Office of the Revisor of Statutes
Minnesota Session Laws - 1998, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 339-S.F.No. 2267
An act relating to insurance; regulating terminations
of workers' compensation self-insurance authority and
commercial workers' compensation self-insurance
groups; providing investment, funding, reporting, and
transfer requirements; providing permanent health plan
coverage for prostate cancer screenings; requiring a
notice; amending Minnesota Statutes 1996, sections
79A.06, subdivision 5; 79A.22, subdivision 7, and by
adding a subdivision; 79A.23, subdivisions 1 and 2;
79A.24, subdivisions 1, 2, and 4; 79A.26, subdivision
2; and 79A.31, subdivision 1; Minnesota Statutes 1997
Supplement, section 62J.65; Laws 1996, chapter 446,
article 1, section 72.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1997 Supplement, section
62J.25, is amended to read:
62J.25 [MANDATORY MEDICARE ASSIGNMENT.]
(a) Effective January 1, 1993, a health care provider shall
not charge to or collect from a Medicare beneficiary who is a
Minnesota resident any amount in excess of 115 percent of the
Medicare-approved amount for any Medicare-covered service
provided.
(b) Effective January 1, 1994, a health care provider shall
not charge to or collect from a Medicare beneficiary who is a
Minnesota resident any amount in excess of 110 percent of the
Medicare-approved amount for any Medicare-covered service
provided.
(c) Effective January 1, 1995, a health care provider shall
not charge to or collect from a Medicare beneficiary who is a
Minnesota resident any amount in excess of 105 percent of the
Medicare-approved amount for any Medicare-covered service
provided.
(d) Effective January 1, 1996, a health care provider shall
not charge to or collect from a Medicare beneficiary who is a
Minnesota resident any amount in excess of the Medicare-approved
amount for any Medicare-covered service provided.
(e) This section does not apply to ambulance services as
defined in section 144E.001, subdivision 3, or medical supplies
and equipment. A vendor of medical supplies and equipment that
does not accept assignment under the federal Medicare program
with respect to a purchase or lease of Medicare-covered supplies
or equipment shall notify any purchaser who is a Medicare
beneficiary and Minnesota resident, prior to the purchase, or at
any time upon the request of the purchaser, that the vendor
charges an amount in excess of the Medicare-approved amount.
Sec. 2. Minnesota Statutes 1996, section 79A.06,
subdivision 5, is amended to read:
Subd. 5. [PRIVATE EMPLOYERS WHO HAVE CEASED TO BE
SELF-INSURED.] (a) Private employers who have ceased to be
private self-insurers shall discharge their continuing
obligations to secure the payment of compensation which is
accrued during the period of self-insurance, for purposes of
Laws 1988, chapter 674, sections 1 to 21, by compliance with all
of the following obligations of current certificate holders:
(1) Filing reports with the commissioner to carry out the
requirements of this chapter;
(2) Depositing and maintaining a security deposit for
accrued liability for the payment of any compensation which may
become due, pursuant to chapter 176. However, if a private
employer who has ceased to be a private self-insurer purchases
an insurance policy from an insurer authorized to transact
workers' compensation insurance in this state which provides
coverage of all claims for compensation arising out of injuries
occurring during the period the employer was self-insured,
whether or not reported during that period, the policy will
discharge the obligation of the employer to maintain a security
deposit for the payment of the claims covered under the policy.
The policy may not be issued by an insurer unless it has
previously been approved as to form and substance by the
commissioner; and
(3) Paying within 30 days all assessments of which notice
is sent by the security fund, for a period of seven years from
the last day its certificate of self-insurance was in effect.
Thereafter, the private employer who has ceased to be a private
self-insurer may either: (a)(i) continue to pay within 30 days
all assessments of which notice is sent by the security fund
until it has no incurred liabilities for the payment of
compensation arising out of injuries during the period of
self-insurance; or (b)(ii) pay the security fund a cash payment
equal to four percent of the net present value of all remaining
incurred liabilities for the payment of compensation under
sections 176.101 and 176.111 as certified by a member of the
casualty actuarial society. Assessments shall be based on the
benefits paid by the employer during the calendar year
immediately preceding the calendar year in which the employer's
right to self-insure is terminated or withdrawn.
(b) With respect to a self-insurer who terminates its
self-insurance authority after the effective date of this
clause, that member shall obtain and file with the commissioner
an actuarial opinion of its outstanding liabilities as
determined by an associate or fellow of the Casualty Actuarial
Society. The opinion must separate liability for indemnity
benefits from liability from medical benefits, and must discount
each up to four percent per annum to net present value. Within
30 days after notification of approval of the actuarial opinion
by the commissioner, the member shall pay to the security fund
an amount equal to 120 percent of that discounted outstanding
indemnity liability, multiplied by the greater of the average
annualized assessment rate since inception of the security fund
or the annual rate at the time of the most recent assessment
before termination.
(c) A former member who terminated its self-insurance
authority before the effective date of this clause who has paid
assessments to the self-insurers' security fund for seven years,
and whose annualized assessment is $500 or less, may buy out of
its outstanding liabilities to the self-insurers' security fund
by an amount calculated as follows: 1.35 multiplied by the
indemnity case reserves at the time of the calculation,
multiplied by the then current self-insurers' security fund
annualized assessment rate.
(d) A former member who terminated its self-insurance
authority before the effective date of this clause, and who is
paying assessments within the first seven years after ceasing to
be self-insured under paragraph (a), clause (3), may elect to
buy out its outstanding liabilities to the self-insurers'
security fund by obtaining and filing with the commissioner an
actuarial opinion of its outstanding liabilities as determined
by an associate or fellow of the Casualty Actuarial Society.
The opinion must separate liability for indemnity benefits from
liability from medical benefits, and must discount each up to
four percent per annum to net present value. Within 30 days
after notification of approval of the actuarial opinion by the
commissioner, the member shall pay to the security fund an
amount equal to 120 percent of that discounted outstanding
indemnity liability, multiplied by the greater of the average
annualized assessment rate since inception of the security fund
or the annual rate at the time of the most recent assessment.
(e) A former member who has paid the security fund
according to paragraphs (b) to (d) and subsequently receives
authority from the commissioner to again self-insure shall be
assessed under section 79A.12, subdivision 2, only on indemnity
benefits paid on injuries that occurred after the former member
received authority to self-insure again; provided that the
member furnishes verified data regarding those benefits to the
security fund.
(f) In addition to proceedings to establish liabilities and
penalties otherwise provided, a failure to comply may be the
subject of a proceeding before the commissioner. An appeal from
the commissioner's determination may be taken pursuant to the
contested case procedures of chapter 14 within 30 days of the
commissioner's written determination.
Any current or past member of the self-insurers' security
fund is subject to service of process on any claim arising out
of chapter 176 or this chapter in the manner provided by section
5.25, or as otherwise provided by law. The issuance of a
certificate to self-insure to the private self-insured employer
shall be deemed to be the agreement that any process which is
served in accordance with this section shall be of the same
legal force and effect as if served personally within this state.
Sec. 3. Minnesota Statutes 1996, section 79A.22,
subdivision 7, is amended to read:
Subd. 7. [INVESTMENTS.] (a) Any securities purchased by
the common claims fund shall be in such denominations and with
dates of maturity to ensure securities may be redeemable at
sufficient time and in sufficient amounts to meet the fund's
current and long-term liabilities.
(b) Cash assets of the common claims fund may be invested
in the following securities:
(1) direct obligations of the United States government,
except mortgage-backed securities of the Government National
Mortgage Association;
(2) bonds, notes, debentures, and other instruments which
are obligations of agencies and instrumentalities of the United
States including, but not limited to, the federal National
Mortgage Association, the federal Home Loan Mortgage
Corporation, the federal Home Loan Bank, the Student Loan
Marketing Association, and the Farm Credit System, and their
successors, but not including collateralized mortgage
obligations or mortgage pass-through instruments;
(3) bonds or securities that are issued by the state of
Minnesota and that are secured by the full faith and credit of
the state;
(4) certificates of deposit which are insured by the
federal Deposit Insurance Corporation and are issued by a
Minnesota depository institution;
(5) obligations of, or instruments unconditionally
guaranteed by, Minnesota depository institutions whose long-term
debt rating is at least AA-, or Aa3, or their equivalent by at
least two nationally recognized rating agencies.
(b) Cash assets of the self-insurer's fund may be invested
as provided in section 60A.11 for a casualty insurance company,
provided that investment in real estate of or indebtedness from
a member company or affiliates is prohibited. In addition,
investment in the following is allowed:
(1) savings accounts or certificates of deposit in a duly
chartered commercial bank located within the state of Minnesota
and insured through the Federal Deposit Insurance Corporation;
(2) share accounts or savings certificates in a duly
chartered savings association or savings bank located within the
state of Minnesota and insured through the Federal Deposit
Insurance Corporation;
(3) direct obligations of the United States Treasury, such
as notes, bonds, or bills;
(4) a bond or security issued by the state of Minnesota and
backed by the full faith and credit of the state;
(5) a credit union where the employees of the self-insurer
are members if the credit union is located in Minnesota and
insured through the National Credit Union Administration; or
(6) real estate, common stock, preferred stock, or
corporate bonds listed on the New York, American Stock Exchange
or NASDAQ Stock Market, so long as these investments are not
issued by any member company or affiliate and the total in all
other allowable categories make up at least 75 percent of the
total required in the common claims fund.
Sec. 4. Minnesota Statutes 1996, section 79A.22, is
amended by adding a subdivision to read:
Subd. 13. [COMMON CLAIMS FUND; FIVE-YEAR EXCEPTION.] For
commercial group self-insurers who have been in existence for
five years or more, a level of funding in the common claims fund
must be maintained at not less than the greater of either:
(1) one year's claim losses paid in the most recent year;
or
(2) one-third of the security deposit posted with the
department of commerce according to section 79A.24, subdivision
2.
This provision supersedes any requirements under
subdivisions 11 and 12 and Minnesota Rules, part 2780.5000.
Sec. 5. Minnesota Statutes 1996, section 79A.23,
subdivision 1, is amended to read:
Subdivision 1. [REQUIRED REPORTS TO COMMISSIONER.] Each
commercial self-insurance group shall submit the following
documents to the commissioner.
(a) An annual report shall be submitted by April 1 showing
the incurred losses, paid and unpaid, specifying indemnity and
medical losses by classification, payroll by classification, and
current estimated outstanding liability for workers'
compensation on a calendar year basis, in a manner and on forms
available from the commissioner. In addition each group will
submit a quarterly interim loss report showing incurred losses
for all its membership.
(b) Each commercial self-insurance group shall submit
within 45 days of the end of each quarter:
(1) a schedule showing all the members who participate in
the group, their date of inception, and date of withdrawal, if
applicable;
(2) a separate section identifying which members were added
or withdrawn during that quarter; and
(3) an internal financial statement and copies of the
fiscal agent's statements supporting the balances in the common
claims fund.
(c) The commercial self-insurance group shall submit an
annual certified financial audit report of the commercial
self-insurance group fund by April 1 of the following year. The
report must be accompanied by an expense schedule showing the
commercial self-insurance group's operational costs for the same
year including service company charges, accounting and actuarial
fees, fund administration charges, reinsurance premiums,
commissions, and any other costs associated with the
administration of the group program.
(d) An officer of the commercial self-insurance group
shall, under oath, attest to the accuracy of each report
submitted under paragraphs (a), (b), and (c). Upon sufficient
cause, the commissioner shall require the commercial
self-insurance group to submit a certified audit of payroll and
claim records conducted by an independent auditor approved by
the commissioner, based on generally accepted accounting
principles and generally accepted auditing standards, and
supported by an actuarial review and opinion of the future
contingent liabilities. The basis for sufficient cause shall
include the following factors:
(1) where the losses reported appear significantly
different from similar types of groups;
(2) where major changes in the reports exist from year to
year, which are not solely attributable to economic factors; or
(3) where the commissioner has reason to believe that the
losses and payroll in the report do not accurately reflect the
losses and payroll of the commercial self-insurance group.
If any discrepancy is found, the commissioner shall require
changes in the commercial self-insurance group's business plan
or service company recordkeeping practices.
(e) Each commercial self-insurance group shall submit by
August September 15 a copy of the group's annual federal and
state income tax returns or provide proof that it has received
an exemption from these filings.
(f) With the annual loss report each commercial
self-insurance group shall report to the commissioner any
worker's compensation claim where the full, undiscounted value
is estimated to exceed $50,000, in a manner and on forms
prescribed by the commissioner.
(g) Each commercial self-insurance group shall submit by
May 1 a list of all members and the percentage of premium each
represents to the total group's premium for the previous
calendar year.
(h) Each commercial self-insurance group shall submit by
May 1 the following documents prepared by the group's certified
public accountant:
(1) a compiled combined financial statement of group
members and a list of members included in this statement; and
(2) a report that the statements which were combined have
met the requirements of subdivision 2.
(i) If any group member comprises over 25 percent of total
group premium, that member's financial statement must be
reviewed or audited, and must be submitted to the commissioner,
at the commissioner's option, must be filed with the department
of commerce by May 1 of the following year.
(j) Each commercial self-insurance group shall submit a
copy of each member's accountant's report letter from the
reports used in compiling the combined financial statements.
Sec. 6. Minnesota Statutes 1996, section 79A.23,
subdivision 2, is amended to read:
Subd. 2. [REQUIRED REPORTS FROM MEMBERS TO GROUP.] Each
member of the commercial self-insurance group shall, by April 1,
submit to the group its most recent annual financial statement,
together with other financial information the group may
require. These financial statements submitted must not have a
fiscal year end date older than January 15 of the group's
calendar year end. Individual group members constituting at
least 75 50 percent of the group's annual premium shall submit
to the group reviewed or audited financial statements. The
remaining members may submit compilation level statements.
Sec. 7. Minnesota Statutes 1996, section 79A.24,
subdivision 1, is amended to read:
Subdivision 1. [ANNUAL SECURING OF LIABILITY.] Each year
every commercial self-insurance group shall secure its estimated
future incurred liabilities liability for the payment of
compensation and the performance of the obligations of its
membership imposed under chapter 176. A new deposit must be
posted within 30 days of the filing of the commercial
self-insurance group's annual actuarial report with the
commissioner.
Sec. 8. Minnesota Statutes 1996, section 79A.24,
subdivision 2, is amended to read:
Subd. 2. [MINIMUM DEPOSIT.] The minimum deposit is 150
percent of the commercial self-insurance group's estimated
future incurred liabilities liability for the payment of
compensation as determined by an actuary. If all the members of
the commercial self-insurance group have submitted reviewed or
audited financial statements to the group's accountant, this
minimum deposit shall be 110 percent of the commercial
self-insurance group's estimated future incurred
liabilities liability for the payment of workers' compensation
as determined by an actuary. The group must file a letter with
the commissioner from the group's accountant which confirms that
the compiled combined financial statements were prepared from
members reviewed or audited financial statements only before the
lower security deposit is allowed. Each actuarial study shall
include a projection of future losses during a one-year period
until the next scheduled actuarial study, less payments
anticipated to be made during that time. Deduction should be
made for the total amount which is estimated to be returned to
the commercial self-insurance group from any specific excess
insurance coverage, aggregate excess insurance coverage, and any
supplementary benefits which are estimated to be reimbursed by
the special compensation fund. Supplementary benefits will not
be reimbursed by the special compensation fund unless the
special compensation fund assessment pursuant to section 176.129
is paid and the required reports are filed with the special
compensation fund. In the case of surety bonds, bonds shall
secure administrative and legal costs in addition to the
liability for payment of compensation reflected on the face of
the bond. In no event shall the security be less than the
group's selected retention limit of the workers' compensation
reinsurance association. The posting or depositing of security
under this section shall release all previously posted or
deposited security from any obligations under the posting or
depositing and any surety bond so released shall be returned to
the surety. Any other security shall be returned to the
depositor or the person posting the bond.
Sec. 9. Minnesota Statutes 1996, section 79A.24,
subdivision 4, is amended to read:
Subd. 4. [CUSTODIAL ACCOUNTS.] (a) All surety bonds,
irrevocable letters of credit, and documents showing issuance of
any irrevocable letter of credit shall be deposited in
accordance with the provisions of section 79A.071.
(b) Upon the commissioner sending a request to renew,
request to post, or request to increase a security deposit, a
perfected security interest is created in the commercial
self-insurance group's and member's assets in favor of the
commissioner to the extent of any then unsecured portion of the
commercial self-insurance group's incurred liabilities. The
perfected security interest is transferred to any cash or
securities thereafter posted by the commercial self-insurance
group with the state treasurer and is released only upon either
of the following:
(1) the acceptance by the commissioner of a surety bond or
irrevocable letter of credit for the full amount of the incurred
liabilities for the payment of compensation; or
(2) the return of cash or securities by the commissioner.
The commercial self-insurance group loses all right, title, and
interest in and any right to control all assets or obligations
posted or left on deposit as security. In the event of a
declaration of bankruptcy or insolvency by a court of competent
jurisdiction, or in the event of the issuance of a certificate
of default by the commissioner, the commissioner shall liquidate
the deposit as provided in this chapter, and transfer it to the
commercial self-insurance group security fund for application to
the commercial self-insurance group's incurred liability.
(c) No securities in physical form on deposit with the
state treasurer or the commissioner or custodial accounts
assigned to the state shall be released or exchanged without an
order from the commissioner. No security can be exchanged more
than once every 90 days.
(d) Any securities deposited with the state treasurer or
with a custodial account assigned to the state treasurer or
letters of credit or surety bonds held by the commissioner may
be exchanged or replaced by the depositor with any other
acceptable securities or letters of credit or surety bond of
like amount so long as the market value of the securities or
amount of the surety bonds or letter of credit equals or exceeds
the amount of the deposit required. If securities are replaced
by surety bond, the commercial self-insurance group must
maintain securities on deposit in an amount sufficient to meet
all outstanding workers' compensation liability arising during
the period covered by the deposit of the replaced securities.
(e) The commissioner shall return on an annual basis to the
commercial self-insurance group all amounts of security
determined by the commissioner to be in excess of the statutory
requirements for the group to self-insure, including that
necessary for administrative costs, legal fees, and the payment
of any future workers' compensation claims.
Sec. 10. Minnesota Statutes 1996, section 79A.26,
subdivision 2, is amended to read:
Subd. 2. [BOARD OF TRUSTEES.] The commercial security fund
shall be governed by a board consisting of a minimum of three
and maximum of five trustees. The trustees shall be
representatives of commercial self-insurance groups who shall be
elected by the participants of the commercial security fund,
each group having one vote. The trustees initially elected by
the participants shall serve staggered terms of either two or
three years. Thereafter, trustees shall be elected to
three-year terms and shall serve until their successors are
elected and assume office pursuant to the bylaws of the
commercial security fund. Two additional trustees shall be
appointed by the commissioner. These trustees shall serve
four-year terms. Initially, one of these trustees shall serve a
two-year term. Thereafter, the trustees shall be appointed to
four-year terms, and shall serve until their successors are
appointed and assume office according to the bylaws of the
commercial security fund. In addition to the trustees elected
by the participants or appointed by the commissioner, the
commissioner of labor and industry or the commissioner's
designee shall be an ex officio, nonvoting member of the board
of trustees. A member of the board of trustees may designate
another person to act in the member's place as though the member
were acting and the designee's actions shall be deemed those of
the member.
Sec. 11. Minnesota Statutes 1996, section 79A.31,
subdivision 1, is amended to read:
Subdivision 1. [WITHDRAWAL.] Any group self-insurer that
is a member as of August 1, 1995, of the self-insurers' security
fund established under section 79A.09, may until January 1,
1996, elect to withdraw from that fund and become a member of
the commercial self-insurance group security fund established
under section 79A.26. The transferring group shall be subject
to the provisions and requirements of sections 79A.19 to 79A.32
as of the date of transfer. Additional security may be required
pursuant to section 79A.24. Group self-insurers electing to
transfer to the commercial self-insurance group fund shall not
be subject to the provisions of section 79A.06, subdivision 5,
including, but not limited to, assessments by the self-insurers'
security fund. Notice of transfer must be filed by November 1
for all transfers that must be effective at midnight on December
31.
Sec. 12. Laws 1996, chapter 446, article 1, section 72, is
amended to read:
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. 13. [EFFECTIVE DATE.]
Sections 2 to 12 are effective the day following final
enactment.
Presented to the governor March 27, 1998
Signed by the governor March 31, 1998, 10:55 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes