director or officer of the
converting mutual company, may not acquire any capital stock of
the reorganized company for three years after the effective date
of the conversion, except through a licensed securities broker
or dealer, without the permission of the commissioner. That
provision may not apply to prohibit the directors and officers
from purchasing stock through subscription rights received in
the plan under clause (1).
(c) A plan may allocate to a tax-qualified employee benefit
plan nontransferable subscription rights to purchase up to ten
percent of the capital stock of the reorganized company, its
parent, or a permitted issuer. The employee benefit plan must
be entitled to exercise its subscription rights regardless of
the amount of shares purchased by other persons.
Subd. 12. [ALTERNATIVE PLAN OF CONVERSION.] In lieu of
selecting a plan of conversion provided for in this section, the
converting mutual company may convert according to a plan
approved by the commissioner if the commissioner finds that the
plan does not prejudice the interests of the members, is fair
and equitable, and is based upon an independent appraisal of the
market value of the mutual company by a qualified person, and is
a fair and equitable allocation of any consideration to be given
eligible members. The commissioner may retain, at the
converting mutual company's expense, any qualified expert not
otherwise a part of the commissioner's staff to assist in
reviewing whether the alternative plan may be approved and the
valuation of the company.
Subd. 13. [EFFECT OF CONVERSION.] (a) Upon the conversion
of a converting mutual company to a reorganized company
according to this section, the corporate existence of the
converting mutual company must be continued in the reorganized
company. All the rights, franchises, and interests of the
converting mutual company in and to all property and things in
action belonging to this property, is considered transferred to
and vested in the reorganized company without any deed or
transfer. Simultaneously, the reorganized company is considered
to have assumed all the obligations and liabilities of the
converting mutual company.
(b) The directors and officers of the converting mutual
company, unless otherwise specified in the plan of conversion,
shall serve as directors and officers of the reorganized company
until new directors and officers of the reorganized company are
duly elected according to the articles of incorporation and
bylaws of the reorganized company.
(c) All policies in force on the effective date of the
conversion continue to remain in force under the terms of those
policies, except that any voting rights of the policyholders
provided for under the policies are extinguished on the
effective date of the conversion.
Subd. 14. [CONFLICT OF INTEREST.] No director, officer,
agent, employee of the converting mutual company, or any other
person shall receive a fee, commission, or other valuable
consideration, other than the person's usual regular salary and
compensation, for in any manner aiding, promoting, or assisting
in the conversion except as set forth in the plan approved by
the commissioner. This provision does not prohibit the payment
of reasonable fees and compensation to attorneys, accountants,
investment bankers, and actuaries for services performed in the
independent practice of their professions.
Subd. 15. [COSTS AND EXPENSES.] All the costs and expenses
connected with a plan of conversion must be paid for or
reimbursed by the converting mutual company or the reorganized
company except where the plan provides otherwise.
Subd. 16. [LIMITATION OF ACTIONS.] (a) An action
challenging the validity of or arising out of acts taken or
proposed to be taken according to this section must be commenced
within 180 days after the effective date of the conversion.
(b) The converting mutual company, the reorganized company,
or any defendant in an action described in paragraph (a), may
petition the court in the action to order a party to give
security for the reasonable attorney fees that may be incurred
by a party to the action. The amount of security may be
increased or decreased in the discretion of the court having
jurisdiction if a showing is made that the security provided is
or may become inadequate or excessive.
Subd. 17. [SUPERVISORY CONVERSIONS.] The commissioner may
waive or alter any of the requirements of this section to
protect the interests of policyholders if the converting mutual
company is subject to the commissioner's administrative
supervision under chapter 60G or rehabilitation under chapter
60B.
Sec. 4. [60A.077] [MUTUAL INSURANCE HOLDING COMPANIES.]
Subdivision 1. [FORMATION.] (a) A domestic mutual
insurance company, upon approval of the commissioner, may
reorganize by forming an insurance holding company based upon a
mutual plan and continuing the corporate existence of the
reorganizing insurance company as a stock insurance company.
The commissioner, if satisfied that the interests of the
policyholders are properly protected and that the plan of
reorganization is fair and equitable to the policyholders, may
approve the proposed plan of reorganization and may require as a
condition of approval the modifications of the proposed plan of
reorganization as the commissioner finds necessary for the
protection of the policyholders' interests. The commissioner
shall retain jurisdiction over the mutual insurance holding
company according to this section and chapter 60D to assure that
policyholder interests are protected.
(b) All of the initial shares of the capital stock of the
reorganized insurance company must be issued to the mutual
insurance holding company or to an intermediate stock holding
company that is wholly owned by the mutual insurance holding
company. The membership interests of the policyholders of the
reorganized insurance company become membership interests in the
mutual insurance holding company. "Membership interests" means
those interests described in section 60A.075, subdivision 1,
paragraph (h). Policyholders of the reorganized insurance
company shall be members of the mutual insurance holding company
in accordance with the articles of incorporation and bylaws of
the mutual insurance holding company. The mutual insurance
holding company shall, at all times, directly or through an
intermediate stock holding company, control a majority of the
voting shares of the capital stock of the reorganized insurance
company.
Subd. 2. [MERGER.] (a) A domestic mutual insurance
company, upon the approval of the commissioner, may reorganize
by merging its policyholders' membership interests into a mutual
insurance holding company formed according to subdivision 1 and
continuing the corporate existence of the reorganizing insurance
company as a stock insurance company subsidiary of the mutual
insurance holding company. "Membership interests" means those
interests described in section 60A.075, subdivision 1, paragraph
(h). The commissioner, if satisfied that the interests of the
policyholder are properly protected and that the merger is fair
and equitable to the policyholders, may approve the proposed
merger and may require as a condition of approval the
modifications of the proposed merger as the commissioner finds
necessary for the protection of the policyholders' interests.
The commissioner shall retain jurisdiction over the mutual
insurance holding company organized according to this section to
assure that policyholder interests are protected.
(b) All of the initial shares of the capital stock of the
reorganized insurance company must be issued to the mutual
insurance holding company, or to an intermediate stock holding
company that is wholly owned by the mutual insurance holding
company. The membership interests of the policyholders of the
reorganized insurance company become membership interests in the
mutual insurance holding company. Policyholders of the
reorganized insurance company shall be members of the mutual
insurance holding company according to the articles of
incorporation and bylaws of the mutual insurance holding company.
Subd. 3. [PLAN OF REORGANIZATION; APPROVAL BY
COMMISSIONER.] (a) The reorganizing or merging insurer shall
file a plan of reorganization, approved by the affirmative vote
of a majority of its board of directors, for review and approval
by the commissioner. The plan must provide for the following:
(1) establishing a mutual insurance holding company with at
least one stock insurance company subsidiary, the majority of
shares of which must be owned, either directly or through an
intermediate stock holding company, by the mutual insurance
holding company;
(2) analyzing the benefits and risks attendant to the
proposed reorganization, including the rationale for the
reorganization and analysis of the comparative benefits and
risks of a demutualization under section 60A.075;
(3) protecting the immediate and long-term interests of
existing policyholders;
(4) ensuring immediate membership in the mutual insurance
holding company of all existing policyholders of the
reorganizing domestic insurance company;
(5) describing a plan providing for membership interests of
future policyholders;
(6) describing the number of members of the board of
directors of the mutual insurance holding company required to be
policyholders;
(7) ensuring that, in the event of proceedings under
chapter 60B involving a stock insurance company subsidiary of
the mutual insurance holding company that resulted from the
reorganization of a domestic mutual insurance company, the
assets of the mutual insurance holding company will be available
to satisfy the policyholder obligations of the stock insurance
company;
(8) for periodic distribution of accumulated holding
company earnings to members;
(9) describing the nature and content of the annual report
and financial statement to be sent to each member;
(10) a copy of the proposed mutual insurance holding
company's articles of incorporation and bylaws specifying all
membership rights;
(11) the names, addresses, and occupational information of
all corporate officers and members of the proposed mutual
insurance holding company board of directors;
(12) information sufficient to demonstrate that the
financial condition of the reorganizing or merging company will
not be diminished upon reorganization;
(13) a copy of the articles of incorporation and bylaws for
any proposed insurance company subsidiary or intermediate
holding company subsidiary;
(14) describing any plans for the initial sale of stock for
the reorganized insurance company; and
(15) any other information requested by the commissioner or
required by rule.
(b) The commissioner may approve the plan upon finding that
the requirements of this section have been fully met and the
plan will protect the immediate and long-term interests of
policyholders.
(c) The commissioner may retain, at the reorganizing or
merging mutual company's expense, any qualified experts not
otherwise a part of the commissioner's staff to assist in
reviewing the plan.
(d) The commissioner may, but need not, conduct a public
hearing regarding the proposed plan. The hearing must be held
within 30 days after submission of a completed plan of
reorganization to the commissioner. The commissioner shall give
the reorganizing mutual company at least 20 days' notice of the
hearing. At the hearing, the reorganizing mutual company, its
policyholders, and any other person whose interest may be
affected by the proposed reorganization, may present evidence,
examine and cross-examine witnesses, and offer oral and written
arguments or comments according to the procedure for contested
cases under chapter 14. The persons participating may conduct
discovery proceedings in the same manner as prescribed for the
district courts of this state. All discovery proceedings must
be concluded no later than three days before the scheduled
commencement of the public hearing.
Subd. 4. [APPROVAL BY COMMISSIONER.] The plan by order
shall be approved, conditionally approved, or disapproved within
the later of 30 days from the date of the commissioner's receipt
of all required information or 30 days after the conclusion of
the public hearing. An approval or conditional approval of a
plan of reorganization expires if the reorganization is not
completed within 180 days after the approval or conditional
approval unless the time period is extended by the commissioner
upon a showing of good cause.
Subd. 5. [APPROVAL BY MEMBERS.] The plan shall be approved
by the members as provided in section 60A.075, subdivision 5.
Subd. 6. [INCORPORATION.] A mutual insurance holding
company resulting from the reorganization of a domestic mutual
insurance company organized under chapter 300 shall be
incorporated pursuant to chapter 300. The articles of
incorporation and any amendments to the articles of the mutual
insurance holding company are subject to approval of the
commissioner in the same manner as those of an insurance company.
Subd. 7. [APPLICABILITY OF CERTAIN PROVISIONS.] (a) A
mutual insurance holding company is considered to be an insurer
subject to chapter 60B and shall automatically be a party to any
proceeding under chapter 60B involving an insurance company
that, as a result of a reorganization according to subdivision 1
or 2, is a subsidiary of the mutual insurance holding company.
In any proceeding under chapter 60B involving the reorganized
insurance company, the assets of the mutual insurance holding
company are considered to be assets of the estate of the
reorganized insurance company for purposes of satisfying the
claims of the reorganized insurance company's policyholders. A
mutual insurance holding company shall not dissolve or liquidate
without the approval of the commissioner or as ordered by the
district court according to chapter 60B.
(b) A mutual insurance holding company is subject to
chapter 60D to the extent consistent with this section.
(c) As a condition to approval of the plan, the
commissioner may require the mutual insurance holding company to
comply with any provision of the insurance laws necessary to
protect the interests of the policyholders as if the mutual
insurance holding company were a domestic mutual insurance
company.
Subd. 8. [APPLICABILITY OF DEMUTUALIZATION PROVISIONS.] (a)
Except as otherwise provided, section 60A.075 is not applicable
to a reorganization or merger according to this section, and
except for section 60A.075, subdivisions 14 to 16.
(b) Section 60A.075 is applicable to demutualization of a
mutual insurance holding company that resulted from the
reorganization of a domestic mutual insurance company organized
under chapter 300 as if it were a mutual insurance company.
Subd. 9. [MEMBERSHIP INTERESTS.] A membership interest in
a domestic mutual insurance holding company does not constitute
a security as defined in section 80A.14, subdivision 18.
Subd. 10. [FINANCIAL STATEMENT REQUIREMENTS.] (a) In
addition to any items required under chapter 60D, each mutual
insurance holding company shall file with the commissioner, by
April 1 of each year, an annual statement consisting of the
following:
(1) an income statement, balance sheet, and cashflow
statement prepared in accordance with generally accepted
accounting principles;
(2) complete information on the status of any closed block
formed as part of a plan of reorganization;
(3) an investment plan covering all assets; and
(4) a statement disclosing any intention to pledge, borrow
against, alienate, hypothecate, or in any way encumber the
assets of the mutual insurance holding company. Action taken
according to the statement is subject to the commissioner's
prior written approval.
(b) The aggregate pledges and encumbrances of a mutual
holding company's assets shall not affect more than 49 percent
of the company's stock in any subsidiary insurance holding
company or subsidiary insurance company that resulted from a
reorganization or merger.
(c) At least 50 percent of the generally accepted
accounting principles (GAAP) net worth of a mutual insurance
holding company must be invested in insurance company
subsidiaries.
Subd. 11. [SALE OF STOCK AND PAYMENT OF DIVIDENDS.] No
solicitation for the sale of the stock of the reorganized
insurance company, or of an intermediate stock holding company
of the mutual insurance holding company, may be made without the
commissioner's prior written approval. Dividends and other
distributions to the shareholders of the reorganized stock
insurance company or of an intermediate stock holding company
shall not be made except in compliance with section 60D.20.
Sec. 5. Minnesota Statutes 1994, section 60A.11,
subdivision 21, is amended to read:
Subd. 21. [FOREIGN INVESTMENTS.] Obligations of and
investments in foreign countries, on the following conditions:
(a) a company may acquire and hold any foreign investments
which are required as a condition of doing business in the
foreign country or necessary for the convenient accommodation of
its foreign business. An investment is considered necessary for
the convenient accommodation of the insurance company's foreign
business only if it is demonstrably and directly related in size
and purpose to the company's foreign insurance operations; and
(b) a company may not also invest not more than five
percent of its total admitted assets in any combination of:
(1) the obligations of foreign governments, corporations,
or business trusts;
(2) obligations of federal, provincial, or other political
subdivisions backed by the full faith and credit of the foreign
governmental unit;
(3) or in the stocks or stock equivalents or obligations of
foreign corporations or business trusts not qualifying for
investment under subdivision 12, if the obligations, stocks or
stock equivalents are listed or regularly traded on the London,
Paris, Zurich, or Tokyo stock exchange or any similar regular
securities exchange not disapproved by the commissioner within
30 days following notice from the company of its intention to
invest in these securities.
Sec. 6. Minnesota Statutes 1995 Supplement, section
60A.67, subdivision 2, is amended to read:
Subd. 2. [PROHIBITION ON ANNOUNCEMENTS.] The comparison of
an insurer's total adjusted capital to any of its risk-based
capital levels is a regulatory tool that may indicate the need
for possible corrective action with respect to the insurer and
is not intended as a means to rank insurers generally. Except
as otherwise required under sections 60A.60 to 60A.696, the
making, publishing, dissemination, circulating, or placing
before the public, or causing, directly or indirectly to be
made, published, disseminated, circulated, or placed before the
public, in a newspaper, magazine, or other publication, or in
the form of a notice, circular, pamphlet, letter, or poster, or
over any radio or television station, or in any other way, an
advertisement, announcement, or statement containing an
assertion, representation, or statement with regard to the
risk-based capital levels of an insurer, or of any component
derived in the calculation, by an insurer, agent, broker, or
other person engaged in any manner in the insurance business
would be misleading and is prohibited. However, if a materially
false statement with respect to the comparison regarding an
insurer's total adjusted capital to its risk-based capital
levels, or any of them, or an inappropriate comparison of any
other amount to the insurer's risk-based capital levels is
published in a written publication and the insurer is able to
demonstrate to the commissioner with substantial proof the
falsity of the statement, or the inappropriateness, as the case
may be, then the insurer may publish an announcement in a
written publication if the sole purpose of the announcement is
to rebut the materially false statement. This subdivision does
not prohibit an insurance company or its holding company from
disclosing information about its risk-based capital levels in
the notes to its financial statements if required by
pronouncements of the American Institute of Certified Public
Accountants or the Financial Accounting Standards Board, or
making this disclosure as required by other governmental
regulatory agencies.
Sec. 7. Minnesota Statutes 1994, section 60C.09,
subdivision 2, is amended to read:
Subd. 2. [FURTHER DEFINITION.] In addition to subdivision
1, a covered claim does not include:
(1) claims by an affiliate of the insurer; and
(2) claims due a reinsurer, insurer, insurance pool, or
underwriting association, as subrogation recoveries or otherwise.
This clause does not prevent a person from presenting the
excluded claim to the insolvent insurer or its liquidator, but
the claims shall not be asserted against another person,
including the person to whom the benefits were paid or the
insured of the insolvent insurer, except to the extent that the
claim is outside the coverage of the policy issued by the
insolvent insurer; and
(3) any first-party claims, resulting from insolvencies
which occur after July 31, 1996, by an insured whose net worth
exceeds $25,000,000 on December 31 of the year prior to the year
in which the insurer becomes an insolvent insurer; provided that
an insured's net worth on that date shall be deemed to include
the aggregate net worth of the insured and all of its
subsidiaries as calculated on a consolidated basis.
Sec. 8. Minnesota Statutes 1994, section 60C.11, is
amended by adding a subdivision to read:
Subd. 7. The association may recover the amount of any
covered claim paid, resulting from insolvencies which occur
after July 31, 1996, on behalf of an insured who has a net worth
of $25,000,000 as provided in section 60C.09, subdivision 2,
clause (3), on December 31 of the year immediately preceding the
date the insurer becomes an insolvent insurer and whose
liability obligations to other persons are satisfied in whole or
in part by payments made under this chapter.
Sec. 9. Minnesota Statutes 1994, section 61A.32, is
amended to read:
61A.32 [DOMESTIC MUTUAL AND STOCK AND MUTUAL COMPANIES;
VOTING RIGHTS OF MEMBERS.]
Every person insured by a domestic mutual life insurance
company, and every participating policyholder of a domestic
stock and mutual life insurance company as defined in sections
61A.33 to 61A.36, shall be a member, entitled to one vote and
one vote additional for each $1,000 of insurance in excess of
the first $1,000; provided, that no member shall be entitled to
more than 100 votes; and, provided, further, that in the case of
group insurance on employees such group shall be deemed to be a
single member and the employer shall be deemed to be such member
for the purpose of voting, having not to exceed 100 votes,
provided, that in cases where the employees pay all or any part
of the premium, either directly or by payroll deductions, the
employees shall be allowed to choose their representative, who
shall exercise a voting power in proportion to the percentage of
premium paid by such employees. Every member shall be notified
of its annual meetings by a written notice mailed to the
member's address, or by an imprint on the back of the policy,
premium notice, receipt or certificate of renewal, as follows:
"The insured is hereby notified that by virtue of this
policy the insured is a member of the .......... Insurance
Company, and that the annual meetings of said company are held
at its home office on the ..... day of ..... in each year, at
.......... o'clock."
The blanks shall be duly filled in print. Any such member
may vote by proxy by filing written proxy appointment with the
secretary of the company at its home office at least five days
before the first meeting at which it is to be used. Such proxy
appointment may be for a specified period of time or may provide
that it will be in effect until revoked not to exceed one year.
A proxy may be revoked by a member at any time by written notice
to the secretary of the company or by executing a new proxy
appointment and filing it as required herein: provided,
however, that any member may always appear personally and
exercise rights as a member at any meeting of the company.
A domestic mutual life insurance company may by its
articles of incorporation or bylaws provide for a representative
system of voting in any meeting of members. The articles or
bylaws may provide for the selection of representatives from
districts as therein specified, such representatives to
represent approximately equal numbers of members with power to
exercise all the voting powers, rights and privileges of the
members they represent with the same force and effect as might
be exercised by the members themselves. In such a
representative system the votes cast by the representative shall
be one vote for each member, notwithstanding the amount of
insurance carried, and proxy voting shall not be permitted;
provided, however, that any member may always appear personally
and exercise rights as a member of the company at any meeting of
the membership.
Sec. 10. Minnesota Statutes 1994, section 61B.20,
subdivision 15, is amended to read:
Subd. 15. [PREMIUMS.] "Premiums" means amounts received on
covered policies or contracts less premiums, considerations, and
deposits returned, and less dividends and experience credits on
those covered policies or contracts to the extent not guaranteed
in advance. The term does not include amounts received for
policies or contracts or for the portions of policies or
contracts for which coverage is not provided under section
61B.19, subdivision 3, except that assessable premium shall not
be reduced on account of section 61B.19, subdivision 4, relating
to limitations with respect to any one life, any one individual,
and any one contract holder,. Premiums subject to assessment
under section 61B.24, include all amounts received on any
unallocated annuity contract issued to a contract holder
resident in this state if the contract is not otherwise excluded
from coverage under section 61B.19, subdivision 3; provided that
"premiums" shall not include any premiums in excess of the
liability limit on any unallocated annuity contract specified in
section 61B.19, subdivision 4.
Sec. 11. [REPEALER.]
Minnesota Statutes 1994, section 60A.13, subdivision 8, is
repealed.
ARTICLE 3
Section 1. Minnesota Statutes 1995 Supplement, section
62L.045, is amended to read:
62L.045 [ASSOCIATIONS.]
Subdivision 1. [DEFINITIONS.] For purposes of this
section, the following terms have the meanings given:
(a) "Association" means:
(1) an association as defined in section 60A.02;
(2) a group or organization of political subdivisions;
(3) an educational cooperative service unit a service
cooperative created under section 123.58 123.582; or
(4) a joint self-insurance pool authorized under section
471.617, subdivision 2.
(b) "Qualified association" means an association, as
defined in this subdivision, that:
(1) is registered with the commissioner of commerce;
(2) provides health plan coverage through a health carrier
that participates in the small employer market in this state,
other than through associations, to the extent that the
association purchases health plan coverage rather than
self-insures;
(3) has and adheres to membership and participation
criteria and health plan coverage eligibility criteria that are
not designed to disproportionately include or attract small
employers that are likely to have low costs of health coverage
or to disproportionately exclude or repel small employers that
are likely to have high costs of health coverage; and
(4) permits any small employer that meets its membership,
participation, and eligibility criteria to become a member and
to obtain health plan coverage through the association.
(c) "Health coverage" means a health benefit plan as
defined in section 62L.02, subdivision 15; or similar
self-insured coverage offered, sold, issued, or renewed by an
association as defined in paragraph (a) to a small employer.
Subd. 2. [QUALIFIED ASSOCIATIONS.] (a) A qualified
association, as defined in this section, and health benefit
plans coverage offered by it, to it, or through it, to a small
employer in this state must comply with the requirements of this
chapter regarding guaranteed issue, guaranteed renewal,
preexisting condition limitations, credit against preexisting
condition limitations for continuous coverage, treatment of MCHA
enrollees, and the definition of dependent, and with section
62A.65, subdivision 5, paragraph (b). They must also comply
with all other requirements of this chapter not specifically
exempted in paragraph (b) or (c).
(b) A qualified association and a health carrier offering,
selling, issuing, or renewing a health benefit plan coverage to,
or to cover, a small employer in this state through the
qualified association, may, but are not, in connection with that
health benefit plan coverage, required to:
(1) offer the two small employer plans described in section
62L.05; and
(2) offer to small employers that are not members of the
association, health benefit plans coverage offered to, by, or
through the qualified association.
(c) A qualified association, and a health carrier offering,
selling, issuing, and renewing a health benefit plan coverage
to, or to cover, a small employer in this state must comply with
section 62L.08, except that:
(1) a separate index rate may be applied by a health
carrier to each qualified association, provided that:
(1) (i) the premium rate applied to participating small
employer members of the qualified association is no more than 25
percent above and no more than 25 percent below the index rate
applied to the qualified association, irrespective of when
members applied for health coverage; and
(2) (ii) the index rate applied by a health carrier to a
qualified association is no more than 20 percent above and no
more than 20 percent below the index rate applied by the health
carrier to any other qualified association or to any small
employer. In comparing index rates for purposes of this clause,
the 20 percent shall be calculated as a percent of the larger
index rate; and
(2) a qualified association described in subdivision 1,
paragraph (a), clauses (2) to (4), providing health coverage
through a health carrier, or on a self-insured basis in
compliance with section 471.617 and the rules adopted under that
section, may cover small employers and other employers within
the same pool and may charge premiums to small employer members
on the same basis as it charges premiums to members that are not
small employers, if the premium rates charged to small employers
do not have greater variation than permitted under section
62L.08. A qualified association operating under this clause
shall annually prove to the commissioner of commerce that it
complies with this clause through a sampling procedure
acceptable to the commissioner. If the qualified association
fails to prove compliance to the satisfaction of the
commissioner, the association shall agree to a written plan of
correction acceptable to the commissioner. The qualified
association is considered to be in compliance under this clause
if there is a premium rate that would, if used as an index rate,
result in all premium rates in the sample being in compliance
with section 62L.08. This clause does not exempt a qualified
association or a health carrier providing coverage through the
qualified association from the loss ratio requirement of section
62L.08, subdivision 11.
Subd. 3. [OTHER ASSOCIATIONS.] Associations as defined in
this section that are not qualified associations; health benefit
plans coverage offered, sold, issued, or renewed by or through
them; and the health carriers doing so, must fully comply with
this chapter with respect to small employers that are members of
the association.
Subd. 4. [PRINCIPLES; ASSOCIATION COVERAGE.] (a) This
subdivision applies to associations as defined in this section,
whether qualified associations or not, and is intended to
clarify subdivisions 1 to 3.
(b) This section applies only to associations that
provide health coverage to small employers.
(c) The requirements of guaranteed issue and guaranteed
renewal apply to coverage issued to cover small employers and
persons covered through them, within the context of an
arrangement between an association and a health carrier. A
health carrier is not required under this chapter to comply with
guaranteed issue and guaranteed renewal with respect to its
relationship with the association itself. An arrangement
between the health carrier and the association, once entered
into, must comply with guaranteed issue and guaranteed renewal
with respect to members of the association that are small
employers and persons covered through them.
(d) When an arrangement between a health carrier and an
association has validly terminated, the health carrier has no
continuing obligation to small employers and persons covered
through them, except as otherwise provided in:
(1) section 62A.65, subdivision 5, paragraph (b);
(2) any other continuation or conversion rights applicable
under state or federal law; and
(3) section 60A.082, relating to group replacement
coverage, and rules adopted under that section.
(e) When an association's arrangement with a health carrier
has terminated and the association has entered into a new
arrangement with that health carrier or a different health
carrier, the new arrangement is subject to section 60A.082 and
rules adopted under it, with respect to members of the
association that are small employers and persons covered through
them.
(f) An association that offers its members more than one
health plan of health coverage may have uniform rules
restricting movement between the health plans of health
coverage, if the rules do not discriminate against small
employers.
(g) This chapter does not require or prohibit separation of
an association's members into one group consisting only of small
employers and another group or other groups consisting of all
other members. The association must comply with this section
with respect to the small employer group.
(h) For purposes of this section, "member" of an
association includes an employer participant in the association.
(i) For purposes of this section, health coverage issued
to, or to cover, a small employer includes a certificate of
coverage issued directly to the employer's employees and
dependents, rather than to the small employer.
Subd. 5. [REGISTRATION.] The commissioner may require all
associations that are subject to this section to register with
the commissioner prior to an initial purchase of health coverage
under this section.
Sec. 2. Minnesota Statutes 1994, section 471.617,
subdivision 2, as amended by Laws 1995, chapter 233, article 2, section
56,
is amended
to read:
Subd. 2. Any two or more statutory or home rule charter
cities, counties, school districts, or instrumentalities thereof
which together have more than 100 employees may jointly
self-insure for any employee health benefits including long-term
disability, but not for employee life benefits, subject to the
same requirements as an individual self-insurer under
subdivision 1. Self-insurance pools under this section are
subject to section 62L.045. A self-insurance pool established
and operated by one or more service cooperatives governed by
section 123.582 to provide coverage described in this
subdivision qualifies under this subdivision. The commissioner
of commerce may adopt rules pursuant to chapter 14, providing
standards or guidelines for the operation and administration of
self-insurance pools.
Sec. 3. Minnesota Statutes 1994, section 471.98,
subdivision 3, as amended by Laws 1995, chapter 256, section 19, is
amended
to read:
Subd. 3. [POOL.] "Pool" means any self-insurance fund or
agreement for the reciprocal assumption of risk established by
or among two or more political subdivisions for coverage of
their respective risks including, but not limited to, the pools
described in section 471.982, subdivision 3. Except in
connection with provisions in sections 471.981 and 471.982 that
relate to bonding, "pool" does not include a self-insurance pool
for employee health benefits under section 471.617.
Sec. 4. [SMALL SELF-INSURED POLITICAL SUBDIVISION POOLS.]
Self-insurance pools under Minnesota Statutes, section
471.617, subdivision 2, having fewer than 1,500 enrollees as of
March 1, 1996, shall become subject to Minnesota Statutes,
chapter 62L, effective January 1, 1998.
Sec. 5. [EFFECTIVE DATE.]
Sections 1 to 3 are effective January 1, 1997, and apply to
coverage issued; renewed; or continued as defined in Minnesota
Statutes, section 60A.02, subdivision 2a; on or after that date.
Presented to the governor April 4, 1996
Signed by the governor April 11, 1996, 11:58 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes